military/aerospaceTable productof lines to companies such as Raytheon, Lockheed Martin, Northrup Grumman and Textron. Contents

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

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

Patents Table of Contents

Item 3.Table Legalof Proceedings Contents

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

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

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

13 Table of Contents

14 Table of Contents

Item 6.Table Selectedof Financial Data Contents

Item 7.Table Management’s Discussion and Analysis of Financial Condition and Results of Operations Contents

18 Table of Contents

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

NetTable Lossof and Loss per Share Contents

GrossTable Profit of Contents

GeneralTable andof Administrative Expenses Contents

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

OtherTable Incomeof (Expense) Contents

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

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

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

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

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

Item 7A.Table Quantitativeof and Qualitative Disclosures about Market Risk Contents

28 Table of Contents

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

29 Table of Contents

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

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

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

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

IndemnificationTable andof Expense Advancement Contents

36 Table of Contents

40 Table of Contents

CERTIFICATIONS Table of Contents

(WithTable Independentof Auditors’ Report Thereon) Contents

TheTable Board of Directors Contents

Denver,Table Colorado August 1,of 2003 Contents

VLTable DISSOLUTIONof CORPORATION Contents

(inTable thousands of dollars) Contents

SeeTable accompanyingof notes to financial statements. Contents

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended June 30, ~~2003~~2004

Commission File No. 0-23866

VL Dissolution Corporation

(Name of Issuer in its Charter)

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


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

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

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

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

Title of Class

Common Stock, $.01 Par Value

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~[X]~~ x Yes ~~[ ]~~ o No

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of issuer’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ~~[ ]~~x

At Check ~~September 15,~~if ~~2003,~~registrant ~~7,348,572~~is ~~shares~~an ofaccelerated ~~Common~~filer ~~Stock~~(as ~~were~~defined ~~outstanding. The~~in ~~aggregate~~Rule 12b-2 ~~market value~~ of the ~~Common Stock held by non-affiliates on~~ ~~September 15, 2003 was $8,156,915 based on the OTCBB closing price of $1~~Act).11 ~~per share~~o Yes ~~on that date.~~x No

As of June 28, 2004, all remaining assets of the issuer were distributed to its shareholders and the stock transfer books were closed. The distribution resulted in the complete redemption and cancellation of all outstanding shares of the Common Stock. Accordingly, there are no remaining holders of record of the issuers Common Stock.

TABLE OF CONTENTS

PART I
	Item 1. Business
	Item 2. Description of Property
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 4A. Executive Officers of the Registrant
PART II
	Item 5. Market for Common Equity and Related Stockholder Matters
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures about Market Risk
	Item 8. Financial Statements
	Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
	Item 9A. Controls and Procedures
PART III
	Item 10. Directors of the Registrant
	Item 10. Executive Officers and Directors of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
	Item 13. Certain Relationships and Related Transactions
	Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
	Item 14. Principal Accountant Fees and Services
Part IV
	Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
SIGNATURES
CERTIFICATIONS
Financial Statements
EX-10.43 Letter Agreement
Report of Independent Registered Public Accounting Firm
EX-23 Consent of KPMG LLP
Statements of Net Assets in Liquidation
Statements of Changes in Net Assets in Liquidation
Statements of Operations
Statements of Stockholders’ Equity
Statements of Cash Flows
Notes to the Financial Statements
Exhibit Index
Certification Pursuant to Section 302
Certification Pursuant to Section 906

PART I

Item 1. Business

Introduction

VL Dissolution Corporation, formerly Vari-L Company, Inc., a Colorado corporation (the “Company”), iswas engaged in the process of orderly liquidation of its remaining assets, the winding up of its business and operations, and the dissolution of the Company. Effective June 28, 2004, we distributed all of our remaining assets to our shareholders.

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

~~The~~As ~~asset~~of ~~sale~~the ~~resulted~~date ~~from~~of athis ~~process~~filing, ~~that~~we ~~began~~have incompleted ~~2002,~~the ~~when~~process weof ~~determined~~the orderly ~~that~~liquidation anof ~~asset~~our ~~sale~~remaining ~~was~~assets, in the ~~best~~winding ~~interest~~up of ~~our~~the ~~shareholders~~business, and our dissolution. ~~That~~The process involved ~~consideration~~the sale and disposition of ~~various~~assets ~~alternatives~~that towere not ~~finance~~acquired by Sirenza, the ~~Company~~payment of or ~~sell our~~provision ~~business.~~for Onliabilities ~~December 2,~~and ~~2002,~~other claims wethat ~~entered~~were ~~into~~not anassumed ~~agreement~~by toSirenza, ~~sell substantially~~and ~~all~~the distribution of ~~our~~all remaining assets to ~~Sirenza~~our shareholders.

OnDuring ~~December~~the year ended June 1930, ~~2002~~2004, ~~the~~we ~~Board~~made ofaggregate ~~Directors~~distributions ~~voted~~ to ~~approve~~our shareholders ~~a plan~~ of ~~dissolution~~ ~~subject~~approximately to2.7 million ~~the~~shares ~~completion~~ of ~~the~~Sirenza’s ~~asset~~common ~~sale~~stock valued toat ~~Sirenza~~$11.8 million Weat ~~held~~the ~~a special~~time ~~meeting~~ of ~~our~~such ~~shareholders~~distributions onand ~~April~~approximately $1.5 28million in cash. At June 30, ~~2003~~2004, towe ~~approve~~have ~~the~~satisfied ~~proposed asset~~our ~~sale~~known liabilities and ~~plan~~distributed all of ~~dissolution.~~our Aassets ~~quorum~~other ofthan ~~shareholders~~a ~~was~~small ~~not~~cash ~~present~~balance to satisfy ~~when~~any ~~the~~remaining ~~meeting~~liabilities ~~was~~relating ~~first~~to ~~convened~~our onliquidation. ~~April 28~~Accordingly, ~~2003,~~we sowill wenot make ~~adjourned~~any further distributions to our shareholders and the ~~meeting~~ Company will cease to ~~May 5,~~exist ~~2003~~in any capacity.

WeAs ~~reconvened~~outstanding ~~the~~shares ~~meeting~~of onour ~~May 5,~~common ~~2003~~stock ~~and~~are atdeemed ~~that~~worthless ~~time~~as ~~a quorum~~ of the ~~shares~~ date of ~~common~~final ~~stock~~distribution, ~~was~~our ~~present.~~Board Atof ~~that~~Directors ~~meeting,~~approved ~~our~~the ~~shareholders~~closing ~~approved~~of our stock ~~the~~transfer ~~proposals~~books. ~~included~~Accordingly, inno ~~the~~transfers ~~proxy~~of ~~statement,~~shares ~~including~~of ~~the~~our ~~asset~~common ~~sale~~stock ~~and~~have ~~plan~~been ofregistered ~~dissolution.~~on Onour ~~that~~stock ~~same~~transfer ~~day,~~books weor ~~closed~~otherwise ~~the~~recognized ~~asset~~by ~~purchase~~us ~~agreement~~after ~~and~~July 13, ~~our~~2004, ~~name~~the ~~was~~date ~~changed~~on towhich VLour ~~Dissolution~~transfer ~~Corporation~~books were closed.

~~Since~~We ~~that~~have ~~date,~~also wefiled ~~have~~Form 15 ~~begun~~with the ~~process~~Securities ofand ~~the~~Exchange ~~orderly~~Commission, pursuant ~~liquidation~~to ofwhich our ~~remaining~~ ~~assets,~~duty ~~the~~to ~~winding~~file upreports ofrequired ~~the~~under ~~business,~~Section ~~and~~13(a) of the Securities ~~dissolution~~Exchange Act of ~~the Company.~~1934, ~~This~~as ~~process~~amended, iswas ~~being~~immediately ~~managed~~suspended byand ~~Cloyses~~our duty to file reports required under ~~the~~Section ~~direction~~15(d) of ~~our~~the Securities Exchange ~~Board~~Act of ~~Directors.~~1934, ~~This~~as ~~process~~amended, ~~involves~~was ~~the~~suspended ~~sale~~as ~~and~~of ~~disposition~~June 30, of2004. ~~assets that~~This ~~were~~annual ~~not~~report represents ~~acquired~~our byfinal ~~Sirenza,~~periodic ~~the~~report ~~payment~~to ofbe orfiled ~~provision~~with ~~for~~the ~~liabilities~~Securities Exchange ~~and~~Commission. No other ~~claims~~filings ~~that~~will ~~were~~be ~~not~~made ~~assumed~~with bythe ~~Sirenza,~~Securities and ~~the~~Exchange Commission ~~distribution~~and ofno ~~any remaining~~further ~~assets~~communications will be made to our shareholders.

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

~~Our~~Prior ~~corporate~~to ~~headquarters~~closing ~~are~~the ~~currently~~asset ~~located~~sale atto ~~1625 Broadway~~Sirenza, ~~Suite 990~~we designed, ~~Denver,~~ ~~Colorado 80202~~manufactured, and ~~the telephone number is (303) 592-5700. Our~~ ~~website~~marketed ~~address is www.vl-dissolution-corp.com. We lease one building in Denver, Colorado with~~ a ~~total~~wide variety of ~~13,500~~radio ~~square~~frequency ~~feet~~and ofmicrowave ~~manufacturing~~components and ~~office~~devices ~~space.~~for Weuse ~~are~~ in ~~the~~wireless ~~process~~communications. ofOur ~~attempting~~products towere ~~sublease~~used ~~this~~in ~~facility~~many ~~since we~~different nocommercial ~~longer~~and ~~need~~military/aerospace ~~office~~applications, ~~or manufacturing space.~~including

~~Accounting~~wireless ~~Restatement~~telecommunications networks, wireless base stations, wireless point-to-point radio systems, wireless point-to-multi-point radio systems, wireless local area networks, satellite payload, test equipment (instrumentation) and ~~Related~~ground ~~Issues~~communications, radar systems, weapons guidance systems and advanced telemetry systems. We operated as a single business unit and continued to report as such during liquidation. While we no longer have active business operations, the following description of our business operations prior to the asset sale is provided to aid our reader’s understanding of our historical financial statements.

InOur ~~late~~products ~~1999,~~were ~~the~~primarily ~~Securities~~used ~~and~~as ~~Exchange~~parts ~~Commission~~or ~~(the~~components ~~“SEC”)~~of ~~commenced~~other anmanufacturers’ ~~investigation~~wireless ~~into~~communications ~~our~~products ~~accounting~~or ~~and~~equipment. ~~reporting~~Wireless ~~practices~~communication ~~for~~is the ~~periods prior~~ totransmission ~~and~~of ~~including~~voice ~~1999.~~or ~~The~~data ~~investigation~~signals ~~ultimately~~through ~~led~~the toair, ~~the~~without ~~withdrawal~~a ofphysical ~~audit~~connection, ~~reports~~such ~~issued~~as bya ~~our~~metal ~~previous~~wire ~~auditors~~or ~~for~~fiber-optic ~~the~~cable. ~~1997,~~Information ~~1998~~transmitted through ~~and~~wireless ~~1999~~communications equipment is transmitted by electromagnetic ~~financial~~waves, ~~statements~~also known as signals. InElectromagnetic ~~September~~waves ~~2001~~vary wein ~~agreed~~length, tofrequency, and aintensity. ~~settlement~~The ~~with~~range of electromagnetic waves is called the ~~SEC~~spectrum, ~~under~~ which aencompasses ~~federal~~audio ~~district~~near ~~court~~the ~~issued~~low anend ~~injunction~~and ~~against~~light ~~future~~toward the higher end. In ~~violations~~between ofis ~~reporting,~~the ~~proxy~~radio ~~and~~spectrum ~~anti-fraud~~used ~~provisions~~in bymost ~~us,~~wireless ~~but~~communications. ~~did~~RF ~~not~~refers ~~require~~to usthe tolower ~~pay~~frequencies ~~any~~in ~~civil~~the ~~penalties~~spectrum orwhile ~~money~~“microwave” ~~damages.~~refers ~~See~~to ~~“Legal~~higher ~~Proceedings~~frequencies.”

AsFor amore ~~result~~than of50 years, ~~the~~we ~~withdrawal~~supplied ofwireless ~~audit~~communications ~~reports~~products ~~for~~to the military/aerospace ~~1997,~~industry. ~~1998~~In ~~and 1999 financial statements~~1993, we noexpanded ~~longer~~our ~~met the requirements for listing on NASDAQ.~~engineering, ~~Beginning~~manufacturing ~~September 11,~~and ~~2000,~~sales ~~our~~efforts ~~securities~~to ~~were~~address ~~quoted on~~ the ~~other~~growing ~~OTC market.~~demand ~~In May 2002, an application~~ for ~~listing was filed with the Over the~~commercial ~~Counter~~wireless ~~Bulletin~~communications ~~Board system (the “OTCBB”)~~products. OnIn ~~June 26,~~ 2002, ~~the~~we ~~application was~~expanded ~~accepted and~~ our ~~common~~product ~~stock~~line ~~began~~by introducing ~~trading~~wideband onvoltage-controlled ~~the~~oscillators ~~OTCBB~~and ~~under~~stripline ~~the stock symbol “VARL~~couplers.”

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

~~Prior~~Our toproduct ~~closing~~lines ~~the~~fell ~~asset~~into ~~sale~~two tomajor ~~Sirenza,~~categories: weproducts ~~designed,~~which ~~manufactured, and~~produce ~~marketed~~electromagnetic asignals, ~~wide~~which ~~variety~~we ofreferred ~~radio~~to ~~frequency~~as ~~and~~signal ~~microwave~~source components, and ~~devices~~ ~~for~~products ~~use~~which inreceive ~~wireless~~or ~~communications~~process electromagnetic signals, or passive components. ~~Our~~Sales of our products were ~~used~~generated inthrough ~~many~~a ~~different~~combination of ~~commercial~~manufacturers’ representatives and ~~military/aerospace~~our ~~applications,~~own ~~including~~direct ~~wireless telecommunications~~sales ~~networks,~~force ~~wireless base stations~~team, ~~wireless~~and ~~point-to-point~~were ~~radio~~supplemented ~~systems,~~by ~~wireless~~advertising ~~point-to-multi-point~~in ~~radio~~trade ~~systems~~magazines, ~~wireless~~participating ~~local~~in ~~area~~trade shows ~~networks,~~and ~~satellite~~on ~~payload,~~our ~~test~~website. ~~equipment~~Most ~~(instrumentation) and~~of ~~ground communications,~~our ~~radar~~products ~~systems,~~were ~~weapons~~customized ~~guidance~~according ~~systems~~to ~~and advanced telemetry~~our ~~systems.~~customers’ Wespecifications, ~~operated~~but aswe aalso ~~single~~produced ~~business~~some ~~unit~~standard ~~and~~products. ~~will continue to report as~~We ~~such~~also ~~during~~designed ~~liquidation.~~and ~~While~~manufactured wecustom noproducts ~~longer~~in ~~have~~response ~~active~~to ~~business~~specific ~~operations,~~customer ~~the~~requirements. ~~following~~The ~~description~~majority of our ~~business~~sales ~~operations~~were ~~prior~~in toparts ~~the~~that ~~asset~~are ~~sale~~customized isto ~~provided~~meet tothe ~~aid~~performance ~~our~~requirements ~~reader’s understanding~~ of ~~our~~specific ~~historical financial statements~~customers.

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

~~For~~Prior ~~more than 50 years, we supplied wireless communications products~~ to the ~~military/aerospace~~ ~~industry.~~closing Inof ~~1993,~~the weasset ~~expanded~~sale ~~our engineering, manufacturing and sales efforts~~ to ~~address the growing demand for commercial wireless communications products. In 2002~~Sirenza, we ~~expanded~~had ~~our~~three ~~current~~primary product ~~line~~ ~~by introducing wideband voltage-controlled oscillators, and stripline couplers.~~lines:

~~Through~~• ~~May 5,~~Commercial ~~2003,~~Signal ~~our~~Sources ~~principal~~• commercial customers were original equipment manufacturers (“OEMs”) and contract manufacturers that design and build electronic products and equipment such as cellular base stations, point to point radios, pagers and radar systems. These contract manufacturers included Solectron, Flextronics and SanminaHigh-~~SCI.~~Reliability ~~Our~~Signal ~~commercial~~Sources ~~product~~• ~~lines~~Military ~~were marketed~~Signal toProcessing ~~OEM customers including Motorola, Ericsson, Lucent, Nokia, Microwave Data Systems, Hughes Network Systems, GE Medical and Siemens. We sold our~~ Components

3Most of our revenue came from sales of signal source components namely, voltage-controlled oscillators (“VCOs”) and phase locked loop synthesizers (“PLLs”). These signal source components were designed to produce a high quality signal that can be used over a range of radio frequencies. We held six patents related to signal source design and technology. These patents were included in the assets sold to Sirenza.

~~Table of Contents~~3

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

~~Products~~From 1996 through 2003, most of our revenues came from sales of our commercial narrowband VCOs. However, in mid-2003 we were beginning to see a shift in the wireless industry from VCOs to PLLs resulting in increasing sales of our PLLs. The PLL assemblies consisted of our VCOs integrated with other components and had a higher average selling price than our VCOs. Our VCOs and PLLs were used in high-performance cellular base stations and other demanding applications where signal quality was especially important.

~~Prior~~High-Reliability toSignal ~~the~~Source ~~closing of the asset sale to Sirenza, we had three primary product~~Components ~~lines:~~

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

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

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

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

~~High~~In March 2002, we introduced a line of 3-~~Reliability~~dB ~~Signal~~hybrid ~~Source~~couplers. ~~Components~~3-dB hybrid couplers were critical components used to build high-power amplifiers, vector modulators and antenna systems.

~~Our~~We ~~high~~also ~~reliability,~~offered orother ~~hi-rel,~~passive ~~signal source~~ components ~~performed~~(couplers, ~~the~~transformers ~~same function~~and ~~as the commercial signal source components. Our hi-rel signal source~~power ~~components,~~dividers) ~~however,~~that were ~~constructed~~used ~~using different assembly techniques because they are designed to operate~~ in ~~different~~a ~~operating~~variety ~~environments.~~of ~~These components~~niche ~~were~~fiber-optic ~~designed for wideband~~ applications ~~(i.e.~~, ~~applications~~ ~~involving~~including acable ~~wider~~television ~~range of signal frequencies)~~ and ~~were~~point-to-point ~~constructed~~data ~~in hermetically~~transmission ~~sealed packages for use over extended temperature ranges and in~~networks. ~~adverse~~However, ~~environments.~~these ~~Hi-rel~~ products ~~are~~did ~~typically~~not ~~specified~~account for ~~both military/aerospace~~a ~~and~~significant ~~high-end~~percentage ~~industrial~~of ~~applications~~our total revenue.

~~Military Signal Processing Components~~Manufacturing

~~Our~~Through ~~military~~the ~~signal~~date ~~processing~~of ~~components~~the ~~were~~asset ~~primarily~~sale ~~used~~to inSirenza, ~~military~~we ~~and aerospace~~manufactured ~~applications.~~most ~~These~~of our products ~~included~~in ~~power~~our ~~dividers~~own ~~and~~facilities ~~combiners used~~in ~~for~~Denver, ~~directing~~Colorado. RFAll ~~and~~of ~~microwave~~our ~~signals,~~products ~~solid~~were completed ~~state~~and ~~switches~~tested ~~used~~at ~~to change~~our ~~the~~manufacturing ~~routing~~facilities ofin RFDenver, ~~and~~Colorado. ~~microwave~~A contract ~~signals,~~manufacturer ~~and~~who ~~transformers~~specialized ~~used~~in ~~to convert~~the ~~signals~~unique ~~between~~production ~~different~~process ~~impedances.~~required by Wethis ~~also~~product ~~produced~~manufactured ~~mixers,~~our ~~which are~~3dB ~~used~~hybrid tocouplers. ~~convert~~Final ~~the~~testing ~~frequency~~and ofmarking was RFperformed ~~and~~at ~~microwave~~our ~~signals~~facilities toin ~~baseband signals~~Denver, Colorado.

