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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-K/A

(AMENDMENT NO. 1)

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(MARK ONE)

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED JANUARY 31, 1999
OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ______________ TO ______________

COMMISSION FILE NUMBER 0-27414

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REMEC, INC.

(Exact Name of Registrant as Specified in its Charter)

CALIFORNIA 95-3814301
(State or Other Jurisdiction (I.R.S. Employer
of Identification No.)
Incorporation or
Organization)

9404 CHESAPEAKE DRIVE, SAN DIEGO, CALIFORNIA 92123
(Address of Principal Executive Offices) (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK, $.01 PAR VALUE
(Title of Class)

Securities registered pursuant to Section 12(g) of the Act: NONE

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Indicate by check mark whether REMEC (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve (12) months (or such shorter period that REMEC was required
to file such reports) and (2) has been subject to such filing requirements for
the past ninety (90) days: Yes /X/ No / /

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

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REMEC, INC.

AMENDMENT NO. 1
TO ANNUAL REPORT ON FORM 10-K/A
FOR FISCAL YEAR ENDED JANUARY 31, 1999

TABLE OF CONTENTS

PAGE
-----

LIST OF ITEMS AMENDED...................................................................................... 1

PART II.................................................................................................... 2

ITEM 6. SELECTED FINANCIAL DATA.......................................................................... 2

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............ 3

Results of Operations.................................................................................. 4

Fiscal Year Ended January 31, 1999 vs. Fiscal Year Ended January 31, 1998.............................. 4

Fiscal Year Ended January 31, 1998 vs. Fiscal Year Ended January 31, 1997.............................. 5

Liquidity and Capital Resources........................................................................ 6

Interest Rate Risk..................................................................................... 7

Year 2000 Readiness Disclosure......................................................................... 7

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................................................... 8

PART IV.................................................................................................... 9

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K................................. 9

LIST OF ITEMS AMENDED

PART II

Item 6. Selected Financial Data

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation

Item 8. Financial Statements and Supplementary Data

PART IV

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

Each of the above-listed Items is hereby amended by deleting the item in its
entirety appearing in the Form 10-K of REMEC, Inc. (the "Company" or "REMEC")
filed with the Securities and Exchange Commission ("SEC") on March 25, 1999 (the
"Initial Filing"), and replacing each such Item with the corresponding Item that
appears in this Amendment No. 1 to Annual Report on Form 10-K/A ("Amendment No.
1"). The purpose of this Amendment No. 1 is to restate the Consolidated
Financial Statements of REMEC to reflect its acquisition of Airtech plc that was
completed in April 1999 and accounted for by REMEC as a pooling of interests.

PART II

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data set forth below with respect to
REMEC's statements of income for each of the years in the three year period
ended January 31, 1999 and with respect to the balance sheets at January 31,
1998 and 1999, are derived from the audited consolidated financial statements
which are included elsewhere in this Annual Report on Form 10-K and are
qualified by reference to such financial statements. The statement of operations
data for the years ended January 31, 1995 and 1996 and the balance sheet data at
January 31, 1995, 1996 and 1997, are derived from audited financial statements
not included in this Annual Report on Form 10-K. The following selected
financial data should be read in conjunction with the Consolidated Financial
Statements for REMEC and notes thereto and Item 7 "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
herein.

YEARS ENDED JANUARY 31,
-----------------------------------------------------
1995 1996 1997 1998 1999
--------- --------- --------- --------- ---------

(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENTS OF OPERATIONS DATA(1):
Net sales....................................................... $ 84,407 $ 97,700 $ 131,643 $ 191,008 $ 179,215
Cost of sales................................................... 59,385 68,776 95,359 132,349 137,443
--------- --------- --------- --------- ---------
Gross profit.................................................... 25,022 28,924 36,284 58,659 41,772
Operating expenses:
Selling, general and administrative........................... 16,524 18,159 23,313 32,279 36,835
Research and development...................................... 2,471 4,707 6,349 7,887 10,903
--------- --------- --------- --------- ---------
Total operating expenses.................................... 18,995 22,866 29,662 40,166 47,738
--------- --------- --------- --------- ---------
Income from operations.......................................... 6,027 6,058 6,622 18,493 (5,966)
Gain on sale of subsidiary...................................... -- -- -- 2,833 --
Interest income (expense) and other, net........................ (592) (426) 15 2,314 3,008
--------- --------- --------- --------- ---------
Income before provision for income taxes........................ 5,435 5,632 6,637 23,640 (2,958)
Provision for income taxes...................................... 2,290 2,328 3,780 8,886 1,873
--------- --------- --------- --------- ---------
Net income...................................................... 3,145 3,304 2,857 14,754 (4,831)
Dividend accrued on Preferred Stock............................. -- 80 128 -- --
--------- --------- --------- --------- ---------
Income (loss) applicable to Common Stock........................ 3,145 3,224 2,729 14,754 (4,831)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Earnings per share:
Basic......................................................... $ .23 $ .23 $ .15 $ .65 ($ .20)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Diluted....................................................... $ .23 $ .23 $ .15 $ .64 ($ .20)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Shares used in per share calculations:
Basic......................................................... 13,892 13,819 17,633 22,535 24,722
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Diluted....................................................... 13,892 13,936 17,944 23,228 24,722
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

AT JANUARY 31,
-----------------------------------------------------
1995 1996 1997 1998 1999
--------- --------- --------- --------- ---------

BALANCE SHEET DATA(1):
Cash and cash equivalents....................................... 2,679 4,146 75,134 47,966 83,012
Working capital................................................. 15,753 19,575 100,673 99,221 133,807
Total assets.................................................... 43,797 53,798 151,524 179,082 218,571
Long-term debt.................................................. 3,235 4,781 3,234 -- --
Total shareholders' equity...................................... 24,918 29,722 121,639 145,990 191,607

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

(1) REMEC acquired Magnum in August 1996, Radian in February 1997, C&S Hybrid in
June 1997, Q-bit in October 1997 and Airtech in April 1999, each of which
was accounted for as a pooling of interests and, as such, all financial
amounts contained in the above table have been restated to include the
financial results and data of Magnum, Radian, C&S Hybrid, Q-bit and Airtech
for all periods presented. REMEC acquired Verified Technical Corporation in
March 1997 and Nanowave Technologies Inc. in October 1997 in transactions
accounted for as purchases.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

REMEC commenced operations in 1983 and has become a leader in the design and
manufacture of microwave multi-function modules (MFMs) for microwave
transmission systems used in defense applications and the commercial wireless
telecommunications industry. REMEC's consolidated results of operations include
the operations of REMEC Microwave, Inc. (Microwave), REMEC Wireless, Inc.
(Wireless), Humphrey, Inc. (Humphrey), REMEC Magnum, Inc. (Magnum), REMEC
Veritek, Inc. (REMEC Veritek), REMEC CSH, Inc. (REMEC CSH), Q-bit Corporation
(REMEC Q-bit) and REMEC Nanowave, Inc. (REMEC Nanowave), Airtech plc (Airtech)
and REMEC Inc., S.A. (REMEC Costa Rica). REMEC's consolidated results of
operations also include the operations of RF Microsystems (RFM) for the period
from April 30, 1996 to August 26, 1997.

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

Effective April 30, 1996, REMEC acquired all of the outstanding common stock
of RFM and various VSAT microwave design and manufacturing resources from STM in
a transaction that was accounted for as a purchase. RFM provides the Department
of Defense with research and analysis, systems engineering and test evaluation
services. The consolidated statements of income and cash flows for all periods
subsequent to April 30, 1996 include RFM's operating results from April 30,
1996. On August 26, 1997, REMEC sold RFM in exchange for cash consideration of
$5.0 million. The sale resulted in an after-tax gain of $1,728,000, or $0.08 per
share.

On August 26, 1996, REMEC acquired all of the outstanding common stock of
Magnum in a transaction that was accounted for as a pooling of interests. Magnum
is a leading supplier of oscillators and mixers. On February 28, 1997, REMEC
acquired all of the outstanding common stock of Radian, in a transaction that
was accounted for as a pooling of interests. Radian provides the defense market
with microwave components, primarily synthesizers, receivers, oscillators and
filters. On June 27, 1997, REMEC acquired all of the outstanding common stock of
C&S Hybrid in a transaction that was accounted for as a pooling of interests.
C&S Hybrid is a manufacturer of transmitter and receiver hardware assemblies
that are integrated into terrestrial-based point-to-point microwave radios
primarily for use in commercial applications. On October 24, 1997, REMEC
acquired all of the outstanding common stock of Q-bit in a transaction that was
accounted for as a pooling of interests. Q-bit is a manufacturer of
amplifier-based microwave components and multi-function modules. On April 29,
1999, REMEC acquired Airtech, a United Kingdom based manufacturer of coverage
enhancement products for wireless communications, in a transaction that was
accounted for as a pooling of interests. All accompanying historical financial
statement information has been restated to include the operations, assets and
liabilities of Magnum, Radian, C&S Hybrid, Q-bit and Airtech.

In March 1997, REMEC acquired Veritek, a producer of high quality surface
mount manufacturing assemblies in a transaction accounted for as a purchase. The
consolidated statements of income and cash flows for all periods subsequent to
March 31, 1997 include Veritek's operating results from April 1, 1997. In
October 1997, REMEC formed REMEC Canada (as a wholly owned subsidiary) for the
purpose of facilitating the acquisition of Canadian companies, including the
then contemplated acquisition of Nanowave, a manufacturer of amplifier based
microwave and millimeter wave components and multi-function modules, in a
transaction accounted for as a purchase. REMEC Canada

completed the acquisition of Nanowave effective as of October 29, 1997. The
fiscal 1998 consolidated statements of income and cash flows include Nanowave's
operating results from October 31, 1997.

Subsequent to January 31, 1999, the Company acquired Wacom Products, Inc. (a
manufacturer of commercial radio frequency filters) and the assets of Smartwaves
International in transactions that have been accounted for as purchases.

RESULTS OF OPERATIONS

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

YEARS ENDED JANUARY 31,
-------------------------------------
1999 1998 1997
----- ----- -----

Net sales................................................... 100% 100% 100%
Cost of sales............................................... 77 69 72
--- --- ---
Gross profit.............................................. 23 31 28
Operating expenses:
Selling, general & administrative......................... 20 17 18
Research and development.................................. 6 4 5
--- --- ---
Total operating expenses................................ 26 21 23
--- --- ---
Income (loss) from operations............................... (3) 10 5
Gain on sale of subsidiary.................................. -- 2 --
Interest income and other, net.............................. 1 1 --
--- --- ---
Income (loss) before provision for income taxes............. (2) 13 5
Provision for income taxes.................................. 1 5 3
--- --- ---
Net income (loss)........................................... (3)% 8% 2%
--- --- ---
--- --- ---

FISCAL YEAR ENDED JANUARY 31, 1999 VS. FISCAL YEAR ENDED JANUARY 31, 1998

NET SALES. Net sales decreased 6.2% from $191.0 million during fiscal 1998
to $179.2 million during fiscal 1999. The decrease in sales was primarily
attributable to the decreased revenues from REMEC's Airtech subsidiary (which
was acquired in April 1999 in a transaction accounted for as a pooling of
interests). The decline in Airtech's sales was attributable to delays in new PCS
mobile infrastructure "roll-outs" in the United States, delays to one customer's
new product program, financial instability in the Far East impacting new mobile
infrastructure projects in the region and customers delaying orders pending
availability of Airtech's next generation production, the G3 MHA.

