COMTECH TELECOMMUNICATIONS CORP /DE/, S-2/A, 2000-01-31

COMTECH TELECOMMUNICATIONS CORP /DE/
S-2/A, 2000-01-31
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT

Previous: COMSTOCK RESOURCES INC, SC 13G/A, 2000-01-31

Next: CONSOLIDATED NATURAL GAS CO, U-12-IB, 2000-01-31

<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 2000

REGISTRATION NO. 333-94767

________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------

AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

COMTECH TELECOMMUNICATIONS CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-------------------

<TABLE>
<S> <C>
DELAWARE 11-2139466
(STATE OR OTHER JURISDICTION OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
</TABLE>

105 BAYLIS ROAD
MELVILLE, NEW YORK 11747
(516) 777-8900

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-------------------

FRED KORNBERG
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND PRESIDENT
COMTECH TELECOMMUNICATIONS CORP.
105 BAYLIS ROAD
MELVILLE, NEW YORK 11747
TELEPHONE: (516) 777-8900
FAX: (516) 777-8877

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
-------------------

COPIES OF COMMUNICATIONS TO:

<TABLE>
<C> <S>
ROBERT A. CANTONE, ESQ. THOMAS A. LITZ, ESQ.
PROSKAUER ROSE LLP THOMPSON COBURN LLP
1585 BROADWAY ONE MERCANTILE CENTER, 34TH FLOOR
NEW YORK, NEW YORK 10036 ST. LOUIS, MISSOURI 63101
TELEPHONE: (212) 969-3000 TELEPHONE: (314) 552-6000
FAX: (212) 969-2900 FAX: (314) 552-7000
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this form, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
-------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

________________________________________________________________________________

<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

PROSPECTUS (SUBJECT TO COMPLETION)
Issued January 31, 2000

2,300,000 SHARES
[LOGO]

COMMON STOCK
-------------------

Comtech Telecommunications Corp. is selling 2,300,000 shares of common
stock. Our common stock is traded on the Nasdaq National Market under the symbol
CMTL. On January 28, 2000, the closing sale price of our common stock was $16.50
per share.

INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE 'RISK FACTORS' BEGINNING ON PAGE 5.

<TABLE>
<CAPTION>
PER SHARE TOTAL
------------- -------------
<S> <C> <C>
Public offering price....................................... $ $
Underwriting discounts...................................... $ $
Proceeds, before expenses, to Comtech....................... $ $
</TABLE>

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Comtech has granted an option to the underwriters to purchase a maximum
345,000 shares of common stock from Comtech within 30 days following the date of
this prospectus to cover over-allotments.

The underwriters are severally underwriting the shares of common stock being
offered. The underwriters expect to deliver the shares to purchasers in New
York, New York on , 2000.

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

<TABLE>
<S> <C>
ABN AMRO ROTHSCHILD STIFEL, NICOLAUS & COMPANY
A DIVISION OF ABN AMRO INCORPORATED INCORPORATED
</TABLE>

HCFP/BRENNER SECURITIES, LLC

The date of this Prospectus is , 2000

<PAGE>

[The inside front cover of the prospectus contains a diagram outlining the
operations of our Mobile Data Communications Services Segment and its
applications. The diagram shows an arrow labeled 'Customer Access,' which points
to a box labeled 'Customer Support Segment.' This box is connected by a line
labeled 'Internet, Microwave or Satellite' to a box labeled 'Network Management
Segment.' This box is connected by a line to a drawing of an earth based
station, which is labeled 'COMTECH Gateway Earth Station.' A jagged line
connects this drawing to a drawing of a space based satellite, which is labeled
'Commercial L-Band/S-Band Space Segment.' Four lines, each with an arrow on each
end, emanate from this drawing. Each line points to one of four following
diagrams: a train engine (labeled 'Rail Car GPS'); a ship (labeled 'Marine
Navigation'); a truck (labeled 'Truck Tracking'); and an aircraft (labeled
'Search & Rescue Communications').]

Comtech's Mobile Data Communications Services business segment offers a
Web-enabled, satellite-based mobile data communications system that can provide
secure, near real-time two-way messaging links between mobile platforms, such as
land vehicles, rail and aircraft, or remotely placed fixed site sensors and
user headquarters through our Germantown, Maryland satellite earth station
gatewey.

Services range from simple asset location tracking, to messaging, e-mail,
broadcasting of information, security alerts and remote meter, gauge and other
sensor monitoring.

<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 5
Use of Proceeds............................................. 14
Price Range of Common Stock................................. 14
Dividend Policy............................................. 14
Capitalization.............................................. 15
Selected Consolidated Financial Data........................ 16
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 17
Business.................................................... 25
Management.................................................. 37
Certain Transactions........................................ 39
Beneficial Ownership of Securities.......................... 39
Description of Capital Stock................................ 41
Underwriting................................................ 45
Legal Matters............................................... 46
Experts..................................................... 46
Where You Can Find More Information......................... 46
Index to Consolidated Financial Statements.................. F-1
</TABLE>

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

CAUTION ABOUT FORWARD-LOOKING STATEMENTS

Certain statements in the 'Risk Factors' section and elsewhere in this
prospectus constitute 'forward-looking statements' within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. These forward-looking statements include:

Statements of goals, intentions and expectations;

Estimates of risks and of future costs and benefits;

Statements as to Year 2000 compliance; and

Statements of the ability to achieve financial and other goals.

These forward-looking statements are subject to significant uncertainties
because they are based upon or are affected by:

Management's estimates and projections of U.S. and international economic
and business conditions;

Statements by suppliers of data processing equipment and services,
government agencies and other third parties as to Year 2000 compliance and
costs;

Future laws and regulations; and

A variety of other matters, including those described under 'Risk Factors.'

Because of these uncertainties, the actual future results may be materially
different from the results indicated by these forward-looking statements. In
addition, our past results of operations do not necessarily indicate our future
results.

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

Unless the context otherwise indicates, the terms 'Comtech,' 'we,' 'us' and
'our' mean Comtech Telecommunications Corp., Comtech's subsidiaries and
Comtech's predecessor corporation. All share and per share information has been
adjusted to reflect the 3-for-2 stock split in the form of a stock dividend that
occurred in July 1999.

Our principal executive offices are located at 105 Baylis Road, Melville,
New York 11747. The headquarters' telephone number is (516) 777-8900.

At our annual meeting held December 14, 1999, the stockholders approved an
increase in the number of shares of common stock authorized from 15,000,000 to
30,000,000. They also approved the 2000 Stock Incentive Plan whereby an
additional 500,000 shares are reserved for issuance under such plan.

Except as otherwise noted, all information in this prospectus assumes no
exercise of the underwriters' over-allotment option.

<PAGE>
PROSPECTUS SUMMARY

This summary highlights information contained in other parts of this
prospectus. It is not complete and may not contain all of the information that
you should consider before deciding to invest in shares of our common stock. The
other information is important, so you should read the entire prospectus
carefully.

COMTECH

The demand for mobile data communications services and products has
increased dramatically in recent years for both commercial and government
applications. This demand has been driven by advances in digital technology
coupled with the need to better locate, manage, monitor and communicate with
mobile and fixed assets. Recognizing the potential of this market, we acquired
the assets of Mobile Datacom Corporation in 1998, forming a new subsidiary,
Comtech Mobile Datacom Corporation, a development-stage company. Through this
subsidiary, we have continued to develop and are marketing a Web-enabled,
satellite-based data communications system for land mobile, remote sensing,
utility, aviation and maritime markets.

We believe that our mobile data communications system offers significant
operational and cost advantages over competitive systems. Largely as a result of
these advantages, the U.S. Army awarded us a contract in June 1999 to provide a
global system for its Logistics Command for use in tracking its mobile assets
and communicating by message in near real-time with these units from fixed and
mobile command centers. The contract, which is subject to government funding and
deployment decisions based upon, among other things, additional field testing,
provides for the purchase of up to $418.2 million in mobile terminal units and
global data communications services over an eight-year period. In September
1999, we completed a validation test involving communicating between mobile
terminals in Germany and Texas over two satellite links, with the respective
ground stations interconnected via the Internet. An operational readiness
evaluation is scheduled to take place in March 2000. Due to the increased
visibility our system has achieved as a result of this contract, other agencies
of the Department of Defense, as well as a variety of other government agencies,
have shown an increased interest in the potential use of our system.

While we anticipate receiving our first significant order from the U.S. Army
in the second half of fiscal 2000, we have not yet received significant orders
from the U.S. Army or any other government agency under this contract, which can
be terminated at any time, and we cannot assure you that we will receive any
such orders.

We conduct our business through three decentralized but complementary
product and service segments: mobile data communications services,
telecommunications transmission and RF microwave amplifiers.

MOBILE DATA COMMUNICATIONS SERVICES -- secure, near real-time two-way
messaging between mobile platforms, such as land vehicles, rail and aircraft,
or remotely placed fixed site sensors and user headquarters through our
Germantown, Maryland satellite earth station gateway. The network will employ
leased satellite capacity to communicate between the mobile platforms and
user headquarters -- via satellite, terrestrial and Internet links. Depending
upon the end user's needs, our services can be configured to provide a wide
range of data applications,

<PAGE>
ranging from simple position tracking to messaging, e-mail, broadcasting of
information and meter, gauge and other sensor monitoring.

TELECOMMUNICATIONS TRANSMISSION -- modems, frequency up converters and down
converters, solid state, high-power amplifiers, very small aperture terminal
(VSAT) transceivers and antennas for satellite ground station applications,
and adaptive modems and microwave radios for over-the-horizon microwave
communications systems. Primary markets include satellite systems integrators
and communications services providers, defense contractors and oil companies.
Customers include Globecomm Systems, Inc., Hughes Network Systems, IDB
Worldcom Inc., DirecTV, ATT Alascom, Northrop Grumman, BP Amoco and Exxon.

RF MICROWAVE AMPLIFIERS -- solid state, high-power broadband amplifier
products in the microwave and radio frequency (RF) spectrums for a wide range
of applications, including cellular and wireless instrumentation testing, and
jamming and identification friend or foe (IFF) and other defense systems.
Target markets are communications service providers, cellular and PCS
telephony system manufacturers and defense contractors. Customers include
Motorola Inc., Ericsson Inc., Nokia Telecommunications, Inc., Lucent
Technologies Inc., Litton Systems Inc., Raytheon Systems Company, Lockheed
Martin Corp. and the U.S. government.

BUSINESS STRATEGIES

We manage our business with the following principal corporate strategies:

Operate on a decentralized basis to maximize responsiveness to
customers.

Continue product innovation through investment in research and
development.

Capitalize on synergies among our business segments to secure larger
contracts.

Pursue acquisitions and investments in complementary businesses,
technologies, products and services.

Specific operating strategies for our business segments include:

MOBILE DATA COMMUNICATIONS SERVICES.

Capture the opportunities available to supply the Logistics Command
under the U.S. Army contract.

Pursue identified opportunities to offer our products and services to
other government agencies.

Penetrate the emerging markets for commercial uses, particularly in the
land mobile and remote sensing markets.

TELECOMMUNICATIONS TRANSMISSION.

Continue broadening our line of satellite ground station products to
better serve our customers as a full-line supplier of video, as well as
data and voice, products.

Enhance our existing products to serve rapidly-developing markets
requiring higher speed and greater bandwidth, such as emerging
applications for wireless Internet access.

Maintain our market leadership in over-the-horizon microwave
technologies by broadening applications and increasing product
performance.

<PAGE>
RF MICROWAVE AMPLIFIERS.

Continue to incorporate the latest advances in solid state device
electronics.

Maintain our technical leadership in this product sector to encourage
system integrators and end users to outsource their requirements rather
than pursue this specialized field in-house.

Expand our product line to include PCS base station amplifiers.

Combine high-power amplifiers and solid state switches for advanced
communications jamming applications.

The demand for telecommunications is increasing worldwide as emerging
economies seek to modernize their infrastructure and as increasingly
information-intensive markets introduce new telecommunications services. The
telecommunications industry has expanded rapidly during the past decade due to
both technological advances and deregulation. Advances in technology have
lowered per-unit communications costs, increased product reliability and
encouraged a proliferation of new and enhanced communications products and
services.

We believe that the global expansion of telecommunications, particularly in
developing countries in Asia, South America, the Middle East and Eastern Europe,
represents a key opportunity for the continued growth of our telecommunications
business. Sales for use by international customers (including sales to prime
contractors' international customers) represented approximately 57.3%, 46.5%,
60.1% and 85.5% of our net sales in fiscal years 1997, 1998, 1999 and the three
months ended October 31, 1999, respectively.

THE OFFERING

The following information is based on 4,508,693 common shares outstanding at
January 31, 2000. This number does not include 1,365,378 shares reserved for
issuance under our equity incentive plans. Under these plans, options for
836,568 shares with a weighted average exercise price of $3.93 per share are
outstanding, of which options for 331,138 shares currently are exercisable. In
addition, we have outstanding warrants to purchase 150,000 shares with an
exercise price of $6.57 per share.

<TABLE>
<S> <C>
Common stock offered by Comtech...................... 2,300,000 shares
Common stock to be outstanding after the offering.... 6,808,693 shares
Use of proceeds...................................... We intend to use the net proceeds of
this offering principally for the
development and expansion of our mobile
data communications services business. A
portion of the proceeds will be used for
other corporate purposes, including
potential acquisitions and investments
in complementary businesses,
technologies, products or services.
Risk Factors......................................... For a discussion of certain risks you
should consider before investing in the
shares, see 'Risk Factors' beginning on
page 5.
Nasdaq National Market symbol........................ CMTL
</TABLE>

<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31, YEAR ENDED JULY 31,
-------------------- -----------------------------------------------
1999 1998 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:

Net sales..................................... $11,747 $ 8,735 $37,886 $30,114 $24,746 $20,916 $16,455

Operating income (loss)....................... 865 609 2,827 1,452 638 341 (1,335)

Income (loss) from continuing operations
before income taxes.......................... 860 578 2,727 1,284 538 99 (1,485)

Provision (benefit) for income taxes.......... 325 45 (3,754)(1) 180 54 27 17

Loss on discontinued operations, net of
applicable income tax benefits............... -- (139) (1,216) -- -- -- --
------- ------- ------- ------- ------- ------- -------

Net income (loss)............................. $ 535 $ 394 $ 5,265 $ 1,104 $ 484 $ 72 $(1,502)
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------

Basic income (loss) per share:

Income (loss) from continuing operations... $ 0.12 $ 0.14 $ 1.56 $ 0.28 $ 0.13 $ 0.02 $ (0.39)

Loss from discontinued operations.......... -- (0.04) (0.29) -- -- -- --
------- ------- ------- ------- ------- ------- -------

Basic income (loss)........................ $ 0.12 $ 0.10 $ 1.27 $ 0.28 $ 0.13 $ 0.02 $ (0.39)
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------

Diluted income (loss) per share:

Income (loss) from continuing operations... $ 0.11 $ 0.12 $ 1.42 $ 0.27 $ 0.12 $ 0.02 $ (0.39)

Loss from discontinued operations.......... -- (0.03) (0.27) -- -- -- --
------- ------- ------- ------- ------- ------- -------

Diluted income (loss)...................... $ 0.11 $ 0.09 $ 1.15 $ 0.27 $ 0.12 $ 0.02 $ (0.39)
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------

Weighted average number of common shares
outstanding -- basic computation............. 4,399 3,926 4,143 3,902 3,873 3,887 3,885

Weighted average number of common and common
equivalent shares outstanding assuming
dilution -- diluted computation.............. 5,082 4,271 4,573 4,166 3,906 3,992 3,885

OTHER OPERATING DATA:

Backlog at period-end......................... $36,178(2) $10,651 $38,637(2) $15,452 $14,724 $ 9,700 $10,242

New orders.................................... 9,288 3,934 61,071 30,842 29,770 20,374 21,694

Research and development -- internal and
customer funded.............................. 776 521 3,801 1,675 1,459 1,257 1,418
</TABLE>

<TABLE>
<CAPTION>
OCTOBER 31, 1999
------------------------
ACTUAL AS ADJUSTED(3)
------ --------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:

Working capital............................................. $11,316 $46,110

Total assets................................................ 29,915 64,709

Long-term debt, less current installments................... 825 825

Stockholders' equity........................................ 19,019 53,813
</TABLE>

- ---------

(1) In accordance with applicable accounting principles, during fiscal 1999 we
reduced our previous valuation reserve for deferred tax assets since we
believe that it is more likely than not that we will generate sufficient
taxable income to utilize our deferred tax assets.

(2) Includes $100 and $400 at July 31, 1999 and October 31, 1999, respectively,
of funded backlog relating to the U.S. Army contract, which was awarded in
June 1999.

(3) Gives effect to common stock to be offered by us in this offering and the
estimated net proceeds as described under 'Use of Proceeds.'

<PAGE>
RISK FACTORS

You should carefully consider the risks described below before deciding to
invest in our common stock. These risks could materially and adversely affect
our business, financial condition and results of future operations. If that were
to happen, the trading price of our common stock could decline, and you could
lose all or part of your investment.

The risks described below are not the only ones we face. Our business
operations could also be impaired by additional risks and uncertainties that are
not presently known to us, or that we currently consider immaterial.

ALL OF OUR BUSINESSES ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE; WE MUST KEEP
PACE WITH CHANGES TO COMPETE SUCCESSFULLY.

We are engaged in businesses characterized by rapid technological change,
evolving industry standards, frequent new product announcements and
enhancements, and changing customer demands. The introduction of products and
services embodying new technologies and the emergence of new industry standards
could render our products and services obsolete or non-competitive. The
technology used in our products and services evolves rapidly, and our business
position depends, in large part, on the continuous refinement of our scientific
and engineering expertise and the development, either through internal research
and development or acquisitions, of new or enhanced products and technologies.
We may not have the economic or technological resources to be successful in such
efforts and we may not be able to identify and respond to technological
improvements made by our competitors in a timely or cost-effective fashion. A
significant technological breakthrough by others, including smaller competitors
or new firms, could have a material adverse impact on our business.

OUR MOBILE DATA COMMUNICATIONS SERVICES BUSINESS IS SUBJECT TO RISK.

Our mobile data communications services business is a development-stage
business which has a limited operating history and has not yet generated any
material sales. It is subject to all of the risks inherent in the operation of a
new business enterprise. Moreover, our business experience has been in producing
products, not in providing services. We may not be able to implement and operate
our mobile data communications services business successfully. In addition to
the other risk factors described in this section, the risk factors applicable to
our mobile data communications services business include the following:

Although the U.S. Army contract obligates us to provide up to 56,000 mobile
terminals and worldwide satellite services over an eight-year period as and
when ordered by the U.S. Army and at the fixed prices and other terms set
forth in this contract, the U.S. Army is not obligated to purchase any
terminals or services under this contract and may terminate this contract
at its convenience. Sales under the U.S. Army contract will be subject to
unpredictable funding and deployment decisions and contingencies,
including, among other things, additional field testing. We currently
anticipate receiving our first production order under this contract during
the second half of fiscal 2000, but we cannot assure you that any orders
will be received.

Certain components that we need have a purchasing lead-time of four months
or longer, and the U.S. Army contract requires us to provide mobile
terminals within 30 days after we receive an order. As a result of these
supply and manufacturing lead-times, we anticipate spending approximately
$4.2 million for mobile terminal parts and assembly and supporting
infrastructures before we receive a significant order from the U.S. Army.

Our success in commercial markets will depend on, among other things, our
ability to access the best distribution channels, the development of
applications which create real value for the customer and our ability to
attract and retain qualified personnel. Delays in delivering terminals
could also adversely affect our ability to obtain and retain commercial
customers.

<PAGE>
In general, as we seek to grow our mobile data communications services
business, we anticipate that we will need to maintain a substantial
inventory in order to provide terminals to our customers on a timely basis.
If forecasted orders are not received, we might be left with large
inventories of slow moving or unusable parts or terminals. This could
result in an adverse effect on our business, results of operations,
liquidity and financial position.

We will lease the satellite capacity necessary to operate our system from
third party satellite networks. We do not currently have long-term leases
with any satellite network, but we are in negotiations with two satellite
network operators for long-term satellite coverage in North America,
Central America and the northern rim of South America, and expect to sign a
lease for such coverage when we receive material production orders from the
U.S. Army. Although we cannot assure you that the lease that we ultimately
enter into will be on the following terms, we expect that any lease will
have a duration of four to five years and provide for total lease payments
of $4.0 million to $5.0 million over the lease term, with the early monthly
fee payments being less than later payments, in recognition of our need to
sign up customers and generate revenue. We expect that any lease would
require us to pay a penalty of up to 12 months of fees if we terminate the
lease before the end of its term. While several vendors have announced
plans for new satellite systems, only one provider, INMARSAT, presently
offers the global coverage that will be required under the U.S. Army
contract. We cannot assure you that we will be able to obtain sufficient
satellite capacity or geographical coverage from any vendor to operate our
mobile data communications services system on acceptable terms or on a
timely basis.

There are several existing competitors in the mobile data communications
market that have established systems with sizable customer bases and much
greater financial resources than us. The largest of these competitors is
QUALCOMM Incorporated, which reported that, as of September 30, 1999, it
had sold more than 300,000 mobile terminals and provided messaging and
maintenance services to more than 850 transportation companies in the
United States. Orbcomm Global, L.P. has deployed a low earth orbit
satellite system for remote data communications services, including
tracking and messaging. Orbcomm's system has generated considerable
commercial interest. Existing competitors, including terrestrial service
providers such as PCS vendors, are also aggressively pricing their products
and services and may continue to do so in the future. Competitors continue
to offer new value added products and services, which we may be unable to
match on a timely or cost-effective basis. Increased competition may impact
margins throughout the industry. We anticipate that new competitors will
enter the mobile data communications market in the future.

We are currently operating our system under a temporary license from the
Federal Communications Commission ('FCC'). Although we expect to be able to
obtain a permanent license for commercial operations on a timely basis, we
can give you no assurance that we will be able to do so.

The satellite system we are currently using, the Canadian-based TMI
Communications' system, was authorized by the FCC in November 1999 to
provide mobile communications services to authorized users in the United
States. A competitor of TMI has filed notice of intent to challenge the
FCC's action in Federal court. We believe the challenge will be rejected by
the Court, but can give you no assurance as to the outcome. The FCC's
authorization also imposed certain technical limitations on mobile terminal
operations which will require us, as well as other data service providers,
to seek waivers to avoid the need for substantial changes to its existing
system. Based on FCC decisions on related matters involving a U.S. company
(the same company challenging the FCC's action with respect to TMI), we
expect that the FCC will grant waivers permitting mobile data services to
be offered without requiring extensive system changes. However, we can give
you no assurance that the FCC will grant such waivers, or do so on a timely
basis.

All satellite communications are subject to the risk that a satellite or
ground station failure or a natural disaster may interrupt service.
Interruptions in service could have a material adverse effect on our
results of operations. With respect to U.S. satellite service, satellite

<PAGE>
network providers have arranged to provide back-up satellite and ground
station service for each other in the event of catastrophic failure. We
expect to establish a redundant gateway communications center located
distant from our main Germantown facility during fiscal 2000 as our
business develops at an estimated cost of $250,000.

Our mobile terminals will be manufactured by subcontractors, the first of
which is SCI Systems, Inc. of Huntsville, Alabama, a large electronics
contract manufacturer. While we have successfully produced limited
quantities of terminals, we have not yet produced significant quantities of
terminals or complete assemblies (which include computers and palm top
input/output devices for user-customized applications) and we cannot assure
you that we will be able to obtain them on a timely or cost-effective
basis.

We believe that we own or have licensed all intellectual property rights
necessary for the operation of our mobile data communications services
business as currently contemplated. If our terminals or services are found
to infringe on protected technology, we could be required to redesign our
terminals, license the protected technology, and/or pay damages or other
compensation to the infringed party. If we are unable to license protected
technology used in our terminals or if we were required to redesign our
terminals, we could be prohibited from making and selling our terminals or
providing mobile data communications services.

DUE TO MANY FACTORS, INCLUDING THE AMOUNT OF BUSINESS REPRESENTED BY LARGE
CONTRACTS, OUR OPERATING RESULTS ARE DIFFICULT TO FORECAST AND MAY BE VOLATILE.

We have experienced, and will experience in the future, significant
fluctuations in sales and operating results from quarter to quarter. One reason
for this is that a significant portion of our business -- primarily the
over-the-horizon microwave systems and other products of our telecommunications
transmission business segment and a portion of our RF microwave amplifier
business segment -- is derived from a limited number of relatively large
customer contracts, the timing of which cannot be predicted. For example, sales
to one customer represented 58.2% of our total net sales in the three months
ended October 31, 1999. While we generally recognize income under contracts when
the products are shipped, income is recognized on the percentage-of-completion
method when the performance of a contract will extend beyond a 12-month period.
Our net sales and operating results also may vary significantly from period to
period because of the following factors: product mix sold; fluctuating market
demand; price competition; new product introductions by our competitors;
fluctuations in foreign currency exchange rates; unexpected changes in delivery
of components or subsystems; political instability; regulatory developments; and
general economic conditions. Accordingly, you should not rely on
period-to-period comparisons as indications of our future performance because
these comparisons may not be meaningful.

OUR DEPENDENCE ON INTERNATIONAL SALES MAY ADVERSELY AFFECT US.

Sales for use by international customers (including sales to prime
contractors' international customers) represented approximately 57.3%, 46.5%,
60.1% and 85.5% of our total net sales for the fiscal years ended July 31, 1997,
1998 and 1999 and the three months ended October 31, 1999, respectively.
Approximately 92.1% and 84.1% of our backlog at July 31, 1999 and October 31,
1999 consisted of orders for use by foreign customers. We expect that
international sales will continue to be a substantial portion of our total
sales. These sales expose us to certain risks, including barriers to trade,
fluctuations in foreign currency exchange rates (which may make our products
less price competitive), political and economic instability, availability of
suitable export financing, tariff regulations, and other U.S. and foreign
regulations that may apply to the export of our products, as well as the
potential impact of Year 2000 computer problems on developing economies and the
generally greater difficulties of doing business abroad. We attempt to reduce
the risk of doing business in foreign countries by seeking subcontracts with
large system suppliers, contracts denominated in U.S. dollars, advance payments
and irrevocable letters of credit in our favor.