4Sales and Marketing

~~Table~~Our original business focus was on the military/aerospace market. In 1993, we expanded our market focus to include commercial applications, to lessen our susceptibility to cyclical trends in defense spending and to seek a share of the ~~Contents~~growing market for commercial wireless communications products. As a result of this shift, our business became less dependent on U.S. military spending and more dependent on the commercial telecommunications market. During the fiscal year ended June 30, 2002 and the period from July 1, 2002 to May 5, 2003, demand for our core products sold

~~Other Products~~4

Weto ~~also~~the ~~offered~~telecommunications ~~other~~equipment ~~passive~~providers ~~components~~fell ~~(couplers,~~dramatically ~~transformers~~due ~~and~~to ~~power~~an ~~dividers)~~overall ~~that~~slowdown ~~are~~within ~~used~~the intelecommunications ~~a variety of niche fiber-optic applications~~industry, including ~~cable television and point-to-point data transmission networks.~~rapid ~~However,~~declines ~~these~~in ~~products~~expenditures ~~did not account~~ for acapital ~~significant~~infrastructure ~~percentage~~equipment ofby ~~total~~service ~~revenue for the period from July 1, 2002 to May 5, 2003~~providers.

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

~~Through~~The ~~the~~following ~~date~~table ofsummarizes ~~the asset sale to Sirenza, we manufactured most of~~ our ~~products~~ innet ~~our~~sales ~~own facilities in Denver, Colorado. All of our products were completed and tested at our manufacturing facilities in Denver, Colorado. Our 3dB hybrid couplers were manufactured~~ by ~~a contract manufacturer who specializes in the unique production process required by this~~ product. ~~Final testing~~line ~~and marking was performed at our facilities~~ (in ~~Denver,~~thousands ~~Colorado.~~of dollars):

Sales and Marketing


	Period from		Year
	July 1, 2002 to		Ended
	May 5, 2003		June 30, 2002
Commercial Signal Source Components	$	10,541	$	15,615
Hi-Rel Signal Source Components		2,684		3,651
Military Signal Processing Components		630		1,848
Other Products		56		234

Net sales	$	13,911	$	21,348

~~Our~~We ~~original~~sold ~~business focus was on the military/aerospace market. In 1993, we expanded~~ our ~~market~~products ~~focus~~primarily tothrough ~~include~~manufacturers’ ~~commercial~~representatives ~~applications, to lessen our~~who ~~susceptibility~~promoted ~~to cyclical trends in defense spending~~ and tosolicited ~~seek~~orders ~~a share of the growing market~~ for ~~commercial~~our ~~wireless communications~~ products. Ason a ~~result~~ ofcommission ~~this~~basis ~~shift,~~in exclusive ~~our~~marketing ~~business became less dependent on U~~territories.S. ~~military spending~~We ~~and~~typically ~~more~~engaged ~~dependent~~14 onto ~~the~~16 ~~commercial telecommunications market. During~~manufacturers’ ~~the~~representative ~~fiscal~~firms ~~year~~in ~~ended June 30, 2002 and~~ the ~~period~~U.S. ~~from~~We ~~July 1,~~also ~~2002~~had to20 ~~May 5, 2003,~~manufacturers’ ~~demand for our core products sold to the telecommunications equipment~~representatives ~~providers~~covering ~~fell~~18 ~~dramatically~~foreign ~~due~~countries. toIn ~~an overall slowdown within the telecommunications industry~~addition, ~~including~~we ~~rapid~~had ~~declines~~a indirect-sales ~~expenditures for capital infrastructure equipment by service providers~~force.

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

5Our principal customers were OEMs and contract manufacturers of communications equipment in either the commercial or military/aerospace marketplace. Many of our customers were large international and domestic companies with worldwide operations or prime contractors for military/aerospace work.

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

The following ~~table~~represents ~~summarizes~~the ~~our~~sales ~~net~~revenues ~~sales~~from byour ~~product~~largest ~~line~~customers ~~(in~~as ~~thousands~~a percentage of ~~dollars)~~ our total sales:

	Period
	Period from			Year ended
	from July			Year			Year
	July 1, 2002 to			June 30,
	1, 2002 to			Ended			Ended
	May 5, 2003			2002
	May 5,			June 30,			June 30,
Nokia		23	%		18	%
	2003			2002			2001
Motorola		13	%		17	%
Commercial Signal Source Components	$	10,541			15,615			34,899
ACAL Electronics (includes Siemens)		11	%		13	%
Hi-Rel Signal Source Components		2,684			3,651			2,808
Military Signal Processing Components		630			1,848			1,318
Other Products		56			234			2,352
Net sales	$	13,911			21,348			41,377

WeOur ~~sold~~customers ~~our~~historically ~~products~~purchased ~~primarily through manufacturers’ representatives who promote and solicit orders for our~~ products onfrom aus ~~commission~~as ~~basis~~needed, inrather ~~exclusive~~than ~~marketing~~through ~~territories.~~long-term Wesupply ~~typically engaged 14 to 16 manufacturers’ representative firms in the U~~contracts.S. We ~~also~~did, ~~had~~however, 20enter ~~manufacturers’~~into ~~representatives~~long-term ~~covering~~purchase 18agreements ~~foreign~~with ~~countries.~~some Inof ~~addition, we had a direct-sales force.~~our

~~Customers~~5

~~Through~~larger ~~May 5, 2003, our key~~ customers ~~included~~that ~~ACAL~~established ~~Electronics,~~preferred ~~Hughes Network~~vendor ~~Systems,~~status ~~Ericsson,~~for ~~Motorola,~~us ~~Nokia~~and, ~~Microwave Data Systems, Siemens and Solectron~~ in ~~the commercial market~~most cases, ~~and~~indicated ~~Boeing~~estimated ~~(formerly~~purchase ~~Hughes),~~quantities ~~Lockheed Martin,~~over ~~Textron,~~the ~~Northrop~~term ~~Grumman,~~of ~~Raytheon and in~~ the ~~military/aerospace market~~agreement.

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

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

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

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

6Prior to the asset sale to Sirenza, we focused our research and development efforts in the following areas:

~~Table~~• Application engineering, • Improvement of ~~Contents~~the Commercial Signal Source product line, and • Development of new product lines.

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

WeOur ~~considered~~research ~~Mini-Circuits, M/A-COM, Matsushita, ALPs, Temex~~ and ~~Z-Com~~development toexpenses ~~be our~~for ~~largest competitors in~~ the ~~commercial~~period ~~signal~~from ~~source components market. Additionally~~July 1, we2002 ~~believed~~to ~~Merrimac Industries was our largest competitor in the~~May ~~military~~5, ~~signal~~2003 ~~processing~~were ~~components market~~$2.4 million ~~Remec/Magnum~~compared ~~was~~to ~~our~~$2.7 million ~~primary competitor~~for in the ~~Hi-Rel~~year ~~signal~~ended ~~source components market and Anaren Microwave~~June 30, ~~was our primary competitor in the coupler market~~2002.

~~Research and Development~~Patents

~~Prior~~We todo ~~the~~not ~~asset~~have ~~sale~~any ~~to Sirenza, we focused our research and development~~patents. ~~efforts in the following areas:~~

~~• Application engineering, • Improvement of the Commercial Signal Source product line, and • Development of new product lines.~~Employees

~~Our~~We ~~research~~had ~~and~~no ~~development~~employees ~~team~~as ~~focused~~of onJune 30, ~~developing~~2004 ~~both new base technologies~~ and ~~design methodologies for existing base technologies~~2003. ~~The application~~All ~~and~~persons ~~design~~who ~~engineering~~have ~~team used these efforts and modified and/or~~provided ~~extended~~services ~~them~~ to ~~meet~~the ~~specific~~Company, ~~customer~~including ~~needs.~~Cloyses, Wehave ~~also~~done ~~had~~so anin ~~ongoing~~their ~~product~~capacity as ~~improvement~~independent ~~program~~contractors.

~~Our research and development expenses for the period from July 1, 2002 to May~~6 ~~5, 2003 were $2.4 million compared to $2.7 million for the year ended June 30, 2002 and $4.0 million for the year ended June 30, 2001.~~

WeFinancial doInformation ~~not~~about ~~have~~Geographic ~~any patents at this time. On May 5, 2003 we assigned nine active~~Regions ~~U.S. Patents to Sirenza, six of which related to signal source products.~~

~~Employees~~Prior to May 5, 2003, we attributed sales to customers based on the country to which the products were shipped. Net sales by country were as follows (in thousands of dollars):

We had no employees as of June 30, 2003.


	Period from
	July 1, 2002		Year ended
	to		June 30,
	May 5, 2003		2002
United States	$	5,954		8,985
China		2,506		3,800
Finland		2,217		2,995
Germany		647		1,147
Sweden		623		1,321
Italy		404		462
England		232		1,349
Canada		201		109
Other		1,127		1,180

Net sales	$	13,911		21,348

7 Item 2. Description of Property

~~Table~~At June 30, 2004, we have no facilities. We previously leased a 13,500 square foot building in Denver, Colorado which was our main commercial products manufacturing facility from a partnership that included our former Chief Scientific Officer as the general partner. This lease was scheduled to expire on October 31, 2005 and the lease rate was $10,801 per month. We had the option to terminate the lease in the event the landlord contracted to sell the property during the lease term. In April 2004, the building was sold and we terminated the lease. In connection with the termination of ~~Contents~~the lease, we made a lease termination payment of $203,100.

~~Financial~~Item ~~Information~~3. ~~about~~Legal ~~Geographic Regions~~ Proceedings

WeAs ~~attributed~~of ~~sales~~June 30, to2004, ~~customers~~there ~~based~~are onno ~~the~~material ~~country~~legal toproceedings ~~which~~involving the ~~products are~~ ~~shipped~~Company. ~~Net sales by country are as follows (in thousands of dollars):~~

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

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

~~Item 2. Description of Property~~None

~~We currently lease one building, a 13,500 square foot building in Denver,~~7 Colorado that was our main commercial products manufacturing facility. We lease this facility from a partnership that includes our former Chief Scientific Officer as the general partner. This lease expires on October 31, 2005 and the current lease rate is $10,801 per month. We believe that the lease rate for this facility is in excess of the current fair market value lease rates for comparable facilities within the area. We are in the process of attempting to sublease this facility since we no longer need office or manufacturing space. We have listed this property for sublease with a broker; however there can be no assurance that we will be successful in subleasing this property prior to the expiration of the existing lease agreement. Even if we are successful in subleasing this property, there can be no assurance that the sublease agreement will be at prevailing market rates.

~~Securities~~PART ~~and Exchange Commission Investigation~~II

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

8Our stock was traded on the Over the Counter Bulletin Board system (the “OTCBB”) under the stock symbol “VARL” until November 25, 2003. Our stock was delisted by the OTCBB for failure to remain in compliance with the listing requirements set forth in OTCBB Rule 6530. Beginning November 26, 2003 and until the final distribution to our shareholders, our stock was quoted on the Pink Sheets OTC market under the stock symbol “VLDS.PK.” The following table sets forth the high and low prices for the common stock for the periods indicated:


	High		Low
Quarter ended September 30, 2002	$	1.05	$	0.45
Quarter ended December 31, 2002	$	0.90	$	0.21
Quarter ended March 31, 2003	$	0.77	$	0.40
Quarter ended June 30, 2003	$	0.67	$	0.41
Quarter ended September 30, 2003
Quarter ended December 31, 2003	$	0.73	$	0.62
Quarter ended March 31, 2004	$	0.98	$	0.63
Period ended June 28, 2004	$	0.82	$	0.61

~~G.Sherman~~As the outstanding shares of our common stock are deemed worthless as of the date of the final distribution, ~~Jon~~our L.Board ~~Clark~~of ~~and~~Directors ~~Sarah~~approved Ethe closing of our stock transfer books. ~~Hume~~Accordingly, ~~United~~no ~~States~~transfers ~~District~~of ~~Court, District~~shares of ~~Colorado~~our common stock have been registered on our stock transfer books or otherwise recognized by us after July 13, 2004, the date on which our transfer books were closed.

~~Private Securities Class Action~~Holders

AAs ~~number~~ of ~~private~~June 28, ~~shareholder~~2004, ~~class~~all ~~actions~~remaining ~~alleging~~assets ~~violations~~ of ~~federal securities~~the ~~laws~~Company were ~~filed~~distributed ~~against~~to our shareholders and the ~~Company~~stock ~~and~~transfer ~~certain~~books were closed. Under our Amended Plan of ~~its~~Dissolution ~~former~~the distribution of our remaining assets to our ~~officers~~shareholders resulted in the ~~United~~complete ~~States~~redemption ~~District~~and ~~Court~~cancellation ~~for~~of ~~the~~all outstanding ~~District~~shares of ~~Colorado~~Common Stock. Accordingly, there are no remaining holders ~~beginning~~of inrecord ~~June~~of ~~2000~~our common stock.

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

~~Shareholder~~On ~~Derivative~~October 31, ~~Suit~~2003, our Board of Directors effected an initial distribution (or conversion to cash in the case of fractional shares) of approximately 1.4 million shares of Sirenza’s common stock to our shareholders.

On ~~August~~June 2128, ~~2002~~2004, ~~the~~our ~~District~~Board ~~Court,~~of ~~City~~Directors ~~and~~effected ~~County~~a offinal ~~Denver~~distribution ~~dismissed the~~(or ~~shareholder~~conversion ~~derivative~~to ~~action~~cash ~~filed,~~in ~~purportedly~~the oncase ~~behalf~~ of ~~the~~fractional ~~Company against~~shares) ~~Joseph~~of ~~Kiser,~~approximately ~~David Sherman, Jon Clark, Derek Bailey, Sarah Booher, David Lisowski, Anthony Petrelli, Jae Shim and the Company~~1. ~~The derivative~~3 ~~plaintiff~~million ~~appealed~~shares ~~the~~of ~~Court~~Sirenza’s ~~ruling~~common tostock ~~the~~and ~~Colorado~~approximately ~~Court of Appeals~~$1. ~~On November~~5 ~~12,~~million ~~2002,~~in ~~the parties filed a stipulated voluntary dismissal of the~~cash ~~appeal.~~to Onour ~~November 14, 2002, the Colorado Court of Appeals granted the~~shareholders. ~~stipulated dismissal and issued its mandate ordering that the appeal be~~ ~~dismissed.~~

~~Declaratory Judgment Action by Excess Insurer~~8

~~Company~~Item ~~Action~~6. ~~against~~Selected ~~Former~~Financial ~~Officers~~ Data

OnThe ~~March 19,~~selected ~~2002,~~historical ~~the~~financial ~~Company~~information ~~filed~~presented abelow ~~lawsuit~~ (in ~~the~~thousands ~~District Court~~of dollars, ~~City~~except share and ~~County~~ ofper ~~Denver,~~share ~~against~~data) ~~Mr. David~~should ~~Sherman,~~be ~~Mr. Joseph~~read ~~Kiser,~~in ~~individuals,~~conjunction ~~and~~with ~~J.C.~~“Management’s ~~Enterprises,~~Discussion aand ~~Colorado~~Analysis ~~general~~of ~~partnership.~~Financial ~~Mr. Sherman~~Condition isand ~~the~~Results ~~former~~of ~~President~~Operations” ~~of the Company~~ and ~~Mr. Kiser~~our isfinancial ~~the~~statements ~~former~~and ~~Chairman~~related ofnotes ~~the~~thereto. ~~Company’s~~Certain ~~Board~~fiscal ofyear ~~Directors~~2002 ~~and~~amounts ~~Chief~~have ~~Scientific~~been ~~Officer.~~reclassified ~~Additionally,~~to ~~Mr. Kiser~~conform is to the ~~General~~fiscal ~~Partner~~year 2003 ~~of J~~presentation.C. ~~Enterprises.~~ The ~~Company~~financial ~~subsequently~~statements ~~amended~~for ~~the complaint~~periods prior to ~~add Ms.~~June ~~Joan~~30, ~~Sherman~~2000 have ~~and~~not ~~the~~been ~~Kaythern Sherman Trust as defendants~~audited.

9Upon the sale of substantially all of our operating assets to Sirenza on May 5, 2003, we terminated our employees and ceased operations. Accordingly, a comparison of the selected financial data for the period from July 1, 2002 to May 5, 2003 with that of the prior fiscal years should take into account the fact that the Company ceased its operations just over ten months after the beginning of the fiscal year ended June 30, 2003.


	Period									Twelve
	from			Year			Year			Months
	July 1, 2002			Ended			Ended			Ended
	to May 5,			June 30,			June 30,			June 30,
	2003			2002			2001			2000
Statement of Operations Data:
Net sales	$	13,911			21,348			41,377			30,597
Cost of goods sold		10,148			13,582			21,747			17,540

Gross profit		3,763			7,766			19,630			13,057

Operating expenses:
Selling		2,299			2,925			4,268			3,636
General and administrative		5,040			6,398			9,664			4,436
Research and development		2,444			2,653			4,021			5,646
Expenses related to workforce reductions and the asset sale to Sirenza		3,636			101			—			—
Expenses related to accounting restatements and the related shareholder litigation		82			1,805			2,387			469

Total operating expenses		13,501			13,882			20,340			14,187

Operating loss		(9,738	)		(6,116	)		(710	)		(1,130	)
Other income (expense):
Interest income		18			48			416			460
Interest expense		(866	)		(199	)		(1,062	)		(873	)
Gain on disposition of assets		6,284			—			—			—
Other, net		375			12			(43	)		(35	)

Total other income (expenses)		5,811			(139	)		(689	)		(448	)

Net loss	$	(3,927	)		(6,255	)		(1,399	)		(1,578	)

Loss per share	$	(0.54	)		(0.87	)		(0.20	)		(0.25	)

Weighted average shares outstanding		7,258,853			7,152,342			7,083,866			6,232,964

~~In its lawsuit, the Company sought to rescind certain employment and consulting~~9 agreements between the Company and Messrs. Kiser and Sherman, and to rescind certain stock and stock option grants made to them, on the basis that such agreements were entered into, and such stock option grants were made, based upon mistaken or misrepresented information regarding the Company’s true financial performance. The Company also sought to recover the compensation and bonuses paid to them as a result of such mistaken or misrepresented information. In addition, the Company sought to recover excessive rent it paid pursuant to a lease agreement between the Company and J.C. Enterprises in reliance on misrepresented information provided by Messrs. Kiser and Sherman. The Company added Ms. Sherman and the Kaythern Sherman Trust to this action because they may have received assets from Mr. Sherman that the Company may have been entitled to recover.