GROSS PROFIT. Gross profit decreased 28.8% from $58.7 million in fiscal
1998 to $41.8 million in fiscal 1999. As a percentage of net sales, gross
margins decreased from 30.7% in fiscal 1998 to 23.3% in fiscal 1999. The
fluctuations in gross margins are primarily attributable to costs associated
with Airtech's MHA warranty upgrade program, changes in the mix of products sold
and reduced production volume at certain of REMEC's subsidiaries.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative (SG&A) expenses increased 14.1% from $32.3 million in fiscal 1998
to $36.8 million in fiscal 1999. The increase in SG&A was primarily attributable
to inclusion of a full year of SG&A expenses from REMEC's Veritek and Nanowave
subsidiaries (which were acquired in March and October 1997, respectively, in
transactions accounted for as purchases and, therefore, do not have a full
year's operations included in the fiscal

1998 results of operations), increased administrative expenses related to
Airtech's continued development of its international sales infrastructure in the
Far East and accounting and legal expenses associated with an income tax credit
study completed during fiscal 1999. As a percentage of net sales, SG&A expenses
increased from 16.9% in fiscal 1998 to 20.6% in fiscal 1999, due to the factors
discussed above.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased 38.2% from $7.9 million in fiscal 1998 to $10.9 million in fiscal
1999, and as a percentage of net sales, R&D expenses increased from 4.1% in
fiscal 1998 to 6.1% in fiscal 1999. These expenditures are almost entirely
attributable to the commercial wireless business and reflect an increase in
activity associated with product development.

GAIN ON SALE OF SUBSIDIARY. REMEC's results of operations for the year
ended January 31, 1998 include the gain from the sale of REMEC's RFM subsidiary.
There was no similar gain in the current fiscal year.

INTEREST INCOME AND OTHER, NET. Interest income and other, net increased
from $2.3 million in fiscal 1998 to $3.0 million in fiscal 1999. This increase
was due to the increased level of cash available for investment as a result of
the funds generated from REMEC's follow-on public offering, which was completed
in March 1998.

PROVISION FOR INCOME TAXES. Income tax expense decreased 78.9% from $8.9
million in fiscal 1998 to $1.9 million in fiscal 1999. The decrease in income
tax expense reflects the tax benefit of $2.0 million related to the recognition
of research and experimentation tax credits pertaining to previously filed
income tax returns, the benefit of tax credits for certain capital expenditures,
the effect of tax exempt interest income and a decrease in domestic income
before taxes of $12.1 million.

FISCAL YEAR ENDED JANUARY 31, 1998 VS. FISCAL YEAR ENDED JANUARY 31, 1997

NET SALES. Net sales increased 45.1% from $131.6 million in fiscal 1997 to
$191.0 million in fiscal 1998. The increase in sales was primarily attributable
to increased customer demand for REMEC's commercial wireless products.

GROSS PROFIT. Gross profit increased 61.7% from $36.3 million in fiscal
1997 to $58.7 million in fiscal 1998. As a percentage of net sales, gross
margins increased from 27.6% in fiscal 1997 to 30.7% in fiscal 1998. The
increase in gross margins was primarily attributable to changes in the mix of
products shipped and due to the lower unit costs arising from improved overhead
absorption attributable to the increase in sales volume.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses increased 38.4%
from $23.3 million in fiscal 1997 to $32.3 million in fiscal 1998. The increase
in SG&A was primarily attributable to increased personnel, legal and other
administrative expenses resulting from REMEC's revenue growth, as well as
approximately $1.1 million of direct transaction costs associated with the
acquisitions of Radian, C&S Hybrid and Q-bit. As a percentage of net sales, SG&A
expenses declined from 17.7% in fiscal 1997 to 16.9% in fiscal 1998.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased 24.2% from $6.3 million in fiscal 1997 to $7.9 million in fiscal 1998,
however, as a percentage of net sales, R&D expenses decreased from 4.8% in
fiscal 1997 to 4.1% in fiscal 1998. These expenditures were almost entirely
attributable to the commercial wireless business.

INTEREST INCOME AND OTHER, NET. Interest income and other, net increased
from $15,000 during fiscal 1997 to $2.3 million in fiscal 1998. This increase
was due to the increased level of cash available for investment as a result of
the funds generated from REMEC's follow-on public offering which was completed
in January 1997.

PROVISION FOR INCOME TAXES. REMEC's effective tax rate declined from 57%
during fiscal 1997 to 38% during fiscal 1998. The decrease primarily reflected
the pre-acquisition net income generated at REMEC's Q-bit subsidiary in fiscal
1998. Prior to its acquisition by REMEC, Q-bit had operated as an S corporation
for federal and state income tax purposes and, accordingly, all taxable income
generated by Q-bit during the pre-acquisition period in fiscal 1998 was
allocated to the shareholders of Q-bit and included on their personal income tax
returns. Therefore, REMEC's effective tax rate in fiscal 1998 reflects no
provision for income taxes on Q-bit's pre-acquisition earnings. The reduction in
the effective tax rate in fiscal 1998 also reflects the benefit of tax credits
for certain capital expenditures.

LIQUIDITY AND CAPITAL RESOURCES

At January 31, 1999, REMEC had $133.8 million of working capital which
included cash and cash equivalents totaling $83.0 million. REMEC also has $17.0
million available under two credit facilities consisting of a $9.0 million
revolving working capital line of credit and a $8.0 million revolving term loan.
The borrowing rate under both credit facilities is based on a fixed spread over
the London Interbank Offered Rate (LIBOR). The revolving working capital line of
credit terminates July 3, 2000. The revolving period under the term loan expires
July 1, 2000, at which time any loan amount outstanding converts to a term loan
to be fully amortized and paid in full by January 2, 2004. As of January 31,
1999, there were no borrowings under REMEC's credit facilities.

During fiscal 1999, net cash provided by operations totaled $6.3 million as
the cash flows from earnings and non-cash expenses (primarily depreciation and
amortization) more than offset the $1.6 million increase in inventories and the
$3.8 million repayment of trade accounts payable and other accrued expenses.
Inventories increased during this period due to requests by certain commercial
customers to delay delivery of previously announced requirements. Investing
activities utilized $19.9 million during fiscal 1999, primarily as a result of
capital expenditures of $18.3 million and deposits associated with the
acquisition of land and a manufacturing facility in Costa Rica of $1.5 million.
The bulk of the capital expenditures were associated with the expansion of
REMEC's commercial wireless telecommunications business. The above expenditures
were financed primarily by cash on hand. REMEC's future capital expenditures may
continue to be substantially higher than historical levels as a result of
commercial wireless telecommunications expansion requirements. Financing
activities generated approximately $48.4 million during fiscal 1999, principally
as a result of the net proceeds of $49.6 million from the follow-on offering and
the proceeds of $3.0 million generated by the issuance of shares in connection
with REMEC's Employee Stock Purchase Plan and from exercises of stock options,
net of $2.9 million utilized for the repurchase and retirement of Company common
stock and $1.4 million utilized to repay company credit obligations.

REMEC's future capital requirements will depend upon many factors, including
the nature and timing of orders by OEM customers, the progress of REMEC's
research and development efforts, expansion of REMEC's marketing and sales
efforts, and the status of competitive products. REMEC believes that available
capital resources will be adequate to fund its operations for at least twelve
months from February 1, 1999.

INTEREST RATE RISK

REMEC is exposed to changes in interest rates to the extent of its
borrowings under its revolving working capital line of credit and revolving term
loan. At January 31, 1999, REMEC had no borrowings under these credit facilities
and, therefore, no exposure to interest rate movement on its debt.

REMEC also will be affected by changes in interest rates in its investments in
certain held-to-maturity securities. Under its current policies, REMEC does not
use interest rate derivative instruments to manage exposure to interest rate
changes. A hypothetical 100 basis point increase in interest rates in REMEC's
held-to-maturity securities would not materially effect the fair value of these
securities at January 31, 1999.

YEAR 2000 READINESS DISCLOSURE

GENERAL. Many currently available installed computer systems, software
products and equipment are coded to accept only two digit entries to recognize
years. These date-sensitive systems, products and equipment may not be able to
accurately recognize the year 2000. As a result, these systems, products and
equipment may need to be upgraded or replaced in order to become year 2000
ready.

REMEC's Vice President of Information Technology is responsible for
coordinating REMEC's efforts relating to year 2000 readiness. These efforts
include the following phases: (i) identification of potential year 2000
problems; (ii) assessment of the potential impact on and risks to REMEC's
business; (iii) determination of specific solutions; (iv) implementation of
solutions; and (v) evaluation of all of the foregoing. The Vice President of
Information Technology reports to REMEC's President and Chief Operating Officer
on these matters. In addition, REMEC's Audit Committee and Board of Directors
provides supervisorial oversight of REMEC's efforts relating to year 2000
readiness.

MANUFACTURING. REMEC utilizes various tools and equipment in connection
with the manufacture of its products which may have embedded technology that is
date sensitive. REMEC is testing substantially all of its critical tools and
equipment currently being utilized by REMEC in the manufacture of its products,
and continues to monitor year 2000 readiness in this area. Based on its efforts
to date, REMEC believes that its critical tools and equipment will be year 2000
ready on or before December 31, 1999. As a result, REMEC currently does not
anticipate significant interruption of its manufacturing capabilities due to the
failure of its tools and equipment to be year 2000 ready.

INFORMATION SYSTEMS. REMEC has various internal financial information and
reporting systems, human resources and payroll applications, procurement
requirements, customer billing applications, manufacturing monitoring systems,
communications systems, desktop computers and computer networks. REMEC is
testing all of these internal systems and applications and upgrading or
replacing software and hardware where needed. Based on its efforts to date,
REMEC currently does not anticipate significant interruption of its operations
due to the failure of its information systems to be year 2000 ready.

In addition to testing existing information systems for year 2000
compliance, REMEC is phasing in the installation of a new management information
system which will be used by REMEC and a majority of its operating subsidiaries
in connection with internal financial information and reporting, production
planning and manufacturing monitoring and procurement requirements. The purchase
and installation of this system is estimated to cost approximately $3.0 million
and will be paid for by REMEC out of existing funds when installed at the
various Company facilities. Although this system is not being purchased
exclusively to address year 2000 compliance issues, this management information
system is certified by the manufacturer to be year 2000 compliant. This system
has been implemented in three of REMEC's subsidiaries, is in the process of
being implemented in another subsidiary and is estimated to be completely
installed and operational in a majority of REMEC's facilities over the next two
years. The information systems in place at REMEC's remaining subsidiaries are
being upgraded to year 2000 compliance. This process will be completed by
December 31, 1999 and is anticipated to cost approximately $250,000. REMEC has
recently completed the acquisition of Airtech plc and Wacom Products. The
Company has initiated year 2000 readiness reviews at each of these entities.
Although REMEC has yet to develop a formal plan to ensure year 2000 readiness at
Airtech and Wacom, the Company intends to be compliant prior to December 31,
1999.

FACILITIES. REMEC is also testing all of its facilities and infrastructure
systems, including the heating/ventilation/air conditioning (HVAC) systems,
security systems and health, safety and environment systems at each of its
facilities. REMEC currently has manufacturing operations or management personnel
in thirteen leased facilities. Based on its efforts to date, REMEC currently
does not anticipate significant interruption of its operations due to the
failure of its facilities and infrastructure systems to be year 2000 ready.