<PAGE>
Foreign defense contracts generally contain provisions relating to
termination at the convenience of the government. In addition, certain of our
products and systems may require licenses from U.S. government agencies for
export from the United States, and some of our products are not permitted to be
exported. We cannot be sure of our ability to gain any licenses that may be
required to export our products, and failure to receive required licenses could
materially reduce our ability to sell our products outside the United States.

OUR DEPENDENCE ON COMPONENT AVAILABILITY, SUBCONTRACTOR AVAILABILITY AND
PERFORMANCE AND KEY SUPPLIERS MAY ADVERSELY AFFECT US.

We do not generally maintain a substantial inventory of components and
subsystems. We obtain certain components and subsystems from a single source or
a limited number of sources, but believe that most components and subsystems are
available from alternative suppliers and subcontractors. A significant
interruption in the delivery of such items, however, could have a material
adverse effect on our business and results of operations.

OUR BACKLOG IS SUBJECT TO CUSTOMER CANCELLATION OR MODIFICATION.

We currently have a backlog of orders, mostly under contracts that the
customer may modify or terminate. We cannot assure you that our backlog will
result in net sales.

OUR SALES TO THE U.S. GOVERNMENT ARE SUBJECT TO FUNDING AND OTHER RISKS.

We sell our products and services to agencies of the U.S. government or to
contractors or subcontractors under contracts with U.S. agencies. These sales
accounted for approximately, 17.0%, 19.5%, 15.6% and 3.7% of our total net sales
in fiscal 1997, 1998 and 1999 and the three months ended October 31, 1999,
respectively. As a result of our contract with the U.S. Army, we expect sales to
agencies of the U.S. government to increase significantly in the future. As is
customary for government sales, these sales are subject to various risks. These
risks include the ability of the U.S. government to:

change government policy which could reduce our business;

terminate existing contracts for its convenience; and

audit our contract-related costs and fees, including allocated indirect
costs.

A reduction in government agency budgets could cause us to experience
declining net sales, increased pressure on operating margins and, in certain
cases, net losses. The loss or significant cutback of a large program in which
we participate could also materially adversely affect our future results of
operations.

All of our U.S. government contracts can be terminated by the U.S.
government for its convenience. Termination for convenience provisions provide
only for our recovery of costs incurred or committed, settlement expenses and
profit on work completed prior to termination. In addition to the right of the
U.S. government to terminate, U.S. government contracts are conditioned upon the
continuing approval by Congress of the necessary spending. Congress usually
appropriates funds for a given program on a fiscal-year basis even though
contract performance may take more than one year. Consequently, at the beginning
of a major program, the contract is usually not fully funded, and additional
monies are normally committed to the contract only if, as and when
appropriations are made by Congress for future fiscal years.

The U.S. government may review our costs and performance on their contracts,
as well as our accounting and general business practices. Based on the results
of such audits, the U.S. government may adjust our contract-related costs and
fees, including allocated indirect costs. In addition, under U.S. government
purchasing regulations, some of our costs, including certain financing costs,
goodwill, portions of research and development costs, and certain marketing
expenses, may not be reimbursable under U.S. government contracts.

<PAGE>
We obtain U.S. government contracts through a competitive bidding process.
We cannot assure you that we will continue to win competitively awarded
contracts or that awarded contracts will generate sufficient net sales to result
in profitability.

ACQUISITIONS AND STRATEGIC INVESTMENTS MAY DIVERT OUR RESOURCES AND MANAGEMENT
ATTENTION; RESULTS MAY FALL SHORT OF EXPECTATIONS.

We intend to continue pursuing selected acquisitions of and investments in
businesses, technologies and product lines as a key component of our growth
strategy. Any future acquisition or investment may result in the use of
significant amounts of cash, potentially dilutive issuances of equity
securities, incurrence of debt and amortization expenses related to goodwill and
other intangible assets. Acquisitions involve numerous risks, including:

difficulties in the integration and assimilation of the operations,
technologies, products and personnel of an acquired business;

diversion of management's attention from other business concerns; and

potential loss of key employees or customers of any acquired business.

OUR FIXED PRICE CONTRACTS SUBJECT US TO RISK.

Almost all of our products and services are sold under fixed price
contracts. This means that we bear the risk if unanticipated technological,
manufacturing, supply or other problems or price increases delay or increase the
cost of performance.

OUR MANAGEMENT HAS BROAD DISCRETION IN USE OF PROCEEDS OF THIS OFFERING.

Our management may spend the proceeds from this offering in ways with which
our stockholders may not agree. We intend to use the net proceeds from the
offering primarily to continue the development and expansion of our mobile data
communications services business, including working capital, inventory build-up,
ongoing research and development, capital expenditures, additional personnel and
to build and/or acquire sales and marketing capability. We will use a portion of
the net proceeds of this offering for other corporate purposes, including
acquiring or investing in complementary businesses, technologies, services or
products, although we do not currently have any agreement, understanding or
commitment with respect to any material acquisition or investment.

OUR STOCKHOLDER RIGHTS PLAN, CERTIFICATE OF INCORPORATION AND DELAWARE LAW COULD
ADVERSELY AFFECT THE PERFORMANCE OF OUR STOCK.

Our certificate of incorporation includes provisions that stagger directors'
terms of office and require the approval of holders of at least 80% of our
voting stock as a condition to a merger or certain other business transactions
with, or proposed by, a holder of 10% or more of our voting stock (including the
approval of the holders of at least 66 2/3% of our voting stock not held by such
stockholder). This approval is not required in cases where certain of our
directors approve the transaction or where certain minimum price criteria and
other procedural requirements are met. Our certificate of incorporation also
requires the approvals of holders of at least 66 2/3% of our voting stock to
amend or change the provisions mentioned relating to the classified board or the
business transactions approval. Finally, our certificate of incorporation
provides that any action required or permitted to be taken by our stockholders
must be effected at a duly called annual or special meeting rather than by any
consent in writing.

The classified board, business transactions approval and other charter
provisions and provisions of Delaware law (the state in which we are
incorporated) may discourage certain types of transactions involving an actual
or potential change in our control. These provisions may also discourage certain
types of transactions in which our stockholders might otherwise receive a
premium for their shares over then current market prices and may limit our
stockholders' ability to approve transactions that they may deem to be in their
best interests.

<PAGE>
Further, we have distributed a dividend of one preferred stock purchase
right for each outstanding share of our common stock. Each newly issued share of
our common stock (including shares sold in this offering) will also be granted a
right. These rights would cause substantial dilution to the ownership of a
person or group that attempts to acquire us on terms not approved by our Board
of Directors and may have the effect of deterring hostile takeover attempts. In
addition, our Board of Directors has the authority to fix the rights and
preferences of and issue shares of preferred stock without stockholder approval.
This right may have the effect of delaying or preventing a change in control of
Comtech without action by our stockholders.

OUR MARKETS ARE HIGHLY COMPETITIVE.

The markets for our products are highly competitive. We cannot assure you
that we will be able to successfully compete or that our competitors will not
develop new technologies and products that are more commercially effective than
our own. We expect the Department of Defense's increased use of commercial
off-the-shelf products and components in military equipment will encourage new
competitors to enter the market. Also, although the implementation of advanced
telecommunications services is in its early stages in many developing countries,
we believe competition may intensify as businesses and foreign governments
realize the market potential of telecommunications services. Many of our
competitors have financial, technical, marketing, sales and distribution
resources greater than ours.

THE LOSS OF KEY TECHNICAL OR MANAGEMENT PERSONNEL COULD ADVERSELY AFFECT OUR
BUSINESS.

Our success depends on the continued contributions of key technical
management personnel, including the key management at each of our subsidiaries.
Many of our key personnel, particularly the key engineers of our subsidiaries,
would be difficult to replace, and are not subject to employment or
noncompetition agreements. The development of our mobile data communications
services business is particularly dependent upon Joel R. Alper, the President of
our Comtech Mobile Datacom Corp. subsidiary. The success of our Comtech Systems,
Inc. subsidiary is particularly dependent upon Richard L. Burt, its President.
Our growth and future success will depend in large part upon our ability to
attract and retain highly qualified engineering, sales and marketing personnel.
Competition for such personnel from other companies, academic institutions,
government entities and other organizations is intense. Although we believe that
we have been successful to date in recruiting and retaining key personnel, we
may not be successful in attracting and retaining the personnel we will need to
continue to grow and operate profitably. Also, the management skills that have
been appropriate for us in the past may not continue to be appropriate if we
continue to grow and diversify.

Our success also depends to a significant extent upon our President and
Chief Executive Officer, Fred Kornberg. The loss of the services of Mr. Kornberg
could have a material adverse effect on us. We have entered into an employment
contract with Mr. Kornberg. We have also purchased key man insurance in the
amount of $1.0 million on each of Fred Kornberg, Joel R. Alper and Richard L.
Burt.

THE POTENTIAL LOSS OF TAX CARRYFORWARDS MAY ADVERSELY AFFECT OUR FINANCIAL
RESULTS.

As a result of this offering, our ability to use our net operating loss
carryforwards, approximately $9.4 million for U.S. Federal income tax purposes
as of October 31, 1999, to offset U.S. Federal taxable income in the current and
future fiscal years might be materially limited. The sale of common stock in
this offering will increase the likelihood that future changes in stock
ownership (including changes resulting from the exercise of outstanding options
and warrants or future acquisitions) might limit our ability to use our net
operating loss carryforwards.

OUR FISCAL 1999 RESULTS WERE SIGNIFICANTLY IMPACTED BY THE REVERSAL OF NOL AND
OTHER DEFERRED TAX ASSET RESERVES.

Approximately $4.6 million of the $6.5 million of income from continuing
operations that we reported in fiscal 1999 was the result of the reversals of
valuation reserves that had been taken in

<PAGE>

prior years against our net operating loss carryforwards and other deferred tax
assets. The net income from such reversals was recognized in full in the second
and fourth quarters of fiscal 1999, and these non-recurring events may adversely
affect comparisons between our financial results for such period and future
fiscal quarters and years. We do not currently believe, however, that any
potential limitation on our ability to use our net operating loss carryforwards
as a result of changes in stock ownership would require us to establish
valuation reserves against our deferred tax assets. See 'Management's Discussion
and Analysis of Financial Condition and Results of Operations.'

OUR OUTSTANDING AND FUTURE OPTIONS AND WARRANTS MAY DILUTE THE PERCENTAGE OF
OWNERSHIP INTEREST OF OUR STOCKHOLDERS AND MAY ADVERSELY AFFECT THE TERMS UPON
WHICH WE OBTAIN CAPITAL.

As of January 31, 2000, options to purchase an aggregate of 836,568 shares
of our stock at a weighted average price of $3.93 per share were outstanding, of
which options for 331,138 shares were exercisable. These options were granted to
key employees under our equity incentive plans as part of our long-term
incentive compensation strategy to attract, retain and incentivize highly
qualified employees. A total of approximately 1,365,378 shares of our stock are
reserved for issuance under our equity incentive plans, including the shares
subject to these outstanding options. In addition, there are outstanding
warrants to purchase an aggregate of 150,000 shares of our stock at an exercise
price of $6.57 per share.

These options and warrants constitute opportunities to profit from a rise in
the market price of our securities without assuming the risk of ownership, with
a resulting dilution in the interest of other security holders. As long as these
options and warrants remain unexercised, the terms under which we could obtain
capital may be adversely affected. Moreover, the holders of these options and
warrants would be expected to exercise them at a time when we would, in all
likelihood, be able to obtain any needed capital by a new offering of our
securities on terms more favorable than those provided by such options and
warrants.

SALES OF SUBSTANTIAL AMOUNTS OF OUR COMMON STOCK AFTER THIS OFFERING COULD
DECREASE OUR STOCK PRICE AND OUR ABILITY TO RAISE CAPITAL.

Sales of a large number of shares of our common stock (including shares
issuable upon the exercise of the stock options and warrants described in the
preceding risk factor) by current holders of our common stock, stock options,
and warrants, or the perception that such sales might occur, could decrease the
market price of our common stock and our ability to raise capital. As of
January 31, 2000, our directors and executive officers owned, in the aggregate,
508,735 outstanding shares and options to purchase an additional 250,938 shares
that were either currently exercisable or would become exercisable within
60 days.

Our executive officers and directors have agreed to a 180-day 'lock-up' with
respect to the shares of common stock and any other Comtech securities that they
beneficially own or have the right to acquire upon exercise of options. We have
agreed with the underwriters to a 180-day 'lock-up' with respect to previously
unissued or treasury shares. This means that, with certain exceptions, during
the 'lock-up' periods, Comtech and these officers and directors may not offer,
sell, pledge or otherwise dispose of our common stock without the prior written
consent of ABN AMRO Incorporated.

PROTECTION OF OUR INTELLECTUAL PROPERTY IS LIMITED; WE ARE SUBJECT TO THE RISK
OF THIRD PARTY CLAIMS OF INFRINGEMENT.

Our businesses rely in large part upon our proprietary scientific and
engineering 'know-how' and production techniques. Historically, patents have not
been an important part of our protection of our intellectual property rights. We
rely upon the laws of unfair competition, restrictions in licensing agreements
and confidentiality agreements to protect our intellectual property. We limit
access to and distribution of our proprietary information. These efforts allow
us to rely upon the knowledge and experience of our management and technical
personnel to market our existing products and to develop new products. The
departure of any of our key management and

<PAGE>
technical personnel, the breach of their confidentiality and non-disclosure
obligations to us or the failure to achieve our intellectual property objectives
may have a material adverse effect on our business, financial condition and
results of operations.

Our ability to compete successfully and achieve future revenue growth will
depend, in part, on our ability to protect our proprietary technology and
operate without infringing upon the rights of others. We may fail to do so. In
addition, the laws of certain countries in which our products are or may be sold
may not protect our products and intellectual property rights to the same extent
as the laws of the United States.

OUR OPERATIONS ARE SUBJECT TO ENVIRONMENTAL REGULATION.

We are subject to a variety of local, state and federal governmental
regulations relating to the storage, discharge, handling, emission, generation,
manufacture and disposal of toxic or other hazardous substances used to
manufacture our products, particularly in the fabrication of fiberglass antennas
by our Comtech Antenna Systems, Inc. subsidiary. We believe that we are
currently in compliance in all material respects with such regulations and that
we have obtained all necessary environmental permits to conduct our business.
Nevertheless, the failure to comply with current or future regulations could
result in the imposition of substantial fines, suspension of production,
alteration of our manufacturing processes or cessation of operations that could
materially adversely affect our business, financial condition and results of
operations.

OUR BUSINESS MAY BE HARMED BY YEAR 2000 ISSUES.

We believe that our mission critical systems and products are Year 2000
compliant and, to date, we have not experienced any problems associated with our
products, systems or non-compliance by third parties whose systems or operations
could impact us. However, we may be adversely affected in the future. Specific
factors leading to this uncertainty include failure to identify any problems
associated with our products or our internal systems, or non-compliance by third
parties whose systems and operations impact us, and other similar uncertainties.
A worst case scenario might include one or more of our products, internal
systems, suppliers or customers being non-compliant. An event such as this could
result in a material disruption to our operations. Specifically, we could
experience problems associated with producing and delivering our products or
services or failures of software applications, computer networks, manufacturing
equipment and telephone communication systems. Supply chain and product
non-compliance could result in our failure to perform on contracts, delayed
delivery of products to customers and inadequate customer service. Customer
non-compliance could result in delayed payments for products and services and
build up of inventories. Should a worst case scenario occur, it could, depending
on its duration, have a material impact on our business, results of operations,
liquidity and financial condition.

Certain experts who have studied the issue have published reports indicating
that the Year 2000 problem could be substantially more severe in developing
economies than in the United States. A significant amount of our sales are for
customers in developing countries. Accordingly, the Year 2000 problem could have
a disproportionate effect on our business compared to other companies with less
international sales.

OUR STOCK PRICE IS VOLATILE.

The stock market in general, and the stock prices of technology-based
companies in particular, have experienced extreme volatility that often has been
unrelated to the operating performance of any specific public companies. The
market price of our common stock has fluctuated significantly in the past and is
likely to fluctuate significantly in the future as well. Factors that may have
significant impact on the market price of our stock include:

future announcements concerning us or our competitors;

receipt or non-receipt of substantial orders for products and services;

results of technological innovations;

<PAGE>
new commercial products;

changes in recommendations of securities analysts;

government regulations;

proprietary rights or product or patent litigation;

changes in market conditions generally, particularly in the market for
small cap stocks; and

limited public float.

Shortfalls in our revenues or earnings in any given period relative to the
levels expected by securities analysts could immediately, significantly and
adversely affect the trading price of our common stock.

WE HAVE NEVER DECLARED OR PAID DIVIDENDS.

We have never declared or paid a cash dividend and do not intend to declare
any cash dividends on our common stock in the foreseeable future.

<PAGE>
USE OF PROCEEDS

The net proceeds to us from the sale of the 2,300,000 shares of common stock
being sold in this offering are estimated to be approximately $34.8 million
($40.1 million if the underwriters' over-allotment option is exercised in full).
Our estimate is based on an assumed public offering price of $16.50 per share
(the closing sales price of our stock on the Nasdaq Stock Market on January 28,
2000), and reflects the deduction of the underwriters' discount and estimated
offering expenses.

We intend to use the net proceeds primarily to continue the development and
expansion of our mobile data communications services business, including working
capital, inventory build-up, ongoing research and development, capital
expenditures, additional personnel and to build and/or acquire sales and
marketing capability. We intend to use a portion of the net proceeds of this
offering for other corporate purposes, including acquiring and investing in
complementary businesses, technologies, services or products, although we do not
currently have any agreement, understanding or commitment with respect to any
material acquisition or investment.

As of the date of this prospectus, we cannot specify with certainty the
particular uses for the net proceeds to be received from this offering.
Accordingly, our management will have broad discretion in the application of the
net proceeds. Pending use, the net proceeds will be primarily invested in
short-term, investment grade, interest-bearing securities.

PRICE RANGE OF COMMON STOCK

The following table shows for the periods indicated the high and low sales
prices of our common stock as reported by the Nasdaq National Market. Such
prices do not include retail markups, markdowns, or commissions.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED HIGH LOW
- ----------------- ---- ---
<S> <C> <C>
July 31, 1998:
First Quarter........................................... $ 3.42 $ 2.17
Second Quarter.......................................... 3.75 2.79
Third Quarter........................................... 6.83 2.85
Fourth Quarter.......................................... 7.50 3.96
July 31, 1999:
First Quarter........................................... 6.50 3.33
Second Quarter.......................................... 6.50 4.33
Third Quarter........................................... 5.92 3.83
Fourth Quarter.......................................... 18.67 5.25
July 31, 2000:
First Quarter........................................... 14.56 8.00
Second Quarter (through January 28, 2000)............... 29.50 14.13
</TABLE>

Our common stock is listed on the Nasdaq National Market under the symbol
'CMTL.' The closing sales price of our common stock on January 28, 2000 was
$16.50 per share.

DIVIDEND POLICY

We have never paid cash dividends on our common stock and we intend to
continue this policy for the foreseeable future. We expect to use earnings to
finance the development and expansion of our business. Our Board of Directors
reviews our dividend policy periodically. The payment of dividends in the future
will depend upon our earnings, capital requirements, financial condition and
other factors considered relevant by our Board of Directors.

<PAGE>
CAPITALIZATION

The following table sets forth our actual capitalization as of October 31,
1999 and as adjusted to reflect the sale of 2,300,000 shares of common stock
offered by us in this offering and the application of the estimated net proceeds
as described under 'Use of Proceeds.' This table should be read in conjunction
with 'Management's Discussion and Analysis of Financial Condition and Results of
Operations,' our Consolidated Financial Statements and related notes included
elsewhere in this prospectus.

<TABLE>
<CAPTION>
OCTOBER 31, 1999
----------------------
AS
ACTUAL ADJUSTED
------ --------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, less current installments................... $ 825 $ 825
------- -------
Stockholders' equity:
Preferred stock, par value $.10 per share; authorized
and unissued -- 2,000,000............................. -- --
Common stock, par value $.10 per share; authorized
15,000,000 shares; 4,496,741 shares issued and
6,796,741 shares issued as adjusted(1)................ 450 680
Additional paid-in capital.............................. 23,866 58,430
Accumulated deficit..................................... (4,211) (4,211)
------- -------
20,105 54,899
Less: treasury stock (82,500 shares).................... (184) (184)
Deferred compensation............................... (902) (902)
------- -------
Total stockholders' equity............................ 19,019 53,813
------- -------
Total capitalization................................ $19,844 $54,638
------- -------
------- -------
</TABLE>

- ---------

(1) Does not include an aggregate 1,365,378 shares reserved for issuance under
our equity incentive plans as of January 31, 2000 (836,568 of which shares
are subject to outstanding options with a weighted average exercise price of
$3.93, per share, of which options for 331,138 shares are exercisable), and
150,000 shares subject to outstanding warrants with an exercise price of
$6.57 per share.

<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following table shows selected consolidated financial data for Comtech.
You should read it in conjunction with the financial information and other
information provided in this prospectus. Detailed financial information is
included in audited consolidated balance sheets as of July 31, 1999 and 1998 and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended July 31, 1999 and the
unaudited consolidated interim balance sheet as of October 31, 1999 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the three-month periods ended October 31, 1999 and 1998 (page F-1).
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
OCTOBER 31, YEAR ENDED JULY 31,
------------------ ------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales............................................. $11,747 $ 8,735 $37,886 $30,114 $24,746 $20,916 $16,455
Cost of sales......................................... 8,406 6,008 26,405 21,330 17,670 14,819 12,096
------- ------- ------- ------- ------- ------- -------
Gross profit.......................................... 3,341 2,727 11,481 8,784 7,076 6,097 4,359
Expenses:
Selling, general and administrative................ 1,946 1,640 6,632 6,013 5,415 5,015 4,658
Research and development........................... 530 478 2,022 1,319 1,023 741 1,036
------- ------- ------- ------- ------- ------- -------
2,476 2,118 8,654 7,332 6,438 5,756 5,694
------- ------- ------- ------- ------- ------- -------
Operating income (loss)............................... 865 609 2,827 1,452 638 341 (1,335)
Other expenses (income):
Interest expense................................... 37 52 204 234 284 302 341
Interest income.................................... (32) (19) (65) (36) (33) (60) (171)
Other income....................................... -- (2) (39) (30) (151) -- (20)
------- ------- ------- ------- ------- ------- -------
Income (loss) from continuing operations before income
taxes................................................ 860 578 2,727 1,284 538 99 (1,485)
Provision (benefit) for income taxes.................. 325 45 (3,754)(1) 180 54 27 17
------- ------- ------- ------- ------- ------- -------
Income (loss) from continuing operations.............. 535 533 6,481 1,104 484 72 (1,502)
Discontinued operations:
Loss from operations of discontinued business (net
of applicable income tax benefit of $320 for
fiscal 1999)...................................... -- (139) (622) -- -- -- --
Loss on disposal of discontinued business,
including provision of $430 for operating losses
during phase-out period (net of income tax benefit
of $306).......................................... -- -- (594) -- -- -- --
------- ------- ------- ------- ------- ------- -------
Net income (loss)..................................... $ 535 $ 394 $ 5,265 $ 1,104 $ 484 $ 72 $(1,502)
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Basic income (loss) per share:
Income (loss) from continuing operations........... $ 0.12 $ 0.14 $ 1.56 $ 0.28 $ 0.13 $ 0.02 $ (0.39)
Loss from discontinued operations.................. -- (0.04) (0.29) -- -- -- --
------- ------- ------- ------- ------- ------- -------
Basic income (loss)................................ $ 0.12 $ 0.10 $ 1.27 $ 0.28 $ 0.13 $ 0.02 $ (0.39)
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Diluted income (loss) per share:
Income (loss) from continuing operations........... $ 0.11 $ 0.12 $ 1.42 $ 0.27 $ 0.12 $ 0.02 $ (0.39)
Loss from discontinued operations.................. -- (0.03) (0.27) -- -- -- --
------- ------- ------- ------- ------- ------- -------
Diluted income (loss).............................. $ 0.11 $ 0.09 $ 1.15 $ 0.27 $ 0.12 $ 0.02 $ (0.39)
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Weighted average number of common shares
outstanding -- basic computation..................... 4,399 3,926 4,143 3,902 3,873 3,887 3,885
Potential dilutive common shares...................... 683 345 430 264 33 105 --
------- ------- ------- ------- ------- ------- -------
Weighted average number of common and common
equivalent shares outstanding assuming dilution --
diluted computation................................ 5,082 4,271 4,573 4,166 3,906 3,992 3,885

OTHER CONSOLIDATED OPERATING DATA:
Backlog at period-end................................. $36,178(2) $10,651 $38,637(2) $15,452 $14,724 $ 9,700 $10,242
New orders............................................ 9,288 3,934 61,071 30,842 29,770 20,374 21,494
Research and development -- internal and customer
funded............................................... 776 521 3,801 1,675 1,459 1,257 1,418
</TABLE>

<TABLE>
<CAPTION>
JULY 31,
OCTOBER 31, -----------------------------------------------
1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Total assets............................................... $29,915 $29,847 $19,710 $17,960 $16,629 $16,783
Working capital............................................ 11,316 10,192 8,917 7,930 7,797 7,681
Long-term debt, less current installments.................. 825 959 1,445 1,310 1,875 2,277
Stockholders' equity....................................... 19,019 18,357 12,093 10,878 10,301 10,081
</TABLE>

- ---------

(1) In accordance with applicable accounting principles, we reduced our previous
valuation reserve for deferred tax assets since we believe that it is more
likely than not that we will generate sufficient taxable income to utilize
these deferred tax assets.