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


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

~~During~~On ~~the~~May 5, ~~latter~~2003, ~~half~~we ofcompleted ~~calendar 2002,~~ the ~~Company~~sale ~~executed~~of ~~settlement agreements and/or mutual releases with~~ all ~~parties to the Company action against the former officers. Under the terms~~ of ~~the~~our ~~settlement~~operating ~~agreement~~assets ~~with Mr. Kiser and J.C. Enterprises, the Company paid $245,000 in total consideration; $230,000~~ to ~~Mr. Kiser as well as $15,000 to his former attorneys~~Sirenza toand ~~cover~~ceased ~~certain~~preparing ~~legal~~our ~~expenses.~~financial Instatements ~~return,~~on ~~Mr. Kiser agreed to~~ a ~~mutual general~~going ~~release~~concern ~~including,~~basis ~~but not limited to, releasing the Company, Messrs.~~in ~~Bland,~~accordance ~~Dutkiewicz,~~with ~~Risley~~accounting ~~and~~principles ~~Van~~generally ~~Lunsen~~accepted ~~from~~in ~~all claims related to his employment agreement and~~ the ~~advancement~~United ~~or indemnification of attorneys’ fees~~States ~~and other costs~~ of ~~defense, subject to the settlement of the private securities class action~~America. ~~Under~~Changes ~~the~~in ~~terms~~our ofnet ~~this~~assets ~~settlement~~in ~~agreement,~~liquidation ~~the~~since ~~Company agreed to pay the current required rental amount under the existing lease with J.C. Enterprises~~May 5, ~~but~~2003 ~~the~~are ~~Company has the option to terminate the lease, after~~as ~~sufficient~~follows ~~notice,~~ (in ~~the~~thousands ~~event~~of ~~J.C. Enterprises contracts to sell the property~~dollars): ~~during the remaining lease term.~~

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


				Period from
	Year ended			May 6, 2003 to
	June 30, 2004			June 30, 2003
Net increase (decrease) in net assets in liquidation:
Mark-to-market adjustment on investment in common stock of Sirenza	$	6,363		$	1,920
Realized gains (losses) on sale of investment in common stock of Sirenza, net		971			—
Net death benefits from life insurance policy		329			—
Refund of use tax paid		60			—
Adjustment to estimated costs of liquidation		(199	)		—
Interest income		7			—
Issuance of 2.0 million shares of common stock to fund settlement obligation		1,200			—
Distribution of 2.7 million shares of Sirenza common stock		(11,753	)		—
Distribution of cash to shareholders		(1,486	)		—

Net increase (decrease) in net assets in liquidation		(4,508	)		1,920
Net assets in liquidation, beginning of period		4,508			2,588

Net assets in liquidation, end of period	$	—		$	4,508

~~The Company also signed mutual general releases with Messrs. Bailey and Clark,~~10 which, among other things, release the Company from all claims related to their employment and separation agreements and any rights they may have had regarding advancement or indemnification of attorneys’ fees and other costs of defense.

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

~~Table~~The following discussion and analysis should be read in conjunction with the selected financial data in Item 6 and our financial statements and the notes thereto beginning on page F-1. Prior to May 5, 2003, our operations consisted of ~~Contents~~a single business segment — the design, manufacture and sale of a wide variety of radio frequency and microwave components and devices mainly used in the wireless communications industry.

~~Patent~~Critical ~~Litigation~~Accounting Policies and Estimates

OnOur ~~August 8,~~discussion ~~2002,~~and ~~Anaren~~analysis ~~Microwave,~~of ~~Inc.~~our ~~(“Anaren”)~~historical ~~filed~~and ~~suit~~liquidation ~~against~~based ~~the~~financial ~~Company~~condition ~~for~~and ~~infringement~~results of ~~U.S.~~operations ~~Patent~~are ~~No. 4,821,007.~~based Onupon ~~November 19,~~our ~~2002~~financial statements, ~~the~~which ~~Company~~have ~~was~~been ~~served~~prepared ~~with~~in ~~the~~accordance ~~complaint.~~with ~~Anaren~~accounting ~~has~~principles ~~requested~~generally accepted ~~damages~~ in ~~an unspecified~~the ~~amount~~United ~~and~~States ~~attorneys’~~of ~~fees, costs and expenses~~America. The ~~Company~~preparation ~~and~~of ~~its~~these financial ~~counsel~~statements ~~are~~requires ~~investigating~~us ~~Anaren’s~~to ~~allegations.~~make ~~The~~estimates ~~complaint~~and ~~does~~judgments ~~not~~that ~~specify~~affect the reported ~~which~~amounts of ~~the~~assets, ~~Company’s~~liabilities, ~~products~~revenues isand ~~alleged~~expenses. toOn ~~infringe~~an ~~the~~on-going ~~intellectual~~basis, we ~~property~~evaluated ofour ~~Anaren~~estimates, ~~nor~~including ~~the~~those ~~exact~~related ~~nature~~to ofrevenue ~~the alleged infringement. However~~recognition, ~~the~~allowances ~~Company~~for ~~believes~~doubtful ~~that~~accounts, ~~Anaren’s~~inventory ~~claim~~valuation isand ~~directed~~commitments ~~at its coupler product~~and ~~line~~contingencies. ~~The~~We ~~coupler~~based ~~line~~our isestimates aon ~~recently~~historical ~~introduced~~experience ~~product~~and ~~line~~on ~~which accounted~~various ~~for~~other ~~less~~assumptions ~~than~~that ~~$10,000~~are ofbelieved ~~gross~~to ~~sales~~be ~~from~~reasonable ~~its~~under ~~inception~~the ~~through May 5~~circumstances, ~~2003.~~ ~~The~~the ~~Company~~results ~~has~~of ~~sold~~which ~~substantially~~form ~~all~~the ofbasis ~~its~~for ~~assets~~making tojudgments ~~Sirenza,~~about ~~including~~ the carrying ~~products~~value toof ~~which~~assets ~~the~~and ~~company~~liabilities ~~believes~~ that ~~Anaren’s~~are ~~claim~~not isreadily ~~directed.~~apparent ~~Under~~from other ~~the~~sources. ~~Company’s~~Actual ~~agreement~~results ~~with~~may ~~Sirenza,~~differ ~~Sirenza~~from ~~has~~these ~~assumed~~estimates ~~responsibility~~under ~~for~~different ~~this~~assumptions ~~claim~~or conditions.

~~Item 4.~~We ~~Submission~~believe ofthe ~~Matters~~following tocritical aaccounting ~~Vote~~policies impacted our more significant judgments and estimates used in the preparation of ~~Security~~our ~~Holders~~historical and liquidation based financial statements.

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

~~Proposal~~Revenues Iwere -recognized Toat ~~approve~~ the ~~sale~~time byof ~~the~~shipment ~~Company~~to, ofor ~~substantially~~acceptance ~~all~~by, ~~of its~~the ~~tangible~~customer, ~~and~~provided ~~intangible~~title ~~assets~~and torisk ~~Sirenza~~of ~~pursuant~~loss transferred to the ~~terms of the Purchase Agreement~~customer.

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

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

Inventory Valuation

~~Proposal~~We IIvalued our inventories at lower of cost or market on a part-by-part basis. ToAdditionally, ~~approve~~we ~~the~~made ~~dissolution~~estimates ofregarding the ~~Company~~market ~~and~~value ~~adopt~~of ~~the~~our inventory, ~~Plan~~including an assessment of excess or obsolete inventory. We ~~Dissolution~~determined excess and obsolete inventory based on an estimate of the ~~Company~~future demand within a specified time horizon, ~~including~~generally ~~the~~twelve ~~change~~months. ofThe estimates ~~the~~we ~~Company’s~~used ~~name~~for todemand VLwere also used for near-term capacity planning ~~Dissolution~~and ~~Corp~~inventory purchasing and were consistent with our revenue forecasts. If our actual forecast was less than our demand forecast, we provided additional excess inventory charges, which decreased future gross margin and net operating results.

~~The results were as follows:~~11

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

11Commitments and Contingencies

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

~~Item 4A.~~Accrued ~~Executive~~Costs ~~Officers~~of Liquidation and Effects of ~~the~~Change ~~Registrant~~to Liquidation Basis

~~Concurrent~~Pursuant ~~with~~to the ~~closing~~amended plan of dissolution, which was approved by the shareholders ~~asset~~at ~~sale~~the ~~with~~special ~~Sirenza~~meeting on May 5, 2003, ~~all employees~~we filed articles of dissolution with the ~~Company~~Secretary ~~resigned~~of orState ~~were~~of ~~terminated.~~the ~~Effective~~State ~~May 6,~~of ~~2003,~~Colorado. Upon filing of the ~~process~~articles of ~~liquidating~~dissolution, our ~~remaining~~operations ~~assets,~~were ~~winding~~limited to winding-up ~~the~~our business, and ~~dissolving~~ ~~the~~affairs, ~~Company~~selling isour ~~being~~remaining ~~managed~~assets, discharging byour ~~Cloyses~~known ~~under~~liabilities, ~~the~~establishing ~~direction~~a contingency reserve for payment of expenses and contingent liabilities, and distributing any remaining assets to our shareholders, all in accordance with the amended ~~Board~~plan of ~~Directors~~dissolution. ~~Following~~As is a ~~list~~result, ofwe changed our ~~executive~~basis ~~officers~~of ~~that~~accounting ~~served~~to the ~~through~~liquidation basis as of May 5, 2003. The accompanying statements of operations, ~~their~~stockholders’ ~~respective~~equity ~~ages~~and ascash offlows for the period from July 1, 2002 to May 5, 2003 and ~~their~~for ~~former~~year ended June 30, 2002 have been presented on ~~positions~~a ~~within~~going concern basis comparable to prior periods, which assumes the realization of assets and the liquidation of liabilities in the normal course of business. Upon changing to the liquidation basis of accounting, which assumes that assets and liabilities are reflected at the estimated amounts to be paid or received, we recorded $1.317 million of accrued costs of liquidation representing an estimate of the costs to be incurred during dissolution. During the year ended June 30, 2004, the Company: recorded adjustments of $199,000 representing an increase in its original estimate of the costs to be incurred during dissolution.

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

Comparison of our Results of Operations

~~Charles R. Bland – President, Chief Executive Officer and Director. Mr. Bland, age 55, joined us in May 2001 as our President and Chief Executive Officer.~~ On ~~December~~May 265, ~~2001~~2003, hewe ~~was~~completed ~~appointed to~~ the ~~Board~~sale of ~~Directors.~~all ~~From June 1, 2000 until he joined us, he served as the President~~ of ~~Growzone,~~our ~~Inc., a~~operating ~~software~~assets ~~company~~to ~~focused on the horticultural industry,~~ Sirenza and ~~from~~ceased ~~June~~preparing ~~1999 until~~our ~~June~~financial ~~2000,~~statements heon ~~was~~a ~~the~~going ~~President~~concern ofbasis ~~AmericasDoctors.com, an Internet~~under ~~health~~generally ~~care~~accepted ~~content~~accounting ~~site~~principles. ~~From 1998 to 1999~~Accordingly, ~~Mr. Bland~~results ~~was the Chief Operating Officer at Quark Incorporated, provider~~ of ~~shrink wrap and client server~~operations ~~software~~ for the ~~publishing~~period ~~industry.~~from ~~For the previous 24~~May ~~years~~6, ~~Mr. Bland worked~~2003 into ~~positions of increasing responsibility with Owens Corning Fiberglas~~June 30, a ~~world~~2004 ~~leader in high performance glass composites~~ and ~~building~~for ~~materials, with~~the ~~his~~year ~~final~~ended ~~assignment being President, Africa/Latin American Operations.~~June ~~Mr. Bland received his B.S.~~30, ~~Accounting~~2004 ~~and~~are ~~Finance,~~not ~~from~~comparable ~~Ohio~~to ~~State~~any ~~University and~~other ~~his MBA from the Sloan School, Massachusetts Institute of Technology~~periods.

~~Richard~~Changes ~~P. Dutkiewicz – Vice President of Finance, Chief Financial Officer and Secretary. Mr. Dutkiewicz, age 48, joined us~~ in ~~January~~Net ~~2001~~Assets as our Vice President of Finance, Chief Financial Officer and Assistant Secretary. On December 31, 2001, he was appointed Secretary of the Corporation. From 1995 to 2001, Mr. Dutkiewicz was Vice President – Finance, Chief Financial Officer, Secretary and Treasurer of Coleman Natural Products, Inc., located in ~~Denver, Colorado,~~Liquidation afor ~~leading supplier of branded natural beef in~~ the ~~United~~year ~~States.~~ended ~~Mr. Dutkiewicz’ previous experience includes senior financial management positions at Tetrad Corporation, MicroLithics Corporation and various divisions of United Technologies Corporation. Mr.~~June Dutkiewicz was an Audit Manager at KPMG LLP. Mr. Dutkiewicz also serves on the Board of Directors of CareerLab.com. He received his BBA degree from Loyola University of Chicago in 1977. He is a member of the American Institute of Certified Public Accountants30, ~~Financial Executives~~2004 ~~International and the Association for Corporate Growth.~~

~~Timothy~~For G.the ~~Schamberger~~year –ended ~~Vice~~June 30, ~~President~~2004, ~~Sales~~we ~~and~~recorded ~~Marketing.~~a Mrmark-to market adjustment of $6.4 ~~Schamberger, age~~million ~~42,~~due ~~became~~to a net increase in value in our ~~Vice~~investment ~~President~~in the common stock of ~~Sales~~Sirenza and ~~Marketing~~we inrecorded ~~May~~a ~~2002.~~net ~~Prior~~death ~~to joining~~benefit usof $329,000 heas ~~served~~we inwere ~~various~~the sole ~~capacities~~beneficiary ~~including~~on ~~Strategic~~a ~~Account~~life ~~Manager with~~insurance ~~M/A-COM Inc~~policy. We sold 570,974 ashares ~~leading~~of ~~wireless~~Sirenza common RFstock ~~components~~realizing ~~manufacturer~~net ~~since~~gains ~~1993~~of $1. ~~Mr.~~3 ~~Schamberger’s~~million. ~~previous~~We ~~experience~~received ~~also~~a ~~includes~~use ~~sales~~tax settlement ~~management~~from the State of Colorado in the amount of $60,000 and we issued 2 ~~engineering~~million ~~positions~~shares ~~with~~of ~~Allied~~our ~~Signal~~common ~~Aerospace~~stock ~~Corp~~valued at $1.2 million, apursuant ~~manufacturer~~to ofthe ~~non-nuclear~~settlement ~~systems~~of ~~for~~the ~~nuclear~~private ~~weapons,~~securities ~~and~~class ~~Wilcox~~action. ~~Electric~~Additionally we recorded an adjustment of $199,000 arepresenting ~~manufacturer~~an increase in our original estimate of the ~~ground-based~~costs ~~navigation~~to ~~aid~~be ~~equipment.~~incurred Mrduring dissolution and we made distributions to our shareholders of 2.7 ~~Schamberger~~million ~~received~~shares ~~his~~of ~~BSEE~~Sirenza’s ~~from~~common stock with a fair market ~~Kansas~~value ~~State~~on ~~University~~the indates ~~1983~~of distribution of $11.8 million and cash of $1.5 million.

12Changes in Net Assets in Liquidation for the period from May 6, 2003 to June 30, 2003

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

~~Daniel J. Wilmot – Vice President of Research and Development. Mr. Wilmot, age~~12 37, joined us in August 1992. He served as Product Development PLL Design Engineer and Director of Advanced Product/Development Engineer in 1993 before he was appointed Vice President of Research and Development in November 1993. Prior to joining us, Mr. Wilmot was an RF Lead Engineer with Rockwell International where he worked in management, design, development, cost management and containment for PLLs and VCOs among other hybrid RF devices. Before Rockwell International, he worked at Interstate Electronics Corp. in Anaheim, California as a Radio subsystem designer for GPS applications. Mr. Wilmot received his BSEE from University of California at Santa Barbara in June 1986 and an MSEE from the California State University at Fullerton in December 1991. Mr. Wilmot also completed the AEA/Stanford Executive Institute for Management of High-Technology Companies at Stanford University, California in August 1999.

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

~~PART~~Net IISales

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

~~Market~~Gross Profit

InGross ~~May~~profit for the period from July 1, 2002 to May 5, an2003 ~~application~~decreased ~~for~~51.5% ~~listing~~to $3.8 million, ~~was~~or ~~filed~~27.1% of net sales, compared with ~~the~~$7.8 million, ~~Over~~or ~~the~~36.4% ~~Counter~~of ~~Bulletin~~net ~~Board~~sales, ~~system~~for (the ~~“OTCBB”)~~year ended June 30, 2002. The ~~application~~gross ~~was~~profit ~~accepted~~percent ~~and~~in ~~we began~~any ~~trading~~period oncan ~~the~~be ~~OTCBB~~affected ~~under~~significantly ~~the~~by ~~stock~~volume ~~symbol~~and ~~“VARL~~price concessions.” ~~Formerly,~~Fixed manufacturing ~~our~~overhead ~~common~~adversely ~~stock was~~affects ~~traded~~gross onprofit ~~the~~at ~~Nasdaq~~lower ~~National~~sales ~~Market~~levels. Accordingly, ~~until~~reduced ~~July 7,~~sales ~~2000~~levels ~~when~~combined itwith ~~was~~fixed manufacturing overhead ~~suspended~~levels bycomparable ~~Nasdaq.~~to ~~During~~prior periods has the ~~period~~effect ~~from~~of ~~July 7,~~lowering ~~2000~~gross ~~through~~profit ~~September 9,~~as a ~~2000~~percentage ~~when~~of ~~the~~sales. ~~stock~~Additionally, ~~was~~changes ~~delisted~~in bymarket ~~Nasdaq~~demand for our products, combined ~~there~~with ~~was~~changes noin ~~active~~product ~~public~~design ~~trading market~~resulted ~~for~~in ~~our~~excess ~~stock~~inventory parts. ~~Beginning~~On a ~~September 11,~~quarterly ~~2000~~basis, ~~our~~we ~~stock~~reviewed ~~was~~our ~~quoted~~inventory on ~~the other~~hand ~~OTC~~and ~~market~~firm ~~until~~purchase commitments versus our ~~subsequent~~sales ~~listing~~forecast ~~with~~to determine the ~~OTCBB~~adequacy onof ~~June 26,~~the ~~2002~~existing reserve for excess and obsolete inventory.

~~The~~Included ~~following~~in ~~table~~cost ~~sets~~of ~~forth~~goods sold for the ~~high~~period ~~and~~from ~~low~~July 1, ~~prices~~2002 to May 5, 2003 and for the ~~common~~year ~~stock~~ended June 30, 2002 is a charge of $475,000 and $564,000 for excess and obsolete inventory, respectively. Additionally, for the ~~periods~~year ~~indicated:~~ended June 30, 2002, we recognized a benefit of $268,000 of recoveries for previously written-off inventory.