SUPPLIERS. REMEC is implementing a system to monitor the year 2000
readiness of its suppliers. The system will include awareness/notification
letters, warranties and a review of suppliers' web-site statements regarding
year 2000 readiness. If a supplier is identified as having a high risk of year
2000 non-readiness, REMEC will develop alternative sourcing plans to minimize
the year 2000 risks.

COSTS. REMEC estimates that the aggregate costs for its year 2000 readiness
program incurred by REMEC to date and anticipated to be incurred by REMEC
through December 31, 1999 is approximately $350,000. Approximately $125,000 of
the aggregate estimated costs relate to internal resources incurred or
anticipated to be incurred in connection with REMEC's readiness program. The
Company has incurred approximately one-third of its estimated aggregate costs
relating to its year 2000 readiness program. No information technology or other
capital expenditure projects have been delayed due to REMEC's year 2000 efforts
and the costs relating thereto.

WORST CASE SCENARIO: CONTINGENCY PLAN. The most reasonably likely worst
case year 2000 scenario which may affect REMEC is a significant disruption in
the business operations of REMEC's customers due to year 2000 problems. REMEC
manufactures components and systems for commercial customers and various
government agencies. To the extent that the customers' business is disrupted by
year 2000 problems, these customers may be unable to purchase or pay for REMEC's
products which may have a material adverse effect on REMEC's business, financial
condition and results of operation will be adversely effected.

UNCERTAINTIES. The above description of REMEC's year 2000 efforts contains
forward-looking statements, including: the expected state of readiness of
REMEC's manufacturing equipment, information systems and facilities; the future
impact of REMEC's business, financial condition and results of operation due to
its year 2000 readiness; the anticipated state of readiness of REMEC's
suppliers; the estimated costs associated with REMEC's year 2000 readiness
program; and REMEC's most reasonably likely worst case scenario. There are many
factors that could cause REMEC's actual results to differ materially from those
year 2000 related forward-looking statements.

Some of the factors that could affect the anticipated impact of REMEC's year
2000 readiness include the availability and cost of personnel trained in this
area, the ability of company personnel, vendors, customers and suppliers to
locate and correct all relevant computer codes; the reliability of statements of
third parties (customers, suppliers and vendors) regarding their own year 2000
readiness; and similar uncertainties. In addition, the anticipated costs of any
year 2000 modifications are based on management's best estimates, which were
derived utilizing numerous assumptions of future events. Many of these factors
and assumptions are beyond REMEC's control and no assurances can be given that
REMEC, its suppliers and customers will be able to resolve all of their year
2000 readiness problems in a timely manner to avoid a material adverse effect on
REMEC's business, financial condition or results of operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this item is included as a separate section following Item
14 of this Amendment No. 1 to Annual Report on Form 10-K/A.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements

Report of Independent Auditors

Consolidated Balance Sheets at January 31, 1999 and 1998

Consolidated Statements of Income for the years ended January 31,
1999, 1998 and 1997

Consolidated Statements of Shareholders' Equity as of January 31,
1999, 1998 and 1997

Consolidated Statements of Cash Flows for the years ended January 31,
1999, 1998 and 1997

Notes to Consolidated Financial Statements

2. Financial Statement Schedule

Schedule II: Valuation and Qualifying Accounts

All other schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedules or because the information required is included in the
Consolidated Financial Statements or Notes thereto.

3. Exhibits

EXHIBIT
NO. DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------

3.1 (1) Restated Articles of Incorporation
3.2 (1) By-Laws, as amended
10.1 (1) Equity Incentive Plan
10.2 (1) Employee Stock Purchase Plan
10.3 (1) Form of Indemnification Agreements between Registrant and its officers and directors
10.4 (2) 1996 Nonemployee Directors Stock Option Plan
10.5 (3) Second Amended and Restated Loan Agreement between REMEC and The Union Bank of California, N.A.,
dated June 25, 1998, as amended
10.6 (3) Participation Agreement dated as of August 25, 1998 among REMEC, Union Bank of California N.A.,
and certain other parties identified therein
10.7 (3) Master Lease dated as of August 25, 1998, between Union Bank of California, N.A., as Certificate
Trustee, and REMEC
10.8 (3) Lessee Guarantee executed by REMEC dated as of August 25, 1998
21.1 (4) Subsidiaries of REMEC
23.1 (4) Consent of Ernst & Young LLP, Independent Auditors
23.2 (4) Consent of Ireland San Filippo LLP, Independent Public Accountants
23.3 (4) Consent of Bray, Beck & Koetter, Independent Auditors
23.4 (4) Consent of Arthur Andersen, Independent Auditors
23.5 (4) Consent of Binder Hamlyn, Independent Auditors
24.1 Power of Attorney (included on Page S-1 of the Initial Filing of the Annual Report on Form 10-K)
27.1 (4) Financial Data Schedule

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

(1) Previously filed with the Securities and Exchange Commission on February
1, 1996 as an exhibit to REMEC's Registration Statement on Form S-1 (No.
333-80381) and incorporated by reference into this Amendment No. 1 to
Annual Report on Form 10-K/A.

(2) Previously filed with the Securities and Exchange Commission on November
25, 1996 as an exhibit to REMEC's Registration Statement on Form S-8 (No.
333-16687) and incorporated by reference into this Amendment No. 1 to
Annual Report on Form 10-K/A.

(3) Previously filed with the Securities and Exchange Commission on March
25, 1999 as an exhibit to REMEC's Annual Report on Form 10-K for the year
ended January 31, 1999 and incorporated by reference into this Amendment
No. 1 to Annual Report on Form 10-K/A.

(4) Filed with this Amendment No. 1 to Annual Report on Form 10-K/A.

(b) Report on Form 8-K

There were no reports on Form 8-K filed in the fourth quarter of
fiscal 1999.

INDEX TO FINANCIAL STATEMENTS

PAGE
---------

REMEC, INC.

Report of Ernst & Young LLP, Independent Auditors............................ F-2

Report of Arthur Andersen, Independent Auditors.............................. F-3

Report of Binder Hamlyn, Independent Auditors................................ F-4

Report of Ireland San Filippo LLP, Independent Auditors...................... F-5

Report of Bray, Beck & Koetter, Independent Auditors......................... F-6

Consolidated Balance Sheets at January 31, 1999 and 1998..................... F-7

Consolidated Statements of Income for the years ended January 31, 1999, 1998
and 1997................................................................... F-8

Consolidated Statements of Shareholders' Equity as of January 31, 1999, 1998
and 1997................................................................... F-9

Consolidated Statements of Cash Flows for the years ended January 31, 1999,
1998 and 1997.............................................................. F-10

Notes to Consolidated Financial Statements................................... F-11

F-1

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Shareholders
REMEC, Inc.

We have audited the accompanying consolidated balance sheets of REMEC, Inc.
as of January 31, 1999 and 1998, and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the three years in the
period ended January 31, 1999. These financial statements are the responsibility
of REMEC's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of Airtech plc, Radian Technology, Inc. and Q-bit Corporation,
wholly-owned subsidiaries, which statements reflect total assets constituting 5%
and 14% in 1999 and 1998, respectively, and total revenues constituting 12%, 18%
and 25% in 1999, 1998 and 1997, respectively, of the related consolidated
totals. Those statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to data included for
Airtech plc, Radian Technology, Inc. and Q-bit Corporation, is based solely on
the reports of the other auditors.

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

In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of REMEC, Inc. at January 31, 1999 and 1998,
and the consolidated results of its operations and its cash flows for each of
the three years in the period ended January 31, 1999 in conformity with
generally accepted accounting principles.

/s/ ERNST & YOUNG LLP
-----------------------------------
Ernst & Young LLP

San Diego, California
February 26, 1999,
except for the first paragraph of Note 2,
as to which the date is April 29, 1999

F-2

REPORT OF ARTHUR ANDERSEN, INDEPENDENT AUDITORS

TO THE SHAREHOLDERS OF AIRTECH PLC

We have audited the financial statements of Airtech plc and its subsidiaries
("Group") as of December 31, 1998 and December 31, 1997 and of the Group's
results from operations and cash flows for each of the years then ended. These
financial statements have not been prepared for the purposes of section 226 of
the Companies Act 1985 and are therefor not statutory accounts.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

The company's directors are responsible for the preparation of the financial
statements. It is our responsibility to form an independent opinion, based on
our audit, on those statements and to report our opinion to you.

BASIS OF OPINION

We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom which are substantially
consistent with generally accepted auditing standards in the United States. An
audit includes examination, on a test basis, of evidence relevant to the amounts
and disclosures in the financial statements. It also includes an assessment of
the significant estimates and judgements made by the directors in the
preparation of the financial statements, and of whether the accounting policies
are appropriate to the circumstances of the Group, consistently applied and
adequately disclosed.

We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we have also evaluated the overall
adequacy of the presentation of information in the financial statements.

OPINION

In our opinion the financial statements give a true and fair view of the
state of affairs of the Group at December 31, 1998 and December 31, 1997, and of
the Group's results from operations and cash flows for each of the years then
ended in accordance with generally accepted accounting principles in the United
Kingdom.

Accounting practices used by the Group in preparing the accompanying
financial statements conform with generally accepted accounting principles in
the United Kingdom, but do not conform with accounting principles generally
accepted in the United States. A description of these differences and a
reconciliation of consolidated net income and shareholders' equity to U.S.
generally accepted accounting principles is set forth in Note 29 to the
financial statements of the Group.

/s/ ARTHUR ANDERSEN
- ----------------------------------------------------------------
Arthur Andersen
Chartered Accountants
St. Albans, England

24 March 1999

F-3

REPORT OF BINDER HAMLYN, INDEPENDENT AUDITORS

TO THE SHAREHOLDERS OF AIRTECH PLC

We have audited the financial statements of Airtech plc and its subsidiaries
("Group") as of December 31, 1996 and the Group's loss and cash flows for each
of the year then ended. These financial statements have not been prepared for
the purposes of section 226 of the Companies Act 1985 and are therefor not
statutory accounts.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

BASIS OF OPINION

We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom which are substantially
consistent with generally accepted auditing standards in the United States and
for which purpose our report is dual dated in respect of Notes 28 and 29 to the
financial statements of the Group. An audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and
judgements made by the directors in the preparation of the financial statements,
and of whether the accounting policies are appropriate to the circumstances of
the Group, consistently applied and adequately disclosed.

OPINION

In our opinion the financial statements give a true and fair view of the
Group's loss and cash flows for the year ended December 31, 1996 in accordance
with generally accepted accounting principles in the United Kingdom.

/s/ BINDER HAMLYN
- ----------------------------------------------------------------
Binder Hamlyn
London, England

26 March 1997, except for Notes 28 and 29
as to which the date is 24 March 1999.

F-4

REPORT OF IRELAND SAN FILIPPO LLP, INDEPENDENT AUDITORS

To the Board of Directors
Radian Technology, Inc.
Santa Clara, California

We have audited the balance sheet of Radian Technology, Inc. (a California
corporation), as of December 27, 1996, and the related statements of income and
expense, stockholders' equity, and cash flows for each of the years ended
December 29, 1995, and December 27, 1996. These financial statements are the
responsibility of REMEC's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Radian Technology, Inc. as
of December 27, 1996, and the results of its operations and its cash flows for
each of the years ended December 29, 1995, and December 27, 1996, in conformity
with generally accepted accounting principles.