(2) Includes $100 and $400 at July 31, 1999 and October 31, 1999, respectively,
of funded backlog relating to the U.S. Army contract, which was awarded in
June 1999.

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Our business consists of three segments: mobile data communications
services, a development-stage business; telecommunications transmission; and RF
microwave amplifiers. We began reporting financial results on a segment basis in
fiscal 1999. While currently not material, our sales of mobile data
communications services are expected to increase substantially if, when and as
orders are received under our contract with the U.S. Army and we penetrate other
government and commercial markets for these services.

Our sales are made to domestic and international customers, both commercial
and governmental. International sales (including sales to prime contractors'
international customers) are expected to increase in the foreseeable future due
to the growing worldwide demand for wireless and satellite telecommunications
and our expanded line of product offerings to meet these demands.

A substantial portion of our sales is derived from a limited number of
relatively large customer contracts, the timing of which cannot be predicted.
Quarterly sales and operating results may be significantly affected by one or
more of such contracts. For example, sales to one customer in the quarter ended
October 31, 1999 accounted for 58.2% of total net sales and sales to two
different customers in the quarter ended October 31, 1998 amounted to 29.6% of
total net sales. Accordingly, we experience significant fluctuations in sales
and operating results from quarter to quarter and, because our backlog is
comprised in large part of a small number of large contracts, we expect such
fluctuations to continue in the future.

Sales consist of stand-alone products and systems. For the past five years
we have endeavored to achieve greater product sales as a percentage of total
sales, because product sales generally have higher gross profit margins than
systems sales. In the future, as our installed base of mobile data
communications terminals is established, we expect an increasing amount of our
sales will be attributable to the recurring revenue component of our mobile data
communications services segment.

We generally recognize income under contracts only when the products are
shipped. However, when the performance of a contract will extend beyond a
12-month period, income is recognized on the percentage-of-completion method.

Our gross profit is affected by a variety of factors, including the mix of
products, systems and equipment sold, production efficiency and price
competition.

Selling, general and administrative expenses consist primarily of salaries
and benefits for marketing, sales and administrative employees, advertising and
trade show costs, professional fees and amortization of deferred compensation.
Deferred compensation consists of restricted stock awards granted to certain
operating management personnel. Under these grants, the employees purchased
shares of our common stock at prices representing a discount to the then market
value. The shares vest ten years after issuance, subject to earlier vesting upon
achievement of certain operating unit performance goals.

Our research and development expenses relate to both existing product
enhancement and new product development. A portion of our research and
development efforts is related to specific contracts and is recoverable under
those contracts because they are funded by the customers. Such

<PAGE>
customer-funded expenditures are not included in research and development
expenses for financial reporting purposes but are reflected in cost of sales.

As of the end of fiscal 1998, we had a 100% valuation allowance against our
gross deferred tax assets. During fiscal 1999, based on our assessment of the
recoverability of the deferred tax assets, we concluded that a full valuation
allowance was no longer necessary given our estimates of future earnings and the
expected timing of temporary difference reversals. Accordingly, we reduced the
valuation allowance to $777,000 and recorded a corresponding one-time $4.6
million benefit for income taxes in fiscal 1999.

In the first quarter of fiscal 1999, we acquired the assets and assumed
certain liabilities of two businesses through newly formed, wholly-owned
subsidiaries: Comtech Mobile Datacom Corp., our mobile data communications
services business; and Comtech Wireless, Inc., our wireless local loop business.
Both acquisitions were accounted for using the purchase method of accounting.
The goodwill resulting from the purchase of the mobile data communications
services business (i.e., the excess of the purchase price over the fair value of
the net assets acquired and liabilities assumed) is being amortized over a
20-year period. In June 1999, the U.S. Army awarded Comtech Mobile Datacom Corp.
a contract which, subject to, among other things, government funding and
deployment decisions and additional field testing, provides for the purchase of
up to $418.2 million in mobile terminal units and global data communications
services over an eight-year period. Although sales will be dependent upon annual
government funding and deployment decisions, we anticipate sales under this
contract in the second half of fiscal 2000. Sales by our mobile data
communications services segment in fiscal 1999 and the three months ended
October 31, 1999 were approximately $318,000 and $145,000, respectively.

Comtech Wireless, Inc. designs and manufactures wireless local loop systems
for the rural and remote telephony market. Due to disappointing results and
uncertain prospects, effective July 31, 1999, we adopted a plan to liquidate
Comtech Wireless, Inc. by January 31, 2000. The results of operations for the
segment have been shown as a discontinued operation in the consolidated
financial statements. Comtech Wireless, Inc. did not have any sales in fiscal
1999 and in the three months ended October 31, 1999.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain income
and expense items expressed as a percentage of our net sales:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31, YEAR ENDED JULY 31,
------------------ -------------------------------
1999 1998 1999 1998 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales............................... 100.0% 100.0% 100.0% 100.0% 100.0%
Gross margin............................ 28.4 31.2 30.3 29.2 28.6
Selling, general and administrative
expenses.............................. 16.6 18.8 17.5 20.0 21.9
Research and development expenses....... 4.5 5.5 5.3 4.4 4.1
Operating income from continuing
operations............................ 7.4 7.0 7.5 4.8 2.6
Interest expense, net................... 0.0 0.4 0.4 0.7 1.0
Income before income taxes.............. 7.3 6.6 7.2 4.3 2.2
Net income.............................. 4.6 4.5 13.9 3.7 2.0
</TABLE>

The following table sets forth the percentage change in certain of our
income and expense items from fiscal 1997 to 1998, 1998 to 1999 and the three
months ended October 31, 1998 to the three months ended October 31, 1999,
respectively:

<PAGE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31, YEAR ENDED JULY 31,
------------------ -----------------------
% CHANGE % CHANGE % CHANGE
FROM 1998 FROM 1998 FROM 1997
TO 1999 TO 1999 TO 1998
--------- --------- ---------
<S> <C> <C> <C>
Net sales....................................... 34.5% 25.8% 21.7%
Gross profit.................................... 22.5 30.7 24.1
Selling, general and administrative expenses.... 18.7 10.3 11.0
Research and development expenses............... 10.9 53.3 28.9
Operating income from continuing operations..... 42.0 94.7 127.6
Interest expense, net........................... (84.8) (29.8) (21.1)
Income before income taxes...................... 48.8 112.4 138.7
Net income...................................... 35.8 376.9 128.1
</TABLE>

COMPARISON OF THREE MONTHS ENDED OCTOBER 31, 1999 AND OCTOBER 31, 1998

NET SALES Consolidated net sales were $11.7 million and $8.7 million for the
three months ended October 31, 1999 and 1998, respectively, representing an
increase of $3.0 million or 34.5%. This increase was primarily due to increased
sales by our telecommunications transmission segment of over-the-horizon
microwave equipment principally to one customer, a major U.S. prime contractor,
partly offset by lower sales at our RF microwave amplifier segment.
International sales increased by approximately $6.0 million or 148.7%,
representing 85.5% and 46.2% of total net sales for the three months ended
October 31, 1999 and 1998, respectively. Domestic sales decreased by $1.5
million or 53.4%, representing 10.8% and 31.2% of total net sales for the three
months ended October 31, 1999 and 1998, respectively. U.S. government sales
decreased by $1.5 million or 78.2%, representing 3.7% and 22.5% of total net
sales for the three months ended October 31, 1999 and 1998, respectively.

GROSS PROFIT Gross profit was $3.3 million and $2.7 million for three months
ended October 31, 1999 and 1998, respectively, representing an increase of
$614,000 or 22.5%. This increase was due primarily to the increase in sales
volume. Gross margin as a percentage of net sales, was 28.4% and 31.1% in the
three months ended October 31, 1999 and 1998, respectively. The lower gross
margin in the 1999 period was due primarily to the changes in the product mix
compared to the prior year period.

SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative
expenses were $1.9 million and $1.6 million for the three months ended October
31, 1999 and 1998, respectively, representing an increase of $306,000 or 18.7%.
This increase was due primarily to the additional expenses required to support
the increased sales volume, including additional personnel, sales commissions,
deferred compensation and other administrative expenses. As a percentage of
sales, these expenses were 16.6% and 18.8% in the three months ended
October 31, 1999 and 1998, respectively. In addition, the increased expenditures
reflected those required by our mobile data communications services segment.

RESEARCH AND DEVELOPMENT Research and development expenses were $530,000 and
$478,000 for the three months ended October 31, 1999 and 1998, respectively,
representing an increase of $52,000 or 10.9%. This increase was due to
continuing development of new products and technologies and general product
enhancement. Whenever possible, we seek customer funding for research and
development to adapt our products to specialized customer requirements. During
the three months ended October 31, 1999 and 1998, customers reimbursed us
$246,000 and $43,000, respectively, which amounts are not reflected in the
reported research and development expenses.

OPERATING INCOME As a result of the foregoing factors, we had operating
income from continuing operations of $865,000 in the three months ended October
31, 1999, compared to $609,000 in the prior year period, representing an
increase of $256,000 or 42.0%.

INTEREST EXPENSE Interest expense was $37,000 and $52,000 for the three
months ended October 31, 1999 and 1998, respectively, representing a decrease of
$15,000 or 28.8%. Interest expense for both periods was substantially due to
interest associated with our capital lease obligations.

<PAGE>
INTEREST INCOME Interest income was $32,000 and $19,000 for the three months
ended October 31, 1999 and 1998, respectively, representing an increase of
$13,000 or 68.4%. This increase was due primarily to the increase in the amount
of cash available to invest during this period. Interest income was primarily
derived from the cash on hand in excess of working capital requirements that is
invested in highly liquid, short-term money-market funds and commercial paper.

PROVISION FOR INCOME TAXES The provision for income taxes was $325,000 and
$45,000 for the three months ended October 31, 1999 and 1998, respectively. The
income tax provision for the three-month period of 1999 reflects an approximate
38% tax rate while the provision for the three-month period of 1998 reflects an
effective tax rate of approximately 8%. In the three months ended October 31,
1998, the Company utilized available Federal net operating loss carryforwards to
offset taxable income which were not previously recorded as a deferred tax
asset. The deferred tax assets associated with such carryforwards were
recognized by July 31, 1999.

COMPARISON OF FISCAL 1999 AND 1998

NET SALES Consolidated net sales were $37.9 million and $30.1 million for
fiscal 1999 and 1998, respectively, representing an increase of $7.8 million or
25.8%. This increase was due primarily to increased sales by our
telecommunications transmission segment of over-the-horizon microwave equipment,
principally to one customer, a major U.S. prime contractor. Total sales to this
customer during fiscal 1999 were approximately $10.2 million, representing 27.0%
of the total net sales. The total order received from this customer in fiscal
1999 was approximately $43.6 million and the contract balance of approximately
$33.3 million at July 31, 1999 is expected to be recognized as revenue in fiscal
2000 and 2001. There were no other customers for which total sales in fiscal
1999 represented 10.0% or more of net sales. In fiscal 1998, sales to a
different customer represented 12.2% of total net sales. Included in the
telecommunications transmission segment are sales of our satellite equipment
products, which increased in fiscal 1999 by approximately 65.8%, due to
additional product offerings. Sales from our RF microwave amplifier segment
declined by approximately 14.9% compared to fiscal 1998, due to the timing of
receipt of follow on orders. International sales increased by approximately $8.8
million, or 62.7%, representing 60.1% and 46.5% of total net sales for fiscal
1999 and 1998, respectively. Domestic sales decreased by $1.0 million, or 9.9%,
representing 24.3% and 34.0% of total net sales for fiscal 1999 and 1998,
respectively. U.S. government sales increased by $20,000 or 0.3%, representing
15.6% and 19.5% of total net sales for fiscal 1999 and 1998, respectively.

GROSS PROFIT Gross profit was $11.5 million and $8.8 million for fiscal 1999
and 1998, respectively, representing an increase of $2.7 million or 30.7%. The
increase was due primarily to the increase in sales volume in fiscal 1999
compared to fiscal 1998. Gross profit as a percentage of net sales was 30.3% and
29.2% in fiscal 1999 and 1998, respectively, due primarily to increased sales of
products coupled with lower per unit costs.

SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative
expenses were $6.6 million and $6.0 million in the fiscal 1999 and 1998,
respectively, representing an increase of $619,000 or 10.3%. This was due
primarily to higher sales commissions, marketing personnel expenses, deferred
compensation and other administrative expenses. As a percentage of net sales,
these expenses were 17.5% and 20.0% in fiscal 1999 and 1998, respectively.
Although increased expenses were required to support the higher sales volume in
fiscal 1999 compared to fiscal 1998, these expenses increased at a lower rate
than the increase in sales. In addition, the increased expenditures reflect
those required by our mobile data communications services segment, which was
acquired in fiscal 1999.

RESEARCH AND DEVELOPMENT Research and development expenses were $2.0 million
and $1.3 million in fiscal 1999 and 1998, respectively, representing an increase
of $703,000 or 53.3%. We are continually enhancing and developing new products
and technologies. In fiscal 1999, the research and development expenses were
primarily for developing additional satellite product offerings and redesigning
components of over-the-horizon microwave products. Whenever possible, we seek
customer funding for research and development to adapt our products to
specialized customer

<PAGE>
requirements. During fiscal 1999 and 1998, we were reimbursed $1.8 million and
$356,000, respectively. These amounts are not reflected in the reported research
and development expenses.

OPERATING INCOME As a result of the foregoing factors, we had operating
income from continuing operations of $2.8 million and $1.5 million in fiscal
1999 and 1998, respectively, representing an increase of $1.4 million or 94.7%.

INTEREST EXPENSE Interest expense was $204,000 and $234,000 for fiscal 1999
and 1998, respectively, representing a decrease of $30,000 or 12.8%. Interest
expense in both years was due primarily to interest associated with our capital
lease obligations.

INTEREST INCOME Interest income was $65,000 and $36,000 for fiscal 1999 and
1998, respectively, representing an increase of $29,000 or 80.6%. The increase
was due primarily to the increase in the amount of cash available to invest in
fiscal 1999 as compared to fiscal 1998. Interest income was primarily derived
from the cash on hand in excess of working capital requirements that is invested
in highly liquid, short-term money-market funds consisting primarily of direct
obligations of the U.S. government.

INCOME TAXES The benefit for income taxes applicable to continuing
operations in fiscal 1999 was $3.8 million compared to the provision for income
taxes of $180,000 in fiscal 1998. Due to our net operating loss carryforwards
and other temporary differences between recognition of income for financial
reporting and income tax purposes, we had deferred tax assets of $5.4 million
and $5.3 million at the end of fiscal 1999 and 1998, respectively. As of July
31, 1998, we had assessed a 100% valuation allowance against this deferred tax
asset. During fiscal 1999, we concluded that a full valuation allowance was no
longer necessary given our estimates of future earnings based on substantial new
contracts entered into and the expected timing of temporary difference
reversals. Accordingly, we reduced the valuation allowance to $777,000 during
fiscal 1999. The effect of this change resulted in a tax benefit in fiscal 1999
of $4.6 million, which was partially offset by the provision for the current
year's income tax expense.

DISCONTINUED OPERATIONS We adopted a plan, effective as of July 31, 1999, to
liquidate our wireless local loop business. The loss from operations, net of a
tax benefit, for fiscal 1999, was $622,000. The loss on the disposition of the
segment, net of tax benefit, was $594,000, which includes a provision of
$430,000 for operating losses expected to be incurred during the phase-out
period. The liquidation is expected to be completed by January 31, 2000.

COMPARISON OF FISCAL 1998 AND 1997

NET SALES Consolidated net sales were $30.1 million and $24.7 million in
fiscal 1998 and 1997, respectively, representing an increase of $5.4 million or
21.7%. This increase was due primarily to increased domestic and U.S. government
sales of high power amplifiers and increased international sales of
over-the-horizon microwave equipment, partially offset by decreased
international sales of satellite communications products. International sales
decreased by approximately $184,000, or 1.3%, representing 46.5% and 57.3% of
total net sales for fiscal 1998 and 1997, respectively. Domestic sales increased
by $3.9 million, or 60.9%, representing 34.0% and 25.7% of total net sales. U.S.
government sales increased by $1.7 million, or 39.9%, representing 19.5% and
17.0% of total net sales in fiscal 1998 and 1997, respectively. Sales to one
customer in fiscal 1998 and sales to a different customer in fiscal 1997
represented 12.2% and 10.2%, respectively, of total net sales for such years.

GROSS PROFIT Gross profit was $8.8 million and $7.1 million in fiscal 1998
and 1997, respectively, representing an increase of $1.7 million. The primary
reason for this increase was a net increase in sales volume in fiscal 1998.
Gross profit, as a percentage of net sales, was relatively unchanged.

SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative
expenses were $6.0 million and $5.4 million in fiscal 1998 and 1997,
respectively, representing an increase of $598,000 or 11.0%. This increase was
due primarily to the increased expenses required to support the higher level of
sales in fiscal 1998, including higher bid and proposal expenses, sales
commissions,

<PAGE>
marketing personnel expenses and other administrative expenses. As a percentage
of sales, however, these expenses decreased to 20.0% in fiscal 1998, from 21.9%
in fiscal 1997.

RESEARCH AND DEVELOPMENT Research and development expenses were $1.3 million
and $1.0 million in fiscal 1998 and 1997, respectively, representing an increase
of $296,000 or 28.9%. Research and development expenses as a percentage of net
sales were 4.4% and 4.1%, respectively. This increase was primarily due to
increased expenses for general product improvements and for the development of a
CSAT terminal and VSAT modem and a complement of additional product offerings to
the 'fly-away' and 'quick deployment' antenna product lines. Whenever possible,
we seek customer funding for research and development to adapt our products to
specialized customer requirements. During fiscal 1998 and 1997, we were
reimbursed $356,000 and $436,000, respectively, which amounts are not reflected
in the reported research and development expenses.

OPERATING INCOME As a result of the foregoing factors, we reported operating
income of $1.5 million in fiscal 1998 compared to operating income of $638,000
in fiscal 1997, representing an increase of $814,000 or 127.6%.

INTEREST EXPENSE Interest expense was $234,000 and $284,000 in fiscal 1998
and 1997, respectively. Interest expense in both years was due primarily to
interest associated with our capital lease obligations.

INTEREST INCOME Interest income for fiscal 1998 and 1997 was $36,000 and
$33,000, respectively. This increase was due primarily to the increase in the
amount of cash available to invest in fiscal 1998. Interest income in fiscal
1997 included approximately $14,000 that was received from a customer for
extended payment terms.

OTHER INCOME We reported other income of $30,000 and $151,000 in fiscal 1998
and 1997, respectively. Other income in fiscal 1998 was due primarily to the
gain on a foreign currency exchange rate and to the sale of scrap materials. In
fiscal 1997, the primary components were the result of a gain on the sale of a
storage facility, the sale of fully depreciated equipment and a finder's fee we
earned, offset by the write-off of other miscellaneous items.

INCOME TAXES The provision for income taxes was $180,000 and $54,000 in
fiscal 1998 and 1997, respectively. This was comprised of $45,000 and $20,000
for Federal income tax and $135,000 and $34,000 for state income taxes in fiscal
1998 and 1997, respectively. Net operating loss carryforwards were available to
offset corporate Federal income tax and we were generally subject only to the
alternative minimum tax. We believed our tax benefits were subject to a 100%
valuation allowance as of July 31, 1998 and 1997 due to earnings fluctuations
inherent in our operations and recent operating losses.

LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash equivalents position increased by $3.2 million from $2.7
million at July 31, 1998 to $5.9 million at July 31, 1999. Restricted cash of
$22,000, which was securing standby letters of credit at July 31, 1998, was no
longer required at the end of fiscal 1999. In fiscal 1999, operating activities
provided net cash of $4.9 million, investing activities used net cash of $1.2
million and financing activities used net cash of $598,000. During fiscal 1999,
we acquired the assets and assumed certain liabilities of two businesses: a
mobile data communications services business and a wireless local loop business.
The total consideration for these acquisitions of approximately $978,000 was
financed by a cash payment of $200,000, a non-recourse note of $250,000, and the
issuance of restricted stock and warrants. As of July 31, 1999, one of these
acquisitions, the wireless local loop business, was classified as a discontinued
operation and certain adjustments were made and expenses accrued, as a result of
this decision.

For the three-month period ended October 31, 1999, our cash and cash
equivalent position decreased by $4.5 million from $5.9 million at July 31, 1999
to $1.4 million at October 31, 1999. Operating activities used $4.2 million,
investing activities used $210,000 and financing activities used $105,000.

<PAGE>
Accounts receivable decreased by $1.0 million from July 31, 1998 to July 31,
1999 due primarily to the timing of shipments and subsequent collections. The
allowance for doubtful accounts decreased by $25,000. Accounts receivable
increased by $4.4 million from July 31, 1999 to October 31, 1999, due primarily
to the timing of shipments, the subsequent collections of the related
receivables, and an increase of approximately $2.1 million in unbilled
receivables. The allowance for doubtful accounts of $145,000 remained the same
at October 31, 1999 as at the end of fiscal year 1999. We review our allowance
for doubtful accounts periodically and believe it adequately reflects the
collectibility of our receivables based on past experience and our credit
standards. Generally, foreign customers are required to secure payment by an
irrevocable letter of credit before an order is accepted.

Inventory increased by $1.7 million from July 31, 1998 to July 31, 1999 due
primarily to the higher backlog of orders. Inventory increased by $287,000 from
July 31, 1999 to October 31, 1999, primarily due to the higher levels of
inventory required by our mobile data communications services segment. We
generally operate on a job-order cost basis, that is, costs are incurred as
work-in-process inventory for specific contracts or jobs. Accordingly, inventory
levels will vary as a function of our order backlog. Some of our product lines
require a more rapid delivery response to customers' requirements and require us
to provide for a level of 'off-the-shelf' equipment inventory availability. The
only other general inventory that we maintain is for basic components which are
common to many of our products. Inventory reserves increased by $341,000 from
July 31, 1998 to July 31, 1999 and decreased by $25,000 from July 31, 1999 to
October 31, 1999. Inventory reserves are reviewed on an ongoing basis and
adjustments are made as needed.

Net intangible assets at July 31, 1999 and October 31, 1999 of $1.6 million
represent goodwill as a result of our acquisition of a mobile data
communications services business and entry into that segment. The amortization
period for this asset is 20 years.

Accounts payable increased by $372,000 from July 31, 1998 to July 31, 1999,
due primarily to the timing of the purchases and to the higher volume of
inventory purchased due to the increased level of sales and backlog. Accounts
payable increased by $1.4 million from July 31, 1999 to October 31, 1999
primarily due to an increase in inventory purchases.

Accrued expenses and other current liabilities increased by $2.4 million
from July 31,1998 to July 31, 1999. This was due primarily to the increase in
customer advances and deposits and, to a lesser extent, to accrued wages and
benefits. Accrued expenses and other current liabilities decreased by $2.1
million from July 31, 1999 to October 31, 1999, primarily due to decreases in
customer advances and deposits partly offset by increases in accrued
commissions. Whenever possible, we require advance payments, deposits or
'milestone' payments on long-term contracts in order to provide working capital
while the contract is in process. Accrued wages and benefits are primarily a
function of the number of employees. At October 31, 1999, we had 278 employees
compared to 268 employees at July 31, 1999 and 216 employees at July 31, 1998.

During fiscal 1999, we made leasehold improvements and purchases of
machinery and equipment of $1.1 million, of which $136,000 was financed by
capital leases. Purchases of property plant and equipment were $210,000 for the
three-month period ended October 31, 1999.

All of our long-term debt consists of capital lease obligations. Principal
payments on long-term debt of $821,000 and $173,000, respectively, were made
during fiscal 1999 and the first quarter of fiscal 2000, respectively, resulting
in long-term debt, including the current portion, of $1.6 million and $1.4
million, respectively.

We have a $12.0 million secured credit facility from Republic National Bank
of New York. The line of credit, to be used for working capital requirements, is
for a term of one year and bears interest at 90-day LIBOR plus 1.50% (7.75% at
October 31, 1999). During fiscal 1999, we drew advances in the aggregate of
$850,000 which were totally repaid by July 31, 1999. There were no borrowings
during the three months ended October 31, 1999. The credit facility expires
December 31, 2000. We have renewed and received increases in this line of credit
annually since 1996.

<PAGE>
We believe that our working capital position, available credit facilities
and the net proceeds to us from the sale of shares of our common stock in this
offering will be sufficient to meet our cash requirements for at least the next
year.

YEAR 2000 COMPLIANCE

Management has initiated a company-wide program and has developed a formal
plan of implementation to prepare for the Year 2000. This includes taking
actions designed to ensure that our information technology systems, products and
infrastructure are Year 2000 compliant and that our customers, suppliers and
service providers have taken similar action. With respect to Year 2000 internal
issues, we have evaluated our IT systems, products, equipment and other
facilities systems, and management believes that all are Year 2000 compliant.
With respect to our external Year 2000 issues, we have surveyed our customers,
suppliers and service providers primarily through written correspondence.
Despite the efforts to survey customers, suppliers and service providers,
management cannot be certain as to the actual Year 2000 readiness of these third
parties. To the extent any of our suppliers or service providers are not Year
2000 ready, we believe that we will be able to obtain other suppliers or service
providers without a significant interruption to our business. Based upon
responses to our inquiries of third parties and our experience since
December 31, 1999, we currently believe we do not have a need for a contingency
plan. Certain experts who have studied the issue have published reports
indicating that the Year 2000 problem could be substantially more severe in
developing economies than in the United States. A significant amount of our
sales are for customers in developing countries. Accordingly, the Year 2000
problem could have a disproportionate effect on our business compared to other
companies with less international sales.

To date, the costs related to our compliance with the Year 2000 issue have
not had a material adverse effect on our consolidated financial position,
results of operations or cash flows.