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

Selling Expenses

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

AsGeneral ofand ~~September 15,~~Administrative ~~2003, there were approximately 400 holders of record of our~~Expenses ~~common stock.~~

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

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

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

~~See “Equity Compensation Plan Information” in Item 12.~~13

~~Table~~Expenses ofRelated ~~Contents~~to Workforce Reductions and the Asset Sale to Sirenza

~~Sales~~As a result of ~~Unregistered~~the ~~Securities~~continuing weakness in the wireless industry in 2002 and 2003 and the impact it had upon our revenues, we reduced our workforce and incurred severance expenses. Additionally, we incurred costs in connection with the asset sale to Sirenza. Expenses related to workforce reductions and the asset sale to Sirenza were as follows (in thousands of dollars):

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


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

Total	$	3,636		101

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

~~Issuance~~In early 2000, management of ~~Class Action~~the ~~Settlement~~Company ~~Shares.~~commenced ~~Pursuant~~efforts to ~~the~~restate ~~settlement~~its previously ofissued financial statements after being notified by the Securities ~~private~~and ~~securities~~Exchange ~~class~~Commission ~~action,~~(the we“Commission”) ~~authorized~~that the ~~issuance~~Commission ofwas investigating 2its accounting and reporting practices.~~0 million~~ Certain costs incurred ~~shares~~in ofconjunction ~~our~~with ~~common~~these ~~stock~~efforts tohave been separately classified in the Company’s ~~members~~Statements of ~~the~~Operations ~~plaintiff~~as ~~class~~“Expenses onrelating orto ~~about~~accounting ~~September 15~~restatements and related legal matters, ~~2003~~net of recoveries.” ~~Based~~Expenses onincluded in ~~the~~this ~~closing~~classification ~~price~~include the cost of ~~our~~external ~~common~~counsel ~~stock~~for onservices ~~September 15,~~provided ~~2003,~~in ~~the~~connection ~~aggregate~~with ~~fair~~shareholder ~~market~~lawsuits, ~~value~~the Commission’s investigation of the ~~common~~Company, ~~stock~~legal ~~was approximately~~fees ~~$2,220,000.~~and ~~Since~~expenses of the ~~terms~~Special ~~and~~Litigation Committee ~~conditions~~ of the ~~issuance~~Board of Directors, the ~~shares~~costs ~~was~~incurred ~~approved~~to bysettle the ~~United~~private securities ~~States~~action ~~District~~and ~~Court for~~ the ~~District~~Company ~~of Colorado~~action asagainst ~~fair~~former ~~and~~officers ~~reasonable~~(net toof recoveries), the ~~members~~cost of ~~the~~certain ~~class,~~consultants ~~the~~and ~~shares~~temporary ~~are~~labor hired to beassist ~~issued~~ in ~~reliance~~the ~~upon~~accounting ~~Section 3(a)(10)~~restatements, and reimbursements to current and former employees of the ~~Securities~~Company ~~Act~~for oftheir ~~1933,~~legal ~~as amended~~fees and expenses.

15The accounting restatements were completed in February 2001. Additionally, during October 2002 and December 2002, the Company, the individual defendants in the private securities class action, the Agricultural Excess and Surplus Insurance Company, and the individual defendants in the action against former officers attended global settlement conferences. All parties involved reached an agreement in principle for the global settlement of all litigation as further described in Part II, Item I, “Legal Proceedings.” On January 22, 2003, the Company, the class action representatives and the individual defendants in the private securities class action executed and filed a Stipulation of Settlement (the “Stipulation”) with the United States District Court for the District of Colorado (the “Court”). On January 29, 2003, the Court issued its order preliminarily approving the settlement of the private securities class action, certification of the class, and the provision of notice to members of the class (the “Preliminary Approval”). On March 28, 2003, the Court held a fairness hearing regarding the settlement of the private securities class action. At the hearing, the court approved the settlement of the private securities class action as fair and reasonable to the members of the class. Following the hearing, the Court entered its final judgment and order of dismissal of the actions with prejudice. See Part I, Item 3 “Legal Proceedings” for additional information.

~~Table of Contents~~14

~~The~~Expenses ~~selected~~relating ~~historical~~to ~~financial~~accounting ~~information~~restatements ~~presented~~and ~~below~~related ~~(in~~legal ~~thousands~~matters, net of ~~dollars~~recoveries, ~~except~~were ~~share~~as ~~and~~follows ~~per share data) should be read~~ (in ~~conjunction~~thousands ~~with “Management’s Discussion and Analysis~~ of ~~Financial Condition and Results of~~dollars): ~~Operations” and our financial statements and related notes thereto. Certain~~ ~~fiscal year 2002 amounts have been reclassified to conform to the fiscal year~~ ~~2003 presentation. Information prior to January 1, 1999 cannot be prepared without unreasonable effort and expense. The financial statements for periods prior to June 30, 2000 have not been audited.~~

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


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

Total	$	82			1,805

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

Other Income (Expense)

16Interest expense increased 335.2% to $848,000 for the period from July 1, 2002 to May 5, 2003, compared with expense of $199,000 for the year ended June 30, 2002. The increase was primarily attributable to an increase in interest expense of $649,000 due to a larger balance of debt outstanding during the period from July 1, 2002 to May 5, 2003 as compared to the year ended June 30, 2002 at significantly higher interest rates as a result of our Loan Facility with Sirenza.

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

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

Net Loss and Loss per Share

OnDue ~~May 5,~~to ~~2003, we completed~~ the ~~sale~~factors ofdescribed ~~all~~above, of our ~~operating~~net ~~assets~~loss decreased $2.6 million to ~~Sirenza~~$3.9 ~~and~~million, ~~ceased~~or ~~preparing~~$0.54 ~~our~~per ~~financial~~share, ~~statements~~for onthe aperiod ~~going~~from ~~concern~~July 1, ~~basis~~2002 into May 5, 2003, ~~accordance~~compared with ~~accounting~~a ~~principles~~net ~~generally~~loss ~~accepted in the United States~~ of ~~America~~$6.3 million, ~~Changes~~or in$0.87 ~~our~~per ~~net~~share, ~~assets~~for inthe ~~liquidation~~year ended ~~since May~~June 530, ~~2003 are as~~2002. ~~follows:~~

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

~~Forward~~Liquidity ~~Looking~~and ~~Statements~~Capital Resources

~~The~~At ~~Management’s~~June 30, ~~Discussion~~2004, ~~and~~all ~~Analysis~~the ofremaining ~~Financial~~available ~~Condition~~assets ~~and Results~~ of ~~Operations~~ ~~contains~~the ~~“forward~~Company ~~looking~~had ~~statements”~~been distributed asto ~~that~~our ~~term~~shareholders. isApproximately ~~defined~~$102,000 in ~~the Private~~cash ~~Securities~~has ~~Litigation~~been ~~Reform Act of 1995. These forward-looking~~set ~~statements~~aside ~~are~~to ~~based~~settle onfinal aliabilities ~~number~~which include: (1) preparation of ~~assumptions~~our by2004 fiscal usyear ~~about~~tax ~~the future~~return, ~~usually based~~(2) payment ~~on current conditions. These assumptions may or may not prove~~ to ~~be correct and, as a result,~~ our ~~own~~independent ~~forward-looking~~accountants ~~statements~~for ~~may also be~~various ~~inaccurate.~~audit ~~On the other hand~~services, ~~based on what we know today~~ and ~~what~~(3) other wemiscellaneous ~~expect in~~fees ~~the~~for ~~future,~~professional weservices ~~believe that the forward-looking statements we make in this~~to ~~report~~be ~~are~~provided ~~reasonable. In most cases, when we use words like “believe,” “expect,” “estimate,” “anticipate,” “project,” “plan,” or “predict”~~ to ~~describe something~~the ~~which has not yet occurred, we are making a forward-looking statement~~Company.

WeAs ~~cannot list here all~~ of ~~the~~June 30, ~~risks~~2003, ~~and uncertainties that could cause our actual future financial and operating results to differ materially from our historical experience and our present expectations or projections but~~ we ~~can identify~~had ~~many~~$60,000 of ~~them~~unrestricted cash. ~~For~~During ~~example,~~the ~~our future results could be affected by~~period ~~the~~from ~~cost of satisfying currently known liabilities~~July 1, ~~the~~2002 ~~need~~ to ~~satisfy unanticipated liabilities that might arise in the future~~May 5, ~~the expenses of dissolving and winding up the Company~~2003, ~~and~~operations ~~the~~consumed ~~price at which Sirenza stock may be held or sold~~$4.4 million ~~It is important to remember that forward-looking statements speak only as~~ of ~~the date when they are made and we do not promise that we will~~cash ~~publicly~~primarily ~~update~~due orto ~~revise~~losses ~~those statements whenever conditions~~incurred.

17During the period from July 1, 2002 to May 5, 2003, investing activities provided $4.0 million of cash due primarily to the sale of substantially all of our operating assets to Sirenza. We received $3.8 million in cash and 3.3 million shares of Sirenza’s common stock with a market value of $5.1 million at May 5, 2003.

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

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

~~The~~At following discussion and analysis should be read in conjunction with the selected financial data in Item 6 and our financial statements and the notes thereto beginning on page F-1. The financial statements for periods prior to June 30, ~~2000 have not been audited. Our fiscal year end was changed to June 30 effective in 2000. Previously~~2004, ~~our~~we ~~fiscal~~had ~~year~~no ~~ended~~contractual onobligations ~~December 31.~~requiring ~~Prior to~~tabular May 5, 2003, our operations consisted of a single business segment — the design, manufacture and sale of a wide variety of radio frequency and microwave components and devices mainly used in the wireless communications industrydisclosure.

~~Critical~~Effect ~~Accounting~~of ~~Policies~~Recently ~~and~~Issued ~~Estimates~~Accounting Standards

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

WeItem ~~believe~~7A. ~~the~~Quantitative ~~following critical accounting policies impacted our more significant judgments~~ and ~~estimates~~Qualitative ~~used~~Disclosures inabout ~~the~~Market ~~preparation of our historical and liquidation based financial statements.~~ Risk

~~Revenue~~At ~~Recognition~~June 30, 2004, we were not exposed to any market risks. The carrying amounts of cash and ~~Allowances~~accounts ~~for~~payable ~~Doubtful~~approximate ~~Accounts~~fair value because of the short maturities of these instruments.

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

WeItem ~~maintained allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments~~8. ~~The allowance~~Financial for doubtful accounts was determined based on review of the overall condition of accounts receivable balances and review of significant past due accounts. Additionally, we maintained credit insurance on certain of our foreign accounts receivable. If the financial condition of our customers deteriorated, resulting in an impairment of their ability to make payments, additional allowances were provided. Statements

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

~~We valued our inventories at lower of cost or market on a part-by-part~~16 basis. Additionally, we made estimates regarding the market value of our inventory, including an assessment of excess or obsolete inventory. We determined excess and obsolete inventory based on an estimate of the future demand within a specified time horizon, generally twelve months. The estimates we used for demand were also used for near-term capacity planning and inventory purchasing and were consistent with our revenue forecasts. If our actual forecast was less than our demand forecast, we provided additional excess inventory charges, which decreased future gross margin and net operating results.

~~Table~~Item of9. ~~Contents~~Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

~~Commitments and Contingencies~~None

WeItem ~~were party to various legal proceedings and claims, as well as various other commitments and contingencies~~9A. WeControls ~~recorded a liability if it was (1) probable that an obligation was incurred because of a transaction or event happening on or before the date of the financial statements~~ and ~~(2) the amount of the obligation could be reasonably estimated.~~ Procedures

~~Accrued~~The ~~Costs~~Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files under the Securities Exchange Act of ~~Liquidation~~1934, as amended (“Exchange Act”), is recorded, processed, summarized and ~~Effects~~reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Board of ~~Change~~Directors to ~~Liquidation~~allow ~~Basis~~timely decisions regarding required disclosure about Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act.

~~Pursuant~~As ~~to the amended plan~~ of ~~dissolution, which was approved by the shareholders at the special meeting on~~ May 5, 2003, ~~we filed articles of dissolution with~~ the ~~Secretary~~Company ofsold ~~State~~substantially ofall ~~the State~~ of ~~Colorado.~~its ~~Upon filing~~assets ofand began the ~~articles~~orderly of dissolution, ~~our~~and ~~operations~~liquidation ~~were~~of ~~limited~~its ~~to winding-up~~assets. ~~our~~As ~~business~~the ~~and~~Company currently ~~affairs,~~has ~~selling~~no ~~our~~ongoing ~~remaining assets~~operations, ~~discharging~~ ~~our~~chief ~~known~~executive ~~liabilities~~officer, ~~establishing a contingency reserve for~~principal ~~payment~~financial ~~of expenses and contingent liabilities~~officers, ~~and~~principal ~~distributing~~accounting ~~any remaining~~officer ~~assets~~or ~~to our shareholders~~employees, ~~all in accordance with~~ the ~~amended~~evaluation ~~plan~~ of ~~dissolution.~~the Aseffectiveness ~~a result, we changed our basis~~ of ~~accounting to~~ the ~~liquidation~~ ~~basis~~design asand ofoperation ~~May 5, 2003. The accompanying statements~~ of ~~operations,~~ ~~stockholders’ equity and cash flows for~~ the ~~period~~Company’s ~~from July 1,~~disclosure ~~2002~~controls ~~to May 5, 2003~~ and ~~for~~procedures ~~each~~as of the ~~years~~end inof the ~~two year~~ period ~~ended June 30,~~covered ~~2002~~by ~~have~~this ~~been~~Form ~~presented on a going concern basis comparable to~~10-K ~~prior~~was ~~periods,~~performed ~~which~~by ~~assumes~~ the ~~realization~~Company’s ofBoard ~~assets and the liquidation~~ of ~~liabilities in the normal course of business~~Directors. ~~Upon~~Based ~~changing~~on ~~to the liquidation basis of accounting, which assumes~~ that ~~assets and liabilities are reflected at the estimated amounts to be paid or received~~evaluation, ~~we recorded~~ ~~$1.317 million of accrued costs of liquidation representing an estimate of~~ the ~~costs~~Board tohas beconcluded ~~incurred~~that ~~during dissolution; however, actual costs could differ from those estimates. Distributions ultimately made to stockholders upon liquidation will differ from~~ the ~~“net~~Company’s ~~assets~~disclosure incontrols ~~liquidation”~~and ~~recorded~~procedures inare ~~the~~effective ~~accompanying Statement of Net Assets in Liquidation~~ as ~~a result~~ of ~~future~~ ~~operations~~June 30, ~~the sale proceeds ultimately received by us and adjustments, if any, to estimated costs of liquidation~~2004.

~~At June 30, 2003, the following represents the estimated costs of~~17 ~~liquidation (in thousands of dollars):~~

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

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

~~Results~~Item of10. ~~Operations~~Executive ~~for~~Officers ~~the~~and ~~period~~Directors ~~from~~of ~~July 1, 2002 to May 5, 2003 compared with~~ the ~~Fiscal Year Ended June 30, 2002~~ Registrant

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

19Concurrent with the closing of the asset sale with Sirenza on May 5, 2003, all employees of the Company resigned or were terminated. Effective May 6, 2003, the process of liquidating our remaining assets, winding up the business, and dissolving the Company was being managed by Cloyses under the direction of our Board of Directors.

~~Table of Contents~~Directors

~~results~~David ofA. ~~operations~~Lisowski ~~are~~– ~~not~~Director. ~~comparable~~Mr. Lisowski, toage ~~the~~51, ~~year~~was ~~ended~~elected a Director on June 3026, ~~2002~~1996. ~~Results~~ Mr. Lisowski is the President of ~~operations~~the doDenver ~~not~~Wholesale ~~reflect~~Florist Company, ~~adjustments~~a ~~recorded~~national ~~upon~~wholesale florist, for which he has been the ~~change~~President and Chief Executive Officer since 1993. He was employed by Central Bank of Denver, N.A., a commercial bank in Colorado, and various affiliated banks from 1972 to ~~the~~1992. ~~liquidation~~His ~~basis~~employment with Central Bank included serving as Senior Vice President of ~~accounting~~Commercial Lending in Southern Colorado as well as various other positions. Mr. Lisowski attended Metropolitan State College where he received a BS degree in Finance in 1988.

~~Net~~Anthony ~~Sales~~B. Petrelli – Acting Chairman of the Board and Director. Mr. Petrelli, age 51, was elected a Director on October 17, 1997 and became Acting Chairman of the Board of Directors on July 3, 2001. Mr. Petrelli has served as Senior Vice President of Investment Banking Services at Neidiger, Tucker, Bruner, Inc., an investment banking firm and registered broker-dealer in Denver, Colorado, since May of 1987. He formerly served as a Director of Guardian Acceptance Corp., a consumer finance company in Denver, Colorado, for which he served as President from September 1996 until December 1997. Mr. Petrelli received a BS degree in Business in 1974 and an MBA in 1979 from the University of Colorado.

~~Net~~David ~~sales~~M. ~~for~~Risley ~~the~~– ~~period~~Director. ~~from July~~Mr. 1Risley, ~~2002~~age ~~to May 5~~60, ~~2003~~was ~~decreased~~elected ~~34.8%~~a toDirector on ~~$13.9~~November ~~million~~27, ~~compared~~2001. ~~with~~He ~~$21.3 million~~currently ~~for~~serves ~~the~~as ~~year~~Senior ~~ended~~Vice ~~June 30,~~President ~~2002.~~and Chief ~~While~~Financial ~~our~~Officer ~~unit~~of ~~volume~~La-Z-Boy ~~for~~Inc., ~~its~~a ~~commercial~~$2.2 billion ~~signal~~furniture ~~source~~manufacturer. ~~products increased~~Mr. ~~slightly,~~Risley wealso ~~maintained~~serves ~~our~~as ~~pattern~~a member of the ~~last~~Board ~~few~~of ~~quarters~~Directors of ~~lowering~~Tecumseh ~~prices~~Products ofCompany. ~~our~~Prior ~~commercial~~to ~~signal~~joining ~~source~~La-Z-Boy, ~~products~~he towas ~~several~~Vice ~~key~~President ~~customers~~of toFinance ~~maintain~~and Chief ~~market~~Financial ~~share.~~Officer ~~The~~with ~~sale~~Aeroquip ofVickers, ~~all~~Inc., ofa ~~our~~manufacturing ~~operating~~firm ~~assets~~serving ~~on May 5~~the industrial, ~~2003~~aerospace ~~also contributed~~and toautomotive ~~the~~markets ~~decline~~with inpower ~~revenue.~~and ~~Overall~~motion control devices, ~~the~~fluid ~~wireless~~connectors ~~telecommunications industry~~and ~~has~~composite ~~been~~components. ~~negatively~~He ~~impacted~~holds bya ~~the~~BBA ~~severe~~in Accounting ~~market~~from ~~downturn~~the ~~and~~University ~~more specifically~~of byIowa aand ~~rapid~~an ~~decline~~MBA in ~~expenditures~~Finance ~~for~~from ~~capital infrastructure~~Loyola ~~equipment~~University byof ~~service providers~~Chicago.

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

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

~~Included~~The inBoard ~~cost~~ of ~~goods~~Directors ~~sold~~has ~~for~~determined ~~the~~that ~~period from July~~Mr. 1,Risley ~~2002~~qualifies toas ~~May 5,~~an ~~2003~~“audit ~~and~~committee ~~for~~financial ~~the year ended June 30~~expert,” ~~2002~~as isdefined ain ~~charge~~applicable ofSEC ~~$475,000 and $564,000 for excess and obsolete inventory, respectively~~rules. ~~Additionally, for the year ended~~ ~~June 30, 2002, we recognized a benefit of $268,000 of recoveries for previously~~ ~~written-off inventory.~~

~~Selling~~Section 16(a) ~~Expenses~~Beneficial Ownership Reporting Compliance

~~Selling~~Section 16(a) ~~expenses~~of ~~for~~ the ~~period~~1934 ~~from~~Act ~~July 1,~~requires ~~2002~~our todirectors ~~May 5,~~and ~~2003~~executive ~~decreased~~officers, ~~21.4%~~and topersons ~~$2.3 million,~~who orown ~~16.5%~~more ofthan ~~net~~ten ~~sales,~~percent ~~compared~~of ~~with~~a ~~$2.9 million,~~registered ~~or 13.7%~~class of ~~net~~our ~~sales~~equity securities, ~~for~~to ~~the~~file ~~year~~with ~~ended~~the ~~June 30,~~SEC ~~2002.~~initial ~~The~~reports ~~dollar decrease in selling expenses was primarily attributable to a decrease~~ of ~~$267,000~~ownership ~~in commissions~~and ~~paid~~reports ~~to manufacturer’s representatives as a result~~ of ~~reduced sales~~ ~~volume.~~changes ~~The~~in ~~sale~~ownership of ~~all of~~ our ~~operating~~common ~~assets~~stock onand ~~May 5,~~other ~~2003~~equity ~~also contributed to the decline in selling expenses~~securities.