/s/ IRELAND SAN FILIPPO, LLP

March 6, 1997

F-5

REPORT OF BRAY, BECK & KOETTER, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
Q-bit Corporation
Palm Bay, Florida

We have audited the balance sheets of Q-bit Corporation (an S Corporation)
as of December 31, 1996 and the related statements of operations, retained
earnings (deficit) and cash flows for the years then ended December 31, 1995 and
1996. These financial statements are the responsibility of REMEC's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Q-bit Corporation as of
December 31, 1996 and 1995 and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information on pages 15
and 16 is presented for the 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 audit 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/ BRAY, BECK & KOETTER
Melbourne, Florida
February 28, 1997

F-6

REMEC, INC.

CONSOLIDATED BALANCE SHEETS

JANUARY 31,
------------------------------
1999 1998
-------------- --------------

ASSETS
Cash and cash equivalents........................................................ $ 83,011,819 $ 47,966,101
Accounts receivable, net......................................................... 27,294,544 34,381,474
Inventories, net................................................................. 38,311,527 36,727,941
Deferred income taxes............................................................ 4,425,725 6,435,957
Prepaid expenses and other current assets........................................ 3,596,020 1,579,053
-------------- --------------
Total current assets........................................................... 156,639,635 127,090,526
Property, plant and equipment, net............................................... 44,706,757 34,758,934
Intangible and other assets...................................................... 17,224,432 17,232,241
-------------- --------------
$ 218,570,824 $ 179,081,701
-------------- --------------
-------------- --------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Line of credit borrowings........................................................ $ 75,413 $ 841,000
Accounts payable................................................................. 8,155,490 12,076,756
Accrued salaries, benefits and related taxes..................................... 5,383,932 6,165,248
Income taxes payable............................................................. -- 2,784,479
Accrued expenses................................................................. 9,217,867 6,002,515
-------------- --------------
Total current liabilities...................................................... 22,832,702 27,869,998
Deferred rent.................................................................... -- 104,236
Deferred income taxes............................................................ 4,131,534 5,117,933

Commitments

Shareholders' equity:
Preferred shares--$.01 par value, 5,000,000 shares authorized; none issued and
outstanding....................................................................
Common shares--$.01 par value, 70,000,000 shares authorized; issued and
outstanding shares--24,879,870 and 22,877,042 at January 31, 1999 and 1998..... 248,797 228,772
Paid-in capital.................................................................. 165,632,527 115,402,223
Accumulated other comprehensive income........................................... 257,000 59,000
Retained earnings................................................................ 25,468,264 30,299,539
-------------- --------------
191,606,588 145,989,534
-------------- --------------
Total shareholders' equity....................................................... $ 218,570,824 $ 179,081,701
-------------- --------------
-------------- --------------

See accompanying notes.

F-7

REMEC, INC.

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED JANUARY 31,
----------------------------------------------
1999 1998 1997
-------------- -------------- --------------

Net sales....................................................... $ 179,214,967 $ 191,007,929 $ 131,642,842
Cost of sales................................................... 137,442,678 132,348,510 95,358,524
-------------- -------------- --------------
Gross profit.................................................... 41,772,289 58,659,419 36,284,318
Operating expenses:
Selling, general & administrative............................... 36,835,437 32,279,847 23,312,733
Research and development........................................ 10,903,143 7,886,984 6,349,000
-------------- -------------- --------------
Total operating expenses........................................ 47,738,580 40,166,831 29,661,733
-------------- -------------- --------------
Income (loss) from operations................................... (5,966,291) 18,492,588 6,622,585
Gain on sale of subsidiary...................................... -- 2,833,240 --
Interest income and other, net.................................. 3,008,099 2,314,329 14,405
-------------- -------------- --------------
Income (loss) before provision for income taxes................. (2,958,192) 23,640,157 6,636,990
Provision for income taxes...................................... 1,873,083 8,885,799 3,779,667
-------------- -------------- --------------
Net income (loss)............................................... (4,831,275) 14,754,358 2,857,323
Dividend accrued on preferred stock............................. -- -- (128,000)
-------------- -------------- --------------
Income (loss) applicable to common stock........................ ($ 4,831,275) $ 14,754,358 $ 2,729,323
-------------- -------------- --------------
-------------- -------------- --------------
Earnings (loss) per common share:
Basic......................................................... $ (.20) $ .65 $ .15
-------------- -------------- --------------
-------------- -------------- --------------
Diluted....................................................... $ (.20) $ .64 $ .15
-------------- -------------- --------------
-------------- -------------- --------------
Shares used in computing earnings (loss)
per common share:
Basic......................................................... 24,722,000 22,535,000 17,633,000
-------------- -------------- --------------
-------------- -------------- --------------
Diluted....................................................... 24,722,000 23,228,000 17,944,000
-------------- -------------- --------------
-------------- -------------- --------------

See accompanying notes.

F-8

REMEC, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

PREFERRED SHARES COMMON SHARES
---------------------- -------------------- PAID-IN OTHER COMPREHENSIVE RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL INCOME EARNINGS TOTAL
---------- ---------- ---------- -------- ------------ -------------------- ----------- ------------

Balance at January
31, 1996.......... 2,218,607 $2,416,186 11,111,111 $111,112 $ 14,420,370 ($ 29,000) $12,803,563 $ 29,722,231
Conversion of
preferred
shares.......... (718,607) (7,186) 1,616,864 16,169 (8,983) -- -- --
Dividend accrued
on preferred
shares.......... -- 128,000 -- -- -- -- (128,000) --
Redemption of
preferred
shares.......... (1,500,000) (2,537,000) 163,892 1,639 863,235 -- -- (1,672,126)
Issuance of common
shares.......... -- -- 9,337,969 93,380 88,517,721 -- -- 88,611,101
Income tax
benefits related
to employee
stock purchase
plan and stock
options
exercised....... -- -- -- -- 209,399 -- -- 209,399
Compensation
related to stock
options
granted......... -- -- -- -- 1,338,000 -- -- 1,338,000
Foreign exchange
translation
adjustment...... -- -- -- -- -- 708,000 -- 708,000
Net income........ -- -- -- -- -- -- 2,857,323 2,857,323
------------
Comprehensive
income.......... -- -- -- -- -- -- -- 3,565,323
Adjustment for net
equity activity
of pooled
company......... -- -- -- -- -- -- (135,272) (135,272)
---------- ---------- ---------- -------- ------------ ---------- ----------- ------------
Balance at January
31, 1997.......... -- -- 22,229,836 222,300 105,339,742 679,000 15,397,614 121,638,656
Issuance of common
shares.......... -- -- 647,206 6,472 9,515,468 -- -- 9,521,940
Income tax
benefits related
to employee
stock purchase
plan and stock
options
exercised....... -- -- -- -- 535,013 -- -- 535,013
Compensation
related to stock
options
granted......... -- -- -- -- 12,000 -- -- 12,000
Foreign exchange
translation
adjustment...... -- -- -- -- -- (620,000) -- (620,000)
Net income........ -- -- -- -- -- -- 14,754,358 14,754,358
------------
Comprehensive
income.......... -- -- -- -- -- -- -- 14,134,358
Adjustment for net
equity activity
of pooled
companies....... -- -- -- -- -- -- 147,567 147,567
---------- ---------- ---------- -------- ------------ ---------- ----------- ------------
Balance at January
31, 1998.......... -- -- 22,877,042 228,772 115,402,223 59,000 30,299,539 145,989,534
Issuance of common
shares.......... -- -- 2,369,328 23,690 52,652,461 -- -- 52,676,151
Purchase and
retirement of
common shares... -- -- (366,500) (3,665) (2,847,741) -- -- (2,851,406)
Income tax
benefits related
to employee
stock purchase
plan and stock
options
exercised....... -- -- -- -- 286,584 -- -- 286,584
Rent free period
charges......... -- -- -- -- 139,000 -- -- 139,000
Foreign exchange
translation
adjustment...... -- -- -- -- -- 198,000 -- 198,000
Net loss.......... -- -- -- -- -- -- (4,831,275) (4,831,275)
------------
Comprehensive
loss............ -- -- -- -- -- -- -- (4,633,275)
---------- ---------- ---------- -------- ------------ ---------- ----------- ------------
Balance at January
31, 1999.......... -- $ -- 24,879,870 $248,797 $165,632,527 $ 257,000 $25,468,264 $191,606,588
---------- ---------- ---------- -------- ------------ ---------- ----------- ------------
---------- ---------- ---------- -------- ------------ ---------- ----------- ------------

See accompanying notes.

F-9

REMEC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED JANUARY 31,
-------------------------------------------
1999 1998 1997
------------- ------------- -------------

OPERATING ACTIVITIES:
Net income (loss).................................................. $ (4,831,275) $ 14,754,358 $ 2,857,323
Adjustments to reconcile net income (loss) to net cash provided
(used) by operating activities:
Depreciation and amortization...................................... 9,930,248 6,018,811 3,876,507
Gain on sale of subsidiary......................................... -- (2,833,240) --
Rent charge........................................................ 139,000 -- --
Compensation related to stock options.............................. -- 12,000 1,338,000
Deferred income taxes.............................................. 1,310,214 (2,289,832) (1,078,151)
Changes in operating assets and liabilities:
Accounts receivable.............................................. 7,078,440 (11,450,349) (7,078,195)
Inventories...................................................... (1,583,860) (10,102,804) (7,187,276)
Prepaid expenses and other current assets........................ (2,017,634) 218,838 (1,118,477)
Accounts payable................................................. (3,922,833) 1,006,941 2,448,089
Accrued expenses, income taxes payable and deferred rent......... 160,763 2,711,733 296,250
------------- ------------- -------------
Net cash provided (used) by operating activities................... 6,263,063 (1,953,544) (5,645,930)

INVESTING ACTIVITIES:
Additions to property, plant and equipment......................... (18,278,506) (18,659,394) (9,049,734)
Payment for acquisitions, net of cash acquired..................... -- (5,066,075) (4,011,735)
Proceeds from sale of subsidiary................................... -- 5,000,000 --
Sale of short-term investments..................................... -- -- 1,482,565
Other assets....................................................... (1,589,380) 120,637 (133,320)
------------- ------------- -------------
Net cash used by investing activities.............................. (19,867,886) (18,604,832) (11,712,224)

FINANCING ACTIVITIES:
Proceeds from credit facilities and long-term debt................. -- 12,212,858 3,480,000
Repayments on credit facilities and long-term debt................. (1,391,305) (21,283,512) (3,412,956)
Purchase and retirement of common shares........................... (2,851,406) -- --
Proceeds from issuance of common shares............................ 52,676,151 2,898,273 88,611,101
Redemption of preference shares.................................... -- -- (1,672,126)
Change in deferred offering costs.................................. -- -- 1,108,424
------------- ------------- -------------
Net cash provided (used) by financing activities................... 48,433,440 (6,172,381) 88,114,443
Effect of exchange rate changes.................................... 217,101 (111,000) 266,000
------------- ------------- -------------
Increase (decrease) in cash and cash equivalents................... 35,045,718 (26,841,757) 71,022,289
Cash and cash equivalents at beginning of year..................... 47,966,101 75,134,362 4,145,632
Adjustment for net cash activity of pooled companies............... -- (326,504) (33,559)
------------- ------------- -------------
Cash and cash equivalents at end of year........................... $ 83,011,819 $ 47,966,101 $ 75,134,362
------------- ------------- -------------
------------- ------------- -------------
Supplemental disclosures of cash flow information:
Cash paid for:
Interest........................................................... $ 98,000 $ 440,000 $ 536,000
------------- ------------- -------------
------------- ------------- -------------
Income taxes....................................................... $ 4,661,000 $ 10,162,000 $ 3,091,000
------------- ------------- -------------
------------- ------------- -------------
Supplemental disclosure of noncash investing and financing
activities:
Assets acquired under credit facilities............................ $ -- $ 444,000 $ 2,228,000
------------- ------------- -------------
------------- ------------- -------------
Common shares issued in acquisitions............................... $ -- $ 6,624,000 $ --
------------- ------------- -------------
------------- ------------- -------------

See accompanying notes.

