Global demand for mobile communication services and for real-time access to diverse types of data continues to increase. This demand, coupled with the increasing capabilities and decreasing cost of computing devices, has led to rapid adoption of a wide variety of advanced electronic systems that rely on electromagnetic waves for high speed data transmission, reception or acquisition. These systems utilize a variety of data transmission technologies over a wide range of electromagnetic frequency bands, including RF, microwave and millimeterwave frequencies. These advanced electronic systems are integral to today's wireless networks, such as cellular telephone, fixed wireless and satellite communication systems, as well as wired networks, such as cable TV, broadband access and optical data networks. In addition, an increasing number of automotive, industrial, military, homeland security, scientific and medical applications use RF, microwave and millimeterwave technology to perform detection, measurement and imaging functions. The growth of advanced electronic systems using RF, microwave and millimeterwave technologies has accelerated demand for analog, digital and mixed-signal ICs, modules and subsystems that are optimized to provide high performance signal processing across the electromagnetic frequency spectrum.

The knowledge and skills required to design integrated analog and mixed-signal devices operating at higher frequencies are highly specialized and can take many years to develop. It is believed that a significant market opportunity exists for a supplier of high performance ICs, modules and subsystems optimized for RF, microwave and millimeterwave applications that can meet OEMs' diverse requirements.

The Company offers standard products and custom products. The Company develops standard products from its own specifications and offers them for sale through its direct sales organization and network of sales representatives, a distributor and its website. The Company currently offers more than 340 standard products. The Company also develops custom products to meet the specialized requirements of individual customers.

The Company currently provides semiconductor products spanning nine functional families. The Company’s product lines include most of the functional circuit blocks required to create both receiver and transmitter subsystems for any RF, microwave or millimeterwave application.

Many of the Company’s products are designed to perform across numerous frequency bands, making them useful for diverse applications. The Company also offers products that optimize particular performance attributes required in specific applications. These products are offered in a variety of packaging formats, including bare die, surface mount packages and connectorized modules. The Company’s current product line offerings are amplifiers, attenuators, frequency dividers and detectors, frequency multipliers, mixers and converters, modulators, oscillators, sensors, and switches.

The Company builds upon its standard and custom products, its knowledge of RF, microwave and millimeterwave system design and its electrical, thermal and mechanical engineering expertise to offer the customers highly integrated modules and subsystems that are mounted on either ceramic substrates or printed circuit boards in self-contained metal housings, and equipped with industry standard connectors to facilitate their rapid installation. The Company’s modules and subsystems include: miniature wideband low noise/driver/power amplifiers and frequency dividers; RF, microwave and millimeterwave receivers and synthesizers; telecom and test equipment modules; and self-contained, 15-watt power amplifier.

Cost of revenue increased $5.8 million, or 34.8%, to $22.7 million for the year ended December 31, 2004, from $16.8 million for the year ended December 31, 2003.

Research and development expense increased $1.0 million, or 15.5%, to $7.7 million for the year ended December 31, 2004, from $6.6 million for the year ended December 31, 2003.

Sales and marketing expense increased $2.4 million, or 45.5%, to $7.7 million for the year ended December 31, 2004, from $5.3 million for the year ended December 31, 2003.

Interest income was $0.2 million for the years ended December 31, 2004 and 2003.

Interest expense decreased from $0.2 million for the year ended December 31, 2003, to $0.1 million for the year ended December 31, 2004.