~~General and Administrative Expenses~~18

~~Research~~Officers, directors and ~~Development~~greater ~~Expenses~~than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

~~Research~~To ~~and~~our ~~development~~knowledge, ~~expenses~~based ~~for~~solely on a review of the ~~period~~copies ~~from~~of ~~July 1,~~such ~~2002~~reports furnished to ~~May 5, 2003~~us ~~decreased~~and ~~7.9%~~written torepresentations ~~$2.4 million~~that no other reports were required, orduring ~~17.6%~~the offiscal ~~net~~years ~~sales~~ended June 30, ~~compared~~2004, ~~with~~all ~~$2.7 million~~Section or16(a) ~~12.4%~~filing requirements ofapplicable ~~net~~to ~~sales~~our officers, ~~for~~directors ~~the~~and ~~year~~greater ~~ended~~than ~~June 30,~~ten ~~2002~~percent beneficial owners were complied with.

20Code of Ethics

~~Table~~Since, in connection with the closing of ~~Contents~~the asset sale with Sirenza on May 5, 2003, all employees of the Company resigned or were terminated, the Company has not adopted a code of ethics.

~~Expenses~~Item ~~Related~~11. toExecutive ~~Workforce Reductions and the Asset Sale to Sirenza~~ Compensation

AsConcurrent awith ~~result~~the closing of the ~~continuing~~asset ~~weakness~~sale inwith ~~the~~Sirenza ~~wireless~~on ~~industry~~May 5, ~~and~~2003, ~~the impact~~all itemployees ~~had~~of ~~upon~~the ~~our~~Company ~~revenues,~~resigned weor ~~reduced~~were ~~our~~terminated. ~~workforce~~Effective ~~and~~May 6, ~~incurred severance~~2003, ~~expenses.~~the ~~Additionally,~~process weof ~~incurred~~liquidating ~~costs~~our inremaining ~~connection~~assets, ~~with~~winding up the ~~asset~~business, ~~sale to~~and ~~Sirenza.~~dissolving ~~Expenses~~the ~~related~~Company towas ~~workforce~~being ~~reductions~~managed ~~and~~by ~~the~~Cloyses ~~asset~~under ~~sale~~the todirection ~~Sirenza~~of our ~~were~~Board ~~as follows (in thousands~~ of ~~dollars):~~Directors.

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

Directors’ Compensation

~~Expenses~~During ~~Relating~~the tofiscal ~~Accounting~~year ~~Restatements~~ended ~~and~~June 30, ~~Related~~2004, ~~Legal~~we ~~Matters~~had an arrangement whereby each outside Director received $3,000 ~~Net~~per financial quarter. We reimbursed outside Directors for their expenses in attending meetings of the Board of Directors ~~Recoveries~~and its committees.

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

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

~~Expenses~~None ~~relating~~of tothe ~~accounting~~directors ~~restatements~~is or was in the past one of our officers or employees. No interlocking relationship exists between the Board of Directors or the Compensation Committee and ~~related~~the ~~legal~~board ~~matters,~~of ~~net~~directors or compensation committee of ~~recoveries~~any other company, ~~were~~nor ashas ~~follows~~such ~~(in~~an ~~thousands~~interlocking ofrelationship ~~dollars):~~existed in the past.

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

~~Table~~Equity ofCompensation ~~Contents~~Plan Information

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

As of June 30, 2004, the Company had no securities to be issued upon exercise of outstanding options, warrants or rights. All equity compensation plans have been terminated in connection with the asset sale and dissolution of the Company.

~~Other~~Security ~~Income~~Ownership ~~(Expense)~~of Certain Beneficial Owners and Management

~~Interest~~As ~~expense~~of ~~increased~~June 28, ~~335.2%~~2004, toall ~~$848,000~~remaining ~~for~~assets of the ~~period~~Company ~~from~~were ~~July 1,~~distributed ~~2002~~ to our ~~May 5,~~shareholders ~~2003,~~and ~~compared~~the ~~with~~stock ~~expense~~transfer ofbooks ~~$199,000~~were ~~for~~closed. ~~the~~Under ~~year~~our ~~ended June 30,~~Amended ~~2002.~~Plan ~~The~~of ~~increase~~Dissolution ~~was~~the ~~primarily~~distribution ~~attributable~~of toour anremaining ~~increase~~assets into ~~interest~~our ~~expense~~shareholders ofresulted ~~$649,000~~in ~~due~~the tocomplete aredemption ~~larger~~and ~~balance~~cancellation of ~~debt~~ all outstanding ~~during~~shares ~~the period~~of ~~from~~Common ~~July 1,~~Stock. ~~2002 to May 5~~Accordingly, ~~2003~~there asare ~~compared~~no toremaining ~~the year ended June 30,~~holders ~~2002~~of atrecord ~~significantly higher interest rates as a result~~ of our ~~Loan~~common ~~Facility with Sirenza~~stock.

~~The sale of all of our operating assets on May 5, 2003 contributed to the net~~19 ~~gain of $6.3 million. Other income, net, primarily represents a gain of $375,000 on the sale of various term and whole life insurance policies.~~

~~Results~~In ofthe ~~Operations~~past, ~~for~~ the ~~Year~~Company ~~Ended~~has ~~June 30,~~entered ~~2002~~into ~~compared~~various transactions with ~~the~~its officers ~~Year~~and major shareholders. Transactions with such individuals which ~~Ended~~subject ~~June 30,~~the ~~2001~~Company to continuing obligations are described below.

~~Net~~Indemnification ~~Sales~~and Expense Advancement

~~Net~~Under ~~sales~~our ~~for~~Articles ~~the~~of ~~year ended June 30~~Incorporation, ~~2002~~Bylaws ~~decreased~~and ~~48.4%~~applicable toColorado ~~$21.3 million~~corporate ~~compared~~law, ~~with~~we ~~$41.4 million~~have ~~for~~certain ~~the~~obligations ~~year~~to ~~ended~~indemnify ~~June 30,~~our ~~2001.~~officers ~~This~~and ~~decline~~directors isfor ~~primarily~~expenses ~~due~~they toincur ~~a decrease~~ in ~~demand~~connection ~~for~~with the ~~quantity~~defense of ~~commercial~~litigation ~~signal~~brought ~~source~~against ~~products~~them ~~consistent~~on ~~with~~account anof ~~overall~~actions ~~slowdown~~taken by them in those capacities if such officers or directors are wholly successful, on the ~~wireless~~merits or otherwise, in ~~communications~~their ~~industry~~defense in such proceedings.

22The Company entered into an Amended and Restated Indemnity Agreement with each of David A. Lisowski, Anthony B. Petrelli and David M. Risley, each dated as of March 11, 2003 (the “Indemnity Agreements”). The Indemnity Agreements provide that the Company shall indemnify each indemnitee to the fullest extent permitted by law, including against any and all reasonable expenses, witness fees, damages, judgments, fines and amounts paid because of any claim made against or by the indemnitee in connection with any threatened, pending or completed action, suit or other proceeding of any sort to which the indemnitee is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that the indemnitee is, was or at any time becomes a director, officer, employee or other agent of the Company. The Company’s obligation to indemnify does not apply where a determination has been made that the indemnitee is not entitled to indemnification under applicable law, in which case the indemnitee agrees to reimburse the Company for any amounts previously paid or advanced to the indemnitee. Additionally, the Company shall not be required to indemnify an indemnity for any claims for which indemnification is not lawful, on account of the indemnitee’s conduct that is established by a final judgment as knowingly fraudulent or deliberately dishonest or that constituted willful misconduct, for claims initiated by the indemnitee and not by way of defense (except in certain limited circumstances), to the extent which payment is actually made to the indemnity under a valid and collectible insurance policy or under a valid and enforceable indemnity clause, by law or agreement, or for claims under Section 16 of the Securities Exchange Act of 1934.

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

~~Revenue from commercial signal source products was $15.6 million for the year~~20 ended June 30, 2002, a 55.3% decrease from the $34.9 million for the year ended June 30, 2001. Revenue from commercial signal source products for the year ended June 30, 2001 included fees earned from a contract modification of $295,000. Revenue from all other products was $5.7 million for the year ended June 30, 2002, a 12.3% decrease from the $6.5 million for the year ended June 30, 2001. Revenue from all other products for the year ended June 30, 2001 included a significant end-of-life production run generating net sales of $809,000.

~~Gross~~Item ~~profit for the year ended June 30, 2002 decreased 60~~14.6% toPrincipal ~~$7.7 million, or~~Accountant ~~36.1%~~Fees ~~of net sales, compared with $19.6 million, or 47.4% of net sales, for the year ended June 30, 2001. The gross profit percent in any period is affected significantly by volume~~ and ~~unusual items.~~ Services

~~Fixed~~The ~~manufacturing~~following ~~overhead~~is ~~adversely~~a ~~affects~~summary ~~gross~~of ~~profit at lower sales volumes. Accordingly,~~ the ~~reduced~~fees ~~sales~~billed ~~level~~to ~~for~~ the ~~year~~Company ~~ended~~by ~~June 30,~~KPMG ~~2002 had~~LLP ~~the effect of lowering gross profit as a percentage of sales. Additionally,~~for ~~changes~~professional inservices ~~market~~rendered ~~demand~~ for ~~our~~the ~~products,~~fiscal ~~combined~~years ~~with~~ended ~~changes in product design can result in excess inventory parts~~June 30, ~~such~~2004 ~~as printed circuit boards. On a quarterly basis, we review our inventory on hand~~ and ~~firm purchase~~ ~~commitments versus our sales forecast to determine the adequacy of the existing~~2003: ~~reserve for excess and obsolete inventory.~~

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


Fee Category	Fiscal 2004		Fiscal 2003
Audit Fees ⁽¹⁾	$	21,500	$	112,641
Audit-Related Fees ⁽²⁾		32,281		26,808
Tax Fees ⁽³⁾		27,780		22,475
All Other Fees		—		—

Total Fees	$	81,531	$	161,924

~~During~~All ~~the~~2003 ~~quarter~~fees ~~ended~~described ~~June 30,~~above ~~2002,~~were wepre-approved ~~sold~~by ~~inventories with a net book value of approximately $250,000 for $75,000. As a result, we recorded a charge to cost of goods sold for $175,000. Additionally, due to~~ the ~~continuing~~Audit decline in the industry and weak demand of our commercial signal source products, we offered certain of our preferred customers’ price decreases which resulted in a $152,000 decrement in gross margin for the quarter ended June 30, 2002Committee.

~~Operating~~(1) Audit ~~Expenses~~fees consist of fees paid for professional services for the audit of our consolidated financial statements included in Form 10-K and review of financial statements included in Form 10-Q’s, and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements.

~~Included in operating expenses are charges for non~~(2) Audit-~~cash~~related ~~stock~~fees ~~compensation~~consist of ~~$44,000~~ ~~and~~fees ~~$487,000~~ for ~~the~~audits ~~years ended June 30, 2002 and 2001, respectively. The charges for stock compensation principally relate to amortization~~ of ~~deferred~~ ~~stock~~employee ~~compensation attributable to stock options granted at less than~~benefit ~~the~~plans ~~market~~and ~~price~~consulting ~~of the common stock~~ on ~~the~~employee ~~date of the grant~~benefits. ~~Of the $487,000~~ ~~total amount of stock compensation expense recorded for the year ended June 30,~~ ~~2001, $409,000 relates to options granted in December 1999. In December 2000,~~ these options were re-priced at $34.50 per share, the market price of the common stock at the date of the original grant. As a result, the remaining unamortized stock compensation associated with these option grants was reversed in December 2000.

~~In April 2002, we filed a Tender Offer~~ (~~the “Offer”~~3) Tax ~~with~~fees ~~the~~consist ~~SEC which offered employees the right to exchange all outstanding options to purchase shares~~ of ~~the~~ ~~Company’s~~fees ~~common stock with an exercise price equal to $34.50 per share~~ for ~~replacement~~ ~~options~~tax toconsultation ~~be granted no earlier than six months~~ and ~~one day from~~tax ~~the~~compliance ~~expiration of the Offer at an exercise price equal to no less than the fair market value of the common stock on the grant date~~services. ~~Under the terms and subject~~ ~~to the conditions set forth in the Offer, 180,579 options were surrendered by~~ ~~eligible employees and cancelled on May 23, 2002. We issued replacement options~~ ~~to purchase an aggregate of up to 180,579 shares of common stock in exchange for the options surrendered pursuant to the Offer on November 25, 2002.~~

23Pre-Approval Policies and Procedures.

~~Table~~The Audit Committee complies with procedures for the pre-approval of ~~Contents~~audit and non-audit services rendered by our independent registered public accounting firm, KPMG LLP. Pre-approval may be given as part of the Audit Committee’s approval of the scope of the engagement of the independent auditor or on an individual explicit case-by-case basis before the independent auditor is engaged to provide each service.

~~Selling~~The ~~Expenses~~Audit Committee has determined that the rendering of the services other than audit services by KPMG LLP is compatible with maintaining the principal auditor’s independence.

~~Selling expenses for the year ended June 30, 2002 decreased 31.5% to $2.9~~21 million, or 13.7% of net sales, compared with $4.3 million, or 10.3% of net sales, for the year ended June 30, 2001. The dollar decrease in selling expenses was primarily attributable to lower commissions paid to manufacturer’s representatives as a result of reduced sales volume and a decrease in charges for non-cash stock compensation.

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

~~Research~~Item 15. Exhibits, Financial Statement Schedules and ~~Development~~Reports ~~Expenses~~ on Form 8-K

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


Exhibit No.		Description
2.1		Amended Plan of Dissolution of Vari-L Company, Inc. as approved by the shareholders at the special meeting held on May 5, 2003 filed as Exhibit 2.1 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.

3.1a		Restated Articles of Incorporation, as Amended, filed as Exhibit 4.1 to the Form S-8 Registration Statement (No. 33-88666) and incorporated herein by reference.

3.1b		Articles of Amendment to the Articles of Incorporation filed as Exhibit 3.1b to the Form 10-KSB for the year ended December 31, 1996 and incorporated herein by reference.

3.2		Amended and Restated Bylaws adopted September 26, 2002 and filed as Exhibit 3.2 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

4.1		Specimen Certificate for $.01 par value Common Stock filed as Exhibit 4.3 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.

4.2		Rights Agreement with American Securities Transfer, Inc. dated March 15, 1996 filed as Exhibit 4.2 to the Form 8-A/A Registration Statement (No. 0-23866) and incorporated herein by reference.

4.3		Specimen Certificate for Right to Purchase $.01 par value Common Stock filed as Exhibit 4.3 to the Form 8-A/A Registration Statement (No. 0-23866) and incorporated herein by reference.

4.4		Securities Purchase Agreement with the Purchasers dated March 4, 1997 filed as Exhibit 4.5 to the Form S-3 Registration Statement (No. 333-25173) and incorporated herein by reference.

4.6		Form of Warrant to Purchase Common Stock issued to the Purchasers under the Securities Purchase Agreement dated March 4, 1997 filed as Exhibit 4.7 to the Form S-3 Registration Statement (No. 333-25173) and incorporated herein by reference.

4.7		Amendment No. 1 to Rights Agreement with American Securities Transfer, Inc. dated October 7, 2002 and filed as Exhibit 4.7 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.1		Executive Employment Agreement with Joseph H. Kiser, dated effective June 1, 1997, filed as Exhibit 10.1 to the Form 10-QSB for the quarter ended September 30, 1998 and incorporated herein by reference.

10.2		Lease Agreement dated January 1, 1987 with J.C. Enterprises for the facility located at 5165 Peoria Street, Denver, Colorado, as amended on December 6,

~~Expenses Relating to Accounting Restatements and Related Legal Matters, Net of~~22 ~~Recoveries~~

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


Exhibit No.		Description
		1990 and March 23, 1993, filed as Exhibit 10.15 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.

10.3		Settlement Agreement with Joseph H. Kiser, David G. Sherman, Alwin E. Branson and Carolyn Y. Kiser dated January 31, 1992, as amended March 23, 1993, filed as Exhibit 10.18 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.

10.4		Profit Sharing Plan and Trust Agreement, as amended and restated effective April 19, 1994 filed as Exhibit 10.16 to the Form 10-KSB for the year ended December 31, 1994 and incorporated herein by reference.

10.5		Lease Agreement dated March 12, 1997 with Five K Investments for the facility located at 4895 Peoria Street, Denver, Colorado filed as Exhibit 10 to the Form 10-QSB for the quarter ended September 30, 1997 and incorporated herein by reference.

10.6		Third Amendment to Lease Agreement dated January 1, 1987 with J.C. Enterprises for the facility located at 5165 Peoria Street, Denver, Colorado, as amended December 6, 1990, March 23, 1993, and October 30, 1998 filed as Exhibit 10.6 to the Form 10-QSB for the quarter ended September 30, 1998 and incorporated herein by reference.

10.7		Termination and Consulting Agreement with David G. Sherman dated August 1, 2000 filed as Exhibit 10.1 to the Form 8-K dated August 1, 2000 and incorporated herein by reference.

10.8		Employment Agreement with Timothy M. Micun dated March 2, 2001 filed as Exhibit 10.26 to the Form 10-K for the fiscal year ended June 30, 2001 and incorporated herein by reference.

10.9		Credit and Security Agreement with Wells Fargo Business Credit, Inc. dated June 28, 2001 filed as Exhibit 99.2 to the Form 8-K dated June 28, 2001 and incorporated herein by reference.

10.10		Patent and Trademark Security Agreement with Wells Fargo Business Credit, Inc. dated June 28, 2001 filed as Exhibit 99.3 to the Form 8-K dated June 28, 2001 and incorporated herein by reference.

10.11		First Amendment to Credit and Security Agreement dated September 17, 2001 filed as Exhibit 10.1 to the Form 10-Q dated September 30, 2001 and incorporated herein by reference.

10.12		Employee Stock Purchase Plan effective as of November 30, 2001 filed as Exhibit 10.1 to the Form 10-Q for the quarter ended December 31, 2001 and incorporated herein by reference.

10.13		Amended and Restated Tandem Stock Option and Stock Appreciation Rights Plan, effective as of January 1, 2002 filed as Exhibit 10.1 to the Form 10-Q for the quarter ended March 31, 2002 and incorporated by reference herein.

10.14		Stock Grant Plan effective as of January 1, 2002 filed as Exhibit 10.2 to the Form 10-Q for the quarter ended March 31, 2002 and incorporated herein by reference.

~~In December 1999, we learned that the SEC was conducting an investigation to~~23 determine whether there were any violations of the federal securities laws. In September 2001, we agreed to a settlement with the SEC. In December 2001, we formed the SLC. The SLC retained independent counsel to advise the Committee in its investigation of allegations of wrong doing during prior periods by former employees, as well as current and former members of our Board of Directors. For the year ended June 30, 2002, approximately $226,000 of these expenses related to fees charged by the independent counsel to the SLC.