F-10

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. REMEC AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND NATURE OF BUSINESS AND BASIS OF PRESENTATION

REMEC, Inc. was incorporated in the State of California in January 1983.
REMEC is engaged in a single business segment consisting of the research,
design, development and manufacture of microwave and radio frequency (RF)
components and subsystems and precision instruments for control and measurement
systems. Prior to fiscal 1996, the majority of REMEC's sales were to prime
contractors to various agencies of the U.S. Department of Defense and to foreign
governments. In May 1995, REMEC incorporated REMEC Wireless, Inc. (a wholly
owned subsidiary) to research, design, develop and manufacture products based on
microwave technologies for commercial customers. In fiscal 1997, REMEC acquired
Magnum Microwave Corporation, a manufacturer of microwave components and
subsystems, in a transaction accounted for as a pooling of interests. During
1997, REMEC also acquired RF Microsystems, Inc. ("RFM"), a satellite
communications engineering company, in a transaction accounted for as a
purchase. During fiscal 1998, REMEC acquired Radian Technology, Inc., C&S
Hybrid, Inc., and Q-bit Corporation, in a series of transactions accounted for
as poolings of interests. On April 29, 1999, the Company acquired Airtech plc in
a transaction accounted for as a pooling of interests. REMEC's consolidated
financial statements for all periods prior to these acquisitions have been
restated to include each of the acquired company's financial position, results
of operations and cash flows. During fiscal 1998, REMEC also acquired Verified
Technical Corporation and Nanowave Technologies Inc. in transactions which were
accounted for as purchases and sold its RFM subsidiary.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of REMEC and its
wholly owned subsidiaries REMEC Microwave, Inc., REMEC Wireless, Inc., Humphrey,
Inc., REMEC Magnum, Inc., REMEC Veritek, Inc., REMEC CSH, Inc., REMEC Nanowave,
Inc., REMEC Q-bit, Inc., Airtech plc and REMEC Inc. S.A. REMEC's consolidated
financial statements also include the accounts of RF Microsystems, Inc. from
April 30, 1996 through August 26, 1997 (date of sale). All intercompany accounts
and transactions have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS

REMEC considers all highly liquid investments with an original maturity of
three months or less at the date of acquisition to be cash equivalents. REMEC
evaluates the financial strength of institutions at which significant
investments are made and believes the related credit risk is limited to an
acceptable level.

REMEC has adopted Statement of Financial Accounting Standards No. 115 ("SFAS
No. 115"), "Accounting for Certain Investments in Debt and Equity Securities."
SFAS No. 115 requires companies to record certain debt and equity security
investments at market value. At January 31, 1999 and 1998, the cost of cash
equivalents and short-term investments approximated fair value.

CONCENTRATION OF CREDIT RISK

Accounts receivable are principally from U.S. government contractors,
companies in foreign countries and domestic customers in the telecommunications
industry. Credit is extended based on an evaluation of the customer's financial
condition and generally collateral is not required. REMEC performs periodic
credit evaluations of its customers and maintains reserves for potential credit
losses.

F-11

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. REMEC AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORY

Inventories are stated at the lower of weighted average cost or market. In
accordance with industry practice, REMEC has adopted a policy of capitalizing
general and administrative costs as a component of the cost of government
contract related inventories to achieve a better matching of costs with the
related revenues.

PROGRESS PAYMENTS

Progress payments received from customers are offset against inventories
associated with the contracts for which the payments were received.

LONG-LIVED ASSETS

Property, plant and equipment is stated at cost less accumulated
depreciation. Depreciation is provided using the straight-line method over the
estimated useful lives of the assets which range from three to thirty years.
Leasehold improvements are amortized using the straight-line method over the
shorter of their estimated useful lives or the lease period.

Intangible assets in the accompanying balance sheets are primarily comprised
of goodwill and acquired technology recorded in connection with the acquisitions
of Humphrey, Inc. (in February 1994), RF Microsystems, Inc., Verified Technical
Corporation and Nanowave Technologies Inc. (See Note 2). These assets are being
amortized using the straight-line method over the estimated useful lives of the
relevant intangibles ranging from nine to fifteen years, respectively.
Amortization expense related to intangible assets totaled $1,597,189, $766,616
and $345,531 for fiscal years 1999, 1998 and 1997, respectively.

Effective February 1, 1996, REMEC adopted Statement of Financial Accounting
Standard No. 121 "Accounting for Long-Lived Assets and Long-Lived Assets to be
Disposed Of" which established standards for recording the impairment of
long-lived assets, including property, equipment and leasehold improvements,
intangible assets and goodwill.

In accordance with this Statement, REMEC reviews the carrying value of
property, equipment and leasehold improvements for evidence of impairment
through comparison of the undiscounted cash flows generated from those assets to
the related carrying amounts of those assets. The carrying value of intangible
assets are evaluated for impairment through comparison of the undiscounted cash
flows derived from those assets to the carrying value of the related
intangibles.

FOREIGN CURRENCY TRANSLATION

Foreign currency balance sheet accounts are translated into United States
dollars at a rate of exchange in effect at fiscal year end. Income and expenses
are translated at the average rates of exchange in effect during the year. The
related translation adjustments are made directly to a separate component of
shareholders' equity.

REVENUE RECOGNITION

Revenues from commercial contracts are recognized upon shipment of product
and transfer of title to customers. Revenues on long-term fixed-price contracts
with prime contractors to U.S. Government

F-12

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. REMEC AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Agencies are recognized using the units of delivery method. Revenues associated
with the performance of non-recurring engineering and development contracts are
recognized when earned under the terms of the related contract. Revenues for
cost-reimbursement contracts are recorded as costs are incurred and includes
estimated earned fees in the proportion that costs incurred to date bears to
estimated costs. Prospective losses on long-term contracts are based upon the
anticipated excess of inventoriable manufacturing costs over the selling price
of the remaining units to be delivered. Actual losses could differ from those
estimated due to changes in the ultimate manufacturing costs and contract terms.

RESEARCH AND DEVELOPMENT

Research and development costs incurred by REMEC are expensed in the period
incurred.

NET INCOME PER SHARE

REMEC calculates earnings per share in accordance with Financial Accounting
Standards Board Statement No. 128, "Earnings per Share." Basic earnings per
share is computed using the weighted average shares outstanding for each period
presented. Diluted earnings per share is computed using the weighted average
shares outstanding plus potentially dilutive common shares using the treasury
stock method at the average market price during the reporting period. The
calculation of net income per share reflects the historical information for
REMEC and its acquired subsidiaries and the conversion of the common shares of
those companies acquired in pooling of interests transactions into REMEC shares
as stipulated in the respective acquisition agreements. (See Note 2.)

The following table reconciles the shares used in computing basic and
diluted earnings per share in the respective fiscal years:

YEARS ENDED JANUARY 31,
----------------------------------------
1999 1998 1997
------------ ------------ ------------

Weighted average common shares outstanding used in
basic earnings per share calculation.............. 24,722,000 22,535,000 17,633,000
Effect of dilutive stock options.................... -- 693,000 311,000
------------ ------------ ------------
Shares used in diluted earnings per share
calculation....................................... 24,722,000 23,228,000 17,944,000
------------ ------------ ------------
------------ ------------ ------------

On June 6, 1997, REMEC's Board of Directors approved a three-for-two stock
split of REMEC's common stock in the form of a 50% stock dividend payable on
June 27, 1997 to shareholders of record as of June 20, 1997. All share and per
share related data in the consolidated financial statements have been adjusted
to reflect the stock dividend for all periods presented.

STOCK OPTIONS

REMEC has elected to follow APB 25 and related Interpretations in accounting
for its employee stock options because the alternative fair value accounting
provided for under Statement of Financial Accounting Standard No. 123 ("SFAS No.
123"), "Accounting for Stock-Based Compensation" requires use of option
valuation models that were not developed for use in valuing employee stock
options. Under APB 25, because the exercise price of REMEC's employee stock
options equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized.

F-13

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. REMEC AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions about the future that affect the amounts reported in the
consolidated financial statements. These estimates include assessing the
collectibility of accounts receivable, the usage and recoverability of
inventories and long-lived assets and the incurrence of losses on long term
contracts and warranty costs. The markets for REMEC's products are extremely
competitive and are characterized by rapid technological change, new product
development, product obsolescence and evolving industry standards. In addition,
price competition is intense and significant price erosion generally occurs over
the life of a product. As a result of such factors, actual results could differ
from the estimates used by management.

NEW ACCOUNTING STANDARDS

During 1998, REMEC adopted Statement of Financial Accounting Standard No.
130 ("SFAS No. 130"), "Reporting Comprehensive Income" and Statement of
Financial Accounting Standard No. 131 ("SFAS No. 131"), "Segment Information."
SFAS 130 requires that all components of comprehensive income, including net
income, be reported in the financial statements in the period in which they are
recognized. Comprehensive income is defined as a change in equity during a
period from transactions and other events and circumstances from non-owner
sources. Net income and other comprehensive income, including foreign currency
translation adjustments and unrealized gains and losses on investments, are
required to reported, net of their related tax effect, to arrive at
comprehensive income. SFAS No. 131 amends the requirements for public
enterprises to report financial and descriptive information about its reportable
operating segments. Operating segments, as defined in SFAS No. 131, are
components of an enterprise for which separate financial information is
available and is evaluated regularly by REMEC in deciding how to allocate
resources and in assessing performance. The financial information is required to
be reported on the basis that is used internally for evaluating this segment
performance. REMEC operates in one business and operating segment only, and
therefore adoption of this standard did not have a material impact on REMEC's
financial statements.

2. ACQUISITION TRANSACTIONS

AIRTECH PLC

In April 1999, REMEC acquired Airtech plc, a manufacturer of coverage
enhancement products for wireless mobile communication networks, in exchange for
approximately 1.7 million shares of REMEC's common stock. Prior to the
combination, Airtech plc's fiscal year ended on December 31. In recording the
business combination, Airtech plc's financial statements for its fiscal years
ended December 31, 1998, 1997 and 1996 were combined with REMEC's for its fiscal
years ended January 31, 1999, 1998 and 1997, respectively. Airtech plc's net
sales and net loss for the one month period ended January 31, 1999 were $208,683
and $1,353,867, respectively. In accordance with Accounting Principles Board
Opinion No. 16 ("APB No. 16"), Airtech plc's results of operations and cash
flows for the one-month period ended January 31, 1999 will be added directly to
the retained earnings and cash flows of REMEC and excluded from reported fiscal
2000 results of operations and cash flows.