<PAGE>
BUSINESS

We design, develop, produce and market sophisticated wireless
telecommunications transmission components and systems and solid state,
high-power broadband amplifiers for commercial and government purposes. Our
products are used in point-to-point and point-to-multi-point telecommunications
transmission and reception applications such as satellite communications,
over-the-horizon microwave systems, cellular telephone systems and cable and
broadcast television. Our broadband amplifier products are also used in cellular
and PCS instrumentation testing and certain defense systems. We have expanded
our business to offer satellite mobile data communications services. This
business recently won a contract from the U.S. Army which, subject to government
funding and deployment decisions, provides for the purchase of up to $418.2
million in mobile terminal units and global message communications services over
an eight-year period. We believe our mobile data communications products and
services will afford the company important competitive advantages as we endeavor
to expand this business with other government agencies and into commercial
markets.

TELECOMMUNICATIONS INDUSTRY TRENDS

Deregulation and Privatization. Many developing countries that had
previously not committed significant resources to or placed a high priority on
developing and upgrading their communications systems are now doing so,
primarily through deregulation and privatization. A significant number of these
countries do not have the resources, or have large geographic areas or terrain
that make it difficult, to install extensive land-based networks on a
cost-effective basis. This provides an opportunity for satellite and other
wireless communications services systems to meet the requirement for
communications services in these countries.

Growing Demand for Data Communications Services. Factors contributing to the
growing demand for communications services include worldwide economic
development and the increasing globalization of commerce. Businesses have a
growing need for higher bandwidth services to communicate with their customers
and employees around the world and are increasingly reliant upon Internet and
multimedia applications. We expect demand for these kinds of higher bandwidth
services to grow in both developed and developing countries.

Increasing Cost-Effectiveness. The relative cost-effectiveness of satellite
and other wireless telecommunications services is a major factor driving the
growth in areas with rapidly developing telecommunications infrastructures.
These developing infrastructures often cover large geographic areas, where
population concentrations that are separated by significant distances require a
technology whose cost and speed of implementation is relatively insensitive to
distance.

Technological Advances. Technological advances continue to increase the
capacity of telecommunications networks and reduce the overall cost of the
systems and the services they deliver. This increases the number of potential
end users for the services and expands the available market. We believe that
recent technological developments, such as bandwidth on demand and signal
processing methods, will continue to stimulate the demand.

<PAGE>
PRODUCTS AND SERVICES

Our operations consist of three business segments: mobile data
communications services, telecommunications transmission and RF microwave
amplifiers, which offer the following products and services:

<TABLE>
<CAPTION>
REPRESENTATIVE
SEGMENT PRODUCTS AND SERVICES CUSTOMERS APPLICATIONS
------- --------------------- --------- ------------
<S> <C> <C> <C>
Mobile data communications Mobile data terminals and U.S. Army and, potentially, Satellite-based mobile data
services communications services Department of Defense, other communications services (see
governmental agencies, table on page 28 for
transportation companies specific applications)

Telecommunications Up and down frequency Satellite systems Voice, fax, data, video
transmission converters integrators, service broadcast, Internet trunking
providers, television over satellite
broadcasters and defense
contractors such as
Globecomm Systems, Inc.,
Hughes Network Systems, IDB
Worldcom Inc., DirecTV, ATT
Alascom

Modems, including turbo Satellite systems Voice, data, and fax
codec integrators and service communications over
providers such as Data satellite, Internet
Marine Systems Ltd., Telesat trunking, on demand
Canada, PanAmSat Corp., NSN telephony, video
Network Systems, Inc. conferencing

CSAT transceivers Satellite systems Voice, data, fax,
integrators service telemedicine, Internet
providers and telcos, such networks over satellite
as Singapore
Telecommunications, Ltd,
Lanka Internet Services,
Ltd, Louisiana Networks,
Inc.

Over-the-horizon microwave Defense industry, oil Data, fax, telephony for
products companies such as Northrop offshore oil platforms and
Grumman, Esso Production defense communications
Malaysia Inc., BP Amoco PLC applications

Offsat antenna systems Broadcast networks such as 'C' band uplink
National Public Radio, applications, teleport
Worldcom applications, radio networks
and private networks

Simulsat multibeam antenna Cable TV companies such as Receive up to 35 satellites
systems Time Warner Communications, simultaneously; broadcast
Inc., Cox Communications, TV, cable TV and teleport
Inc., GTE Government Systems applications
Corp.

Mobile satellite antenna Transportable satellite Quick response satellite
systems system service providers communications (disaster
1.8 and 2.4 meter fly-away such as Impsat recovery)
quick deployables Communicacoes, Ldta
trailer mounted systems (Brazil), U.S. State
Department, U.S. Department
of Defense

RF microwave amplifiers Linear amplifiers Cellular infrastructure Testing of cellular and PCS
system manufacturers such as products
Motorola Inc., Ericsson
Inc., Nokia
Telecommunications Inc.,
Lucent Technologies Inc.

Pulse amplifiers Major systems integrators IFF (identification friend
such as Litton Systems Inc., or foe), radar (tracking,
Raytheon Systems Company, weather)
Lockheed Martin Corp. and
U.S. government agencies

Special linear amplifiers Condor Systems, Inc. Pre-detonation of electronic
munitions proximity fuses

Special linear amplifiers Domestic and foreign system Communications jammers --
suppliers such as Thomson interrupt communications
CSF Communications, Rockwell links, including cellular,
Collins, Inc. and foreign GSM and PCS services
ministries of defense
</TABLE>

<PAGE>
MOBILE DATA COMMUNICATIONS SERVICES BUSINESS SEGMENT

The demand for mobile data communications services and products has
increased dramatically in recent years for both government and commercial
applications. This demand has been driven by advances in digital technology
coupled with the need to better locate, track, manage, monitor and communicate
with mobile and fixed assets. The transmission of information may be done over
various systems, i.e., terrestrial, cellular or satellite, depending on the most
cost-effective approach to meet the application's requirements. Recently
published third-party studies predict in excess of a ten-fold increase in
terminals for satellite-based data services in the period from 1999 to 2004.

Recognizing the potential of this marketplace, in 1998 we acquired the
assets of Mobile Datacom Corporation to form Comtech Mobile Datacom Corporation.
Mobile Datacom Corporation was formed in 1993 to commercialize mobile data
communications systems in the United States and abroad. The technology base for
these systems was originally developed by engineers and scientists of Geostar
Corporation in the 1980s. Joel R. Alper, a former senior executive for COMSAT
and later founder of Mobile Datacom Corporation, serves as President and Chief
Executive Officer of Comtech Mobile Datacom Corporation.

We have continued to develop and are marketing a Web-enabled,
satellite-based mobile data communications system for the land mobile, remote
sensing, utility, aviation and maritime markets. Applications include asset
location and tracking, two-way mobile messaging, e-mail and automated reading of
sensors, including meters and gauges. Through our satellite earth station
gateway in Germantown, Maryland, we can route signals to and from mobile or
fixed remote terminals via leased satellite capacity. Customers can access their
data through an Internet or terrestrial connection to their headquarters' Web
sites.

We believe that our system offers the following significant advantages over
competitive systems:

Messages or position location reports can be sent automatically at preset
intervals or, if by an operator, upon command by the user;

Messages are delivered typically in less than ten seconds, via satellite
and Internet, between user headquarters and remote/mobile terminals, as
well as from remote/mobile to remote/mobile terminal, anywhere in the world
within the coverage of the satellites employed;

The system is designed for messages up to 100 characters in length, and can
accommodate greater content by sending multiple messages which are combined
at the receiving end into a single, coherent message;

Message content is highly secure by virtue of the proprietary encryption
techniques and the inherent characteristics of the CDMA technology
employed;

The system has the flexibility to operate over a variety of satellite
systems, including those in geostationary orbit (GEO's), as well as those
in low earth orbit (LEO's); and

Changes from one satellite system to another can be accomplished without
the need to modify the mobile terminals, assuring the users that should
demands increase or should a particular satellite system experience
problems of a technical or financial nature, a switch to another system is
feasible without the need to replace assets.

While the service is satellite-based, we do not own satellites. Worldwide
coverage is available today, and multiple system coverage is available in many
regions as well. Satellite capacity will be leased for our data communications
services, which represents a significant advantage in consideration of the
increasingly competitive environment for sale or lease of satellite capacity. As
a result, we believe that our data services costs will be among the lowest in
the industry, and ongoing product development efforts will enable us to maintain
this competitive advantage.

Primarily on the basis of these competitive advantages and our pricing
structure, in June 1999 the U.S. Army selected us to provide a system to be
deployed on a global basis by its Logistics Command for use in tracking its
mobile assets and communicating by message in near real-time with these units
from fixed and mobile command centers. The contract allows for purchases of up
to $418.2 million of equipment and services over an eight-year period, and is
open to other U.S. government agencies to procure their tracking and messaging
requirements.

<PAGE>
Although the U.S. Army contract obligates us to provide up to 56,000 mobile
terminals and worldwide satellite services over an eight-year period as and when
ordered by the U.S. Army and at the fixed prices and other terms set forth in
this contract, the U.S. Army is not obligated to purchase any terminals or
services under this contract and may terminate this contract at its convenience.
Orders under this contract will be subject to unpredictable funding and
deployment decisions based upon, among other things, additional field testing.
We currently anticipate receiving our first production order during the second
half of fiscal 2000, but we cannot assure you that any orders will be received.

In September 1999, we completed a validation test involving communicating
between mobile terminals in Germany and Texas over two satellite links, with the
respective ground stations interconnected via the Internet. An operational
readiness evaluation is scheduled to take place in March 2000. Due to the
increased visibility the system has achieved as a result of this contract, other
agencies of the Department of Defense, as well as a variety of other government
agencies with an interest in secure data communications and personal
communications, have shown increased interest in the potential use of our
system. U.S. companies under contract or bidding for large systems contracts
requiring wireless data communications as one element of the system have
approached us, and there are prospects for multi-agency adoption of this system
as a standard for low data rate wireless messaging. Under joint funding by the
Departments of Defense and Energy, we are proceeding to develop our technology
to reduce size and cost, as well as power demand. That development of a second
generation mobile device would further strengthen our position in the rapidly
growing mobile data communications services market.

While the U.S. Army and other government agency business is expected to
become a major source of our growth in the near term, we intend to expand our
customer base for mobile data communications services and products into
commercial markets. It is important to note that the system, which will be used
by the U.S. Army, is immediately available as a commercial system.

Commercial markets for satellite-based mobile data communications services
include land mobile applications, remote sensing, utility, maritime and aviation
applications. Gartner Group forecasts more than 5,000,000 commercial terminals
for these services in 2004, an increase from fewer than 400,000 in 1998.
QUALCOMM Incorporated is the leading supplier of commercial mobile data
communications services to the transportation industry with approximately
300,000 mobile terminals reported in use as of September 30, 1999. Orbcomm
Global, L.P. has deployed a LEO satellite system for remote data communications
services including tracking and messaging. Orbcomm's system has generated
considerable commercial interest.

Specific applications within each commercial market include the following:

<TABLE>
<CAPTION>
LAND MOBILE REMOTE SENSING UTILITY MARITIME AVIATION
----------- -------------- ------- -------- --------
<S> <C> <C> <C> <C>
Truck fleet Custody transfer Meter reading Fleet monitoring Search and rescue
monitoring metering Near real-time Vessel tracking Flight watch
Cargo tracking Gas compressor utility account systems Flight log
Trailer monitoring monitoring access for Weather Ground watch
Least cost routing Gas pipeline customer service information Flight support
Dispatching monitoring Wireless network Fuel flow - weather
Engine monitoring Flow computer management monitoring - flight plans
data collection Search and rescue - checklists
Valve control Remote monitoring - approaches
Oil storage tank Two-way Aero-mail
monitoring messaging/ Aviation
Remote burglar EDI information
alarm
</TABLE>

We believe the performance and price features of our system will make it an
extremely attractive choice for users in commercial markets. Our success will
depend on our ability to access

<PAGE>

the best distribution channels and develop applications that create real value
for the customer. As a result of our prior activities and relationships, we will
focus first on the land mobile and remote sensing markets. We anticipate having
terminals in beta test with several commercial customers in these markets by the
end of fiscal 2000.

Our ability to achieve significant results in commercial markets will also
depend on, among other things, our ability to attract people and to establish
relationships with value added resellers. Comtech is already engaged in
identifying and hiring marketing staff with knowledge of targeted market
sectors. We have begun to identify resellers in our market segments of immediate
interest, and have plans to work with them in the months ahead.

The availability of products is another critical element to success. Comtech
has selected SCI Systems, Inc. of Huntsville, Alabama to be its subcontractor
for terminals. SCI Systems is one of the world's largest contract manufacturers
of electronics for computers and communications. SCI has worked closely with us
for several years, and is now beginning to manufacture mobile terminals and
computers for the U.S. Army contract. We have placed an order with SCI for the
manufacture of 100 mobile terminals, and parts have been purchased for another
500 terminals. Because certain components that we need currently require a lead
time of four months or longer, and the U.S. Army contract requires us to provide
mobile terminals and services within 30 days after we receive an order, we
anticipate spending approximately $4.2 million in the second half of fiscal 2000
for parts and assembly and supporting infrastructure in advance of receiving our
initial order from the U.S. Army.

To provide engineering support, we have an arrangement with Anteon
Corporation, a large engineering firm with significant experience in military
logistics, whose offices are in Fairfax, Virginia. In addition, under one of our
technology development contracts, we engaged the Canadian firm of Vistar
Telecommunications Inc. to contribute aspects of their technology to our mobile
terminal design. As a result, we license certain aspects of the design
technology used in some of our mobile terminals under a non-exclusive license
agreement with Vistar. The license has an initial term expiring in 2005, subject
to renewal at our option for up to four additional years. Under this license, we
are obligated to pay Vistar a royalty for each mobile terminal that we sell
utilizing their technology. Vistar offers a similar but more limited mobile data
communications service. The material operating system protocols and software and
our gateway technology were developed by us and are not subject to the Vistar
license.

We will lease satellite capacity for our mobile data communications system.
We are in negotiations with two satellite network operators for long-term
satellite coverage in North America, Central America and the northern rim of
South America, and expect to sign a lease for such coverage when we receive the
initial production order from the U.S. Army. Although we cannot assure you that
the lease that we ultimately enter into will be on these terms, we expect that
any such lease will have a term of four to five years and provide for total
lease payments of $4.0 million to $5.0 million over the lease term, with the
early monthly fee payments being less than later payments, in recognition of our
need to sign up customers and generate revenue. We expect that any such lease
would require us to pay a penalty of up to 12 months of fees if we terminate the
lease before the end of its term. There are other satellite coverage
alternatives today for much of the world, and we expect that new satellite
launches will increase those alternatives in the next 12 months. As our system
is capable of operating over a broad range of geostationary and low earth orbit
satellite systems, and as new systems of either type are launched, we will seek,
subject to then existing contractual obligations, the most attractive terms. We
cannot assure you that we will be able to obtain sufficient satellite capacity
on reasonable terms or on a timely basis.

We are currently operating our system under a temporary license from the
FCC. Although we expect that we will be able to obtain a permanent license for
commercial operations on a timely basis, we cannot assure you that we will be
able to do so.

Our Germantown, Maryland gateway communications center is modular and is
easily expandable as the number of subscribers increases. We currently expect to
establish a redundant gateway communications center at another location during
fiscal 2000 as our business develops, at an estimated cost of $250,000.

<PAGE>
TELECOMMUNICATIONS TRANSMISSION BUSINESS SEGMENT

In making procurement decisions, customers for telecommunications equipment
must weigh the relative costs and advantages of the six presently available
transmission technologies: copper cable, fiber optic cable, high frequency radio
systems, wireless microwave systems, over-the-horizon microwave systems and
satellite systems. Rarely is a complete communications network or system based
solely on one of these technologies. Transmission can be routed through a
combination of technologies, each employed where most cost-effective. Our
products are used in satellite, over-the-horizon microwave, terrestrial
line-of-sight microwave and other wireless applications.

COPPER CABLE, the traditional transmission medium most familiar to
consumers, is being replaced and supplemented by the other media,
particularly for high-volume and long distance transmissions where it has
substantial capacity, cost and reliability limitations.

FIBER OPTIC CABLE is best suited to high-volume, point-to-point, short- or
long-distance links where its advantages -- capacity, quality and
security -- justify the long lead-time and high cost to equip and install a
network.

HIGH FREQUENCY (HF) RADIO SYSTEMS employ long wavelengths which are
propagated beyond line-of-sight distances either by surface waves traveling
along the earth's perimeter or by skywave reflection of the transmitted
waves off different layers of the ionosphere.

WIRELESS AND LINE-OF-SIGHT MICROWAVE COMMUNICATIONS SYSTEMS, generally used
for point-to-point communications, employ signals with extremely short
wavelengths which travel only in line-of-sight paths over relatively short
distances, generally under 30 miles, can be quickly and easily installed,
require relatively low initial capital investment and can be upgraded and
expanded over time.

OVER-THE-HORIZON MICROWAVE COMMUNICATIONS SYSTEMS transmit signals over
distances from 30 to 600 miles by reflection of the transmitted signals off
the troposphere, an atmospheric layer located approximately seven miles
above the earth's surface. Such systems offer a high level of reliability
and security.

SATELLITE COMMUNICATIONS SYSTEMS have grown and diversified in response to
demand for efficient and accurate long distance voice and video
communications and digital information exchange. In a satellite
communications system, information is relayed to and from microwave
transmitting and receiving stations on the ground by means of LEO, medium
earth orbit (MEO), or GEO satellites, which are generally placed in an
orbit from 600 to 22,300 miles above the earth's equator. Satellite
communications systems are particularly useful where long-range, high
capacity and high quality point-to-point or point-to-multipoint
communication is desirable. As few as three GEO satellites can provide
global communications coverage. These systems, which use microwave
technology, are well suited for rapid introduction of service in remote
areas or where communications alternatives are unavailable, such as mobile,
shipboard or defense applications.

Our Comtech Communications Corp. subsidiary located in Tempe, Arizona,
designs and manufactures equipment used in commercial and defense satellite
communications applications. The equipment includes modems, frequency up
converters and down converters, solid state power amplifiers and satellite VSAT
transceivers, which combine our frequency converters and solid state, high-power
amplifier technology. These products comprise a broad range of receiving and
transmitting equipment offering a variety of state-of-the-art technical
capabilities with respect to performance, complexity and value. Comtech
Communications Corp. recently introduced a turbo codec modem product line. This
forward error correction solution offers significantly improved power and
bandwidth performance over traditional systems.

Our Comtech Antenna Systems, Inc. subsidiary, located in St. Cloud, Florida,
designs, manufactures, and markets a wide variety of fiberglass and aluminum
antennas for over-the-horizon microwave and satellite communications
applications, including distributed network programming, cable and broadcast
television and radio as well as other forms of information and entertainment
distribution. Comtech Antenna Systems, Inc. designs antennas for specific types
of telecommunications systems and, typically, sells standardized products to
independent distributors,

<PAGE>
prime contractors and end user customers. Comtech Antenna Systems, Inc.'s
antenna product line includes fixed and mobile antenna systems and specialized
multi-beam satellite antenna systems that are capable of receiving signals
simultaneously from many independent satellites located up to 60 degrees apart.

Our Comtech Systems, Inc. subsidiary, located in Orlando, Florida has a
product line consisting primarily of equipment for over-the-horizon microwave
systems and networks. It has a turnkey capability that ranges from system and
network planning through equipment and system training and operation and
maintenance programs. It also supplies telecommunication systems by combining
its products with equipment manufactured by our other operating units and third
parties. Comtech Systems, Inc. markets its products and services to oil and gas
companies and other commercial users, foreign defense commands and system prime
contractors. We believe that Comtech Systems, Inc.'s products, which employ
adaptive modem digital transmission technology, offer high-speed data benefits
over the traditional analog over-the-horizon microwave products offered by its
sole competitor.

RF MICROWAVE AMPLIFIER BUSINESS SEGMENT

Amplifiers reproduce signals with greater power, current or voltage
amplitude. Indispensable in the world of signal processing, amplifiers can be as
tiny as a microchip for a hearing aid or as massive as a multi-story building
for transmitting radio signals to submerged submarines or to outer space.

In telecommunications, solid state high-power amplifiers are used to amplify
signals for radiation from transmitting antennas in satellite or other wireless
telecommunications systems. They are also used to amplify signals in defense and
airport radar and electronic jamming systems. In the laboratory, solid state,
high-power amplifiers are used to test the performance of high power microwave
and wireless electronic system components used in cellular and PCS networks.

Solid state high-power amplifiers are also used in electromagnetic
compatibility and susceptibility testing. The proliferation of electronic
systems in products such as automobiles, computers, wireless telephones, radios,
televisions, medical equipment, sound amplifiers, aircraft and other products
has led to increasingly serious problems with electromagnetic interference.
Manufacturers, therefore, test these electronic systems for electromagnetic
compatibility and susceptibility using solid state, high-power RF microwave
amplifiers such as those we manufacture. For example, such testing may be used
to determine whether the various electronic systems in a commercial aircraft are
likely to be affected by the use of laptop computers, wireless telephones or
video games by passengers in flight.

We believe our Comtech PST Corp. subsidiary, located in Melville, New York,
is one of a small number of companies designing, developing, manufacturing and
marketing solid state high-power large signal amplifiers in the microwave and RF
spectrums. Our products amplify energy for applications, including wireless and
satellite telecommunications, instrumentation and defense systems. Comtech PST
Corp. sells its products to domestic and foreign commercial users, government
agencies and prime contractors. We believe it is an innovative supplier of these
amplifiers and related power processing equipment.

BUSINESS STRATEGIES

We manage our business with the following principal corporate strategies:

Operate on a decentralized basis to maximize responsiveness to customers.

Continue product innovation through investment in research and development.

Capitalize on synergies among our business segments to secure larger
contracts.

Pursue acquisitions and investments in complementary businesses,
technologies, products and services.

<PAGE>
In addition, we have developed various specific strategies within our
business segments to capitalize on the growth opportunities we have identified.
These strategies include:

Mobile data communications services. We believe our systems and products
offer advantages useful to our target market, including broad geographic
coverage, near real-time data delivery and greater functionality than other
providers. As the scale of our mobile data communications services business
increases, we expect to offer customers cost-effective communications solutions
and achieve further growth by:

Managing the roll out of the U.S. Army system to capitalize on the
contract's opportunities and to provide a referenceable customer
relationship that validates the effectiveness of our systems and products
and generates substantial renewals.

Continuing to pursue identified opportunities to sell these systems and
products to other agencies of the U.S. government, including the Air Force
and Departments of Defense and Energy.

Focusing on development of new and emerging commercial applications for our
mobile data communications systems primarily by working with value added
resellers and early adopter end users. The first two applications we will
target are in the land mobile and remote sensing markets. We anticipate
having terminals in beta test with several customers in these markets by
the end of fiscal 2000.

Telecommunications transmission. We attribute our historical success in this
area to designing, manufacturing and marketing high quality products. We believe
that we can continue to grow our telecommunications transmission business by:

Further expanding our product line to meet a wider range of our customers'
needs for high quality components and sub-systems, with particular focus on
operators of satellite ground systems.

Enhancing our existing product line to serve rapidly developing markets.
For example, we are developing modems, transceivers and other products to
meet the growing need for higher speeds and greater bandwidth resulting
from new and emerging Internet applications.

Endeavoring to maintain our market leadership in over-the-horizon microwave
technologies and to broaden applications and improve product performance to
facilitate the functionality of our products for users where unfriendly
terrain or other constraints make other forms of communication impractical.

RF microwave amplifiers. We will seek to increase our share of this market
by:

Continuously enhancing our amplifier product line to incorporate advances
in solid state device electronics.

Continuing efforts to encourage original equipment manufacturers and users
to outsource their requirements based upon the technical leadership of our
products.

Expanding our products to include a line of PCS base station amplifiers.

Combining high-power amplifiers and solid state switches for advanced
communications jamming applications.

SALES, MARKETING AND CUSTOMER SUPPORT

Our international sales (including sales to prime contractors' international
customers) from all three business segments represented approximately 57.3%,
46.5%, 60.1% and 85.5% of total net sales in the fiscal 1997, 1998 and 1999 and
the three months ended October 31, 1999, respectively. We expect our
international sales to continue to increase due to the global expansion of
telecommunications and microwave instrumentation and we expect that
international sales will remain a substantial portion of our total sales for the
foreseeable future.

<PAGE>

Domestic commercial sales represented approximately 25.7%, 34.0%, 24.3% and
10.8% of our total net sales in fiscal 1997, 1998 and 1999 and the three months
ended October 31, 1999, respectively. The balance of our sales is to U.S.
government departments or agencies.

Sales to one customer in fiscal 1997 and to two different customers in
fiscal 1998 and 1999 represented 27.0%, 12.2% and 10.2% of our total net sales,
respectively. Sales to one customer, a major U.S. aerospace prime contractor,
represented 58.2% of our total net sales for the three months ended October 31,
1999. We have experienced and will continue to experience the effect of a
limited number of customers on our net sales because most of our sales are
derived from a relatively small number of large customer contracts.

Each of our operating units conducts its own sales and marketing efforts. In
some instances, our operating units may bundle other units' products. Sales and
marketing strategies vary with particular markets served and include direct
sales through sales, marketing and engineering personnel, sales through
independent representatives, value added resellers or a combination of the
foregoing. Our operating units enter into sales distribution agreements for
certain products with distributors. Unlike sales representatives, who merely
find customers on a commission basis, some of our distributors purchase products
from us for resale. We intend to continue to expand domestic and international
marketing efforts through independent sales representatives, distributors and
value added resellers.

Our management technical and marketing personnel establish and maintain
relationships with customers. Our strategy includes a commitment to provide
ongoing customer support for our systems and equipment. This support involves
providing direct access to engineering staff or trained technical
representatives to resolve technical or operational problems.