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


Exhibit No.		Description
10.15		Agreement between Vari-L Company, Inc. and Asvan Technology, LLC dated January 25, 2002 filed as Exhibit 10.15 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.16		Second Amendment to Credit and Security Agreement with Wells Fargo Business Credit, Inc. dated February 8, 2002 filed as Exhibit 10.16 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.17		Form of Indemnity Agreement by and among Vari-L Company, Inc. and each of Gil J. Van Lunsen (dated June 1, 2001), Sarah L. Booher (dated July 5, 2001), David A. Lisowski (dated July 5, 2001), Anthony B. Petrelli (dated July 5, 2001), David M. Risley (dated November 21, 2001) and Robert C. Dixon (dated January 11, 2002) filed as Exhibit 10.17 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.18		Employment Agreement with Charles R. Bland dated August 1, 2002 filed as Exhibit 10.18 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.19		Employment Agreement with Russell M. Crouch dated August 1, 2002 filed as Exhibit 10.19 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.20		Employment Agreement with Richard P. Dutkiewicz dated August 1, 2002 filed as Exhibit 10.20 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.21		Employment Agreement with Ernest C. Hafersat dated August 1, 2002 filed as Exhibit 10.21 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.22		Employment Agreement with Janice E. Hyland dated August 1, 2002 filed as Exhibit 10.22 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.23		Employment Agreement with Matthew D. Pope dated August 1, 2002 filed as Exhibit 10.23 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.24		Employment Agreement with Larry M. Romero dated August 1, 2002 filed as Exhibit 10.24 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.25		Employment Agreement with Timothy G. Schamberger dated August 1, 2002 filed as Exhibit 10.25 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.26		Employment Agreement with Daniel J. Wilmot dated August 1, 2002 filed as Exhibit 10.26 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

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


Exhibit No.		Description
10.27		Engagement letter with Green, Manning & Bunch, Ltd. dated September 9, 2002 filed as Exhibit 10.27 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.28		Forbearance Agreement and Third Amendment to Credit and Security Agreement with Wells Fargo Business Credit, Inc. dated September 26, 2002 filed as Exhibit 99.1 to the Form 8-K dated October 1, 2002 and incorporated herein by reference.

10.29		Indemnity Agreement, dated October 2, 2002, by and among Vari-L Company with Charles R. Bland filed as Exhibit 10.29 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.30		Indemnity Agreement, dated October 2, 2002, by and among Vari-L Company, Inc. with Richard P. Dutkiewicz filed as Exhibit 10.30 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.31		Memorandum of Understanding dated October 3, 2002 between Vari-L Company, Inc. and the plaintiffs in Civil Action No. 00-S-1198 between plaintiffs Michael Rasner, et al., on behalf of themselves and other similarly situated and defendants Vari-L Company, Inc., Derek Bailey, Joseph Kiser, David G. Sherman and Jon Clark in the United States District Court, District of Colorado, by and through their respective attorneys, for settlement of litigation against Vari-L Company, Inc. filed as Exhibit 10.31 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.32		Loan Agreement with Sirenza Microdevices, Inc. dated October 7, 2002 filed as Exhibit 10.32 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.33		Security Agreement with Sirenza Microdevices, Inc. dated October 7, 2002 filed as Exhibit 10.33 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.34		Exclusivity and Right of First Refusal Agreement with Sirenza Microdevices, Inc. dated October 7, 2002 filed as Exhibit 10.34 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.35		Resale Registration Rights Agreement with Sirenza Microdevices, Inc. dated October 7, 2002 filed as Exhibit 10.35 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.36		Letter Agreement dated November 12, 2002 between Vari-L Corporation, Inc. and Five K Investments amending that certain lease agreement dated as of March 12,1997 by and between Vari-L Corporation, Inc. and Five K Investments filed as Exhibit 10.1 to the Form 10-Q for the quarter ended September 30, 2002 and incorporated herein by reference.

10.37		Stipulation of Settlement dated January 22, 2003 between Vari-L Company, Inc., Derek L. Bailey, Joseph H. Kiser, David G. Sherman, Jon L. Clark and the plaintiffs in Civil No. 00-S-1198 between plaintiffs Michael Rasner, et al., on behalf of themselves and other similarly situated and defendants Vari-L Company, Inc., Derek L. Bailey, Joseph H. Kiser, David G. Sherman and Jon L. Clark in the United State District Court, District of Colorado, by and through

~~Net Loss and Loss per Share~~25

Liquidity and Capital Resources


Exhibit No.		Description
		their respective attorneys, for settlement of litigation against Vari-L Company, Inc. filed as Exhibit 10.1 to the Form 10-Q for the quarter ended December 31, 2002 and incorporated herein by reference.

10.38		Form of Amended and Restated Indemnity Agreement by and among Vari-L Company, Inc. and each of Gil J. Van Lunsen, Sarah L. Booher, David A. Lisowski, Anthony B. Petrelli, David M. Risley, Robert C. Dixon, Charles A. Bland and Richard P. Dutkiewicz each dated as of March 11, 2003 filed as Exhibit 10.1 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.

10.39		Sublease Agreement dated March 31, 2003, by and among Vari-L Company, Inc. and Olin Acquisition Corporation for the facility located at 11101 East 51st Street, Denver, Colorado filed as Exhibit 10.2 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.

10.40		Sublease Agreement dated March 31, 2003, by and among Vari-L Company, Inc. and Olin Acquisition Corporation for the facility located at 5165 Peoria Street, Denver, Colorado filed as Exhibit 10.3 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.

10.41		Sublease Agreement dated March 31, 2003, by and among Vari-L Company, Inc. and Olin Acquisition Corporation for the facility located at 4895 Peoria Street, Denver, Colorado filed as Exhibit 10.4 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.

10.42		Sublease Agreement dated March 31, 2003, by and among Vari-L Company, Inc. and Olin Acquisition Corporation for the facility located at 4955 Peoria Street, Denver, Colorado filed as Exhibit 10.5 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.

23		Letter Agreement dated May 6, 2003 between Vari-L Corporation, Inc. and Cloyses Partners, LLC filed as exhibit 10.43 to the Form 10-K for the year ended June 30, 2003 and incorporated herein by reference.

31		Certification pursuant to 18 U.S.C. Section 1350 by the Board of Directors, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed with the Securities and Exchange Commission as Exhibit 31 to the company’s Annual Report on Form 10-K for the year ended June 30, 2004.

32		Certification pursuant to 18 U.S.C Section 1350 by the Board of Directors, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed with the Securities and Exchange Commission as Exhibit 32 to the company’s Annual Report on Form 10-K for the year ended June 30, 2004.

~~At of June 30, 2003, we had $60,000 of unrestricted cash. During the period~~26 ~~from July 1, 2002 to May 5, 2003, operations consumed $4.4 million of cash primarily due to losses incurred.~~

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

~~Outstanding~~Schedule II, ~~Liabilities~~Valuation and ~~Investment~~Qualifying inAccounts, ~~Common~~for ~~Stock~~the ofperiod ~~Sirenza~~from July 1, 2002 to May 5, 2003 and for the year ended June 30, 2002

AtReports ~~June 30,~~on ~~2003, we had $2.5~~Form ~~million in liabilities and an investment in the~~8-K ~~common stock of Sirenza valued at $6.6 million. During August and September~~ ~~2003, we sold 550,000 shares of the common stock of Sirenza at an average price~~ of $3.76. Proceeds from the sale are being used to pay our outstanding liabilities and obligations, and to establish a reserve for future liabilities and expenses. Any cash not used to satisfy liabilities and expenses will be distributed to shareholders. It is our intention to settle our outstanding obligations and sell our remaining assets as expeditiously as possible. Final dissolution of the Company and related distributions to our shareholders will occur upon obtaining final resolution of all liquidation issues and expiration of the period during which Sirenza may make an indemnity claim. As of the date of this filing, no distributions have been made to shareholders. We intend to make an initial distribution of the Sirenza stock to our shareholders during October 2003.

~~Factors~~A ~~Affecting~~report ~~Our~~on ~~Future~~Form ~~Results~~8-K dated June 15, 2004 under Items 5 and 7 was filed with the Commission on June 15, 2004.

~~In addition to the factors discussed elsewhere in this Form 10-K, the following~~27 are important factors which could cause actual results or events to differ materially from those contained in any forward looking statements made by or on behalf of us. If we are adversely affected by such risks, then the trading price of our common stock could decline, and you could lose all or part of your investment.

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

25In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


/s/ David A. Lisowski		Date: August 10, 2004

David A. Lisowski, Director

/s/ Anthony B. Petrelli		Date: August 10, 2004

Anthony B. Petrelli, Director

/s/ David M. Risley		Date: August 10, 2004

David M. Risley, Director

~~parties are paid or otherwise resolved. Accordingly, we and our shareholders~~28 ~~will bear market risk with respect to a decline in the trading price of Sirenza’s stock until such shares are resold.~~

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

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

It is our intention to settle our outstanding obligations and sell our remaining assets as expeditiously as possible. Final dissolution of the Company and related distributions to our shareholders will occur upon obtaining final resolution of all liquidation issues and expiration of the period during which Sirenza may make an indemnity claim. As of the date of this filingJune 30, no2004 ~~distributions have been made to shareholders. We intend to make an initial~~ ~~distribution of the Sirenza shares to our shareholders during October 2003.~~

~~Effect~~(With ofIndependent ~~Recently~~Auditors’ ~~Issued~~Report ~~Accounting Standards~~Thereon)

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

26Financial Statements

~~Table~~June 30, ~~of Contents~~2004

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

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


Financial Statements:
Report of Independent Registered Public Accounting Firm			F-1
Statements of Net Assets in Liquidation, June 30, 2004 and 2003			F-2
Statements of Changes in Net Assets in Liquidation, for the year ended June 30, 2004 and for the period from May 6, 2003 to June 30, 2003			F-3
Statements of Operations, for the period from July 1, 2002 to May 5, 2003 and for the year ended June 30, 2002			F-4
Statements of Stockholders’ Equity, for the period from July 1, 2002 to May 5, 2003 and for the year ended June 30, 2002			F-5
Statements of Cash Flows, for the period from July 1, 2002 to May 5, 2003 and for the year ended June 30, 2002			F-6
Notes to Financial Statements			F-7
Schedule:
Schedule II – Valuation and Qualifying Accounts for the period from July 1, 2002 to May 5, 2003 and for the year ended June 30, 2002			F-17

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

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

~~Item~~We have audited the accompanying statements of net assets in liquidation of VL Dissolution Corporation as of June 830, 2004 and 2003, and the related statements of changes in net assets in liquidation for the year ended June 30, 2004 and for the period from May 6, 2003 to June 30, 2003. ~~Financial~~We ~~Statements~~have also audited the related statements of operations, stockholders’ equity, and cash flows for the period from July 1, 2002 to May 5, 2003 and for the year ended June 30, 2002. 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.

~~The~~We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and ~~related~~disclosures in the financial ~~information~~statements. ~~required~~An toaudit bealso ~~filed~~includes assessing the accounting ~~hereunder~~principles ~~begins~~used onand ~~page~~significant ~~F-1~~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.

~~Item 9~~As described in Note 1 to the financial statements, the stockholders of Vari-L Company, Inc. ~~Changes~~approved Ina plan of liquidation on May 5, 2003, and ~~Disagreements~~the ~~With~~Company commenced ~~Accountants~~liquidation shortly thereafter. As a result, the Company has changed its basis of accounting for periods subsequent to May 5, 2003, from the going-concern basis to a liquidation basis. Also on ~~Accounting~~May 5, ~~and~~2003, Vari-L ~~Financial~~Company, ~~Disclosure~~Inc. changed its name to VL Dissolution Corporation.

27In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets in liquidation of VL Dissolution Corporation as of June 30, 2004 and 2003, the changes in its net assets in liquidation for the year ended June 30, 2004 and for the period from May 6, 3003 to June 30, 2003, and the results of its operations and its cash flows for the period from July 1, 2002 to May 5, 2003, and for the year ended June 30, 2002, in conformity with U.S. generally accepted accounting principles.

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

~~None~~/s/ KPMG LLP

~~Item~~Denver, Colorado July ~~9A.~~19, ~~Controls and Procedures~~2004

As of May 5, 2003, VL Dissolution Corp. (the “Company”) sold substantially all of its assets and began the orderly dissolution and liquidation of its assets. As the Company currently has no ongoing operations, chief executive officer, principal financial officers, principal accounting officer or employees, it is unable to perform the evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13aF-~~15(e).~~1

~~Table~~VL DISSOLUTION CORPORATION Statements of ~~Contents~~Net Assets in Liquidation

~~PART~~(in ~~III~~thousands of dollars)

Item 10. Directors of the Registrant


	June 30,			June 30,
	2004			2003
Assets
Cash and cash equivalents	$	102			60
Restricted cash		—			1,475
Prepaid expenses and other assets		—			96
Investment in common stock of Sirenza		—			4,065
Restricted investment in common stock of Sirenza		—			2,542

	$	102			8,238

Liabilities
Accounts payable and accrued costs of liquidation	$	(102	)		(2,530	)
Settlement obligation to issue 2,000,000 shares of common stock		—			(1,200	)

Commitments and contingencies
Net assets in liquidation	$	—			4,508

~~Board~~See ofaccompanying ~~Directors~~notes to financial statements.

~~David A. Lisowski – Director. Mr. Lisowski, age 50, was elected a Director~~F-2 on June 26, 1996. Mr. Lisowski is the President and a Director of the Denver Wholesale Florist Company, a national wholesale florist, for which he has been the President and Chief Executive Officer since 1993. He was employed by Central Bank of Denver, N.A., a commercial bank in Colorado, and various affiliated banks from 1972 to 1992. His employment with Central Bank included serving as Senior Vice President of Commercial Lending in Southern Colorado as well as various other positions. Mr. Lisowski attended Metropolitan State College where he received a BS degree in Finance in 1988.

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

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

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


				Period from
				May 6, 2003
	Year ended			to
	June 30, 2004			June 30, 2003
Net increase (decrease) in net assets in liquidation (Note 3):
Mark-to-market adjustments, including realized gains on sale of investment in common stock of Sirenza	$	7,334			1,920
Net death benefits from life insurance policy		329			—
Refund of use tax paid		60			—
Adjustment to estimated costs of liquidation		(199	)		—
Interest income		7			—
Issuance of 2.0 million shares of common stock to fund settlement obligation		1,200			—
Distribution of 2.7 million shares of Sirenza common stock		(11,753	)		—
Distribution of cash to shareholders		(1,486	)		—

Net increase (decrease) in net assets in liquidation		(4,508	)		1,920
Net assets in liquidation, beginning of period		4,508			2,588

Net assets in liquidation, end of period	$	—			4,508

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

~~Section 16(a) Beneficial Ownership Reporting Compliance~~F-3

~~Table~~VL ofDISSOLUTION ~~Contents~~CORPORATION

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

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

Item 11. Executive Compensation


	Period from
	July 1, 2002			Year ended
	to			June 30,
	May 5, 2003			2002
Net sales	$	13,911			21,348
Cost of goods sold		10,148			13,582

Gross profit		3,763			7,766

Operating expenses:
Selling		2,299			2,925
General and administrative		5,040			6,398
Research and development		2,444			2,653
Expenses related to workforce reductions and the asset sale to Sirenza (Note 6)		3,636			101
Expenses relating to accounting restatements and related legal matters, net of recoveries (Note 7)		82			1,805

Total operating expenses		13,501			13,882

Operating loss		(9,738	)		(6,116	)
Other income (expense):
Interest income		18			48
Interest expense		(866	)		(199	)
Gain on sale/disposal of assets, net		6,284			—
Other, net		375			12

Total other income (expense)		5,811			(139	)

Net loss	$	(3,927	)		(6,255	)

Loss per share, basic and diluted (Note 8)	$	(0.54	)		(0.87	)

Weighted average shares outstanding, basic and diluted		7,258,853			7,152,342

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

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

F-4

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

30VL DISSOLUTION CORPORATION

~~Table~~Statements of ~~Contents~~Stockholders’ Equity

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

Period from July 1, 2002 to May 5, 2003 and for the year ended June 30, 2002

~~None~~(in ofthousands ~~the named Executive Officers received additional perquisites or other personal benefits the aggregate amount~~ of ~~which was the lesser of either $50~~dollars,~~000~~ orexcept ~~10%~~share ~~of the total of annual salary and bonus reported for such~~data) ~~persons.~~

Option/SAR Grants in Last Fiscal Year


	Common stock						Additional paid-in			Unamortized stock compensation			Accumulated			Total stockholders’
	Shares			Amount			capital			cost			deficit			equity
Balance June 30, 2001		7,107,161			71			36,829			(79	)		(22,992	)		13,829
Common stock issued under employee stock purchase plan		76,011			1			123			—			—			124
Common stock issued under stock award plan		2,900			—			4			—			—			4
Common stock repurchased and retired		(6,240	)		—			(7	)		—			—			(7	)
Stock options forfeited		—			—			(4	)		4			—			—
Amortization of stock compensation cost		—			—			—			44			—			44
Net loss		—			—			—			—			(6,255	)		(6,255	)

Balance June 30, 2002		7,179,832		$	72			36,945			(31	)		(29,247	)		7,739
Common stock issued under employee stock purchase plan		169,874			2			115			—			—			117
Common stock issued under stock award plan		3,600			—			1			—			—			1
Common stock surrendered and retired		(100,813	)		(1	)		(75	)		—			—			(76	)
Common stock exercised under stock option plan		96,079			—			23			—			—			23
Stock options forfeited		—			—			(3	)		3			—			—
Amortization of stock compensation cost		—			—			—			28			—			28
Net loss		—			—			—			—			(3,927	)		(3,927	)

Balance May 5, 2003		7,348,572		$	73			37,006			—			(33,174	)		3,905
Effects of change to liquidation basis (Note 9)		—			—			—			—			(1,317	)		(1,317	)

Balance May 5, 2003		7,348,572		$	73			37,006			—			(34,491	)		2,588

~~There~~See ~~were~~accompanying nonotes ~~grants of stock options and appreciation rights during the last fiscal year~~ to ~~any~~financial ~~of the named Executive Officers~~statements.

~~Aggregated Option/SAR Exercises in Last Fiscal Year and~~F-5 ~~Fiscal Year End Option/SAR Values~~

Number of

Securities

Value of

Underlying

Unexercised

In-the-Money

Options/SARs at

Fiscal Year-

End(#)(1)

End($)(1)

Acquired on

Value Realized

Exercisable/

Name

Exercise(#)

($)

Unexercisable

Charles R. Bland

-0-

N/A

0/0

$0/$0

Richard P. Dutkiewicz

-0-

N/A

0/0

$0/$0

Timothy G. Schamberger

-0-

N/A

0/0

$0/$0

VL DISSOLUTION CORPORATION

Statements of Cash Flows

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

Directors’ Compensation


	Period from
	July 1, 2002			Year ended
	to			June 30,
	May 5, 2003			2002
Net income (loss)	$	(3,927	)		(6,255	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization		1,679			2,095
Gain on sale/disposal of assets		(6,284	)		—
Loss on disposal of other assets		59			30
Common stock issued under profit sharing and stock award plans		1			4
Common stock surrendered and retired		(76	)		—
Amortization of stock compensation		28			44
Write-off of debt issue costs		59			—
Forfeiture and write-off of deposits		131			—
Settlement obligation to issue 2,000,000 shares of common stock		—			1,200
Changes in:
Accounts receivable, inventories, prepaid expenses and other assets		2,025			4,457
Accounts payable, accrued expenses and other liabilities		1,905			(751	)

Total adjustments		(473	)		7,079

Cash provided by (used in) operating activities		(4,400	)		824

Cash flows from investing activities:
Purchases of property and equipment		(156	)		(953	)
Proceeds from sale of other assets		23			59
Consideration from sale of assets to Sirenza		3,835			—
Net proceeds (investment) from cash surrender value of whole life insurance		269			(29	)

Cash provided by (used in) investing activities		3,971			(923	)

Cash flows from financing activities:
Proceeds from notes payable		5,751			7,257
Payments of notes payable		(578	)		(8,738	)
Proceeds from long-term obligations		—			484
Payments of long-term obligations		(1,527	)		(422	)
Payment of debt issue costs		—			(59	)
Proceeds from common stock issued under stock option plan		23			—
Proceeds from common stock issued under stock purchase plan		117			124
Common stock repurchased and retired		—			(7	)

Cash provided by (used) in financing activities		3,786			(1,361	)

Increase (decrease) in cash and cash equivalents		3,357			(1,460	)
Cash and cash equivalents at beginning of period		553			2,013

Cash and cash equivalents at end of period	$	3,910			553

Supplemental disclosure of cash flow information:
Cash paid for interest	$	819			159

Cash paid for income taxes	$	—			—

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

~~Employment Agreements with Officers~~F-6

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

31Notes to the Financial Statements

~~Table~~June 30, ~~of Contents~~2004

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

(1)		Liquidation Basis of Accounting and Sale of Substantially All Assets

		Vari-L Company, Inc. (the Company) was founded in 1953 and, prior to May 6, 2003, was a manufacturer of electronic components. The Company designed, manufactured, and marketed radio frequency and microwave signal source and processing components and other electronic devices used in the communications industry. The Company operated as a single business segment, and its products were sold to original equipment manufacturers of communication equipment who marketed their products in both commercial and military markets in the United States and internationally.