F-14

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITION TRANSACTIONS (CONTINUED)
Net sales and net income reported by REMEC and Airtech for periods prior to
its acquisition are as follows:

YEARS ENDED JANUARY 31,
----------------------------------------------
1999 1998 1997
-------------- -------------- --------------

Net sales:
REMEC................................... $ 158,401,981 $ 156,056,929 $ 118,553,842
Airtech................................. 20,812,986 34,951,000 13,089,000
-------------- -------------- --------------
Total............................... $ 179,214,967 $ 191,007,929 $ 131,642,842
-------------- -------------- --------------
-------------- -------------- --------------
Net income (loss):
REMEC................................... $ 10,327,725 $ 14,735,358 $ 4,972,323
Airtech................................. (15,159,000) 19,000 (2,115,000)
-------------- -------------- --------------
Total............................... $ (4,831,275) $ 14,754,358 $ 2,857,323
-------------- -------------- --------------
-------------- -------------- --------------

Q-BIT CORPORATION

In October 1997, REMEC acquired all of the outstanding shares of common
stock of Q-bit, a manufacturer of amplifier based microwave components and
multi-function modules, in exchange for 1,047,482 shares of REMEC's common
stock. Prior to the combination, Q-bit's fiscal year ended on December 31. In
recording the business combination, Q-bit's financial statements for the fiscal
years ended December 31, 1995 and 1996 were combined with REMEC's for the fiscal
years ended January 31, 1996 and 1997, respectively. Q-bit's net sales and net
income for the one month period ended January 31, 1997 were $1,295,557 and
$103,610, respectively. In accordance with Accounting Principles Board Opinion
No. 16 ("APB No. 16"), Q-bit's results of operations and cash flows for the
one-month period ended January 31, 1997 have been added directly to the retained
earnings and cash flows of REMEC and excluded from reported fiscal 1998 results
of operations and cash flows. Q-bit's revenues and net income for the period
from February 1, 1997 through the date of acquisition totalled $12,315,818 and
$1,578,333, respectively.

C&S HYBRID

In June 1997, REMEC acquired all of the outstanding shares of common stock
of C&S Hybrid, a manufacturer of transmitter and receiver hardware assemblies
("transceivers") that are integrated by C&S Hybrid's customers into
terrestrial-based point-to-point microwave radios primarily for use in
commercial applications, in exchange for 1,290,000 shares of REMEC's common
stock. Prior to the combination, C&S Hybrid's fiscal year ended on December 27,
1996. In recording the business combination, C&S Hybrid's financial statements
for the fiscal years ended December 22, 1995 and December 27, 1996 were combined
with REMEC's for the fiscal years ended January 31, 1996 and 1997, respectively.
C&S Hybrid's net sales and net income for the one month ended January 31, 1997
were $1,569,129 and $53,976, respectively. In accordance with APB No. 16, C&S
Hybrid's results of operations and cash flows for the one-month period ended
January 31, 1997 have been added directly to the retained earnings and cash
flows of REMEC and excluded from reported fiscal 1998 results of operations and
cash flows. C&S Hybrid's revenues and net income for the period from February 1,
1997 through the date of acquisition totalled $8,033,729 and $357,249,
respectively.

F-15

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITION TRANSACTIONS (CONTINUED)
RADIAN TECHNOLOGY, INC.

On February 28, 1997, REMEC issued 950,024 shares of its common stock in
exchange for all of the outstanding shares of common stock of Radian, a
manufacturer of microwave components and subsystems. Prior to the combination,
Radian's fiscal year ended on the Friday closest to December 31. In recording
the business combination, Radian's financial statements for the fiscal years
ended December 29, 1995 and December 27, 1996 were combined with REMEC's for the
fiscal years ended January 31, 1996 and 1997, respectively. Radian's net sales
and net loss for the one month period ended January 31, 1997 were $299,000 and
$10,019, respectively. In accordance with APB No. 16, Radian's results of
operations and cash flows for the one-month period ended January 31, 1997 have
been added directly to the retained earnings and cash flows of REMEC and
excluded from reported fiscal 1998 results of operations and cash flows.
Radian's revenues and net income for the period from February 1, 1997 through
the date of acquisition totalled $731,089 and $141,888, respectively.

MAGNUM MICROWAVE CORPORATION

On August 26, 1996, REMEC issued 1,612,399 shares of its common stock in
exchange for all of the outstanding shares of common stock of Magnum, a
manufacturer of microwave components and subsystems. Immediately prior to the
acquisition, Magnum issued 197,187 equivalent shares of stock for cash of
approximately $1,500,000. Prior to the combination, Magnum's fiscal year ended
on the Friday closest to March 31. In recording the business combination,
Magnum's financial statements for the 1996 fiscal year were combined with
REMEC's for the fiscal year ended January 31, 1996. Consolidated operating
results and the net change in consolidated cash and cash equivalents for the
year ended January 31, 1997 include Magnum's results of operations and change in
cash flows for the two months ended March 29, 1996. Magnum's net sales and net
income for the two month period ended March 29, 1996 were $1,743,000 and
$135,000, respectively. Included in general and administrative expenses in the
consolidated statement of income for the year ended January 31, 1997 are costs
of $424,000 related to the acquisition of Magnum.

VERIFIED TECHNICAL CORPORATION

On March 31, 1997, REMEC acquired all of the outstanding common stock of
Veritek in exchange for cash consideration of $1,000,000 and 138,000 shares of
REMEC's common stock with a fair value of approximately $2.0 million and the
assumption of liabilities totaling $1.1 million. The acquisition has been
accounted for as a purchase, and accordingly, the total purchase price has been
allocated to the acquired assets and liabilities assumed at their estimated fair
values in accordance with the provisions of APB No. 16. The excess of the
purchase price over the net assets acquired of $2,406,000 has been recorded as
an intangible asset, and is being amortized over an estimated life of 15 years.
The pro forma results of operations of REMEC and Veritek assuming Veritek was
acquired on the first day of REMEC's 1997 fiscal year would not be materially
different from reported results.

NANOWAVE TECHNOLOGIES INC.

In October 1997, REMEC formed REMEC Canada (as a wholly owned subsidiary)
for the purpose of facilitating the acquisition of Canadian companies, including
the then contemplated acquisition of Nanowave, a manufacturer of amplifier based
microwave and millimeter wave components and multi-function modules. Effective
October 29, 1997, REMEC Canada acquired all of the outstanding

F-16

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITION TRANSACTIONS (CONTINUED)
common stock of Nanowave in exchange for cash consideration of $4,025,000 and
182,183 Dividend Access Shares with a fair value of $4,646,000 which was equal
to the fair value of an equivalent number of common shares of REMEC on the date
of acquisition. These Dividend Access Shares are convertible at any time into an
equivalent number of shares of REMEC Common Stock at the option of the security
holder. The acquisition has been accounted for as a purchase, and accordingly,
the total purchase price has been allocated to the acquired assets and
liabilities assumed at their estimated fair values in accordance with the
provisions of APB No. 16. The excess of the purchase price over the net assets
acquired of $11,130,000 has been recorded as intangible assets (acquired
technology, trademarks, assembled workforce and goodwill), and will be amortized
over periods ranging from 9 to 15 years.

Assuming that the acquisition of Nanowave had occurred on the first day of
REMEC's fiscal year ended January 31, 1997, pro forma condensed consolidated
results of operations would have been as follows (in thousands except per share
amounts):

YEARS ENDED JANUARY
31,
----------------------
1998 1997
---------- ----------
(UNAUDITED)

Net sales......................................................... $ 195,532 $ 137,523
Net income applicable to common shareholders...................... 14,307 2,198

Earnings per share
Basic........................................................... $ .63 $ .12
Diluted......................................................... $ .61 $ .12

RF MICROSYSTEMS, INC.

Effective April 30, 1996, REMEC acquired all of the outstanding common stock
of RFM and certain other assets in exchange for cash consideration of
approximately $4,066,000. RFM provided satellite communications engineering
services to agencies of the U.S. Government. The acquisition was accounted for
as a purchase, and accordingly, the total purchase price was allocated to the
acquired assets and liabilities assumed at their estimated fair values in
accordance with the provisions of APB No. 16. The excess of the purchase price
over the net assets acquired of $3,559,000 was recorded as intangible assets,
and was being amortized over an estimated life of 15 years. Upon completion of
the acquisition, certain tangible and intangible assets associated with the
design and production of commercial wireless products with a fair value of
approximately $3.8 million were transferred to another subsidiary of REMEC. On
August 26, 1997, REMEC sold its RFM subsidiary in exchange for cash
consideration of $5.0 million. The sale resulted in an after-tax gain of
$1,728,000 or $.08 per share. REMEC's consolidated financial statements include
the results of RFM from April 30, 1996 through August 26, 1997.

F-17

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. FINANCIAL STATEMENT DETAILS

INVENTORIES

Inventories consist of the following:

JANUARY 31,
----------------------------
1999 1998
------------- -------------

Raw Materials.................................................. $ 21,999,579 $ 19,529,388
Work in progress............................................... 16,406,379 17,873,537
------------- -------------
38,405,958 37,402,925
Less unliquidated progress payments............................ (94,431) (674,984)
------------- -------------
$ 38,311,527 $ 36,727,941
------------- -------------
------------- -------------

Inventories related to contracts with prime contractors to the U.S.
Government included capitalized general and administrative expenses of
$2,076,000 at January 31, 1999 and 1998, respectively.

REMEC had a reserve for obsolete and unusable inventory of $3,804,000 and
$3,210,000 as of January 31, 1999 and 1998, respectively.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

JANUARY 31,
------------------------------
1999 1998
-------------- --------------

Land, building and improvements............................... $ 3,361,097 $ 3,293,776
Machinery and equipment....................................... 74,261,052 58,533,070
Furniture and fixtures........................................ 4,153,572 3,270,147
Leasehold improvements........................................ 4,645,064 3,049,130
-------------- --------------
86,420,785 68,146,123
Less accumulated depreciation and amortization................ (41,714,028) (33,387,189)
-------------- --------------
$ 44,706,757 $ 34,758,934
-------------- --------------
-------------- --------------

F-18

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. FINANCIAL STATEMENT DETAILS (CONTINUED)
INTANGIBLE AND OTHER ASSETS

Intangible and other assets consist of the following:

JANUARY 31,
----------------------------
1999 1998
------------- -------------

Acquired technology............................................ $ 8,358,556 $ 8,358,556
Goodwill....................................................... 7,775,775 7,775,775
Trademarks and other intangible assets......................... 2,250,000 2,250,000
------------- -------------
18,384,331 18,384,331
Less accumulated amortization.................................. (2,988,645) (1,391,456)
------------- -------------
15,395,686 16,992,875
Other assets................................................... 1,828,746 239,366
------------- -------------
$ 17,224,432 $ 17,232,241
------------- -------------
------------- -------------

4. BANK REVOLVING TERM CREDIT FACILITY AND LINE-OF-CREDIT

REMEC has a $9,000,000 working capital line-of-credit with a bank, which
expires July 3, 2000. Interest is due monthly on advances at a fixed spread over
the London Interbank Offered Rate (6.2% at January 31, 1999). At January 31,
1999, there were no outstanding borrowings on the facility.