BACKLOG

Our backlog as of July 31, 1998 and 1999 and the three months ended October
31, 1999 was approximately $15.4 million, $38.6 million and $36.2 million,
respectively. We expect that a substantial majority of our backlog as of July
31, 1999 and October 31, 1999 will be recognized as sales during fiscal 2000. We
received payments in respect of progress billings and advance payments
aggregating approximately $3.1 million and $1.2 million as of July 31, 1999 and
the three months ended October 31, 1999, respectively, in connection with orders
included in the backlog at these dates. At July 31, 1999 and October 31, 1999,
respectively, approximately 2.7% and 4.8% of that backlog consisted of U.S.
government contracts, subcontracts and government funded programs, approximately
92.1% and 84.1% consisted of orders for use by foreign customers (including
sales to prime contractors' international customers) and approximately 5.2% and
11.1% consisted of orders for use by domestic commercial customers. Our backlog
at July 31, 1999 and October 31, 1999 included funded orders of $100,000 and
$400,000, respectively, under the U.S. Army contract with Comtech Mobile Datacom
Corp.

Our backlog consists solely of orders believed to be firm. In the case of
contracts with departments or agencies of the U.S. government, orders are only
included in backlog to the extent funding has been obtained for such orders. All
of the contracts in our backlog are subject to cancellation at the convenience
of the customer or for default in the event that we are unable to perform the
contract.

Variations in backlog from time to time are attributable in part to the
timing of our preparation and submission of contract proposals, the timing of
contract awards and the delivery schedules on specific contracts. As a result,
we believe our backlog at any point in the fiscal year is not necessarily
indicative of the total sales anticipated for any particular future period. Our
Comtech Antenna Systems, Inc. and Comtech Communications Corp. businesses
operate under short lead times and usually generate sales out of inventory, as
is the case for a significant portion of our RF microwave amplifier business.

<PAGE>
MANUFACTURING AND SERVICE

Our manufacturing operations consist principally of the assembly and testing
of electronic products we design and build from purchased fabricated parts,
printed circuits and electronic components and, in the case of antennas, the
casting of fiberglass antennas. We employ formal quality management programs and
other training programs, including International Standards Organization's (ISO
9000) quality procedure registration programs. Our Comtech PST Corp. and Comtech
Systems, Inc. operating units have been qualified for ISO 9001 and we are in the
process of qualifying our other operating units.

Our ability to deliver products to customers on a timely basis is dependent
in part upon the availability and timely delivery by subcontractors and
suppliers of the components and subsystems that we use in manufacturing our
products. Electronic components and raw materials used in our products are
generally obtained from independent suppliers. Some components are standard
items and are available from a number of suppliers. Others are manufactured to
our specifications by subcontractors. We obtain certain components and
subsystems from a single source or a limited number of sources. We believe that
most components and equipment are available from existing or alternative
suppliers and subcontractors. A significant interruption in the delivery of such
items could have a material adverse effect on our business and results of
operations.

See 'Business -- Mobile Data Communications Services Business Segment' for a
further description of manufacturing operations in that segment.

RESEARCH AND DEVELOPMENT

The technology used in our products is subject to rapid development and
frequent change. Our business position is in large part contingent upon the
continuous refinement of our scientific and engineering expertise and the
development, either through internal research and development or acquisitions,
of new or enhanced products and technologies.

A majority of our sales in fiscal 1999 and the three months ended October
31, 1999 were of products developed by us within the past five years, including,
for example, linear amplifiers sold to cellular and PCS telephony system
manufacturers for testing their systems' amplifiers and turbo codec modems sold
to satellite systems integrators and service providers for use in high
performance voice, data, video and fax transmission.

We reported research and development expenses of $1.0 million, $1.3 million,
$2.0 million and $530,000 in fiscal 1997, 1998 and 1999 and the three months
ended October 31, 1999, respectively, representing 4.1%, 4.4%, 5.3% and 4.5% of
total net sales, respectively, for these periods. A portion of our research and
development efforts relates to the adaptation of our basic technology to
specialized customer requirements and is recoverable under such contracts, and
such expenditures are not included in our research and development expenses for
financial reporting purposes. During fiscal 1997, 1998 and 1999 and the three
months ended October 31, 1999, we were reimbursed by customers for such
activities in the amounts of $436,000, $356,000, $1.8 million and $246,000,
respectively. Accordingly, our aggregate research and development expenditures
(internal and customer funded) were 5.9%, 5.6%, 10.0% and 6.6% of total net
sales in fiscal 1997, 1998, 1999 and the three months ended October 31, 1999,
respectively.

PATENTS AND LICENSES

Although we own or hold licenses for a number of patents, patents and
licenses have been of substantially less significance in our business than our
scientific and engineering know-how, production techniques, the timely
application of our technology and the design development and marketing
capabilities of our personnel. We rely on the laws of unfair competition,
restrictions in licensing agreements and confidentiality agreements to protect
such knowledge and techniques.

<PAGE>
COMPETITION

Our businesses are highly competitive and characterized by rapid
technological change. In addition, the number of potential customers for our
products is limited. Our growth and financial condition depend on, among other
things, our ability to keep pace with such changes and developments and to
respond to the sophisticated requirements of an increasing variety of electronic
equipment users. Many of our competitors are substantially larger, have
significantly greater financial, marketing, research and development,
technological and operating resources and broader product lines than we do. A
significant technological breakthrough by others, including smaller competitors
or new companies, could have a material adverse effect on our business. In
addition, certain of our customers have technological capabilities in our
product areas and could choose to replace our products with their own.

In the market for mobile data communications services, there are several
much larger competitors with existing systems. The largest of these competitors
is QUALCOMM Incorporated, which reported that, as of September 30, 1999, it had
sold more than 300,000 mobile units and provided messaging and maintenance
services to more than 850 transportation companies in the United States. Orbcomm
has deployed a LEO satellite system for remote data communications services,
including tracking and messaging. Existing competitors are aggressively pricing
their products and services and may continue to do so in the future. We
anticipate that new competitors will enter that market in the future.
Competitors continue to offer new value added products and services, which we
may be unable to match on a timely or cost-effective basis. Increased
competition may impact margins throughout the industry.

We believe that competition in all of our markets is based primarily on
product performance, reputation, delivery times, customer support and price. Due
to our decentralized organizational structure and proprietary know-how, we
believe we have the ability to develop, produce and to deliver equipment on a
cost-effective basis faster than many of our competitors.

KEY PERSONNEL/EMPLOYEES

We believe our success is dependent upon the continued contributions of our
key management personnel, including the key management at each of our operating
units, and depends to a significant extent upon Fred Kornberg, our Chairman,
Chief Executive Officer and President. Many of our key personnel, particularly
the key engineers, would be difficult to replace, and are not subject to
employment or non-competition agreements. The development of our mobile data
communications services business is particularly dependent upon Joel R. Alper,
the President of Comtech Mobile Datacom Corp. The success of our subsidiary
Comtech Systems, Inc., is particularly dependent upon Richard L. Burt, its
President. Our growth and future success will depend in large part upon our
ability to attract and retain highly qualified engineering, sales and marketing
personnel. Competition for such personnel from other companies, academic
institutions, government entities and other organizations is intense. Although
we believe we have been successful to date in recruiting and retaining key
personnel, we may not be successful in attracting and retaining the personnel we
require in order to continue to grow and operate profitably. The management
skills that have been appropriate for our business in the past may not continue
to be appropriate if our business continues to grow and diversify.

At October 31, 1999, we had 278 employees, 130 of whom were engaged in
production and production support, 91 in research and development and other
engineering support and 57 in marketing and administrative functions. None of
the employees are represented by a labor union. We believe that our employee
relations are good.

COMPLIANCE WITH FEDERAL, STATE AND LOCAL ENVIRONMENT PROTECTION LAWS

<PAGE>
currently in compliance in all material respects with such regulations and that
we have obtained all necessary environmental permits to conduct our business. To
date, compliance with federal, state or local environment protection laws has
not had a material effect on our capital expenditures, earnings or competitive
position, and we do not expect that such compliance will have a material effect
in the future.

PROPERTIES

Our corporate offices are located in a portion of the 46,000-square foot
facility on two acres of land in Melville, New York which also houses Comtech
PST.

We lease the facility in Melville, New York from a partnership controlled by
our Chairman, Chief Executive Officer and President. The lease, as amended,
provides for our exclusive use of the premises as they now exist for an initial
term of ten years through December 2001. We have the option to extend the term
of the lease for an additional ten-year period and a right of first refusal in
the event of a sale of the facility. The base annual rental under the lease is
subject to adjustments. We believe that the terms of this lease are not less
advantageous to us than those that would have been available to us from an
unrelated party.

We lease the 32,000-square foot facility on eight acres of land used by
Comtech Antenna Systems, Inc. in St. Cloud, Florida from a Florida land trust
controlled by our Senior Vice President and Chief Financial Officer. The lease
provides for our exclusive use of the premises as they now exist for a term
expiring September 2003. We have an option to extend the term of the lease for
an additional five-year period. The base annual rental under the lease is
subject to adjustments. We believe that the terms of this lease are not less
advantageous to us than those that would have been available to us from an
unrelated party.

In December 1999, we leased a 72,500-square foot facility for Comtech
Systems, Inc. in Orlando, Florida from an unrelated third party. The lease
provides for the exclusive use of the premises as they now exist through April
2002. The base annual rental is subject to adjustments.

We lease a 20,000-square foot building in Tempe, Arizona for our Comtech
Communications Corp. operating unit from an unrelated third party. The lease
provides for the exclusive use of the premises as they now exist for a term of
three years through April 2001.

We lease 7,100-square feet of space located in Germantown, Maryland that is
used by Comtech Mobile Datacom Corp. from an unrelated third party. This lease
provides for the exclusive use of the premises as they now exist through August
2004.

LEGAL PROCEEDINGS

We are subject to certain legal actions that arise out of the normal course
of business. These actions have not had a material effect on our consolidated
financial position or results of operations.

<PAGE>
MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND OTHER KEY PERSONNEL

The following table sets forth information regarding our directors,
executive officers, and other key personnel.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Fred Kornberg................................... 64 Chairman of the Board, Chief Executive
Officer and President
J. Preston Windus, Jr........................... 56 Senior Vice President and Chief Financial
Officer; President of Comtech PST Corp.
Richard L. Burt................................. 58 Senior Vice President; President of Comtech
Systems, Inc.
Robert L. McCollum.............................. 51 Vice President; President of Comtech
Communications Corp.
Gail Segui...................................... 53 Secretary and Treasurer
Thomas Christy.................................. 50 President of Comtech Antenna Systems, Inc.
Joel R. Alper................................... 61 President of Comtech Mobile Datacom Corp.
George Bugliarello.............................. 72 Director
Richard L. Goldberg............................. 64 Director
Gerard R. Nocita................................ 63 Director
John B. Payne................................... 64 Director
Sol S. Weiner................................... 80 Director
</TABLE>

Mr. Kornberg has been Chief Executive Officer and President of Comtech since
1976. Prior to that, he was the Executive Vice President of Comtech from 1971 to
1976 and the General Manager of the telecommunications transmission segment. He
is also a senior member of the Institute of Electrical and Electronics Engineers
and the Armed Forces Communications and Electronics Association.

Mr. Windus has been a Senior Vice President of Comtech since 1998. He has
served as Chief Financial Officer of Comtech since 1993. From 1993 to 1998, he
also served as a Vice President of Comtech. He became President of Comtech PST
Corp. in 1995. Mr. Windus was President of Fairchild Data Corp., a satellite
modem manufacturer, from 1989 to 1993. He was affiliated with Comtech from 1972
to 1989.

Mr. Burt has been President of Comtech Systems, Inc. since 1989 and before
that had been a Vice President of Comtech Systems, Inc. since its founding in
1984. He became a Senior Vice President of Comtech in 1998 and had been a Vice
President since 1992. Mr. Burt first joined Comtech in 1979 as Director of
Marketing.

Mr. McCollum was appointed a Vice President of Comtech in August 1996. He
founded Comtech Communications Corp. in 1994 and has been its President since
its formation.

Ms. Segui has been the Secretary and Treasurer of Comtech since 1998 and the
Corporate Controller of Comtech since 1990. She joined Comtech in 1989 as
Accounting Manager. Prior to joining Comtech, Ms. Segui served as Accounting
Manager of Photronics, Inc. from 1984 to 1987.

Mr. Christy has been President of Comtech Antenna Systems, Inc. since 1999.
Prior to that, he was Director of Marketing from 1983 to 1989 and was Vice
President of Marketing from 1989 to 1999.

Mr. Alper has been the President of Comtech Mobile Datacom Corp. since June
1998. He has more than 40 years of technical and general management experience
in the fields of satellites and telecommunications. From 1993 until 1998, Mr.
Alper was the President and Chief Executive Officer of Mobile Datacom
Corporation, Comtech Mobile Datacom Corp.'s predecessor. From 1981 to 1993, Mr.
Alper was a member of COMSAT Corp.'s senior management team, including

<PAGE>
President of COMSAT Corp.'s World Systems division from 1983 to 1987. In his
COMSAT Corp. capacity, he was Chairman of the Board of the International
Telecommunications Satellite Organization (INTELSAT) from 1985 to 1986. Prior to
that, Mr. Alper served as the European regional director for TRW Systems for 12
years.

Dr. Bugliarello has been a director of Comtech since 1977. He has also been
Chancellor of the Polytechnic University since 1994 and was President of the
University from 1973 to 1994. He is also a director of KeySpan Energy, The Lord
Corporation and Symbol Technologies Inc.

Mr. Goldberg has been a director of Comtech since 1983. He has also been a
partner since 1990 in the law firm of Proskauer Rose LLP, which renders legal
services to Comtech and has served as Comtech's counsel in connection with this
offering. Prior to 1990, Mr. Goldberg was a partner since 1966 of the firm
Botein Hays & Sklar. He is also a director of Schein Pharmaceutical, Inc.

Mr. Nocita has been a director of Comtech since 1993. He is a private
investor. He was Treasurer of the Incorporated Village of Patchogue, New York
from 1993 to 1996. He was affiliated with Comtech from our inception in 1967
until 1993.

Dr. Payne has been a director of Comtech since 1993. He has also been the
President and Chief Executive Officer of Nucomm, Inc. since 1990. Nucomm, Inc.
produces products for satellite news gathering services. From 1973 through 1990,
he was President and Chief Executive Officer of Communications Technologies,
Inc.

Mr. Weiner has been a director of Comtech since 1980. He is President of Sol
S. Weiner Investments, Inc. Mr. Weiner was Managing Director of Stenhouse,
Weiner, Sherman, Ltd., commodity pool managers, from 1982 to 1994. He is also a
director of Universal Automotive Industries, Inc.

Our Board of Directors is divided into three classes, with each class having
two members. Members of the Board are elected for three-year terms, with the
term of office of one class expiring at each Annual Meeting of our stockholders.
Dr. Bugliarello and Mr. Goldberg are in the class whose term of office expires
in 2000, and Mr. Kornberg and Mr. Weiner are in the class whose term expires in
2001. Mr. Nocita and Dr. Payne are in the class whose term of office expires in
2002.

The Board of Directors has Audit, Executive Compensation, Executive and
Nominating Committees. The Audit Committee, whose members are Dr. Payne, Mr.
Nocita, and Mr. Weiner, recommends the engagement of independent auditors to the
Board, directs investigations into matters relating to audit functions, reviews
the plans and results of audits with our independent auditors, reviews our
internal accounting controls and approves services to be performed by our
independent auditors. The Executive Compensation Committee, whose members are
Mr. Nocita, Dr. Bugliarello and Mr. Weiner, considers and authorizes
remuneration arrangements for senior management and grants options under, and
administers, our stock option plans. The Executive Committee, whose members are
Mr. Goldberg, Mr. Kornberg and Mr. Nocita, has the authority to take all actions
that the Board of Directors may take, subject to certain restrictions imposed by
law. The Nominating Committee, whose members are Mr. Goldberg, Dr. Bugliarello,
and Dr. Payne, identifies and evaluates candidates for election as members of
the Board of Directors and reports its findings to the full Board.

The terms of office of each of our executive officers run until the next
annual meeting of the Board of Directors or until his successor is elected and
qualified.

We employ Mr. Kornberg pursuant to an agreement which was amended and
restated in January 1998. The agreement provides, among other things, for his
employment until 2003, provided, however, that the employment period shall be
automatically extended for successive two-year periods unless terminated by
either party upon six months' prior notice. The agreement also provides for
basic compensation of $295,000 per annum. In addition, Mr. Kornberg may be paid
additional amounts, if any, as our Board or Directors may from time to time
determine and incentive compensation, not to exceed his basic compensation,
equal to 3.5% of our pre-tax income. Fifty percent of any such incentive
compensation is payable to Mr. Kornberg in the

<PAGE>

November following the fiscal year to which such compensation relates, the
balance is payable on the first anniversary of the initial 50% payment. If Mr.
Kornberg voluntarily terminates his employment, other than after a Change in
Control (as defined in his employment agreement), or if we terminate his
employment due to disability or for cause, he will forfeit his right to receive
accrued but unpaid incentive compensation. If we undergo a Change in Control,
Mr. Kornberg is entitled to terminate his employment and receive a lump sum
payment (subject to possible adjustments to avoid the characterization of the
payment as excess parachute payments and the consequent imposition of taxes
under Section 280G of the Internal Revenue Code of 1986) equal to the sum of (1)
his then basic compensation for the balance of the employment period or three
times his basic compensation, whichever is greater, (2) accrued but unpaid
incentive compensation with respect to prior fiscal years and (3) if he so
elects, the market value less the applicable exercise price, of any stock option
then held by him. The aggregate of (1), (2) and (3), as of December 31, 1999,
would have been approximately $3.2 million. Mr. Kornberg would also be entitled
to receive benefits under our benefit plans, or substantially equal benefits,
for the remainder of the employment period.

CERTAIN TRANSACTIONS

We lease facilities in Melville, New York from a partnership controlled by
our Chairman and Chief Executive Officer. The lease, as amended, provides for
our exclusive use of the premises as they now exist for an initial term of ten
years ending December 2001. We have the option to extend the term of the lease
for an additional ten-year period, and a right of first refusal in the event of
a sale of the facility. The annual rental under the lease, $448,000 in fiscal
1999, is subject to adjustments.

We lease our St. Cloud, Florida facility from a Florida land trust
controlled by J. Preston Windus, Jr., our Senior Vice President and Chief
Financial Officer. The annual rental under the lease, $207,000 in fiscal 1999,
is subject to adjustments.

We believe these leases are on terms not less favorable than those that may
be obtained by unrelated third parties.

BENEFICIAL OWNERSHIP OF SECURITIES

The following table shows the common stock owned by our directors and
executive officers and by persons known by us to beneficially own, individually,
or as a group, more than 5% of our outstanding common stock as of January 31,
2000. Except as indicated below, each person has sole voting and dispositive
power with respect to these shares and each person's business address is our
executive offices.

This information has been prepared based on the Securities and Exchange
Commission's 'beneficial ownership' rules. Under these rules a person is deemed
to be a beneficial owner of a security if that person has or shares voting
power, which includes the power to vote or to direct the voting of a security,
or investment power, which includes the power to dispose or to direct the
disposition of a security. More than one person may be deemed to be a beneficial
owner of the same securities. A person is deemed to be a beneficial owner of any
security that the person has the right to acquire within 60 days. The shares of
common stock issuable upon exercise of options exercisable within 60 days from
January 31, 2000 are assumed to be outstanding for the purpose of determining
the percentage of shares beneficially owned by that person. The Commission's
rules sometimes cause the total percentage ownership disclosed to be more than
the sum of the individual ownership percentages.

<PAGE>

<TABLE>
<CAPTION>
PERCENT OF CLASS
-------------------
BEFORE AFTER
NAME OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED OFFERING OFFERING
- ------------------------ ------------------------- -------- --------
<S> <C> <C> <C>
Fred Kornberg(1)(3) ................................. 360,000 7.8 5.2
(Chairman, Chief Executive Officer and President)
Gary Gelman(2)....................................... 242,302 5.4 3.6
George Bugliarello(3) ............................... 29,100 * *
(Director)
Richard L. Burt(3) .................................. 86,646 1.9 1.2
(Senior Vice President; President of
Comtech Systems, Inc.)
Richard L. Goldberg(3) .............................. 26,677 * *
(Director)
Robert L. McCollum .................................. 73,500 1.6 1.1
(Vice President; President of Comtech
Communications Corp.)
Gerard R. Nocita .................................... 0 * *
(Director)
John B. Payne(3) .................................... 41,550 * *
(Director)
Gail Segui(3) ....................................... 10,950 * *
(Secretary and Treasurer)
Sol S. Weiner(3) .................................... 46,500 1.0 *
(Director)
J. Preston Windus, Jr.(3) ........................... 84,750 1.8 1.2
(Senior Vice President and Chief Financial Officer;
President of Comtech PST Corp.)
All directors and executive officers as a group
(10 persons)(3) ................................... 759,673 15.9 10.7
</TABLE>

- ---------

* Less than 1%.

(1) Includes 112,500 shares subject to currently exercisable stock options. Does
not include 3,000 shares held in a family limited partnership in which Mr.
Kornberg is a general partner and has a 1% ownership interest, as to which
shares he disclaims beneficial ownership.

(2) The information presented in the table for Mr. Gelman is based upon
Amendment No. 3 to the Statement on Schedule 13D filed by Mr. Gelman dated
July 19, 1999. Mr. Gelman's address is c/o American Claims Evaluation, Inc.,
One Jericho Plaza, Jericho, New York 11753.

(3) Includes the following shares of common stock with respect to which such
persons have the right to acquire beneficial ownership within 60 days from
such date: Mr. Kornberg 112,500 shares; Mr. Weiner 3,000 shares; Mr.
Goldberg 4,500 shares; Dr. Bugliarello 7,500 shares; Dr. Payne 10,500
shares; Mr. Burt 60,738 shares; Ms. Segui 7,200 shares; Mr. Windus 45,000
shares and all directors and officers as a group 250,938 shares. These
respective shares were deemed to be outstanding for purposes of calculating
the respective percentages owned.

<PAGE>
DESCRIPTION OF CAPITAL STOCK

OVERVIEW

Our authorized capital stock consists of 30,000,000 shares of common stock,
par value $.10, and 2,000,000 shares of preferred stock, par value $.10. As of
January 31, 2000, there were 4,508,693 shares of common stock and no shares of
preferred stock outstanding. As of such date, there were approximately 770
holders of record of our common stock.

COMMON STOCK

Each holder of our common stock is entitled to one vote per share on all
matters submitted to a vote of stockholders, including the election of
directors. The common stock does not have cumulative voting rights, which means
that (subject to the rights of the holders of preferred stock, if any) the
holders of a majority of the shares voting for election of directors can elect
all members of our Board of Directors. Subject to the preferential rights of the
holders of shares of preferred stock, if any, the holders of common stock are
entitled to share ratably in such dividends, if any, as may be declared and paid
by our Board of Directors out of funds legally available therefor. See 'Dividend
Policy.' Upon our liquidation or dissolution, the holders of our common stock
will be entitled to share ratably in the assets legally available for
distribution to shareholders after payment of liabilities and subject to the
prior rights of any holders of preferred stock then outstanding. Holders of our
common stock have no conversion, sinking fund, redemption, preemptive or
subscription rights. The shares of common stock presently issued and outstanding
are, and the common stock to be issued in connection with the offering, when
issued and paid for, will be, fully paid and nonassessable. The rights,
preferences, and privileges of holders of common stock are subject to the rights
of the holders of shares of any series of preferred stock that we may issue in
the future.

PREFERRED STOCK

Our Board of Directors is authorized, subject to any limitations prescribed
by law, from time to time to issue up to an aggregate of 2,000,000 shares of
preferred stock in one or more classes or series, each of such class or series
to have such preferences, voting powers, qualifications and special or relative
rights or privileges as shall be determined by the Board of Directors in a
resolution or resolutions providing for the issue of such class or series of
preferred stock. Thus, any class or series may, if so determined by our Board of
Directors, have full voting rights with our common stock or superior or limited
voting rights, to be convertible into common stock or any other security that we
may be authorized to issue, and have such other preferences, relative rights and
limitations as our Board of Directors shall determine. As a result, any class or
series of our preferred stock could have rights which would adversely affect the
voting power of the common stock or which could delay, defer or prevent a change
in control of Comtech. The shares of any class or series of preferred stock need
not be identical. Currently, 200,000 shares of preferred stock have been
designated Series A junior participating preferred stock pursuant to our rights
plan described below. As of the date of this prospectus, we have no plan to
issue any shares of preferred stock.

RIGHTS PLAN

On December 15, 1998, we entered into a Rights Agreement with American Stock
Transfer and Trust Company, as Rights Agent. Under the Rights Agreement, our
Board of Directors declared a dividend distribution of one Series A junior
participating preferred stock purchase right for each outstanding share of
common stock. The Board also authorized and directed the issuance of one Right
with respect to each share of common stock issued thereafter. The Rights have
certain anti-takeover effects.

The Rights are attached to all certificates representing outstanding shares
of common stock, and no separate Right Certificates will be distributed. The
Rights will separate from the shares of

<PAGE>
common stock upon the earliest to occur of (1) a person or entity or group of
affiliated or associated persons having acquired beneficial ownership of 15% or
more of the outstanding shares of our common stock (except pursuant to a
Permitted Offer, as hereinafter defined); or (2) 10 business days (or such later
date as our Board of Directors may determine) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in a Person or Group becoming an Acquiring
Person (as hereinafter defined) (the earliest of such dates being called the
'Distribution Date'). A Person or Group whose acquisition of shares of our
common stock causes a Distribution Date pursuant to clause (1) above is an
'Acquiring Person.' The date that a Person or Group becomes an Acquiring Person
is the 'Shares Acquisition Date.'

A Person who acquires shares of common stock pursuant to a tender or
exchange offer which is for all outstanding shares of common stock at a price
and on terms which our Board of Directors determines (prior to our acquisition)
to be adequate and in the best interests of us and our stockholders (other than
such Person, its affiliates and associates) (a 'Permitted Offer') will not be
deemed to be an Acquiring Person and such Person's ownership will not constitute
a Distribution Date.