		On December 2, 2002, the Company entered into a definitive asset purchase agreement (the “Asset Purchase Agreement”) to sell substantially all of its assets to a wholly owned subsidiary of Sirenza Microdevices, Inc. (“Sirenza”).

		On May 5, 2003, the asset sale contemplated by the Asset Purchase Agreement was consummated. Effective with the closing, the Company received $3.835 million in cash, 3.255 million shares of Sirenza’s common stock with a market value of $5.143 million as of May 5, 2003, forgiveness of $1.354 million and assumption of $4.594 million of secured loans and accrued interest payable to Sirenza.

		Pursuant to the amended plan of dissolution, which was approved by the shareholders at the special stockholders’ meeting on May 5, 2003, the Company’s operations were limited to winding-up its business and affairs, selling certain of its remaining assets, discharging its known liabilities, establishing a contingency reserve for payment of expenses and contingent liabilities, and distributing any remaining assets to its stockholders, all in accordance with the amended plan of dissolution. As a result, the Company changed its basis of accounting to the liquidation basis as of May 5, 2003, which assumes that assets and liabilities are reflected at the estimated amounts to be paid or received; however actual costs could differ from those estimates.

		In connection with the asset sale and the dissolution of the Company, the Company filed articles of amendment to change its name from Vari-L Company, Inc. to VL Dissolution Corporation, effective May 5, 2003.

		Final dissolution of the Company and related distributions to its stockholders could not occur prior to obtaining final resolution of all liquidation issues and expiration of the period during which Sirenza could make an indemnity claim. The expiration of the period during which Sirenza was entitled to make an indemnity claim against the Company was March 31, 2004. Sirenza and its indemnified parties did not make any claims against the Company. Effective June 28, 2004, resolution of all liquidation issues and final distributions to its stockholders occurred. During the year ended June 30, 2004, the Company made aggregate distributions (or conversion to cash in the case of fractional shares) of approximately 2.7 million shares of Sirenza’s common stock to its shareholders valued at $11.8 million and $1.5 million in cash. At June 30, 2004, the Company has satisfied its known liabilities and distributed all of its assets other than a small cash balance to satisfy any remaining liabilities relating to its liquidation. Accordingly, the Company will not make any further distributions to its shareholders and the Company will cease to exist in any capacity.

~~Under the terms of Mr. Bland’s termination letter, he is entitled to receive (i) a payment equal to approximately seven and one~~F-~~half months’ worth of his~~7 salary (determined at the time Mr. Bland executed the termination letter) to be paid following the closing of the asset sale, (ii) a payment equal to approximately seven and one-half months’ worth of his salary (determined at the time Mr. Bland executed the termination letter) to be paid one year after the closing of the asset sale provided Mr. Bland remains employed by Sirenza and (iii) in the event Mr. Bland is terminated by Sirenza other than for cause prior to the one year anniversary of the closing of the asset sale, a payment equal to the difference between what Mr. Bland would have received under his original employment agreement and the payment described in (i) above. The Company anticipates that the cost of the payments to Mr. Bland in connection with his termination letter could be as large as $307,500.

InVL ~~addition~~DISSOLUTION ~~to the compensation contemplated by Mr. Dutkiewicz’s termination~~CORPORATION ~~letter, upon closing of the asset sale, Mr. Dutkiewicz received a bonus payment~~ ~~of $60,000.~~

~~Compensation~~Notes ~~Committee~~to ~~Interlocks~~the Financial Statements

~~We had a Compensation Committee which~~June 30, ~~in fiscal 2003, was comprised of David~~2004 ~~A. Lisowski (Chairman), Sarah L. Booher and Anthony B. Petrelli. Upon closing~~ ~~of the asset sale, the Compensation Committee was disbanded.~~

~~None~~(2) ofSummary ~~the directors is or was in the past one~~ of ~~our~~Significant ~~officers~~Accounting or employees. No interlocking relationship exists between the Board of Directors or the Compensation Committee and the board of directors or compensation committee of any other company, nor has such an interlocking relationship existed in the past. Policies

~~Item 12~~(a) Use of estimates Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. ~~Security~~Significant ~~Ownership~~assumptions inherent in the preparation of ~~Certain~~the ~~Beneficial~~accompanying ~~Owners~~financial statements include, but are not limited to, estimated costs of liquidation and ~~Management~~commitments and ~~Related~~ ~~Stockholder~~contingencies. ~~Matters~~ Actual results could differ from those estimates. (b) Restricted cash In connection with the asset sale, $1.475 million of cash was restricted as to withdrawal and was retained in a separate bank account designated for such purpose. The cash was to remain restricted until the later of March 31, 2004 or the date at which all indemnification claims against the Company made by Sirenza and its indemnified parties were paid or otherwise resolved. Sirenza and its indemnified parties did not make any claims against the Company. Accordingly, the restricted designation was removed effective March 31, 2004. (c) Marketable securities Marketable securities consisted of an investment in the common stock of Sirenza, were classified as held for trading and were recorded at fair value. In connection with the asset sale, the Company held approximately 1.3 million shares that were restricted as to withdrawal or distribution. The shares were to remain restricted until the later of March 31, 2004 or the date at which all indemnification claims against the Company made by Sirenza and its indemnified parties were paid or otherwise resolved. Sirenza and its indemnified parties did not make any claims against the Company. Accordingly, the restricted designation was removed effective March 31, 2004. Unrealized gains on Sirenza’s common shares distributed to our shareholders were reported in the Statements of Changes in Net Assets in Liquidation. (d) Income taxes For the period from July 1, 2002 to May 5, 2003, and for the year ended June 30, 2002, the Company recorded no provision for federal or state income taxes since a valuation allowance was provided for the income tax benefit of the net operating losses incurred during those periods.

~~Equity Compensation Plan Information~~F-8

~~Security~~VL ~~Ownership~~DISSOLUTION ~~of Certain Beneficial Owners and Management~~CORPORATION

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

32June 30, 2004

*(e)*		*Research and Development and Advertising Costs*

		Research and development and advertising costs were expensed when incurred. Research and development expense for the period from July 1, 2002 to May 5, 2003 and for the year ended June 30, 2002 totaled $2.4 million and $2.7 million, respectively. This amount was comprised of product development expenses of $1.7 million and $1.9 million, respectively, which represented the design costs associated with customized products for customers. Additionally this amount was comprised of research expenses of $729,000 and $813,000, respectively, which were costs associated with the development of new product lines. Advertising costs were $141,000 for the period from July 1, 2002 to May 5, 2003 and $220,000 for the year ended June 30, 2002.

*(f)*		*Revenue Recognition*

		Revenues were recognized at the time of shipment. Provisions were made for sales discounts and allowances at the time product sales were recognized.

~~ownership~~(3) isChanges ~~based~~in ~~upon~~Net ~~statements~~Assets ~~furnished~~in to us by such persons. For purposes of this disclosure, the amount of our Common Stock beneficially owned is the aggregate number of shares of the Common Stock outstanding on such date plus an amount equal to the aggregate amount of Common Stock which could be issued upon the exercise of stock options within 60 days of such date by each individual, irrespective of exercise price. In connection with the asset sale and dissolution of the Company, all outstanding options were canceled effective May 5, 2003. Liquidation

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

*(a)*		*Net realized gains on sale of investment in common stock of Sirenza*

		During the year ended June 30, 2004, the Company sold 570,974 shares generating proceeds of approximately $2.2 million, realizing net gains of $1.3 million. The proceeds were used to satify liabilities and pay expenses of the Company.

*(b)*		*Net death benefits*

		The Company was a beneficiary to a life insurance policy in which a former officer was named as the insured. Under the policy, the Company was entitled to 100% of the net death benefits. In January 2004, the Company was notified of the death of this former officer. The Company received the net proceeds from the life insurance policy during April 2004 and recorded the receipt of $329,000 in its Statement of Changes in Assets for the year ended June 30, 2004.

*(c)*		*Adjustment to estimated costs of liquidation*

		During the year ended June 30, 2004, the Company recorded an adjustment of $199,000 representing an increase in its original estimate of the costs to be incurred during dissolution. The increase primarily represents unanticipated costs incurred in connection with the distribution of Sirenza’s common stock to the Company’s shareholders.

33F-9

~~Item 13.~~VL ~~Certain~~DISSOLUTION ~~Relationships and Related Transactions~~CORPORATION

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

~~Lease~~June 30, 2004

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

*(d)*		*Issuance of 2.0 million shares of common stock to fund settlement obligation*

		During October 2003, the Company issued an aggregate of 2.0 million shares of its common stock to the shareholders in the plaintiff class pursuant to the settlement of the private securities class action. The Company recorded a liability of $1.2 million for the issuance of the settlement shares in June 2002, when all substantive aspects of the settlement were agreed upon, based upon the fair market value of the shares on such date.

*(e)*		*Distribution of 2.7 million shares of Sirenza common stock*

		During the year ended June 30, 2004, the Company made aggregate distributions (or conversion to cash in the case of fractional shares) of 2,683,683 shares of Sirenza’s common stock to its shareholders valued at $11.8 million.

Settlement Agreement with Shareholder

(4)		Stock Transfer Books

		The Company received a total of 3,254,657 shares of Sirenza common stock in the asset sale. The Company either sold, in order to satisfy its liabilities and pay expenses of the Company, or distributed all of the shares. The Company has also distributed all of its remaining cash, other than a small reserve to satisfy any remaining liabilities. As such, the Company will not make any further distributions to its shareholders and the Company will cease to exist in any capacity.

		As outstanding shares of the Company’s common stock are deemed worthless as of the date of final distribution, the Company’s Board of Directors approved the closing of the Company’s stock transfer books. Accordingly, no transfers of shares of the Company’s common stock have been registered on the Company’s stock transfer books or otherwise recognized by the Company after July 13, 2004, the date on which our transfer books were closed.

		The Company has also filed Form 15 with the Securities and Exchange Commission, pursuant to which its duty to file reports required under Section 13(a) of the Securities Exchange Act of 1934, as amended, was immediately suspended and its duty to file reports required under Section 15(d) of the Securities Exchange Act of 1934, as amended, was suspended as of June 30, 2004. This annual report represents the Company’s final periodic report to be filed with the Securities Exchange Commission. No other filings will be made with the Securities and Exchange Commission and no further communications will be made to the former shareholders of the Company.

(5)		Effects of Change to Liquidation Basis

		Commencing on May 5, 2003, the Company’s operations were limited to winding-up its business and affairs, selling certain of its remaining assets, discharging its known liabilities, establishing a contingency reserve for payment of expenses and contingent liabilities, and distributing any remaining assets to its stockholders, all in accordance with the amended plan of dissolution. As a result, the Company changed its basis of accounting to the liquidation basis as of May 5, 2003. Upon changing to the liquidation basis of accounting, which assumes that assets and liabilities are reflected at the estimated amounts to be paid or received, the Company recorded a charge to equity of $1.317 million representing an estimate of the costs to be incurred during dissolution of the Company.

~~During the latter half of 2002, the Company executed a settlement and release~~F-10 agreement with Mr. Kiser related to an employment agreement between the Company and Mr. Kiser. Under the terms of the settlement agreement with Mr. Kiser and J.C. Enterprises, a Colorado general partnership of which Mr. Kiser is a general partner, the Company paid $245,000 in total consideration consisting of $230,000 to Mr. Kiser as well as $15,000 to his former attorneys to cover certain legal expenses. In return, Mr. Kiser agreed to a mutual general release with the Company. Under the terms of this settlement agreement, the Company agreed to pay the current required rental amount under the existing lease with J.C. Enterprises, but the Company has the option to terminate the lease, after sufficient notice, in the event J.C. Enterprises contracts to sell the property during the remaining lease term.

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

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

34June 30, 2004

~~Table~~At June 30, 2003, the following represented the estimated costs of ~~Contents~~liquidation (in thousands of dollars):

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


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

Total	$	1,317

~~The~~During ~~indemnification obligation of~~ the ~~Company~~year ~~under~~ended ~~the~~June ~~Indemnity~~30, ~~Agreements extends~~2004, ~~throughout~~actual ancosts ~~indemnitee’s term~~ of ~~service~~liquidation towere ~~the~~revised ~~Company and for so long thereafter as an indemnitee shall be subject~~ to ~~any~~$1.516 ~~possible claim or action of any sort by reason of the fact that the indemnitee was serving the Company~~million. ~~The~~See ~~Company~~Note is3 ~~also~~for ~~obligated~~additional to advance reasonable expenses incurred by an indemnitee in connection with a covered claim or action if it receives any affirmation by the indemnitee required by the Company’s Bylaws or the Colorado Business Corporation Act and an undertaking by the indemnitee to repay any amounts advanced if it shall be determined ultimately that the indemnitee is not entitled to be indemnified under the Indemnity Agreementsinformation.

~~The~~(6) ~~assets~~Certain Risks and ~~equity~~Concentrations ofprior ~~the Company will be subject~~ to ~~risk if any of~~ the ~~indemnitees~~ ~~incur~~Liquidation ~~liability for which they are entitled to indemnification under the agreements.~~ Period

~~Item 14.~~The ~~Exhibits~~Company’s products were sold to original equipment manufacturers of communications equipment, ~~Financial~~either ~~Statement~~in ~~Schedules~~commercial ~~and~~or ~~Reports~~military onmarkets. ~~Form 8-K~~ The following table shows the percentage of total revenues contributed by significant customers for the periods presented. A significant customer was defined as one contributing 10% or more of total revenues.

Exhibit No.	Description
	Period from
2.1	Amended Plan of Dissolution of Vari-L Company, Inc. as approved by the shareholders at the special meeting held on May 5, 2003 filed as Exhibit 2.1 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.
	July 1, 2002			Year ended
3.1a	Restated Articles of Incorporation, as Amended, filed as Exhibit 4.1 to the Form S-8 Registration Statement (No. 33-88666) and incorporated herein by reference.
	to			June 30,
3.1b	Articles of Amendment to the Articles of Incorporation filed as Exhibit 3.1b to the Form 10-KSB for the year ended December 31, 1996 and incorporated herein by reference.
	May 5, 2003			2002
3.2	Amended and Restated Bylaws adopted September 26, 2002 filed as Exhibit 3.2 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
Nokia		22.73	%		17.49	%
4.1	Specimen Certificate for $.01 par value Common Stock filed as Exhibit 4.3 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.
Motorola		12.98	%		16.71	%
4.2	Rights Agreement with American Securities Transfer, Inc. dated March 15, 1996 filed as Exhibit 4.2 to the Form 8-A/A Registration Statement (No. 0-23866) and incorporated herein by reference.
ACAL Electronics (includes Siemens)		10.66	%		12.99	%
4.3	Specimen Certificate for Right to Purchase $.01 par value Common Stock filed as Exhibit 4.3 to the Form 8-A/A Registration Statement (No. 0-23866) and incorporated herein by reference.

35 The Company produced and sold electronic components in four product lines. Net sales for each of the product lines for the periods presented were as follows (in thousands of dollars):


	Period from
	July 1, 2002		Year ended
	to		June 30,
	May 5, 2003		2002
Commercial Signal Source Components	$	10,541		15,615
Hi-Rel Signal Source Components		2,684		3,651
Military Signal Processing Components		630		1,848
Other products		56		234

Net sales	$	13,911		21,348

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

F-11

~~Table~~VL ofDISSOLUTION ~~Contents~~CORPORATION

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

Notes to the Financial Statements

37June 30, 2004

~~Table of Contents~~F-12

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

38VL DISSOLUTION CORPORATION

~~Table~~Notes ofto ~~Contents~~the Financial Statements

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

June 30, 2004

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


	Period from
	July 1, 2002		Year ended
	to		June 30,
	May 5, 2003		2002
United States	$	5,954		8,985
China		2,506		3,800
Finland		2,217		2,995
Germany		647		1,147
Sweden		623		1,321
Italy		404		462
England		232		1,349
Canada		201		109
Other		1,127		1,180

	$	13,911		21,348

~~Financial~~(7) ~~Statement~~Expenses ~~Schedule~~ Related to Workforce Reductions and the Asset Sale to Sirenza prior to the Liquidation Period

~~Schedule II~~As a result of the continuing weakness in the wireless industry and the impact it had upon the Company’s revenues, ~~Valuation~~the Company reduced its workforce and ~~Qualifying~~incurred ~~Accounts~~severance expenses. Additionally, ~~for~~the Company incurred costs in connection with the ~~period~~asset ~~from~~sale ~~July 1, 2002~~to Sirenza. Expenses related to ~~May 5,~~workforce ~~2003~~reductions and ~~for~~ the ~~years~~asset ~~ended~~sale ~~June 30,~~to ~~2002~~Sirenza ~~and~~were ~~2001~~as follows (~~Unaudited~~in thousands of dollars) :

Reports on Form 8-K


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

Total	$	3,636		101

~~A report on Form 8~~F-~~K dated May 5, 2003 under Items 2 and 7 was filed with the~~13 ~~Commission on May 6, 2003.~~

~~Table~~VL ofDISSOLUTION ~~Contents~~CORPORATION

~~SIGNATURES~~Notes to the Financial Statements

~~In accordance with the Exchange Act~~June 30, ~~this report has been signed below by the~~2004 ~~following persons on behalf of the Registrant and in the capacities and on the~~ ~~dates indicated.~~

/s/ David A. Lisowski		Date: September 23, 2003
(8)		Expenses of Accounting Restatements, Stockholder Litigation and Related Matters prior to the Liquidation Period
David A. Lisowski, Director
		In early 2000, management of the Company commenced efforts to restate its previously issued financial statements after being notified by the Securities and Exchange Commission (the Commission) that the Commission was investigating its accounting and reporting practices. Certain costs incurred in conjunction with these efforts have been separately classified in the Company’s Statements of Operations as “Expenses relating to accounting restatements and related legal matters, net of recoveries.” Expenses included in this classification include the cost of external counsel for services provided in connection with shareholder lawsuits, the Commission’s investigation of the Company, legal fees and expenses of the Special Litigation Committee of the Board of Directors (the “SLC”), the costs incurred to settle the private securities action and the Company action against former officers (net of recoveries), the cost of certain consultants and temporary labor hired to assist in the accounting restatements, and reimbursements to current and former employees of the Company for their legal fees and expenses.
/s/ Anthony B. Petrelli		Date: September 23, 2003
		The accounting restatements were completed in February 2001. Additionally, during October 2002 and December 2002, the Company, the individual defendants in the private securities class action, the Agricultural Excess and Surplus Insurance Company, and the individual defendants in the action against former officers attended global settlement conferences. All parties involved reached an agreement in principle for the global settlement of all litigation. On January 22, 2003, the Company, the class action representatives and the individual defendants in the private securities class action executed and filed a Stipulation of Settlement with the United States District Court for the District of Colorado (the “Court”). On March 28, 2003, the Court held a fairness hearing regarding the settlement of the private securities class action. At the hearing, the Court approved the settlement of the private securities class action as fair and reasonable to the members of the class. Following the hearing, the Court entered its final judgment and order of dismissal of the actions with prejudice. The terms under the Stipulation provided that the Company pay $250,000 in cash and issue 2.0 million shares of its common stock valued at $1.2 million to settle that action.
Anthony B. Petrelli, Director
		Expenses relating to accounting restatements and related legal matters, net of recoveries, were as follows (in thousands of dollars):
/s/ David M. Risley		Date: September 23, 2003
David M. Risley, Director
/s/ Gil J. Van Lunsen		Date: September 23, 2003
Gil J. Van Lunsen, Director


	Period from			Year ended
	July 1, 2002 to			June 30,
	May 5, 2003			2002
Legal fees incurred in connection with the stockholder lawsuits, Special Litigation Committee and the global settlement	$	199			472
Approximate cost to settle the Private Securities Class Action		—			1,450
Other adjustments related to legal settlements		(117	)		(117	)

Total	$	82			1,805

~~Table of Contents~~F-14

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

42Notes to the Financial Statements

~~Table~~June 30, ~~of Contents~~2004

VL DISSOLUTION CORPORATION

(9)		Earnings Per Share prior to the Liquidation Period

		The Company computed net loss per share by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share was computed by dividing the net loss for the period by the weighted average number of shares of common stock increased for potentially dilutive common shares outstanding. The effects of potential common stock equivalents were not been included in the computation of diluted net loss per share as their effect was anti-dilutive.