REMEC also has a $8,000,000 term credit facility with the bank which is
available until July 1, 2000. Outstanding borrowings at July 1, 2000 under this
facility automatically convert into a term note payable in 42 monthly
installments. Interest is due monthly on advances under the facility at a fixed
spread over the London Interbank Offered Rate. At January 31, 1999, there were
no outstanding borrowings on the facility.

Advances under these agreements are secured by substantially all assets of
REMEC. The agreements also contain covenants which require REMEC to maintain
certain financial ratios, achieve specified levels of profitability, restrict
the incurrence of additional debt, limit the payment of cash dividends, and
include certain other restrictions. As of January 31, 1999, REMEC was in
compliance with all covenants specified.

The Company's Airtech subsidiary had a working capital facility with a bank
that expired on November 30, 1998, although the bank has continued to allow
borrowings under this agreement until a new credit facility can be finalized.
Interest accrues on borrowings under this facility at a rate of 1 1/4% over the
banks base rate (6 1/4% at January 31, 1999). Borrowings under this facility are
secured by substantially all of the assets of Airtech. At January 31, 1999,
outstanding borrowings under this facility were approximately $75,000.

5. SHAREHOLDERS' EQUITY

EQUITY OFFERINGS

In March 1998, REMEC issued in a public offering an additional 1,990,000
shares of common stock. The net proceeds from this offering were $49,563,500.
Certain shareholders also sold 1,000,000 shares of REMEC common stock as part of
this offering.

F-19

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. SHAREHOLDERS' EQUITY (CONTINUED)
In January 1997, REMEC issued in a public offering an additional 3,618,750
shares of common stock. The net proceeds from this offering were $51,971,875.
Certain shareholders also sold 1,125,000 shares as part of this offering.

In February 1996, REMEC completed an initial public offering of its common
stock in which REMEC issued a total of 3,397,340 shares of common stock. The net
proceeds from the offering were $15,649,209. Concurrent with the closing of
REMEC's initial public offering, all of the then outstanding shares of REMEC's
preferred stock were converted into 1,616,864 shares of common stock. In
connection with REMEC's initial public offering, certain shareholders also sold
1,777,660 shares as part of the offering.

In October 1996, the Company's Airtech subsidiary completed an initial
public offering of its common stock in which Airtech issued the equivalent of
approximately 602,000 shares of REMEC common stock in exchange for net proceeds
of approximately $16.3 million.

STOCK OPTION PLANS

REMEC's 1995 Equity Incentive Plan provides for the grant of incentive stock
options, non-qualified stock options, restricted stock awards, stock purchase
rights or performance shares to employees of REMEC. During fiscal 1998, REMEC's
shareholders approved an increase in the number of shares available for issuance
under the Plan by 2,250,000 shares to a total of 3,375,000 shares of common
stock. The exercise price of the incentive stock options must at least equal the
fair market value of the common stock on the date of grant, and the exercise
price of non-qualified options may be no less than 85% of the fair market value
of the common stock on the date of grant. Options granted under the plans vest
over a period of three to four years and expire from four and one-half years to
nine years from the date of grant.

REMEC also maintains the 1996 Nonemployee Directors Stock Option Plan under
which 300,000 common shares have been reserved for non-qualified stock option
grants to nonemployee directors of REMEC. Under the Plan, option grants are
automatically made on an annual basis at the fair market value of the stock on
the date of grant. Options granted under the Plan vest over three to four years
and expire four and one-half to nine years from the date of grant.

REMEC had maintained previous stock option plans prior to the inception of
the 1995 Equity Incentive Plan. These incentive plans were terminated upon the
closing of REMEC's initial public offering in February 1996 and all outstanding
options remain exercisable in accordance with their original terms.

F-20

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. SHAREHOLDERS' EQUITY (CONTINUED)

A summary of REMEC's stock option activity and related information is as
follows:

YEARS ENDED JANUARY 31,
------------------------------------------------------------------------
1999 1998 1997
----------------------- ----------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
---------- ----------- ---------- ----------- --------- -----------

Outstanding--beginning of
year....................................... 1,690,974 $ 16.86 928,538 $ 7.71 305,380 $ 2.25
Granted.................................... 1,141,120 15.99 1,024,214 22.42 668,012 9.90
Exercised.................................. (93,801) 4.85 (170,965) 4.37 (37,649) 2.37
Forfeited.................................. (362,822) 25.44 (90,813) 10.17 (7,205) 6.79
---------- ----------- ---------- ----------- --------- -----
Outstanding--end of year..................... 2,375,471 $ 15.60 1,690,974 $ 16.86 928,538 $ 7.71
---------- ----------- ---------- ----------- --------- -----
---------- ----------- ---------- ----------- --------- -----

The following table summarizes by price range the number, weighted average
exercise price and weighted average life (in years) of options outstanding and
the number and weighted average exercise price of exercisable options as of
January 31, 1999:

TOTAL OUTSTANDING
--------------------------------------
WEIGHTED AVERAGE TOTAL EXERCISABLE
-------------------------- ------------------------------
NUMBER OF EXERCISE NUMBER OF WEIGHTED AVERAGE
PRICE RANGE SHARES PRICE LIFE SHARES EXERCISE PRICE
- -------------------------------------------------- ---------- ------------- --- ----------- -----------------

$ 1.61-$ 7.40..................................... 128,497 $ 2.21 1.4 103,269 $ 2.28
$ 7.41-$11.10..................................... 995,750 $ 9.41 6.3 184,235 $ 9.59
$11.11-$14.80..................................... 319,051 $ 14.03 2.6 137,821 $ 14.07
$14.81-$22.20..................................... 486,383 $ 20.84 1.4 154,994 $ 20.40
$22.21-$25.90..................................... 191,125 $ 25.35 3.7 47,662 $ 25.47
$25.91-$37.00..................................... 254,665 $ 30.97 4.8 50,100 $ 32.90
---------- -----------
Total Plan........................................ 2,375,471 $ 15.60 4.5 678,081 $ 14.70
---------- -----------
---------- -----------

At January 31, 1999, options for 863,985 shares of REMEC common stock were
available for future grant.

Pro forma information regarding net income and net income per share is
required by SFAS No. 123, and has been determined as if REMEC has accounted for
its employee stock options and employee stock purchase plan shares under the
fair value method of that statement. The fair value of these options or employee
stock purchase rights was estimated at the date of grant using the Black-Scholes
option pricing model with the following weighted average assumptions for 1999,
1998 and 1997, respectively: risk-free interest rates of 6.0%; dividend yields
of 0%; volatility factors of the expected market price of REMEC's common stock
of 76.0%, 71.3% and 90.9%, a weighted-average life of the option of 3.2 years;
and a weighted-average life of the stock purchase rights of three months.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price

F-21

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. SHAREHOLDERS' EQUITY (CONTINUED)
volatility. Because REMEC's employee stock options and rights under the employee
stock purchase plan have characteristics significantly different from those of
trade options, and because changes in the subjective assumptions can materially
affect the fair value estimate, in management's opinion, the existing models do
not necessarily provide a reliable single measure of the fair market value of
its employee stock options or the rights granted under the employee stock
purchase plan.

For purposes of pro forma disclosures, the estimated fair value of the
options and the shares granted under the employee stock purchase plan is
amortized to expense over their respective vesting or option periods. The
effects of applying SFAS No. 123 for pro forma disclosure purposes are not
likely to be representative of the effects on pro forma net income in future
years because they do not take into consideration pro forma compensation expense
related to grants made prior to 1996. REMEC's pro forma information follows:

YEARS ENDED JANUARY 31,
-------------------------------------------
1999 1998 1997
-------------- ------------- ------------

Net income (loss) applicable to common shareholders:
As reported....................................................... $ (4,831,334) $ 14,754,358 $ 2,729,323
Pro forma......................................................... (11,267,648) 10,622,372 (159,811)

Earnings (loss) per share:
As reported--
Basic........................................................... $ (.20) $ .65 $ .15
Diluted......................................................... $ (.20) $ .64 $ .15
Pro forma--
Basic........................................................... $ (.46) $ .47 $ (.01)
Diluted......................................................... $ (.46) $ .46 $ (.01)

Weighted average fair value of options granted during the year...... $ 12.92 $ 11.48 $ 5.09

STOCK PURCHASE PLAN

REMEC's Employee Stock Purchase Plan provides for the issuance of shares of
REMEC's common stock to eligible employees. During fiscal 1998, REMEC's
shareholders approved an increase in the number of shares available for issuance
under the Employee Stock Purchase Plan by 825,000 shares to a total of 1,200,000
shares of common stock. The price of the common shares purchased under the
Employee Stock Purchase Plan will be equal to 85% of the fair market value of
the common shares on the first or last day of the offering period, whichever is
lower. As of January 31, 1999, 456,227 shares of REMEC common stock remain
available for issuance under the Purchase Plan.

6. COMMITMENTS

DEFERRED SAVINGS PLAN

REMEC has established a Deferred Savings Plan for its employees, which
allows participants to make contributions by salary reduction pursuant to
section 401(k) of the Internal Revenue Code. REMEC matches contributions up to
$100 per quarter, per employee, subject to the attainment of

F-22

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. COMMITMENTS (CONTINUED)
certain quarterly profit levels by REMEC. Employees vest immediately in their
contributions and company contributions vest over a two-year period. REMEC has
charged to operations contributions of approximately $272,000, $399,000 and
$218,000 for the years ended January 31, 1999, 1998 and 1997, respectively.

REMEC's Canadian subsidiary maintains a separate defined contribution
retirement savings plan for substantially all of its employees. Participants may
contribute a portion of their annual salaries subject to statutory annual
limitations. REMEC matches a percentage of the employees contributions as
specified in the plan agreement. Contributions to this plan totalled $49,000 and
$19,000 in 1999 and 1998, respectively.

REMEC's UK subsidiary maintains separate defined contribution retirement
savings plans for substantially all of its employees. Participants may
contribute a portion of their annual salaries subject to statutory annual
limitations. REMEC matches a percentage of the employees contribution as
specified in the plan agreements. Contributions to these plans totalled
$271,000, $169,000 and $77,000 for the years ended January 31, 1999, 1998 and
1997, respectively.

REMEC's C&S Hybrid subsidiary maintained a separate defined contribution
401(k) retirement plan for substantially all of its employees. C&S Hybrid made
contributions to this plan of $42,000 for fiscal 1997. This plan was merged into
the REMEC plan in February 1998.

REMEC's Q-bit subsidiary maintained a separate defined contribution 401(k)
retirement plan for substantially all of its employees. Q-bit made contributions
to this plan of $95,000 for fiscal 1997. This plan was merged into the REMEC
plan in April 1998.

LEASES

REMEC leases offices and production facilities under noncancelable
agreements classified as operating leases. At January 31, 1999, future minimum
payments under these operating leases are as follows:

OPERATING LEASES
----------------

2000.................................................................... $ 2,799,000
2001.................................................................... 2,502,000
2002.................................................................... 2,159,000
2003.................................................................... 2,175,000
2004.................................................................... 1,553,000
Thereafter.............................................................. 413,000
----------------
Total minimum lease payments............................................ $ 11,601,000
----------------
----------------

Certain of these lease agreements include renewal options.

Rent expense totaled $3,775,000, $3,623,000, and $2,846,000 during fiscal
1999, 1998 and 1997, respectively.