The Rights are not exercisable until the Distribution Date, and will expire
at the close of business on December 15, 2008, unless earlier redeemed by us.

In the event that any person becomes an Acquiring Person, each holder of
Rights (other than Rights that have become null and void as described below)
will thereafter have the right (the 'Flip-In Right') to receive, upon exercise
of each Right, the number of shares of common stock (or, in certain
circumstances, other securities of the Company) having a value (immediately
prior to such triggering event) equal to two times the product of (i) that
number of one-hundredths of a share of Series A preferred stock for which such
right is then exercisable and (ii) the exercise price of such Right. Currently,
the exercise price of each Right is $60, and each Right is exercisable for 0.667
one-hundredths of a share of Series A preferred stock. For example, if a Person
became an Acquiring Person at a time when the current per share market price of
our common stock is $15, each holder of a Right (other than a Right which has
become null and void as described herein) would have the right to receive 5.33
shares of common stock upon exercise of the Right and payment of $40.

Our Board of Directors, at its option, may exchange each Right (other than
those that have become null and void as described below) for one share of common
stock in lieu of the Flip-In Right, provided no Person is the beneficial owner
of 50% or more of the shares of common stock at the time of such exchange.
Notwithstanding the foregoing, following the occurrence of the event described
above, all Rights that are or (under certain circumstances specified in the
Rights Agreement) were beneficially owned by any Acquiring Person or any
affiliate or associate thereof or certain transferees thereof will be null and
void.

In the event that, at any time following the Shares Acquisition Date, (1) we
are acquired in a merger or other business combination transaction in which the
holders of all of the outstanding shares of common stock immediately prior to
the consummation of the transaction are not the holders of all of the surviving
corporation's voting power, or (2) more than 50% of our assets or earning power
is sold or transferred, then each holder of Rights (except Rights which
previously have been voided as set forth above) shall thereafter have the right
(the 'Flip-Over Right') to receive, upon exercise of such Rights, shares of
common stock of the acquiring company (or in certain circumstances, its parent)
having a value equal to two times the aggregate exercise price of the Rights.
The Flip-Over Right shall not apply to any transaction described in clause (1)
if such transaction is with a Person or Persons (or a wholly owned subsidiary of
any such Person or Persons) that acquired shares of common stock pursuant to a
Permitted Offer and the price and form of consideration offered in such
transaction is the same as that paid to all holders of common stock whose shares
were purchased pursuant to the Permitted Offer. The holder of a Right will
continue to have the Flip-Over Right whether or not such holder exercises or
surrenders the Flip-In Right.

<PAGE>
At any time prior to the earlier to occur of (1) a person becoming an
Acquiring Person or (2) the expiration of the Rights, we may redeem the Rights
in whole, but not in part, at a price of $.01 per Right (the 'Redemption
Price'), which redemption shall be effective at such time, on such basis and
with such conditions as the Board of Directors may establish in its sole
discretion. We may, at our option, pay the Redemption Price in common stock.

All of the provisions of the Rights Agreement may be amended by the Board of
Directors prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in order to cure
any ambiguity, defect or inconsistency, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or, subject to certain limitations, to shorten or lengthen
any time period under the Rights Agreement.

OUR BOARD OF DIRECTORS

Our Board of Directors is divided into three classes, with each class
holding office for staggered three-year terms. The classification of directors
may have the effect of making it more difficult for our stockholders to change
the composition of the Board of Directors in a relatively short period of time.
In addition, the classified board provision could have the effect of
discouraging a third party from attempting to gain control of us, even though
such an attempt might be beneficial to us and our stockholders. Accordingly, the
classified board provision, if effective, could delay, defer or prevent a change
in control of our company.

FAIR PRICE PROVISION

Our certificate of incorporation contains a Fair Price Provision (the 'Fair
Price Provision') which requires that mergers, certain other business
combinations and similar transactions ('Business Combinations') involving us and
the beneficial owner of more than 10% of our voting shares (an 'Interested
Stockholder') be approved by the vote of 80% or more of the outstanding voting
shares (including a vote of at least 66 2/3% of the shares not held by the
Interested Stockholder) unless the transaction is either approved by at least a
two-thirds majority of the members of our Board of Directors who are
unaffiliated with the Interested Stockholder and were directors before the
Interested Stockholder became such ('Disinterested Directors'), or unless
certain minimum price, form of consideration and procedural requirements are
met. The Fair Price Provision does not, however, preclude our Board of Directors
in exercising its business judgment from either opposing or approving a takeover
proposal, whether or not such a proposal satisfies the minimum price, form of
consideration and procedural requirements. In addition, the Fair Price Provision
renders more difficult the consummation of a Business Combination by a person
acquiring a substantial interest in our stock, regardless of whether any such
transaction was desired by the holders of a majority (but less than 80%) of the
outstanding shares. Another effect of the Fair Price Provision is to vest in one
stockholder, or a group of stockholders controlling 20% or more of our voting
stock, a veto power or its practical equivalent over certain transactions,
unless the transactions were approved by the Disinterested Directors or the
minimum price and other provisions were met, even though holder of a majority of
our common stock may believe such transactions to be desirable and beneficial.

CERTAIN PROVISIONS OF DELAWARE LAW

We are subject to the provisions of Section 203 of the Delaware General
Corporation Law ('GCL'), an anti-takeover law. In general, this statute
prohibits a publicly-held Delaware corporation from engaging in a 'business
combination' with an 'interested stockholder' for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
A 'business combination' includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
certain exceptions, for purposes of Section 203 of the GCL,

<PAGE>
an 'interested stockholder' is a person who, together with affiliates, owns, or
within three years did own, 15% or more of the corporation's voting stock.

LIABILITY OF DIRECTORS AND OFFICERS

As permitted under Delaware law, our Certificate of Incorporation contains a
provision that eliminates the personal liability of the directors to us and our
stockholders for monetary damages for breaches of fiduciary duties as directors,
except that such provision does not apply to any breach that involves

a breach of a director's duty of loyalty to our company,

any act or omission not in good faith or which involves intentional
misconduct or a knowing violation of law,

a transaction from which the director derives an improper personal benefit,
or

the payment of dividends or the approval of stock repurchases or
redemptions that are unlawful under the GCL.

Our By-laws provide that we shall indemnify (a) any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of our company) by reason
of the fact that he is or was one or our directors, officers or employees, or is
or was serving at our request as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him in connection with such
action, suit or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to our best interests, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful, and (b) any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by us or in our name to procure a judgment in its favor by reason of the
fact that he is or was one or our directors, officers or employees, or is or was
serving at our request as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to our
best interests and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of his duty to us
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
issuer pursuant to the foregoing provisions, or otherwise, we have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable.

SHARES AVAILABLE FOR FUTURE SALE -- WARRANTS AND OPTIONS

As of Janaury 31, 2000, there were outstanding options to purchase an
aggregate of 836,568 shares of our stock at a weighted average price of $3.93
per share, of which options for 331,138 shares were exercisable. The options
were granted to key employees under our equity incentive plans as part of our
long-term incentive compensation strategy to attract, retain and incentivize
highly qualified employees. Approximately 1,365,378 shares are reserved for
issuance pursuant to stock option plans, including the shares subject to the
outstanding options. In addition, there are

<PAGE>

outstanding warrants to purchase an aggregate of 150,000 shares of our stock at
an exercise price of $6.57 per share.

TRANSFER AGENT

The transfer agent for our common stock is American Stock Transfer and Trust
Company, 40 Wall Street, New York, New York 10005, telephone number (718)
921-8208.

UNDERWRITING

We have entered into an underwriting agreement with the underwriters named
below. ABN AMRO Incorporated, Stifel, Nicolaus & Company, Incorporated and
HCFP/Brenner Securities, LLC are acting as representatives (the
'Representatives') for the underwriters.

The underwriting agreement provides for each underwriter to purchase the
number of shares of common stock shown opposite its name below, subject to the
terms and conditions of the underwriting agreement. The underwriters'
obligations are several, which means that each underwriter is required to
purchase the specified number of shares, but is not responsible for the
commitment of any other underwriter to purchase shares.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ------
<S> <C>
ABN AMRO Incorporated.......................................
Stifel, Nicolaus & Company, Incorporated....................
HCFP/Brenner Securities, LLC................................
----------
Total................................................... 2,300,000
----------
----------
</TABLE>

This is a firm commitment underwriting, which means that the underwriters
have agreed to purchase all of the shares offered by this prospectus if they
purchase any shares (other than those covered by the over-allotment option
described below). The underwriting agreement provides that if an underwriter
defaults in its commitment to purchase shares, the commitments of non-
defaulting underwriters may be increased or the underwriting agreement may be
terminated, depending on the circumstances.

The Representatives have advised us that the underwriters purpose to offer
the shares directly to the public at the public offering price that appears on
the cover page of this prospectus. In addition, the underwriters may offer some
of the shares to selected securities dealers at the public offering price less a
concession of $ per share. The underwriters may also allow, and these
dealers may reallow, a concession not in excess of $ per share to other
dealers. After the shares are released for sale to the public, the underwriters
may change the offering price and other selling terms at various times.

We have granted the underwriters an over-allotment option. This option,
which is exercisable for up to 30 days after the date of this prospectus,
permits the underwriters to purchase a maximum of 345,000 additional shares from
us to cover over-allotments. If the underwriters exercise all or part of this
option, they will purchase shares covered by the option at the initial public
offering price that appears on the cover page of this prospectus, less the
underwriting discount. The underwriters have severally agreed that, to the
extent the over-allotment option is exercised, they will each purchase a number
of additional shares proportionate to each underwriter's initial commitment
reflected in the foregoing table.

The following table shows the underwriting fees to be paid to the
underwriters by us in connection with this offering. The fees to be paid by us
are shown assuming both no exercise and full exercise of the underwriters'
over-allotment option.

<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per Share............................................ $ $
Total................................................ $ $
</TABLE>

<PAGE>
We will pay the offering expenses, estimated to be approximately $500,000,
which include a non-accountable expense allowance of $60,000 paid to the
Representatives.

Our executive officers and directors have agreed to a 180-day 'lock-up' with
respect to the shares of common stock and any other Comtech securities that they
beneficially own or have the right to acquire upon exercise of options. We have
agreed to a 180-day 'lock-up' with respect to previously unissued or treasury
shares. This means that, with certain exceptions, during the 'lock-up' periods,
Comtech and these officers and directors may not offer, sell, pledge or
otherwise dispose of our common stock without the prior written consent of ABN
AMRO Incorporated.

The rules of the Securities and Exchange Commission may limit the ability of
the underwriters to bid for or purchase shares before the distribution of the
shares is completed. However, the underwriters may engage in the following
activities under the rules:

Stabilizing transactions -- The underwriters may make bids or purchases for
the purpose of pegging, fixing or maintaining the price of shares, so long
as stabilizing bids do not exceed a specified maximum and may discontinue
these bids or purchases at any time.

Over-allotment and syndicate covering transactions -- The underwriters may
create a short position in the shares by selling more shares than are shown
on the cover page of this prospectus. If a short position is created in
connection with the offering, the representatives may engage in syndicate
covering transactions by purchasing shares in the open market. The
representatives may also elect to reduce any short position by exercising
all or part of the over-allotment option.

We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, and to contribute to
payments the underwriters may be required to make to satisfy any such
liabilities.

One of the Representatives, HCFP/Brenner Securities, LLC, was first
registered as a broker-dealer in January 1999 and, as of the date of this
prospectus, has participated in few public offerings. Prospective purchasers of
shares of common stock offered hereby should consider this limited experience in
evaluating the offering.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for us by Proskauer Rose LLP, New York, New York. Richard L. Goldberg, a
director of Comtech, is also a partner in Proskauer Rose LLP. Certain legal
matters will be passed upon for the underwriters by Thompson Coburn LLP, St.
Louis, Missouri.

EXPERTS

Our consolidated financial statements as of July 31, 1999 and 1998 and for
each of the years in the three-year period ended July 31, 1999 have been
included in this prospectus and elsewhere in the registration statement, in
reliance upon the report of KPMG LLP, independent certified public accountants,
appearing elsewhere herein, upon the authority of said firm as experts in
accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You can inspect and
copy these reports, proxy statements and other information at the public
reference facilities of the Securities and Exchange Commission, in Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center, Suite
1300, New York, New York 10048; and Suite 1400, Citicorp Center, 500 W. Madison
Street, Chicago, Illinois 60661-2511. You can also obtain copies of these
materials from the public reference section of the Securities and Exchange
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information on the public reference rooms. The Securities and Exchange
Commission also

<PAGE>
maintains a web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Securities and Exchange Commission (http://www.sec.gov).

We have filed a registration statement and related exhibits with the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
The registration statement contains additional information about us and our
common stock. You may inspect the registration statement and exhibits without
charge at the office of the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and you may obtain copies from the
Securities and Exchange Commission at prescribed rates.

The Securities and Exchange Commission allows us to 'incorporate by
reference' the information we file with it, which means that we can disclose
important information to you by referring to those documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the Securities and Exchange Commission will
automatically update and supersede this information. We incorporate by reference
the following documents we filed with the Securities and Exchange Commission
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the
'Exchange Act'):

Annual Report on Form 10-K for the year ended July 31, 1999; and

Quarterly Report on Form 10-Q for three months ended October 31, 1999.

You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:

Comtech Telecommunications Corp.
105 Baylis Road
Melville, New York 11747
Telephone: (516) 777-8900
Attention: Ms. Gail Segui

<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Financial Statements:

Independent Auditors' Report............................ F-2

Balance Sheets at July 31, 1999 and 1998................ F-3

Statements of Operations for each of the years in the
three-year period ended July 31, 1999.................. F-4

Statements of Stockholders' Equity for each of the years
in the three-year period ended July 31, 1999........... F-5

Statements of Cash Flows for each of the years in the
three-year period ended July 31, 1999.................. F-6

Notes to Consolidated Financial Statements.............. F-7

Unaudited Consolidated Interim Financial Statements:

Unaudited Consolidated Balance Sheet as of October 31,
1999................................................... F-20

Unaudited Consolidated Statements of Operations for each
of the three-month periods ended October 31, 1999 and
1998................................................... F-21

Unaudited Consolidated Statements of Cash Flows for each
of the three-month periods ended October 31, 1999 and
1998................................................... F-22

Notes to Unaudited Consolidated Interim Financial
Statements............................................. F-23
</TABLE>

F-1

<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
COMTECH TELECOMMUNICATIONS CORP.:

We have audited the consolidated financial statements of Comtech
Telecommunications Corp. and subsidiaries as listed in the accompanying index.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Comtech
Telecommunications Corp. and subsidiaries as of July 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended July 31, 1999 in conformity with generally accepted
accounting principles.

/s/ KPMG LLP

Melville, New York
September 24, 1999

F-2

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................... $ 5,896,000 $ 2,724,000
Restricted cash......................................... -- 22,000
Accounts receivable, less allowance for doubtful
accounts of $145,000 in 1999 and $170,000 in 1998..... 5,152,000 5,932,000
Inventories, net........................................ 7,879,000 6,135,000
Prepaid expenses and other current assets............... 138,000 276,000
Deferred tax asset -- current........................... 1,658,000 --
----------- ------------
Total current assets................................ 20,723,000 15,089,000
Property, plant and equipment, net.......................... 4,310,000 4,314,000
Intangible assets, net of amortization of $78,000........... 1,623,000 --
Other assets................................................ 274,000 307,000
Deferred tax asset -- non current........................... 2,917,000 --
----------- ------------
$29,847,000 $ 19,710,000
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (including
payable to related party of $316,000 in 1999 and
$309,000 in 1998)..................................... $ 605,000 $ 804,000
Accounts payable........................................ 3,763,000 2,588,000
Accrued expenses and other current liabilities.......... 6,026,000 2,780,000
Net liabilities of discontinued operation............... 137,000 --
----------- ------------
Total current liabilities........................... 10,531,000 6,172,000
Long-term debt, less current installments (including payable
to related party of $501,000 in 1999 and $817,000 in
1998)..................................................... 959,000 1,445,000
----------- ------------
Total liabilities................................... 11,490,000 7,617,000
----------- ------------
Stockholders' equity:
Preferred stock, par value $.10 per share; shares
authorized and unissued 2,000,000..................... -- --
Common stock, par value $.10 per share; authorized
15,000,000 shares; issued, 4,471,368 shares in 1999
and 4,008,006 shares in 1998.......................... 447,000 401,000
Additional paid-in capital.............................. 23,801,000 22,055,000
Accumulated deficit..................................... (4,746,000) (10,011,000)
----------- ------------
19,502,000 12,445,000
Less:
Treasury stock (82,500 shares in 1999 and 1998)......... (184,000) (184,000)
Deferred compensation................................... (961,000) (168,000)
----------- ------------
18,357,000 12,093,000
----------- ------------
Commitments and contingencies
$29,847,000 $ 19,710,000
----------- ------------
----------- ------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-3

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED JULY 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net sales............................................. $37,886,000 $30,114,000 $24,746,000
----------- ----------- -----------
Costs and expenses:
Cost of sales..................................... 26,405,000 21,330,000 17,670,000
Selling, general and administrative............... 6,632,000 6,013,000 5,415,000
Research and development.......................... 2,022,000 1,319,000 1,023,000
----------- ----------- -----------
35,059,000 28,662,000 24,108,000
----------- ----------- -----------
Operating income from continuing operations........... 2,827,000 1,452,000 638,000
Other expenses (income):
Interest expense.................................. 204,000 234,000 284,000
Interest income................................... (65,000) (36,000) (33,000)
Other............................................. (39,000) (30,000) (151,000)
----------- ----------- -----------
Income from continuing operations before income
taxes............................................... 2,727,000 1,284,000 538,000
Provision (benefit) for income taxes.................. (3,754,000) 180,000 54,000
----------- ----------- -----------
Income from continuing operations..................... 6,481,000 1,104,000 484,000
Discontinued operations (Note 13):
Loss from operations of discontinued segment (net
of applicable income tax benefit of $320,000)... (622,000) -- --
Loss on disposal of segment, including provision
of $430,000 for operating losses during
phase-out period (net of applicable income tax
benefit of $306,000)............................ (594,000) -- --
----------- ----------- -----------
Net income............................................ $ 5,265,000 $ 1,104,000 $ 484,000
----------- ----------- -----------
----------- ----------- -----------
Basic income (loss) per share:
Income from continuing operations................. $ 1.56 $ 0.28 $ 0.13
Loss from discontinued operations................. (0.29) -- --
----------- ----------- -----------
Basic income...................................... $ 1.27 $ 0.28 $ 0.13
----------- ----------- -----------
----------- ----------- -----------
Diluted income (loss) per share:
Income from continuing operations................. $ 1.42 $ 0.27 $ 0.12
Loss from discontinued operations................. (0.27) -- --
----------- ----------- -----------
Diluted income.................................... $ 1.15 $ 0.27 $ 0.12
----------- ----------- -----------
----------- ----------- -----------
Weighted average number of common shares
outstanding -- basic computation.................... 4,143,000 3,902,000 3,873,000
Potential dilutive common shares...................... 430,000 264,000 33,000
----------- ----------- -----------
Weighted average number of common and common
equivalent shares outstanding assuming dilution --
diluted computation................................. 4,573,000 4,166,000 3,906,000
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

See accompanying notes to consolidated financial statements.

F-4

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JULY 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY STOCK
-------------------- PAID-IN ACCUMULATED ------------------ DEFERRED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT COMPENSATION EQUITY
------ ------ ------- ------- ------ ------ ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance July 31,
1996................. 3,911,016 $391,000 $22,105,000 $(11,599,000) 22,500 $(180,000) $ (416,000) $10,301,000

Amortization of
deferred
compensation......... -- -- -- -- -- -- 43,000 43,000

Forfeiture of unvested
restricted shares
issued pursuant to
employee stock award
agreement............ -- -- (211,000) -- -- -- 158,000 (53,000)

Purchase of treasury
shares............... 60,000 (4,000) -- (4,000)

Stock options
exercised............ 64,590 7,000 100,000 -- -- -- -- 107,000

Net income............ -- -- -- 484,000 -- -- 484,000
--------- -------- ----------- ------------ ------ --------- ----------- -----------

Balance July 31,
1997................. 3,975,606 398,000 21,994,000 (11,115,000) 82,500 (184,000) (215,000) 10,878,000

Amortization of
deferred
compensation......... -- -- -- -- -- -- 47,000 47,000

Stock options
exercised............ 32,400 3,000 61,000 -- -- -- -- 64,000

Net income............ -- -- -- 1,104,000 -- -- 1,104,000
--------- -------- ----------- ------------ ------ --------- ----------- -----------

Balance July 31,
1998................. 4,008,006 401,000 22,055,000 (10,011,000) 82,500 (184,000) (168,000) 12,093,000

Amortization of
deferred
compensation......... -- -- -- -- -- -- 248,000 248,000

Stock issued in
acquisition of Mobile
Datacom.............. 150,000 15,000 513,000 -- -- -- -- 528,000

Restricted shares
issued pursuant to
employment stock
award agreement...... 225,000 22,000 1,034,000 -- -- -- (1,041,000) 15,000

Stock options
exercised............ 88,362 9,000 199,000 -- -- -- -- 208,000

Net income............ -- -- 5,265,000 -- -- -- 5,265,000
--------- -------- ----------- ------------ ------ --------- ----------- -----------

Balance July 31,
1999................. 4,471,368 $447,000 $23,801,000 $ (4,746,000) 82,500 $(184,000) $ (961,000) $18,357,000
--------- -------- ----------- ------------ ------ --------- ----------- -----------
--------- -------- ----------- ------------ ------ --------- ----------- -----------
</TABLE>

See accompanying notes to consolidated financial statements.

F-5

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JULY 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income......................................... $ 5,265,000 $ 1,104,000 $ 484,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss from discontinued operations.............. 1,216,000 -- --
Gain on sale of property....................... -- -- (72,000)
Depreciation and amortization.................. 1,510,000 1,206,000 1,055,000
Increase (decrease) in bad debt allowance...... (25,000) 68,000 74,000
Provision (reduction of) inventory reserves.... 341,000 (127,000) 466,000
Deferred income tax provision (benefit)........ (4,575,000) -- --
Changes in assets and liabilities, net of
effects of acquisitions:
Restricted cash securing letter of credit
obligations.............................. 22,000 68,000 130,000
Accounts receivable........................ 1,006,000 (449,000) (2,158,000)
Inventories................................ (1,724,000) 548,000 (495,000)
Prepaid expenses and other current
assets................................... 138,000 (45,000) (35,000)
Other assets............................... 9,000 (3,000) (48,000)
Accounts payable........................... 372,000 (277,000) 828,000
Accrued expenses and other current
liabilities.............................. 2,376,000 479,000 527,000
----------- ----------- -----------
Net cash provided by continuing
operations........................... 5,931,000 2,572,000 756,000
Net cash used by discontinued
operations........................... (988,000) -- --
----------- ----------- -----------
Net cash provided by operating
activities........................... 4,943,000 2,572,000 756,000
----------- ----------- -----------
Cash flows from investing activities:
Purchases of property, plant and equipment......... (1,000,000) (312,000) (903,000)
Sale of property, plant and equipment.............. -- -- 127,000
Payment for business acquisitions net of cash
received......................................... (173,000) -- --
----------- ----------- -----------
Net cash used in investing
activities........................... (1,173,000) (312,000) (776,000)
----------- ----------- -----------
Cash flows from financing activities:
Borrowings under line of credit facility........... 850,000 1,900,000 1,150,000
Repayments of borrowings under line of credit
facility......................................... (850,000) (1,900,000) (1,150,000)
Principal payments on long-term debt............... (821,000) (874,000) (649,000)
Proceeds from issuance of common stock:
Purchase of treasury stock..................... -- -- (4,000)
Stock options.................................. 208,000 64,000 107,000
Restricted stock............................... 15,000 -- --
----------- ----------- -----------
Net cash used in financing
activities........................... (598,000) (810,000) (546,000)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents... 3,172,000 1,450,000 (566,000)
Cash and cash equivalents at beginning of period....... 2,724,000 1,274,000 1,840,000
----------- ----------- -----------
Cash and cash equivalents at end of period............. $ 5,896,000 $ 2,724,000 $ 1,274,000
----------- ----------- -----------
----------- ----------- -----------
Supplemental cash flow disclosure
Cash paid during the period for:
Interest....................................... $ 204,000 $ 234,000 $ 284,000
Income taxes................................... 169,000 22,000 38,000
</TABLE>

See accompanying notes to consolidated financial statements.

F-6

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1999 AND 1998

(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

(a) PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
Comtech Telecommunications Corp. and its subsidiaries (the Company), all of
which are wholly-owned. All significant intercompany balances and transactions
have been eliminated in consolidation.

(b) NATURE OF BUSINESS

We design, develop, produce and market sophisticated components and systems
that are used by telecommunications and defense systems and service providers in
a broad range of applications.

The Company's business is highly competitive and characterized by rapid
technological change. In addition, the number of potential customers for the
Company's products is limited. The Company's growth and financial position
depends, among other things, on its ability to keep pace with such changes and
developments and to respond to the sophisticated requirements of an increasing
variety of electronic equipment users. Many of the Company's competitors are
substantially larger, have significantly greater financial, marketing and
operating resources and broader product lines than does the Company. A
significant technological breakthrough by others, including smaller competitors
or new companies, could have a material adverse effect on the Company's
business. In addition, certain of the Company's customers have technological
capabilities in the Company's product areas and could choose to replace the
Company's products with their own.

International sales expose the Company to certain risks, including barriers
to trade, fluctuations in foreign currency exchange rates (which may make the
Company's products less price competitive), political and economic instability,
availability of suitable export financing, export license requirements, tariff
regulations, and other United States and foreign regulations that may apply to
the export of the Company's products, as well as the generally greater
difficulties of doing business abroad. The Company attempts to reduce the risk
of doing business in foreign countries by seeking contracts denominated in U.S.
dollars, advance payments and irrevocable letters of credit in its favor.