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

Financial Statements


	Period from
	July 1, 2002 to			Year ended
	May 5, 2003			June 30, 2002
Net income (loss)	$	(3,927	)		(6,255	)

Weighted average shares outstanding		7,258,853			7,152,342

Basic and diluted net income (loss) per share	$	(0.54	)		(0.87	)

~~June 30, 2003~~F-15

~~Table~~VL ofDISSOLUTION ~~Contents~~CORPORATION

VLNotes ~~DISSOLUTION~~to ~~CORPORATION~~the Financial Statements

~~Financial~~June 30, ~~Statements~~2004

~~June 30~~(10) Quarterly Financial Information (Unaudited) The following is a summary of the unaudited quarterly financial information for periods prior to change to liuidation basis accounting (in thousands of dollars, ~~2003~~ except per share amounts):

Index


	Quarters Ended
	September 30,			December 31,			March 31,			May 5,
	2002			2002			2003			2003*
Net sales	$	3,982			4,309			4,024			1,596

Gross profit		922			1,241			1,315			285

Operating loss		(2,159	)		(2,485	)		(1,489	)		(3,605	)

Net income (loss)		(2,321	)		(2,751	)		(1,816	)		2,961

Basic and diluted earnings (loss) per share		(0.32	)		(0.38	)		(0.25	)		0.41

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

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


	Quarters Ended
	September 30,			December 31,			March 31,			June 30,
	2001			2001			2002			2002
Net sales	$	5,676			5,607			5,163			4,902

Gross profit		2,146			2,322			1,928			1,305

Operating loss		(1,079	)		(493	)		(1,160	)		(5,542	)

Net loss		(1,120	)		(528	)		(1,211	)		(3,396	)

Basic and diluted loss per share		(0.16	)		(0.07	)		(0.17	)		(0.47	)

~~Independent Auditors’ Report~~F-16

VL ~~Dissolution~~DISSOLUTION ~~Corporation:~~CORPORATION

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

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

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


	Balance at										Balance at
	beginning										end
Description	of period		Additions (a)		Deductions (b)			Asset Sale (c)			of period
Period ended May 5, 2003:
Allowance for doubtful accounts	$	132		25		(107	)		(50	)		—
Allowance for excess and obsolete inventories		2,522		475		(1,291	)		(1,706	)		—
Reserve for product warranties and returns		20		—		—			(20	)		—

Total	$	2,674		500		(1,398	)		(1,776	)		—

Year ended June 30, 2002:
Allowance for doubtful accounts	$	279		104		(251	)		—			132
Allowance for excess and obsolete inventories		2,423		564		(465	)		—			2,522
Reserve for product warranties and returns		31		10		(21	)		—			20

Total	$	2,733		678		(737	)		—			2,674

~~In our opinion, the financial statements referred to above present fairly, in~~Notes: ~~all material respects, the net assets in liquidation of VL Dissolution Corporation as of June~~(a) ~~30,~~Amounts ~~2003,~~charged ~~the changes in its net assets in liquidation for the period from May 6, 3003~~ to ~~June 30,~~costs ~~2003,~~and ~~its financial position as of~~expenses. ~~June~~(b) ~~30,~~Bad ~~2002,~~debt ~~and~~write-offs ~~the results of its operations~~ and ~~its~~charges ~~cash~~to ~~flows for the~~reserves. ~~period from July~~(c) 1,Reserves ~~2002~~deducted toagainst ~~May 5,~~proceeds ~~2003,~~from ~~and~~sale ~~for each~~ of ~~the~~assets ~~years~~to ~~in the two-year period ended June 30, 2002, in conformity with accounting principles generally accepted in the United States of America~~Sirenza.

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

~~/s/ KPMG LLP~~F-17

~~F-1~~Exhibit Index


Exhibit No.		Description
2.1		Amended Plan of Dissolution of Vari-L Company, Inc. as approved by the shareholders at the special meeting held on May 5, 2003 filed as Exhibit 2.1 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.

3.1a		Restated Articles of Incorporation, as Amended, filed as Exhibit 4.1 to the Form S-8 Registration Statement (No. 33-88666) and incorporated herein by reference.

3.1b		Articles of Amendment to the Articles of Incorporation filed as Exhibit 3.1b to the Form 10-KSB for the year ended December 31, 1996 and incorporated herein by reference.

3.2		Amended and Restated Bylaws adopted September 26, 2002 and filed as Exhibit 3.2 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

4.1		Specimen Certificate for $.01 par value Common Stock filed as Exhibit 4.3 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.

4.2		Rights Agreement with American Securities Transfer, Inc. dated March 15, 1996 filed as Exhibit 4.2 to the Form 8-A/A Registration Statement (No. 0-23866) and incorporated herein by reference.

4.3		Specimen Certificate for Right to Purchase $.01 par value Common Stock filed as Exhibit 4.3 to the Form 8-A/A Registration Statement (No. 0-23866) and incorporated herein by reference.

4.4		Securities Purchase Agreement with the Purchasers dated March 4, 1997 filed as Exhibit 4.5 to the Form S-3 Registration Statement (No. 333-25173) and incorporated herein by reference.

4.6		Form of Warrant to Purchase Common Stock issued to the Purchasers under the Securities Purchase Agreement dated March 4, 1997 filed as Exhibit 4.7 to the Form S-3 Registration Statement (No. 333-25173) and incorporated herein by reference.

4.7		Amendment No. 1 to Rights Agreement with American Securities Transfer, Inc. dated October 7, 2002 and filed as Exhibit 4.7 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.1		Executive Employment Agreement with Joseph H. Kiser, dated effective June 1, 1997, filed as Exhibit 10.1 to the Form 10-QSB for the quarter ended September 30, 1998 and incorporated herein by reference.

10.2		Lease Agreement dated January 1, 1987 with J.C. Enterprises for the facility located at 5165 Peoria Street, Denver, Colorado, as amended on December 6,

Statement of Net Assets in Liquidation


Exhibit No.		Description
		1990 and March 23, 1993, filed as Exhibit 10.15 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.

10.3		Settlement Agreement with Joseph H. Kiser, David G. Sherman, Alwin E. Branson and Carolyn Y. Kiser dated January 31, 1992, as amended March 23, 1993, filed as Exhibit 10.18 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.

10.4		Profit Sharing Plan and Trust Agreement, as amended and restated effective April 19, 1994 filed as Exhibit 10.16 to the Form 10-KSB for the year ended December 31, 1994 and incorporated herein by reference.

10.5		Lease Agreement dated March 12, 1997 with Five K Investments for the facility located at 4895 Peoria Street, Denver, Colorado filed as Exhibit 10 to the Form 10-QSB for the quarter ended September 30, 1997 and incorporated herein by reference.

10.6		Third Amendment to Lease Agreement dated January 1, 1987 with J.C. Enterprises for the facility located at 5165 Peoria Street, Denver, Colorado, as amended December 6, 1990, March 23, 1993, and October 30, 1998 filed as Exhibit 10.6 to the Form 10-QSB for the quarter ended September 30, 1998 and incorporated herein by reference.

10.7		Termination and Consulting Agreement with David G. Sherman dated August 1, 2000 filed as Exhibit 10.1 to the Form 8-K dated August 1, 2000 and incorporated herein by reference.

10.8		Employment Agreement with Timothy M. Micun dated March 2, 2001 filed as Exhibit 10.26 to the Form 10-K for the fiscal year ended June 30, 2001 and incorporated herein by reference.

10.9		Credit and Security Agreement with Wells Fargo Business Credit, Inc. dated June 28, 2001 filed as Exhibit 99.2 to the Form 8-K dated June 28, 2001 and incorporated herein by reference.

10.10		Patent and Trademark Security Agreement with Wells Fargo Business Credit, Inc. dated June 28, 2001 filed as Exhibit 99.3 to the Form 8-K dated June 28, 2001 and incorporated herein by reference.

10.11		First Amendment to Credit and Security Agreement dated September 17, 2001 filed as Exhibit 10.1 to the Form 10-Q dated September 30, 2001 and incorporated herein by reference.

10.12		Employee Stock Purchase Plan effective as of November 30, 2001 filed as Exhibit 10.1 to the Form 10-Q for the quarter ended December 31, 2001 and incorporated herein by reference.

10.13		Amended and Restated Tandem Stock Option and Stock Appreciation Rights Plan, effective as of January 1, 2002 filed as Exhibit 10.1 to the Form 10-Q for the quarter ended March 31, 2002 and incorporated by reference herein.

10.14		Stock Grant Plan effective as of January 1, 2002 filed as Exhibit 10.2 to the Form 10-Q for the quarter ended March 31, 2002 and incorporated herein by reference.

			June 30,
Exhibit No.		Description
			2003
10.15		Agreement between Vari-L Company, Inc. and Asvan Technology, LLC dated January 25, 2002 filed as Exhibit 10.15 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
Assets
10.16		Second Amendment to Credit and Security Agreement with Wells Fargo Business Credit, Inc. dated February 8, 2002 filed as Exhibit 10.16 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
Cash and cash equivalents			$	60
10.17		Form of Indemnity Agreement by and among Vari-L Company, Inc. and each of Gil J. Van Lunsen (dated June 1, 2001), Sarah L. Booher (dated July 5, 2001), David A. Lisowski (dated July 5, 2001), Anthony B. Petrelli (dated July 5, 2001), David M. Risley (dated November 21, 2001) and Robert C. Dixon (dated January 11, 2002) filed as Exhibit 10.17 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
Restricted cash (note 2)				1,475
10.18		Employment Agreement with Charles R. Bland dated August 1, 2002 filed as Exhibit 10.18 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
Prepaid expenses and other assets				96
10.19		Employment Agreement with Russell M. Crouch dated August 1, 2002 filed as Exhibit 10.19 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
Investments (note 2)				4,065
10.20		Employment Agreement with Richard P. Dutkiewicz dated August 1, 2002 filed as Exhibit 10.20 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
Restricted investments (note 2)				2,542
10.21		Employment Agreement with Ernest C. Hafersat dated August 1, 2002 filed as Exhibit 10.21 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
			$	8,238
10.22		Employment Agreement with Janice E. Hyland dated August 1, 2002 filed as Exhibit 10.22 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
Liabilities
10.23		Employment Agreement with Matthew D. Pope dated August 1, 2002 filed as Exhibit 10.23 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
Accounts payable and accrued expenses			$	(1,213	)
10.24		Employment Agreement with Larry M. Romero dated August 1, 2002 filed as Exhibit 10.24 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
Accrued costs of liquidation (note 1)				(1,317	)
10.25		Employment Agreement with Timothy G. Schamberger dated August 1, 2002 filed as Exhibit 10.25 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
				(2,530	)
10.26		Employment Agreement with Daniel J. Wilmot dated August 1, 2002 filed as Exhibit 10.26 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.
Settlement obligation to issue 2,000,000 shares of common stock (note 14)				(1,200	)
Commitments and contingencies (notes 1 and 14)
	Net assets in liquidation		$	4,508

Year ending June 30,

Total minimum lease payments

F-2


Exhibit No.		Description
10.27		Engagement letter with Green, Manning & Bunch, Ltd. dated September 9, 2002 filed as Exhibit 10.27 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.28		Forbearance Agreement and Third Amendment to Credit and Security Agreement with Wells Fargo Business Credit, Inc. dated September 26, 2002 filed as Exhibit 99.1 to the Form 8-K dated October 1, 2002 and incorporated herein by reference.

10.29		Indemnity Agreement, dated October 2, 2002, by and among Vari-L Company with Charles R. Bland filed as Exhibit 10.29 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.30		Indemnity Agreement, dated October 2, 2002, by and among Vari-L Company, Inc. with Richard P. Dutkiewicz filed as Exhibit 10.30 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.31		Memorandum of Understanding dated October 3, 2002 between Vari-L Company, Inc. and the plaintiffs in Civil Action No. 00-S-1198 between plaintiffs Michael Rasner, et al., on behalf of themselves and other similarly situated and defendants Vari-L Company, Inc., Derek Bailey, Joseph Kiser, David G. Sherman and Jon Clark in the United States District Court, District of Colorado, by and through their respective attorneys, for settlement of litigation against Vari-L Company, Inc. filed as Exhibit 10.31 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.32		Loan Agreement with Sirenza Microdevices, Inc. dated October 7, 2002 filed as Exhibit 10.32 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.33		Security Agreement with Sirenza Microdevices, Inc. dated October 7, 2002 filed as Exhibit 10.33 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.34		Exclusivity and Right of First Refusal Agreement with Sirenza Microdevices, Inc. dated October 7, 2002 filed as Exhibit 10.34 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.35		Resale Registration Rights Agreement with Sirenza Microdevices, Inc. dated October 7, 2002 filed as Exhibit 10.35 to the Form 10-K for the fiscal year ended June 30, 2002 and incorporated herein by reference.

10.36		Letter Agreement dated November 12, 2002 between Vari-L Corporation, Inc. and Five K Investments amending that certain lease agreement dated as of March 12,1997 by and between Vari-L Corporation, Inc. and Five K Investments filed as Exhibit 10.1 to the Form 10-Q for the quarter ended September 30, 2002 and incorporated herein by reference.

10.37		Stipulation of Settlement dated January 22, 2003 between Vari-L Company, Inc., Derek L. Bailey, Joseph H. Kiser, David G. Sherman, Jon L. Clark and the plaintiffs in Civil No. 00-S-1198 between plaintiffs Michael Rasner, et al., on behalf of themselves and other similarly situated and defendants Vari-L Company, Inc., Derek L. Bailey, Joseph H. Kiser, David G. Sherman and Jon L. Clark in the United State District Court, District of Colorado, by and through

VL DISSOLUTION CORPORATION


Exhibit No.		Description
		their respective attorneys, for settlement of litigation against Vari-L Company, Inc. filed as Exhibit 10.1 to the Form 10-Q for the quarter ended December 31, 2002 and incorporated herein by reference.

10.38		Form of Amended and Restated Indemnity Agreement by and among Vari-L Company, Inc. and each of Gil J. Van Lunsen, Sarah L. Booher, David A. Lisowski, Anthony B. Petrelli, David M. Risley, Robert C. Dixon, Charles A. Bland and Richard P. Dutkiewicz each dated as of March 11, 2003 filed as Exhibit 10.1 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.

10.39		Sublease Agreement dated March 31, 2003, by and among Vari-L Company, Inc. and Olin Acquisition Corporation for the facility located at 11101 East 51st Street, Denver, Colorado filed as Exhibit 10.2 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.

10.40		Sublease Agreement dated March 31, 2003, by and among Vari-L Company, Inc. and Olin Acquisition Corporation for the facility located at 5165 Peoria Street, Denver, Colorado filed as Exhibit 10.3 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.

10.41		Sublease Agreement dated March 31, 2003, by and among Vari-L Company, Inc. and Olin Acquisition Corporation for the facility located at 4895 Peoria Street, Denver, Colorado filed as Exhibit 10.4 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.

10.42		Sublease Agreement dated March 31, 2003, by and among Vari-L Company, Inc. and Olin Acquisition Corporation for the facility located at 4955 Peoria Street, Denver, Colorado filed as Exhibit 10.5 to the Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference.

23		Letter Agreement dated May 6, 2003 between Vari-L Corporation, Inc. and Cloyses Partners, LLC filed as exhibit 10.43 to the Form 10-K for the year ended June 30, 2003 and incorporated herein by reference.

31		Certification pursuant to 18 U.S.C. Section 1350 by the Board of Directors, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed with the Securities and Exchange Commission as Exhibit 31 to the company’s Annual Report on Form 10-K for the year ended June 30, 2004..

32		Certification pursuant to 18 U.S.C Section 1350 by the Board of Directors, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed with the Securities and Exchange Commission as Exhibit 32 to the company’s Annual Report on Form 10-K for the year ended June 30, 2004.

Statement of Changes in Net Assets in Liquidation

(in thousands of dollars)

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

See accompanying notes to financial statements.

F-3

VL DISSOLUTION CORPORATION

Balance Sheet

(in thousands of dollars)

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

See accompanying notes to financial statements.

F-4

VL DISSOLUTION CORPORATION

Statements of Operations

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

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

See accompanying notes to financial statements.

F-5

VL DISSOLUTION CORPORATION

Statements of Stockholders’ Equity

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

(in thousands of dollars, except share data)

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

See accompanying notes to financial statements.

F-6

VL DISSOLUTION CORPORATION

Statements of Cash Flows (in thousands of dollars)

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

See accompanying notes to financial statements.

F-7

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

F-8

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

F-9

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

F-10

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

F-11

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

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

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

F-12

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

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

F-13

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

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

F-14

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

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

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

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

F-15

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

F-16

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

F-17

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

F-18

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

F-19

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

Significant components of deferred tax balances were as follows:

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

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

F-20

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

(7) Stockholders’ Equity

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

F-21

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

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

F-22

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

F-23

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

F-24

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

F-25

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

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

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

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

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

F-26

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

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

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

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

F-27

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

F-28

VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

(14) Estimated Costs of Liquidation The Company’s operations have been limited to winding-up its business and affairs, selling certain of its remaining assets, discharging its known liabilities, establishing a contingency reserve for payment of expenses and contingent liabilities, and distributing any remaining assets to its stockholders, all in accordance with the amended plan of dissolution. As a result, the Company changed its basis of accounting to the liquidation basis as of May 5, 2003. Upon changing to the liquidation basis of accounting, which assumes that assets and liabilities are reflected at the estimated amounts to be paid or received, the Company recorded a charge to equity of $1.317 million representing an estimate of the costs to be incurred during dissolution of the Company; however actual costs could differ from those estimates.

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

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

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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VL DISSOLUTION CORPORATION

Notes to Financial Statements

June 30, 2003 and 2002

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

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

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

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

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VL DISSOLUTION CORPORATION

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

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

Notes:

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

See accompanying independent auditor’s report

F-35

EXHIBIT INDEX

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

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

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

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

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

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