F-23

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. COMMITMENTS (CONTINUED)
CAPITAL EXPENDITURE

REMEC has entered into an agreement for the purchase of land and a
manufacturing facility in Costa Rica with a purchase price of $2,566,000.
Deposits totalling $1,486,000 have been made in connection with this agreement.
Such deposits are included in other assets in REMEC's consolidated balance sheet
as of January 31, 1999.

7. INCOME TAXES

For financial reporting purposes, income before taxes includes the following
components:

YEARS ENDED JANUARY 31,
--------------------------------------------
1999 1998 1997
-------------- ------------- -------------

Pretax income (loss):
United States............................ $ 10,209,758 $ 22,272,438 $ 8,869,450
Foreign.................................. (13,168,009) 1,367,719 (2,232,460)
-------------- ------------- -------------
$ (2,958,251) $ 23,640,157 $ 6,636,990
-------------- ------------- -------------
-------------- ------------- -------------

Temporary differences and carry forwards which give rise to a significant
portion of the net deferred tax assets and liabilities included in the
accompanying consolidated balance sheets at January 31, 1999 and 1998 are shown
below. As of January 31, 1999, a valuation allowance of $4,795,000 has been
recognized as an offset to the deferred tax assets related to the jurisdictions
in which realization of such assets is uncertain. The valuation allowances arose
due primarily to net operating losses of Airtech which are not deductible for US
purposes and which the deductibility for UK purposes is uncertain.

JANUARY 31,
---------------------------
1999 1998
------------- ------------

Deferred tax liabilities:
Tax over book depreciation................................. $ 4,132,000 $ 4,270,000
Inventory costs capitalized................................ 1,037,000 846,000
Other...................................................... 36,000 2,000
------------- ------------
Total deferred tax liabilities............................. 5,205,000 5,118,000
------------- ------------
Deferred tax assets:
Inventory and other reserves............................... 3,493,000 3,696,000
Deferred rent.............................................. -- 65,000
Accrued expenses........................................... 1,588,000 1,623,000
Net operating loss......................................... 4,791,000 71,000
Other...................................................... 421,000 981,000
------------- ------------
Total deferred tax assets.................................... 10,293,000 6,436,000
Valuation allowance.......................................... (4,795,000) --
------------- ------------
5,498,000 6,436,000
------------- ------------
Net deferred tax assets...................................... $ 293,000 $ 1,318,000
------------- ------------
------------- ------------

F-24

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. INCOME TAXES (CONTINUED)
The provision for taxes based on income consists of the following:

YEARS ENDED JANUARY 31,
-----------------------------------------
1999 1998 1997
------------ ------------- ------------

Current:
Federal...................................... $ 1,165,000 $ 7,933,000 $ 3,910,000
Foreign...................................... 20,000 546,000 --
State........................................ (306,000) 1,634,000 874,000

Deferred:
Federal...................................... 1,085,000 (1,188,000) (646,000)
Foreign...................................... 11,000 147,000 (237,000)
State........................................ (102,000) (186,000) (121,000)
------------ ------------- ------------
$ 1,873,000 $ 8,886,000 $ 3,780,000
------------ ------------- ------------
------------ ------------- ------------

A reconciliation of the effective tax rates and the statutory Federal income
tax rate is as follows:

YEARS ENDED JANUARY 31,
--------------------------------------------------------------------------
1998 1997
1999 ----------------------- -----------------------
------------------------ % %
AMOUNT % AMOUNT -- AMOUNT --
------------- --------- ------------ ------------

Tax at Federal rate........................... $ (1,035,000) 35% $ 8,274,000 35% $ 2,323,000 35%
State income tax net of federal............... 747,000 (25) 941,000 4 605,000 9
Tax Credits................................... (2,987,000) 101 -- -- -- --
Loss (Earnings) distributed to S Corporation
shareholders................................ -- -- (642,000) (3) 438,000 7
Increase in valuation-allowance............... 4,795,000 (162) -- -- -- --
Non-deductible deferred compensation.......... -- -- -- -- 402,000 6
Other......................................... 353,000 (12) 313,000 1 12,000 --
-- --
------------- --- ------------ ------------
$ 1,873,000 (64)% $ 8,886,000 57% $ 3,780,000 57%
-- --
-- --
------------- --- ------------ ------------
------------- --- ------------ ------------

Approximately $2.0 million of the above tax credits are related to the
recognition of research and development tax credits pertaining to previously
filed tax returns.

At January 31, 1999, the Company has approximately $14,917,000 of foreign
net operating losses in the United Kingdom, which are available indefinitely.

Prior to its acquisition by REMEC in October 1997, Q-bit Corporation had
elected to be treated as an "S corporation" for income tax purposes and,
accordingly, any liability for income taxes was that of the shareholders and not
Q-bit.

8. SEGMENT INFORMATION

Substantially all of the Company's operations are based in the United
States. The Company's Airtech subsidiary is based in the United Kingdom and
accounted for sales of $20,813,000, $34,951,000 and $13,089,000 in fiscal 1999,
1998 and 1997, respectively.

F-25

REMEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. SEGMENT INFORMATION (CONTINUED)
Substantially all of the Company's long-lived assets are also based in the
United States. The Company's Airtech subsidiary had long-lived assets totalling
$2,547,000 and $2,770,000 at January 31, 1999 and 1998, respectively. The
Company also had long-lived assets of $3,182,000 at its Costa Rican subsidiary
at January 31, 1999.

During fiscal 1999, 1998 and 1997, one customer accounted for 12%, 11% and
12%, respectively, of REMEC's net sales.

Export sales were 5%, 6% and 6% of net sales for fiscal 1999, 1998 and 1997,
respectively.

9. RELATED PARTY TRANSACTIONS

An officer of REMEC holds certain interests in various suppliers to one of
REMEC's subsidiaries. Amounts paid to these suppliers in fiscal 1999, 1998 and
1997 totaled $1,122,000, $2,667,000 and $1,054,000, respectively.

F-26

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, REMEC has duly caused this Annual Report on Form 10-K/A to
be signed on its behalf by the undersigned, thereunto duly authorized, on July
23, 1999.

REMEC, INC.

By: /s/ RONALD E. RAGLAND
-----------------------------------------
Ronald E. Ragland
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K/A has been signed below by the following persons on
behalf of REMEC and in the capacities and on the dates indicated.

SIGNATURE CAPACITY DATE
- ------------------------------ -------------------------- -------------------

Chairman of the Board and
/s/ RONALD E. RAGLAND Chief Executive Officer
- ------------------------------ (Principal Executive July 23, 1999
Ronald E. Ragland Officer)

*
- ------------------------------ President, Chief Operating July 23, 1999
Errol Ekaireb Officer and Director

Executive Vice President,
* President of REMEC
- ------------------------------ Microwave Division and July 23, 1999
Jack A. Giles Director

* Director, Senior Vice
- ------------------------------ President and Chief July 23, 1999
Denny Morgan Engineer

*
- ------------------------------ Executive Vice President July 23, 1999
Joseph T. Lee and Director

Chief Financial Officer,
/s/ MICHAEL D. MCDONALD Senior Vice President
- ------------------------------ and Secretary (Principal July 23, 1999
Michael D. McDonald Financial and Accounting
Officer)

*
- ------------------------------ Director July 23, 1999
Andre R. Horn

S-1

SIGNATURE CAPACITY DATE
- ------------------------------ -------------------------- -------------------

*
- ------------------------------ Director July 23, 1999
Jeffrey M. Nash

*
- ------------------------------ Director July 23, 1999
Thomas A. Corcoran

*
- ------------------------------ Director July 23, 1999
William H. Gibbs

*By: /s/ RONALD E. RAGLAND
-------------------------
Ronald E. Ragland
ATTORNEY-IN-FACT

S-2

SCHEDULE II

REMEC, INC.
VALUATION AND QUALIFYING ACCOUNTS

BALANCE AT CHARGED TO
BEGINNING OF COSTS AND BALANCE AT END
CONTRACT LOSS RESERVE PERIOD EXPENSES DEDUCTIONS OF PERIOD
- ------------------------------------------------------ ------------ ------------ ------------- --------------

Year ended January 31, 1997........................... $ 1,370,000 $ 821,991 $ (620,000) $ 1,571,991
Year ended January 31, 1998........................... 1,571,991 478,009 -- 2,050,000
Year ended January 31, 1999........................... 2,050,000 (345,781) (754,219) 950,000

BALANCE AT CHARGED TO
BEGINNING OF COSTS AND BALANCE AT END
RESERVE FOR OBSOLETE AND UNUSABLE INVENTORY PERIOD EXPENSES DEDUCTIONS OF PERIOD
- ------------------------------------------------------ ------------ ------------ ------------- --------------

Year ended January 31, 1997........................... $ 1,357,000 $ 655,000 $ (126,000) $ 1,886,000
Year ended January 31, 1998........................... 1,886,000 1,622,021 (298,000) 3,210,021
Year ended January 31, 1999........................... 3,210,021 2,722,062 (2,128,160) 3,803,923

REMEC, INC.
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED JANUARY 31, 1999
EXHIBIT INDEX

SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGES
- ----------- -------------------------------------------------------------------------------------- ---------------

3.1(1) Restated Articles of Incorporation
3.2(1) By-Laws, as amended
10.1(1) Equity Incentive Plan
10.2(1) Employee Stock Purchase Plan
10.3(1) Form of Indemnification Agreements between REMEC and its officers and directors
10.4(2) 1996 Nonemployee Directors Stock Option Plan
10.5(3) Second Amended and Restated Loan Agreement between REMEC and The Union Bank of
California, N.A., dated June 25, 1998, as amended
10.6(3) Participation Agreement dated as of August 25, 1998 among REMEC, Union Bank of
California, N.A., and certain other parties identified therein
10.7(3) Master Lease dated as of August 25, 1998, between Union Bank of California, N.A., as
Certificate Trustee, and REMEC
10.8(3) Lessee Guarantee executed by REMEC dated as of August 25, 1998
21.1(4) Subsidiaries of REMEC
23.1(4) Consent of Ernst & Young LLP, Independent Auditors
23.2(4) Consent of Ireland San Filippo LLP, Independent Public Accountants
23.3(4) Consent of Bray, Beck & Koetter, Independent Auditors
23.4(4) Consent of Arthur Andersen, Independent Auditors
23.5(4) Consent of Binder Hamlyn, Independent Auditors
24.1 Power of Attorney (included on Page S-1 of this Annual Report on Form 10-K)
27.1(4) Financial Data Schedule

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

(1) Previously filed with the Securities and Exchange Commission on February 1,
1996 as an exhibit to REMEC's Registration Statement on Form S-1 (No.
333-80381) and incorporated by reference into this Amendment No. 1 to Annual
Report on Form 10-K/A.

(2) Previously filed with the Securities and Exchange Commission on November 25,
1996 as an exhibit to REMEC's Registration Statement on Form S-8 (No.
333-16687) and incorporated by reference into this Amendment No. 1 to Annual
Report on Form 10-K/A.

(3) Previously filed with the Securities and Exchange Commission on March 25,
1999 as an exhibit to REMEC's Annual Report on Form 10-K for the year ended
January 31, 1999 and incorporated by reference into this Amendment No. 1 to
Annual Report on Form 10-K/A.

(4) Filed with this Amendment No. 1 to Annual Report on Form 10-K/A.