Revenues on long-term, fixed price contracts are generally recorded based on
the relationship of total costs incurred to date to total projected final costs
or, alternatively, as deliveries are made. Revenues under cost reimbursement
contracts are recorded as costs are incurred.

Revenues on other contract orders are recognized under the units of delivery
method. Under this method, revenues are recorded as units are delivered with the
related cost of sales recognized on each shipment based upon a percentage of
estimated final contract costs. Contract costs include material, direct labor,
manufacturing overhead and other direct costs. Retainages and estimated earnings
in excess of amounts billed on certain multi-year programs are reported as
unbilled receivables.

Revenues not associated with long-term contracts are generally recognized
when the earnings process is complete, generally upon shipment or customer
acceptance.

Provision for anticipated losses on uncompleted contracts is made in the
period in which such losses are determined.

F-7

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1999 AND 1998

(d) CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid direct obligations of the U.S.
government with a maturity at acquisition of three months or less. Cash
equivalents of July 31, 1999 and 1998 amounted to $2,258,000 and $1,991,000.
These investments are carried at cost plus accrued interest, which approximates
market. The Company had $22,000 of restricted cash securing letter of credit
obligations with a financial institution at July 31, 1998.

(e) STATEMENT OF CASH FLOWS

The Company acquired equipment financed by capital leases in the amounts of
$136,000, $1,207,000 and $48,000 in 1999, 1998 and 1997, respectively.

(f) INVENTORIES

Work-in-process inventory reflects all accumulated production costs, which
are comprised of direct production costs and overhead, reduced by amounts
attributable to units delivered. These inventories are reduced to their
estimated net realizable value by a charge to cost of sales in the period such
excess costs are determined.

Raw materials and components and work-in-process inventory are stated at the
lower of cost or market, computed on the first-in, first-out (FIFO) method.

(g) LONG-LIVED ASSETS

The Company's plant and equipment, which are recorded at cost, are
depreciated or amortized over their estimated useful lives (building and
improvements -- 40 years, equipment -- three to eight years) under the
straight-line method. Capitalized values of properties under leases are
amortized over the life of the lease or the estimated life of the asset,
whichever is less. Intangible assets, consisting of goodwill resulting from
acquisitions, are being amortized over 20 years. The Company reviews its
long-lived assets for impairment whenever events or circumstances indicate that
the carrying amount of an asset may not be recoverable. If the sum of the
expected cash flows, undiscounted and without interest, is less than the
carrying amount of the asset, an impairment loss is recognized as the amount by
which the carrying amount of the asset exceeds its fair value.

(h) OTHER ASSETS

Included in other assets at July 31, 1999 and 1998 is approximately $350,000
less accumulated amortization, which relates to an intellectual property rights
agreement being amortized over the eight-year term of the agreement. At July 31,
1999 and 1998, accumulated amortization related to this purchased technology was
approximately $232,000 and $190,000, respectively. The Company assesses the
recoverability of the intangible asset by determining whether the amortization
of purchased technology over its remaining life can be recovered through
undiscounted future operating cash flows from product sales utilizing the
technology.

(i) RESEARCH AND DEVELOPMENT COSTS

The Company charges research and development costs to operations as
incurred, except in those cases in which such costs are reimbursable under
customer-funded contracts. In fiscal 1999, 1998 and 1997, the Company was
reimbursed by customers for such activities in the amount of $1,779,000,
$356,000 and $436,000, respectively.

F-8

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1999 AND 1998

(j) INCOME TAXES

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using the enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

(k) EARNINGS PER SHARE

The Company calculates earnings per share (EPS) in accordance with the
Statement of Financial Accounting Standards (SFAS) No. 128, 'Earnings per
Share'. Basic EPS are computed based on the weighted average number of shares
outstanding. Diluted EPS reflects the maximum dilution from potential common
stock issuable pursuant to the exercise of stock options and warrants, if
dilutive, outstanding during each period. All share and per share amounts have
been restated to reflect a three-for-two stock split effective July 30, 1999
(Note 9(e)).

(l) FINANCIAL INSTRUMENTS

Management of the Company believes that the book value of its monetary
assets and liabilities approximates fair value as a result of the short-term
nature of such assets and liabilities. Management further believes that the fair
market value of long-term debt relating to capital leases does not differ
materially from its carrying value.

(m) USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results may differ from those estimates.

(n) ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company records compensation expense for employee stock options only if
the current market price of the underlying stock exceeds the exercise price on
the date of the grant. The Company has elected not to implement the fair value
based accounting method for employee stock options of SFAS No. 123, 'Accounting
for Stock-Based Compensation', but has elected to disclose the pro forma net
income per share for employee stock option grants made beginning in fiscal 1996
as if such method had been used to account for stock-based compensation cost as
described in SFAS No. 123.

(o) REPORTING COMPREHENSIVE INCOME

The Company has adopted SFAS No. 130, 'Reporting Comprehensive Income',
which requires companies to report all changes in equity during a period, except
those resulting from investment by owners and distribution to owners, for the
period in which they are recognized. Comprehensive income is the total of net
income and all other nonowner changes in equity (or other

F-9

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1999 AND 1998

comprehensive income) such as unrealized gains/losses on securities classified
as available-for-sale, foreign currency translation adjustments and minimum
pension liability adjustments.

Comprehensive and other comprehensive income must be reported on the face of
annual financial statements or in the case of interim reporting, the footnote
approach may be utilized. The Company's operations did not give rise to items
includible in comprehensive income which were not already included in net
income. Accordingly, the Company's comprehensive income is the same as its net
income for all periods presented.

(2) ACCOUNTS RECEIVABLE

Accounts receivable consist of the following at July 31, 1999 and 1998:

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Accounts receivable from commercial customers............... $3,924,000 $4,302,000
Unbilled receivables (including retainages) on contracts-in-
progress.................................................. 1,154,000 1,531,000
Amounts receivable from the United States government and its
agencies.................................................. 219,000 269,000
---------- ----------
5,297,000 6,102,000
Less allowance for doubtful accounts........................ 145,000 170,000
---------- ----------
Accounts receivable, net................................ $5,152,000 $5,932,000
---------- ----------
---------- ----------
</TABLE>

In the opinion of management, substantially all of the unbilled balances will be
billed and collected during fiscal 2000.

(3) INVENTORIES

Inventories consist of the following at July 31, 1999 and 1998:

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Raw materials and components................................ $3,553,000 $3,365,000
Work-in-process............................................. 5,798,000 4,932,000
---------- ----------
9,351,000 8,297,000

Less:
Progress payments....................................... 302,000 1,333,000
Reserve for anticipated losses on contracts and
inventory reserves.................................... 1,170,000 829,000
---------- ----------
Inventories, net.................................... $7,879,000 $6,135,000
---------- ----------
---------- ----------
</TABLE>

F-10

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1999 AND 1998

(4) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following at July 31, 1999 and
1998:

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Equipment.................................................. $ 9,574,000 $ 8,918,000
Leasehold improvements..................................... 427,000 352,000
Facilities financed by capital lease....................... 3,365,000 3,365,000
Equipment financed by capital lease........................ 4,219,000 3,802,000
----------- -----------
17,585,000 16,437,000
Less accumulated depreciation and amortization............. 13,275,000 12,123,000
----------- -----------
$ 4,310,000 $ 4,314,000
----------- -----------
----------- -----------
</TABLE>

Depreciation and amortization expense on property, plant and equipment
amounted to approximately $1,152,000, $1,103,000 and $994,000 for the years
ended July 31, 1999, 1998 and 1997, respectively.

(5) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following at
July 31, 1999 and 1998:

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Customer advances and deposits.............................. $2,798,000 $ 652,000
Accrued wages and benefits.................................. 1,603,000 1,068,000
Accrued commissions......................................... 915,000 452,000
Other....................................................... 710,000 608,000
---------- ----------
$6,026,000 $2,780,000
---------- ----------
---------- ----------
</TABLE>

(6) SHORT-TERM BORROWINGS

In December 1998, the Company obtained an $8,000,000 secured credit facility
from Republic National Bank of New York. The line of credit, which is to be used
for working capital requirements, is for a term of one year and bears interest
on borrowings at 90-day LIBOR plus 1.50%. There were no borrowings outstanding
at July 31, 1999.

(7) LONG-TERM DEBT

Long-term debt consists of the following at July 31, 1999 and 1998:

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Obligations under capital leases............................ $1,564,000 $2,249,000
Less current installments................................... 605,000 804,000
---------- ----------
$ 959,000 $1,445,000
---------- ----------
---------- ----------
</TABLE>

The obligations under capital leases relate to the Melville, New York
facilities, as well as certain equipment, the net carrying value of which was
$2,087,000 and $2,517,000 at July 31, 1999 and 1998, respectively.

F-11

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1999 AND 1998

Future minimum lease payments under capital leases as of July 31, 1999 are:

<TABLE>
<CAPTION>
YEARS ENDING JULY 31,
- ---------------------
<S> <C>
2000......................................... $ 725,000
2001......................................... 563,000
2002......................................... 315,000
2003......................................... 137,000
2004......................................... 51,000
----------
Total minimum lease payments......................... 1,791,000
Less amounts representing interest (at rates varying
from 6.8% to 10.8%)................................ 227,000
----------
1,564,000
Less current installments............................ 605,000
----------
Obligations under capital leases, net of current
installments....................................... $ 959,000
----------
----------
</TABLE>

In December 1991, the Company and a partnership controlled by the Company's
Chairman, Chief Executive Officer and President entered into an agreement in
which the Company leases from the partnership its corporate headquarters and
Melville production facility. The lease is for a ten-year period and provides
for annual rentals of approximately $448,000 for fiscal 1999, subject to annual
adjustments equal to the lesser of 5% or the change in the Consumer Price Index.
For financial reporting purposes, the Company has capitalized this lease at
inception in the amount of $2,450,000, net of deferred interest of $1,345,000.
The outstanding balance at July 31, 1999 and 1998 approximated $817,000 and
$1,105,000, respectively.

(8) INCOME TAXES

The provision (benefit) for income taxes on continuing operations included
in the accompanying consolidated statements of operations consists of the
following:

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Federal-current...................................... $ 60,000 $ 45,000 $20,000
Federal-deferred..................................... (3,949,000) -- --
State and local-current.............................. 135,000 135,000 34,000
----------- -------- -------
$(3,754,000) $180,000 $54,000
----------- -------- -------
----------- -------- -------
</TABLE>

The provision (benefit) for income taxes on income from continuing
operations was ($3,754,000), $180,000 and $54,000 for fiscal 1999, 1998 and
1997, respectively, and differed from the amounts computed by applying the U.S.
Federal income tax rate of 34% as a result of the following:

F-12

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1999 AND 1998

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------------------------------------------
1999 1998 1997
-------------------- ----------------- ----------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
------ ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Computed 'expected' tax
expense................ $ 927,000 34.0% $ 437,000 34.0% $183,000 34.0%
Increase (reduction) in
income taxes resulting
from:
Change in the
beginning of the
year valuation
allowance for
deferred tax
assets............. (4,544,000) (166.6) (93,000) (7.2) 264,000 49.6
Utilization of tax
benefit
carryforward....... (223,000) (8.2) (299,000) (23.3) (430,000) (79.9)
State and local
income tax, net of
Federal benefit.... 86,000 3.2 135,000 10.5 34,000 6.3
Other................ -- -- -- -- 3,000 --
----------- ------ --------- ----- -------- -----
Effective tax rate....... $(3,754,000) (137.6)% $ 180,000 14.0% $ 54,000 10.0%
----------- ------ --------- ----- -------- -----
----------- ------ --------- ----- -------- -----
</TABLE>

As of July 31, 1999, the Company has net operating loss carryforwards of
approximately $10,260,000 for income tax purposes of which $4,843,000 expires in
2004, $1,473,000 expires in 2005, $415,000 expires in 2009 and $3,529,000
expires in 2010 through 2012.

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at July 31, 1999 and 1998
are presented below.

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts receivable.............. $ 60,000 $ 60,000
Inventory reserve....................................... 646,000 496,000
Plant and equipment, principally due to capitalized
leases and differences in depreciation................ (16,000) 27,000
Compensated absences, principally due to accrual for
financial reporting purposes.......................... 395,000 331,000
Deferred compensation................................... 250,000 154,000
Net operating loss carryforwards........................ 3,490,000 3,726,000
Investment tax credit carryforwards..................... 440,000 440,000
Alternative minimum tax credit carryforwards............ 87,000 87,000
---------- ----------
Total gross deferred tax assets..................... 5,352,000 5,321,000
Less valuation allowance................................ (777,000) (5,321,000)
---------- ----------
Net deferred tax assets............................. $4,575,000 $ --
---------- ----------
---------- ----------
</TABLE>

The Company provides for income taxes under the provisions of SFAS No. 109,
'Accounting for Income Taxes.' SFAS 109 requires an asset and liability based
approach in accounting for income taxes. In assessing the realizability of
deferred tax assets and liabilities, management considers whether it is more
likely than not that some portion or all of them will not be realized. At July
31, 1998 the Company had a 100% valuation allowance against these gross deferred
tax assets. During fiscal 1999, the Company concluded that a full valuation
allowance was no longer necessary given its estimates of future earnings, which
include substantial long-term contracts entered into in the first and fourth
quarters of fiscal 1999 and the expected timing of temporary difference
reversals. Accordingly, the Company reduced the valuation allowance to $777,000
during

F-13

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1999 AND 1998

fiscal 1999 and recorded deferred tax assets of $4,575,000 of which $3,155,000
was recorded in the fourth quarter. The Company must generate approximately
$13,500,000 of taxable income to fully utilize its deferred tax assets.
Management believes it is more likely than not that the results of future
operations will generate sufficient taxable income to realize the net deferred
tax assets.

(9) STOCKHOLDERS' EQUITY

(a) OPTIONS AND WARRANT PLANS AND AGREEMENTS

The Company has several option and warrant plans and agreements as follows:

1982 Incentive Stock Option Plan -- The 1982 Incentive Stock Option and
Appreciation Plan provided for the granting to key employees and officers of
incentive stock options to purchase up to 240,000 shares of the Company's common
stock through September 29, 1992 at prices not less than the fair market value
of such shares on the date the option is granted. The plan expired on September
29, 1992. Options granted to purchase an aggregate of 16,350 shares remain
outstanding.

1993 Incentive Stock Option Plan -- The 1993 Incentive Stock Option Plan, as
amended, provides for the granting to key employees and officers of incentive
and non-qualified stock options to purchase up to 1,042,500 shares of the
Company's common stock at prices generally not less than the fair market value
at the date of grant with the exception of anyone who, prior to the grant, owns
more than 10% of the voting power, the exercise price cannot be less than 110%
of the fair market value. In addition, it provides formula grants to
non-employee members of the Board of Directors. The term of the options may be
no more than ten years. However, for incentive stock options granted to any
employee who, prior to the granting of the option, owns stock representing more
than 10% of the voting power, the option term maybe no more than five years. The
plan expires in 2002, unless terminated earlier by the Board of Directors under
conditions specified in the plan. As of July 31, 1999, the Company had granted
incentive stock options representing the right to purchase an aggregate of
1,029,015 shares at prices ranging between $1.50 -- $7.50 per share, of which
69,600 options were canceled and 888,045 are outstanding at July 31, 1999. To
date, options for 71,370 shares have been exercised.

Warrant Issued Pursuant to Acquisition of CMDC -- As part of the asset
purchase agreement for the acquisition of Mobile Datacom Corp. (see Note 12),
which was incorporated into the Company as a wholly-owned subsidiary, Comtech
Mobile Datacom Corp., the Company issued warrants to the owners and creditors to
purchase 150,000 shares of the Company's common stock at an exercise price of
$6.57. The warrants, which contain transferability restrictions, are exercisable
for a period of five years commencing September 24, 1998, and shares purchased
through the exercise of these warrants contain voting restrictions. Due to the
transferability and voting restrictions and other conditions, no value was
ascribed to these warrants for purposes of determining the cost of the
acquisition.

(b) OPTION ACTIVITY

The following table sets forth summarized information concerning the
Company's stock options:

F-14

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1999 AND 1998

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE EXERCISE
NUMBER OF SHARES PRICE
---------------- -----
<S> <C> <C>
Outstanding at July 31, 1996......................... 363,870 $2.42
Granted.............................................. 43,500 2.16
Expired/canceled..................................... (21,810) 2.85
Exercised............................................ (64,590) 1.65
Outstanding at July 31, 1997......................... 320,970 2.55
Granted.............................................. 583,125 2.99
Expired/canceled..................................... (13,500) 2.13
Exercised............................................ (32,400) 2.00
Outstanding at July 31, 1998......................... 858,195 2.65
Granted.............................................. 140,250 6.08
Expired/canceled..................................... (5,688) 5.90
Exercised............................................ (88,362) 2.43
Outstanding at July 31, 1999......................... 904,395 3.40

Options exercisable at July 31, 1999................. 367,437 2.93
Options available for grant at July 31, 1999......... 83,085 --
</TABLE>

The options outstanding as of July 31, 1999 are summarized in ranges as
follows:

<TABLE>
<CAPTION>
RANGE OF WEIGHTED AVERAGE NUMBER OF OPTIONS WEIGHTED AVERAGE
EXERCISE PRICES EXERCISE PRICE OUTSTANDING REMAINING LIFE
--------------- -------------- ----------- --------------
<S> <C> <C> <C>
$1.50 - 2.50 $2.08 123,870 6 years
2.51 - 4.99 3.09 663,525 8 years
5.00 - 7.50 6.55 117,000 7 years
</TABLE>

The Company has two stock option plans, the 1982 Incentive Stock Option and
Appreciation Plan and the 1993 Incentive Stock Option Plan. The Company accounts
for these plans under APB Opinion No. 25, under which no compensation cost has
been recognized. Had compensation cost for these plans been determined
consistent with SFAS Statement No. 123, the Company's net income and income per
share would have been reduced to the following pro forma amounts:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C> <C> <C>
Net income................... As reported $5,255,000 $1,104,000 $484,000
Pro forma 4,836,000 817,000 475,000
Net income per share......... As reported Basic $1.27 $0.28 $0.13
Diluted 1.15 0.27 0.12
Pro forma Basic 1.17 0.21 0.12
Diluted 1.06 0.19 0.12
</TABLE>

The full impact of calculating compensation cost for stock options under
SFAS No. 123 is not reflected in the pro forma net income and net income per
share amounts presented above because compensation cost is reflected over the
option's vesting period and compensation cost for options granted prior to
August 1, 1995 was not considered.

The per share weighted average fair value of stock options granted during
1999 and 1998 was $3.19 and $2.30, respectively, on the date of grant using the
Black Scholes option pricing model with the following weighted average
assumptions:

1999 -- expected dividend yield of 0%, risk-free interest rate of 5.86%,
expected volatility of 69.5% and an expected option life of 10 years.

F-15

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1999 AND 1998

1998 -- expected dividend yield of 0%, risk-free interest rate of 6%,
expected volatility of 63.32% and an expected option life of 10 years.

1997 -- expected dividend yield of 0%, risk-free interest rate of 6%,
expected volatility of 64.49% and an expected option life of 10 years.

(d) RESTRICTED COMMON STOCK

In February 1994, a total of 180,000 (after effect of three-for-two stock
split -- see Note 9(e)) restricted shares of the Company's common stock were
granted by the Board of Directors to the principal officers of one of the
Company's operating units, Comtech Communications Corp. ('CCC'), at a cost of
$.10 per share. The award relates to services to be provided over future years
and, as a result, the stock awards are subject to certain restrictions which may
be removed earlier upon CCC attaining certain business plan milestones, as
provided in the agreement, but no later than ten years from the date of the
award. The excess of market value over cost of the shares awarded of $633,000
was recorded as deferred compensation and is being amortized to expense over a
ten-year period subject to the aforementioned accelerated provisions, if
appropriate, as evaluated on an annual basis. The deferred compensation is
reflected as a reduction of stockholders' equity in the accompanying
consolidated balance sheet. During fiscal 1997, 60,000 of such shares were
forfeited due to the termination of an officer's employment prior to vesting.

In October 1998, a total of 225,000 (after effect of three-for-two stock
split -- see Note 9(e)) restricted shares of the Company's common stock were
granted by the Board of Directors to the principal officers and employees of the
Company's new subsidiary, Comtech Mobile Datacom Corp. ('CMDC'), at a cost of
$.10 per share. The award relates to services to be provided over future years
and, as a result, the stock awards are subject to certain restrictions which may
be removed earlier upon CMDC attaining certain business plan milestones, as
provided in the agreement, but no later than ten years from the date of the
award. The excess of market value over cost of the shares awarded of $1,041,000
was recorded as deferred compensation and is being amortized to expense over a
ten-year period subject to the aforementioned accelerated provisions, if
appropriate, as evaluated on an annual basis. The deferred compensation is
reflected as a reduction of stockholders' equity in the accompanying
consolidated balance sheet as of July 31, 1999.

(e) STOCK SPLIT

On July 6, 1999, the Company's Board of Directors authorized a three-for-two
stock split effected in the form of a 50% stock dividend payable July 30, 1999
to stockholders of record on July 16, 1999. All share and per share amounts in
the accompanying consolidated financial statements have been restated to reflect
the stock split.

(10) SEGMENT AND PRINCIPAL CUSTOMER INFORMATION

Effective July 31, 1999, the Company adopted SFAS No. 131, 'Disclosures
about Segments of an Enterprise and Related Information.' Reportable operating
segments are determined based on the Company's management approach. The
management approach, as defined by SFAS No. 131, is based on the way that the
chief operating decision-maker organizes the segments within an enterprise for
making operating decisions and assessing performance. While the Company's
results of operations are primarily reviewed on a consolidated basis, the chief
operating decision-maker also manages the enterprise in four segments: (I)
Telecommunications Transmission, (II) RF Microwave Amplifiers, (III) Mobile Data
Communications Services and (IV) Wireless Local Loop, which is being
discontinued. Telecommunications Transmission products include modems, frequency
converters, satellite VSAT transceivers and antennas and over-the-horizon
microwave

F-16

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1999 AND 1998

communications products and systems. RF Microwave Amplifier products include
high-power amplifier products that use the microwave and radio frequency
spectrums. Mobile Data Communications Services include two-way messaging links
between mobile platforms or remote sites and user headquarters using satellite,
terrestrial microwave or Internet links. Corporate assets consist principally of
cash, deferred tax assets and intercompany receivables. Corporate losses result
from such corporate expenses as legal, accounting and executive. Sales between
segments were negligible. Eliminations consist of intercompany balances.

<TABLE>
<CAPTION>
MOBILE DATA
TELECOMMUNICATIONS RF MICROWAVE COMMUNICATIONS CORPORATE
TRANSMISSION AMPLIFIERS SERVICES AND OTHERS ELIMINATIONS TOTAL
------------ ---------- -------- ---------- ------------ -----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
FISCAL 1999

Net sales............ $23,045 $14,523 $ 318 $ -- $37,886
Operating income
(loss)............. 2,296 2,503 (309) (1,663) 2,827
Interest income...... 10 -- -- 55 65
Interest expense..... 38 152 11 3 204
Depreciation and
amortization....... 461 714 87 248 1,510
Expenditure for
long-lived
assets............. 791 326 1,734 3 2,854
Total assets......... 16,907 8,409 2,691 15,494 (13,654) 29,847
</TABLE>

<TABLE>
<CAPTION>
FISCAL 1998
-----------
<S> <C> <C> <C> <C> <C> <C>
Net sales............ 13,047 17,067 -- -- 30,114
Operating income
(loss)............. 123 2,565 -- (1,236) 1,452
Interest income...... -- -- -- 36 36
Interest expense..... 52 160 -- 22 234
Depreciation and
amortization....... 506 653 -- 47 1,206
Expenditure for
long-lived
assets............. 669 850 -- -- 1,519
Total assets......... 4,433 9,207 -- 11,930 (5,860) 19,710
</TABLE>

<TABLE>
<CAPTION>
FISCAL 1997
-----------
<S> <C> <C> <C> <C> <C> <C>
Net sales............ 12,513 12,233 -- -- 24,746
Operating income
(loss)............. 356 1,296 -- (1,014) 638
Interest income...... -- 14 -- 19 33
Interest expense..... 58 214 -- 12 284
Depreciation and
amortization....... 515 550 -- (10) 1,055
Expenditures for
long-lived
assets............. 440 511 -- -- 951
Total assets......... 8,116 9,346 -- 12,502 (12,004) 17,960
</TABLE>

Sales to one customer in fiscal 1999 and to different customers in fiscal
1998 and 1997 represented 27.0% and 12.2% and 10.2% of the consolidated net
sales, respectively. Such sales were made from the Telecommunications
Transmission business segment in 1999 and 1997, and

F-17

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1999 AND 1998

from the RF Microwave Amplifier business segment in 1998. During fiscal 1999,
1998 and 1997, approximately 15.6%, 19.5% and 17.0%, respectively, of the
Company's net sales resulted from contracts with the United States government
and its agencies. Export sales comprised 60.1%, 46.5% and 57.3% of net sales in
fiscal 1999, 1998 and 1997, respectively. Export sales include sales to domestic
companies for inclusion in products that will be sold to international
customers.

(11) COMMITMENTS AND CONTINGENCIES

(a) OPERATING LEASES

The Company is obligated under noncancellable operating lease agreements. At
July 31, 1999, the future minimum lease payments under operating leases are as
follows:

Lease expense charged to operations was $301,000, $140,000 and $123,000 in
fiscal 1999, 1998 and 1997, respectively.

(b) UNITED STATES GOVERNMENT CONTRACTS

Certain of the Company's contracts are subject to audit by applicable
governmental agencies. Until such audits are completed, the ultimate profit on
these contracts cannot be determined; however, it is management's belief that
the final contract settlements will not have a material adverse effect on the
Company's consolidated financial condition.

The Company is subject to certain legal actions which arise out of the
normal course of business. It is management's belief that the outcome of these
actions will not have a material adverse effect on the Company's consolidated
financial position.

(d) EMPLOYMENT CONTRACT

Mr. Kornberg, the Company's Chairman of the Board of Directors, Chief
Executive Officer and President is employed pursuant to an agreement which was
amended and restated in January 1998 which provides, among other things, for his
employment until 2003 at a current basic compensation of $295,000 per annum plus
such additional amounts, if any, as the Board of Directors may from time to time
determine.

(12) ACQUISITIONS

In the first quarter of fiscal 1999, the Company formed two subsidiaries,
Comtech Mobile Datacom Corp. ('CMDC') and Comtech Wireless, Inc. ('CWI') to
acquire the assets and assume certain liabilities of two businesses. The
purchase price of the business acquired by CMDC amounted to $628,000 consisting
of cash of $100,000, 150,000 shares of restricted common stock, valued at
$528,000, and warrants to purchase 150,000 shares of common stock at an exercise
price of $6.57 per share. The purchase price of the business acquired by CWI
amounted to $350,000 consisting of $100,000 of cash and a non-recourse note
payable of $250,000. The assets acquired

F-18

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1999 AND 1998

were inventories and equipment. Both acquisitions were accounted for as
purchases whereby the assets and liabilities of the businesses acquired were
consolidated with those of the Company from their respective acquisition dates.
The excess of the purchase price over the fair value of the net assets of the
business acquired by CMDC approximated $1,701,000 and is being amortized over a
20-year period. This amount is included in intangible assets in the accompanying
consolidated balance sheet. Effective July 31, 1999, the operations of the
business acquired by CWI are being discontinued (see Note 13). The pro forma
effect of the acquisition of CMDC was not material to the results of operations
for the years ended July 31, 1999 and 1998.

(13) DISCONTINUED OPERATIONS

Based upon CWI's disappointing fiscal 1999 results of operations and its
uncertain future prospects, in September 1999, the Board of Directors approved a
plan to liquidate CWI by January 31, 2000. The consolidated financial statements
of the Company have been reclassified to reflect the effects of the Company's
decision to account for the disposal of CWI as a discontinued operation.
Accordingly, costs and expenses, assets and liabilities, and cash flows
associated with CWI have been excluded from the respective captions in the
accompanying consolidated balance sheet, statements of operations and statements
of cash flows. Components of amounts included in the net liabilities of
discontinued operations in the accompanying consolidated balance sheet are as
follows:

<TABLE>
<CAPTION>
JULY 31, 1999
-------------
<S> <C>
Inventory................................................... $ 293,000
Provision for operating losses during phase out period...... (430,000)
---------
$(137,000)
---------
---------
</TABLE>

The Company expects to liquidate the operations of CWI by January 31, 2000
and has estimated a loss of $470,000 on disposal of CWI's assets and $430,000
for operating losses through January 31, 2000. CWI had no revenue in fiscal 1999
and expenses of $942,000.

(14) STOCKHOLDER RIGHTS PLAN

On December 15, 1998, the Company's Board of Directors approved the adoption
of a stockholder rights plan in which one stock purchase right ('Right') was
distributed as a dividend on each outstanding share of the Company's common
stock to stockholders of record at the close of business on January 4, 1999.
Under the plan, the Rights will be exercisable only if triggered by a person or
group's acquisition of 15% or more of the Company's common stock. If triggered,
each Right, other than Rights held by the acquiring person or group, would
entitle its holder to purchase a specified number of the Company's common shares
for 50% of their market value at that time. Unless a 15% acquisition has
occurred, the Rights may be redeemed by the Company at any time prior to the
termination date of the plan.

This Right to purchase common stock at a discount will not be triggered by a
person's or group's acquisition of 15% or more of the common stock pursuant to a
tender or exchange offer which is for all outstanding shares at a price and on
terms that Comtech's Board of Directors determines (prior to acquisition) to be
adequate and in the best interest of the Company and its stockholders. The
Rights will expire on December 15, 2008.

F-19

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
OCTOBER 31, 1999 JULY 31, 1999
---------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................... $ 1,397,000 $ 5,896,000
Accounts receivable, less allowance for doubtful
accounts of $145,000 at October 31, 1999 and July 31,
1999.................................................. 9,577,000 5,152,000
Inventories, net........................................ 8,166,000 7,879,000
Prepaid expenses and other current assets............... 328,000 138,000
Deferred tax asset -- current........................... 1,391,000 1,658,000
Net assets of discontinued operations................... 80,000 --
----------- -----------
Total current assets........................................ 20,939,000 20,723,000
Property, plant and equipment, net.......................... 4,202,000 4,310,000
Intangible assets, net of amortization...................... 1,599,000 1,623,000
Other assets................................................ 258,000 274,000
Deferred tax asset -- non current........................... 2,917,000 2,917,000
----------- -----------
$29,915,000 $29,847,000
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (including
payable to related party of $323,000 at October 31,
1999 and $316,000 at July 31, 1999)................... $ 566,000 $ 605,000
Accounts payable........................................ 5,166,000 3,763,000
Accrued expenses and other current liabilities.......... 3,891,000 6,026,000
Net liabilities of discontinued operations.............. -- 137,000
----------- -----------
Total current liabilities........................... 9,623,000 10,531,000
Long-term debt, less current installments (including
payable to related party of $418,000 at October 31,
1999 and $501,000 at July 31, 1999)................... 825,000 959,000
Other long-term liabilities............................. 448,000 --
----------- -----------
Total liabilities................................... 10,896,000 11,490,000
----------- -----------
Stockholders' equity:
Preferred stock, par value $.10 per share; shares
authorized and unissued 2,000,000..................... -- --
Common stock, par value $.10 per share; authorized
15,000,000 shares; issued 4,496,741 shares at October
31, 1999 and 4,471,368 shares at July 31, 1999........ 450,000 447,000
Additional paid-in capital.............................. 23,866,000 23,801,000
Accumulated deficit..................................... (4,211,000) (4,746,000)
----------- -----------
20,105,000 19,502,000
Less:
Treasury stock (82,500 shares at October 31, 1999 and
July 31, 1999)........................................ (184,000) (184,000)
Deferred compensation expense........................... (902,000) (961,000)
----------- -----------
19,019,000 18,357,000
----------- -----------
Commitments and contingencies
$29,915,000 $29,847,000
----------- -----------
----------- -----------
</TABLE>

See accompanying notes to consolidated financial statements

F-20

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
(UNAUDITED)
-----------------------------
1999 1998
---- ----
<S> <C> <C>
Net sales................................................... $11,747,000 $ 8,735,000
----------- -----------
Operating costs and expenses:
Cost of sales........................................... 8,406,000 6,008,000
Selling, general and administrative..................... 1,946,000 1,640,000
Research and development................................ 530,000 478,000
----------- -----------
Total operating costs and expenses.................. 10,882,000 8,126,000
----------- -----------
Operating income from continuing operations................. 865,000 609,000
Other (expense) income:
Interest expense........................................ (37,000) (52,000)
Interest income......................................... 32,000 19,000
Other income............................................ -- 2,000
----------- -----------
Income from continuing operations before provision for
income taxes.............................................. 860,000 578,000
Provision for income taxes.................................. 325,000 45,000
----------- -----------
Income from continuing operations........................... 535,000 533,000
Loss from operations of discontinued segment................ -- (139,000)
----------- -----------
Net income.................................................. $ 535,000 $ 394,000
----------- -----------
----------- -----------
Basic income (loss) per share:
Income from continuing operations....................... $ 0.12 $ 0.14
Loss from operations of discontinued segment............ -- (0.04)
----------- -----------
Basic income per share.................................. $ 0.12 $ 0.10
----------- -----------
----------- -----------
Diluted income (loss) per share:
Income from continuing operations....................... $ 0.11 $ 0.12
Loss from operations of discontinued segment............ -- (0.03)
----------- -----------
Diluted income per share................................ $ 0.11 $ 0.09
----------- -----------
----------- -----------
Weighted average number of common shares outstanding --basic
computation............................................... 4,399,000 3,926,000
Potential dilutive common shares............................ 683,000 345,000
----------- -----------
Weighted average number of common and common equivalent
shares outstanding assuming dilution -- diluted
computation............................................... 5,082,000 4,271,000
----------- -----------
----------- -----------
</TABLE>

See accompanying notes to consolidated financial statements.

F-21

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
(UNAUDITED)
-----------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................. $ 535,000 $ 394,000
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Loss from discontinued operations....................... -- 139,000
Depreciation and amortization........................... 418,000 353,000
Deferred income tax provision........................... 267,000 --
Changes in assets and liabilities, net of effects of
acquisitions:
Accounts receivable................................... (4,425,000) 556,000
Inventories........................................... (287,000) (36,000)
Prepaid expenses and other current assets............. (190,000) (74,000)
Other assets.......................................... (1,000) 8,000
Accounts payable...................................... 1,403,000 (72,000)
Accrued expenses and other current liabilities........ (2,134,000) (278,000)
Other liabilities..................................... 448,000 --
----------- -----------
Net cash (used in) provided by continuing
operations........................................ (3,966,000) 990,000
Net cash used in discontinued operations............ (218,000) (139,000)
----------- -----------
Net cash (used in) provided by operating
activities........................................ (4,184,000) 851,000
----------- -----------
Cash flows from investing activities:
Purchase of property, plant and equipment................... (210,000) (265,000)
Payment for business acquisitions net of cash acquired...... -- (173,000)
----------- -----------
Net cash used in investing activities............... (210,000) (438,000)
----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt........................ (173,000) (212,000)
Exercise of stock options................................... 68,000 2,000
----------- -----------
Net cash used in financing activities............... (105,000) (210,000)
----------- -----------
Net increase (decrease) in cash and cash equivalents........ (4,499,000) 203,000
Cash and cash equivalents at beginning of period............ 5,896,000 2,746,000
----------- -----------
Cash and cash equivalents at end of period.................. $ 1,397,000 $ 2,949,000
----------- -----------
----------- -----------
Supplemental cash flow disclosure
Cash paid during the period for:
Interest................................................ $ 37,000 $ 52,000
Income taxes............................................ 104,000 133,000
</TABLE>

See accompanying notes to consolidated financial statements.

F-22

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) GENERAL

The accompanying consolidated financial statements as of October 31, 1999
and for the three months ended October 31, 1999 and 1998 are unaudited. In the
opinion of management, the information furnished reflects all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results for the unaudited interim periods. The results of
operations for the three months ended October 31, 1999 are not necessarily
indicative of the results of operations to be expected for the full year.

These financial statements should be read in conjunction with the audited
consolidated financial statements of the Company for the fiscal year ended July
31, 1999 and the notes thereto contained in the Company's Annual Report on Form
10-K, filed with the Securities and Exchange Commission on October 29, 1999.

(2) RECLASSIFICATIONS

Certain balances in the prior fiscal quarter have been reclassified to
conform to the current fiscal quarter and fiscal year-end presentation.

(3) COMPREHENSIVE INCOME

The Company's operations did not give rise to items includible in
comprehensive income which were not already included in net income. Accordingly,
the Company's comprehensive income is the same as its net income for all periods
presented.

(4) ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

<TABLE>
<CAPTION>
OCTOBER 31, JULY 31,
1999 1999
----------- ----------
<S> <C> <C>
Accounts receivable from commercial customers............... $5,833,000 $3,924,000
Unbilled receivables (including retainages) on contracts-in-
progress.................................................. 3,273,000 1,154,000
Amounts receivable from the United States government and its
agencies.................................................. 616,000 219,000
---------- ----------
9,722,000 5,297,000
Less allowance for doubtful accounts........................ 145,000 145,000
---------- ----------
Accounts receivable, net................................ $9,577,000 $5,152,000
---------- ----------
---------- ----------
</TABLE>

(5) INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
OCTOBER 31, JULY 31,
1999 1999
----------- ----------
<S> <C> <C>
Raw materials and components................................ $4,495,000 $3,553,000
Work-in-process............................................. 5,794,000 5,798,000
---------- ----------
10,289,000 9,351,000
---------- ----------
Less:
Progress payments....................................... 978,000 302,000
Inventory reserves...................................... 1,145,000 1,170,000
---------- ----------
Inventories -- net.................................. $8,166,000 $7,879,000
---------- ----------
---------- ----------
</TABLE>

F-23

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(6) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

<TABLE>
<CAPTION>
OCTOBER 31, JULY 31,
1999 1999
----------- ----------
<S> <C> <C>
Customer advances and deposits.............................. $ 184,000 $2,798,000
Accrued wages and benefits.................................. 1,782,000 1,603,000
Accrued commissions......................................... 1,585,000 915,000
Other....................................................... 253,000 710,000
---------- ----------
$3,804,000 $6,026,000
---------- ----------
---------- ----------
</TABLE>

(7) LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
OCTOBER 31, JULY 31,
1999 1999
----------- ----------
<S> <C> <C>
Obligations under capital leases............................ $1,391,000 $1,564,000
Less current installments................................... 566,000 605,000
---------- ----------
$ 825,000 $ 959,000
---------- ----------
---------- ----------
</TABLE>

(8) INCOME TAXES

(9) EARNINGS PER SHARE

The Company calculates earning per share ('EPS') in accordance with the
Statement of Financial Accounting Standards ('SFAS') No. 128, 'Earnings per
Share.' Basic EPS are computed based on the weighted average number of shares
outstanding. Diluted EPS reflects the maximum dilution from potential common
stock issuable pursuant to the exercise of stock options and warrants, if
dilutive, outstanding during each period. All share and per share amounts have
been restated to reflect a three-for-two stock split effective July 30, 1999.

(10) SEGMENT AND PRINCIPAL CUSTOMER INFORMATION

The Company adopted SFAS No 131, 'Disclosures about Segments of an
Enterprise and Related Information.' Reportable operating segments are
determined based on the Company's management approach. The management approach,
as defined by SFAS No. 131, is based on the way that the chief operating
decision-maker organizes the segments within an enterprise for making operating
decisions and assessing performance. While the Company's results of operations
are primarily reviewed on a consolidated basis, the chief operating
decision-maker also manages the enterprise in four segments:
(I) Telecommunications Transmission, (II) RF Microwave Amplifiers, (III) Mobile
Data Communications Services and (IV) Wireless Local Loop, which is being
discontinued. Telecommunications Transmission products include modems, frequency

F-24

<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

converters, satellite VSAT transceivers and antennas and over-the-horizon
microwave communications products and systems. RF Microwave Amplifier products
include high-power amplifier products that use the microwave and radio frequency
spectrums. Mobile Data Communications Services include two-way messaging links
between mobile platforms or remote sites and user headquarters using satellite,
terrestrial microwave or Internet links. Corporate assets consist principally of
cash, deferred tax assets and intercompany receivables. Corporate losses result
from such corporate expenses as legal, accounting and executive. Sales between
segments were negligible. Eliminations consist of intercompany balances.

<TABLE>
<CAPTION>
MOBILE DATA CORPORATE
TELECOMMUNICATIONS RF MICROWAVE COMMUNICATIONS AND
TRANSMISSION AMPLIFIERS SERVICES OTHERS ELIMINATIONS TOTAL
------------ ---------- -------- ------ ------------ -----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED
OCTOBER 31, 1999
- ---------------------

Net sales............ $ 9,453 $2,149 $ 145 $ -- $11,747
Operating income
(loss)............. 1,471 (60) (81) (465) 865
Interest income...... -- -- 32 32
Interest expense..... 8 28 1 -- 37
Depreciation and
amortization....... 154 185 79 -- 418
Expenditures for
long-lived assets.. 93 54 57 6 210
Total assets......... 12,405 8,255 3,333 9,972 (4,050) 29,915
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31, 1998
----------------
<S> <C> <C> <C> <C> <C> <C>
Net sales............ 4,643 4,066 26 -- 8,735
Operating income
(loss)............. 479 594 (56) (408) 609
Interest income...... -- -- -- 19 19
Interest expense..... 10 42 -- -- 52
Depreciation and
amortization....... 121 201 -- 31 353
Expenditures for
long-lived assets.. 127 125 -- -- 252
Total assets......... 8,809 7,771 2,466 7,069 (4,027) 22,088
</TABLE>

F-25

<PAGE>

[The inside back cover of this prospectus contains a diagram outlining the
transmission modes of our Telecommunications Transmission Segment. The diagram
has drawings of a fax machine, personal computer, telephone, television and
cellular phone. Each drawing is connected by a line to a box labeled 'Local
Network and Switching.' Five lines connect this box to the following drawings
showing transmission modes: two earth based stations transmitting to each other
via a space based satellite (labeled 'Satellite'); cable connections (labeled
'Cable'); transmission wires (labeled 'Wire'); two earth based stations
transmitting directly to each other (labeled 'Line of Sight'); and two earth
based stations transmitting to each other over the horizon (labeled
'Troposcatter'). Each drawing is connected to a box labeled 'Local and Network
Switching' which is in turn connected by lines to diagrams of a fax machine,
personal computer, telephone, television and cellular phone.]

The overall telecommunications market can be divided into three broad
categories: end user or subscriber on-premises equipment; local network and
switching; and long distance transmission of voice, data, facsimile and video.
Comtech's Telecommunications Transmission business segment provides
sophisticated products and systems for information transmission in satellite,
over-the-horizon microwave and line-of-sight telecommunications systems.

<PAGE>
________________________________________________________________________________

[Logo]

-------------------
PROSPECTUS
-------------------

ABN AMRO ROTHSCHILD
A DIVISION OF ABN AMRO INCORPORATED

STIFEL, NICOLAUS & COMPANY
INCORPORATED

HCFP/BRENNER SECURITIES, LLC

________________________________________________________________________________

<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The expenses, other than underwriters' discounts and commissions, in
connection with the issuance and distribution of the securities being registered
under the prospectus are as follows (all amounts other than Securities and
Exchange Commission, NASD, and Nasdaq National Market fees are estimated).

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 10,824
NASD registration fee....................................... 4,600
Nasdaq National Market additional listing fee............... 17,500
Blue Sky fees and expenses.................................. 5,000
Transfer agent's fees and expenses.......................... 3,500
Underwriters' expense allowance............................. 60,000
Printing and engraving costs................................ 85,000
Accounting fees and expenses................................ 50,000
Legal fees and expenses (other than Blue Sky fees and
expenses)................................................. 250,000
Miscellaneous............................................... 13,576
--------
Total................................................... $500,000
--------
--------
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

You can find this information in the prospectus under the caption
'Description of Capital Stock -- Liability of Directors and Officers,' which is
incorporated herein by reference.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY
NO. DESCRIPTION REFERENCE TO
--- ----------- ------------
<C> <S> <C>
1 -- Form of Underwriting Agreement between the
Registrant; ABN AMRO Incorporated, Stifel, Nicolaus &
Company, Incorporated, and HCFP/Brenner Securities,
LLC as Representatives of the Underwriters*
3(a) -- Certificate of Incorporation of the Registrant...... Exhibit 3(a) to the
Registrant's fiscal 1987
Form 10-K
3(b) -- Amendment to the Certificate of Incorporation
effecting the five-to-one reverse stock split....... Exhibit 3(b) to the
Registrant's fiscal 1991
Form 10-K
3(c) -- Amended and Restated By-Laws of the Registrant...... Exhibit 3(c) to the
Registrant's fiscal 1987
Form 10-K
3(d) -- Amendment to the Certificate of Incorporation
increasing authorized shares to 12 million.......... Exhibit 3(d) to the
Registrant's fiscal 1994
Form 10-K
3(e) -- Amendment to the Certificate of Incorporation
increasing the authorized shares to 15 million...... Exhibit 3(e) to Registrant's
fiscal 1998 Form 10-K
</TABLE>

II-1

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY
NO. DESCRIPTION REFERENCE TO
--- ----------- ------------
<C> <S> <C>
3(f) -- Form of Certificate of Designation of the Series A
Junior Participating Preferred Stock................ Exhibit A to Exhibit 4.1
to the Registrant's
Form 8-A/A dated
December 23, 1998
3(g) -- Amendment to Certificate of Incorporation increasing
the authorized shares to 32 million*
4 -- Rights Agreement dated as of December 15, 1998
between the Registrant and American Stock Transfer
and Trust Company, as Rights Agent.................. Exhibit 4.1 to the
Registrant's Form 8-A/A
dated December 23, 1998
5 -- Legal Opinion of Proskauer Rose LLP
10(a) -- Amended and Restated Employment Agreement dated
January 14, 1998 between the Registrant and Fred
Kornberg............................................ Exhibit 10(a) to the
Registrant's fiscal 1992
Form 10-K
10(b) -- 1982 Incentive Stock Option and Appreciation Plan... Exhibit A to the
Registrant's Proxy Statement
dated October 29, 1982
10(c) -- Lease and amendment thereto on the Melville
Facility............................................ Exhibit 10(k) to the
Registrant's fiscal 1992
Form 10-K
10(d) -- Amended and Restated 1993 Incentive Stock Option
Plan................................................ Appendix A to the
Registrant's Proxy
Statement dated
November 3, 1997
10(e) -- Time Accelerated Restricted Stock Purchase
Agreements between Registrant and Principals of
Comtech Communications Corp. operating unit......... Exhibit 10(j) to the
Registrant's fiscal 1994
Form 10-K
10(f) -- Time Accelerated Restricted Stock Purchase
Agreements between Registrant and Principals of
Comtech Mobile Datacom Corp. operating unit......... Exhibit 10(f) to the
Registrant's fiscal 1999
Form 10-K
10(g) -- Movement Tracking System Contract between Comtech
Mobile Datacom Corp. and U.S. Army's CECOM
Acquisition Center dated June 24, 1999 (certain
portions of this agreement have been omitted and
filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment).......................................... Exhibit 10(g) to the
Registrant's fiscal 1999
Form 10-K
10(h) -- License Agreement between Vistar Telecommunications
Inc. and Comtech Mobile Datacom Corp. dated August
31, 1999 (certain portions of this agreement have
been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for
confidential treatment)............................. Exhibit 10(h) to the
Registrant's fiscal 1999
Form 10-K
</TABLE>

II-2

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY
NO. DESCRIPTION REFERENCE TO
--- ----------- ------------
<C> <S> <C>
10(i) -- 2000 Stock Incentive Plan........................... Appendix A to the
Registrant's Proxy
Statement dated
November 8, 1999
22 -- Subsidiaries........................................ Exhibit 21 to the
Registrant's fiscal 1999
Form 10-K
23(a) -- Consent of KPMG LLP
23(b) -- Consent of Proskauer Rose LLP (contained in Exhibit
5)..................................................
24 -- Power of Attorney (contained in the signature pages
to this registration statement)*
27 -- Financial Data Schedule............................. Exhibit 27 to the
Registrant's fiscal 1999
Form 10-K
</TABLE>

- ---------

* Previously filed.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes that:

A. For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

B. For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.

D. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by the director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

II-3

<PAGE>
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-2 and authorized this Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City and State of New York, on the 28th day of
January, 2000.

COMTECH TELECOMMUNICATIONS CORP.
By: /S/ FRED KORNBERG
___________________________________
FRED KORNBERG
CHAIRMAN OF THE BOARD, CHIEF
EXECUTIVE OFFICER,
PRESIDENT AND DIRECTOR

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
their respective capacities and on the respective dates set forth opposite their
names.

<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
/S/ FRED KORNBERG Chairman of the Board, January 31, 2000
-------------------------------- Chief Executive Officer,
(FRED KORNBERG) President and Director
(Principal Executive Officer)

* Senior Vice President and Chief January 31, 2000
-------------------------------- Financial Officer
(J. PRESTON WINDUS, JR.) (Principal Financial and Accounting
Officer)

* Director January 31, 2000
--------------------------------
(GERARD R. NOCITA)

* Director January 31, 2000
--------------------------------
(GEORGE BUGLIARELLO)

* Director January 31, 2000
--------------------------------
(RICHARD L. GOLDBERG)

* Director January 31, 2000
--------------------------------
(SOL S. WEINER)

* Director January 31, 2000
--------------------------------
(JOHN B. PAYNE)

*By /S/ FRED KORNBERG
--------------------------------
FRED KORNBERG
AS ATTORNEY-IN-FACT
</TABLE>

II-4

<PAGE>

[Letterhead of Proskauer Rose, LLP]

January 31, 2000

The Board of Directors
Comtech Telecommunications Corp.
105 Baylis Road
Melville, New York 11747

Gentlemen :

You have requested our opinion in connection with the filing by Comtech
Telecommunications Corp., a Delaware corporation (the "Company"), with the
Securities and Exchange Commission of a Registration Statement on Form S-2 (the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act") with respect to 2,645,000 shares (the "Shares") of the Company's common
stock, par value $0.10 (the "Company Stock"), of which 345,000 shares of Common
Stock are subject to a 30-day over-allotment option granted to the underwriters
by the Company.

We have examined and relied upon originals or copies, certified or otherwise
authenticated to our satisfaction, of all such corporate records, documents,
agreements and instruments relating to the Company, and certificates of public
officials and of representatives of the Company, and have made such
investigations of law, and have discussed with representatives of the Company
and such other persons such questions of fact, as we have deemed proper or
necessary as a basis for rendering this opinion.

Based upon the foregoing, it is our opinion that the Shares have been duly
authorized and, when issued and delivered against payment therefor in accordance
with the underwriting agreement, a form of which is filed as an exhibit to the
Registration Statement, will be legally issued, fully paid and nonassessable.

The foregoing opinion relates only to matters of the General Corporation Law of
the State of Delaware and does not purport to express any opinion on the laws of
any other jurisdiction.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the prospectus constituting part of

<PAGE>

The Board of Directors
January 31, 2000
Page 2

the Registration Statement. In so doing, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act or the rules and regulations of the Securities and Exchange Commission
thereunder.

PROSKAUER ROSE LLP

/s/ Robert A. Cantone
- ---------------------------
A Member of the Firm

<PAGE>

The Board of Directors
Comtech Telecommunications Corp.:

We consent to the use of our report dated September 24, 1999 included herein
and to the reference to our firm under the heading "Experts" in the prospectus.

/s/ KPMG LLP

Melville, New York
January 31, 2000