CINCINNATI MICROWAVE INC, POS AM, 1996-06-21

CINCINNATI MICROWAVE INC
POS AM, 1996-06-21
SEARCH, DETECTION, NAVAGATION, GUIDANCE, AERONAUTICAL SYS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 1996

REGISTRATION NO. 33-80628
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE

AMENDMENT NO. 4

FORM S-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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CINCINNATI MICROWAVE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<S> <C>
OHIO 31-0903863
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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ONE MICROWAVE PLAZA
CINCINNATI, OHIO 45249-8236
(513) 489-5400
(ADDRESS, INCLUDING ZIP CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
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ERIKA WILLIAMS

PRESIDENT AND CHIEF EXECUTIVE OFFICER
CINCINNATI MICROWAVE, INC.
ONE MICROWAVE PLAZA
CINCINNATI, OHIO 45249-8236
(513) 489-5400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)

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PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:

NEIL GANULIN, ESQ.
FROST & JACOBS
201 EAST FIFTH STREET
CINCINNATI, OHIO 45202
(513) 651-6800
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.

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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. /X/

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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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THIS POST-EFFECTIVE AMENDMENT NO. 4 TO THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(C)
OF THE SECURITIES ACT OF 1933, AS AMENDED, MAY DETERMINE.

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<PAGE> 2

CINCINNATI MICROWAVE, INC.
CROSS-REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY FORM S-2

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<CAPTION>
ITEM
NUMBER IN
FORM S-2
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<S> <C> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus.............................. Facing Page; Outside Front Cover Page of
Prospectus; Cross-Reference Sheet.
2. Inside Front and Outside Back Cover
Pages of Prospectus..................... Inside Front and Outside Back Cover
Pages of Prospectus; Available
Information; Additional Information;
Incorporation of Documents by Reference;
Table of Contents.
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges...... Prospectus Summary; Risk Factors;
Business.
4. Use of Proceeds......................... Use of Proceeds.
5. Determination of Offering Price......... Inapplicable.
6. Dilution................................ Dilution.
7. Selling Security Holders................ Inapplicable.
8. Plan of Distribution.................... Outside and Inside Front Cover Pages;
Plan of Distribution.
9. Description of Securities to be
Registered.............................. Description of Capital Stock and
Warrants.
10. Interests of Named Experts and
Counsel................................. Legal Matters; Experts.
11. Information with Respect to the
Registrant.............................. Front Cover Page; Prospectus Summary;
Price Range of Common Shares and
Warrants; Dividend Policy;
Capitalization; Selected Consolidated
Financial Data; Management's Discussion
and Analysis of Financial Condition and
Results of Operations.
12. Incorporation of Certain Information by
Reference............................... Incorporation of Documents by Reference.
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Inapplicable.
</TABLE>

<PAGE> 3

AMENDED PROSPECTUS

UP TO 1,073,610 COMMON SHARES

CINCINNATI MICROWAVE, INC.

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The 1,073,610 Common Shares being offered by Cincinnati Microwave, Inc.
(the "Company") pursuant to this Prospectus are issuable upon the exercise of
1,073,610 warrants issued and sold as a part of a rights offering, as described
below.

In December 1994, the Company offered for sale and sold (the "Offering" or
the "Rights Offering") 1,482,435 Units ("Units"), at $7.00 per Unit
("Subscription Price"), each Unit consisting of two of the Company's common
shares, without par value ("Common Shares"), and one warrant ("Warrant"). Each
Warrant entitles the holder thereof to purchase one Common Share at an exercise
price of $4.00 at any time prior to 5:00 p.m., Eastern Standard Time, on
December 31, 1998. As of June 1, 1996, there were 1,073,610 Warrants
outstanding, and a total of 408,825 Warrants had been exercised.

The Common Shares are traded over-the-counter and are quoted on the Nasdaq
National Market under the symbol "CNMW." On June 1, 1996, the closing price of
the Common Shares as reported on the Nasdaq National Market was $4 3/8 per
share. The Warrants are traded over-the-counter and are quoted on the Nasdaq
National Market under the symbol "CNMWW." On June 1, 1996, the closing price of
the Warrants as reported on the Nasdaq National Market was $2 3/4 per Warrant.

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SEE "RISK FACTORS" ON PAGE 4 FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON SHARES
OFFERED HEREBY.

THE COMPANY'S INDEPENDENT ACCOUNTANTS HAVE ISSUED AN OPINION STATING THAT THE
COMPANY'S RECURRING LOSSES FROM OPERATIONS AND SUBSTANTIAL DEBT OBLIGATIONS DUE
IN 1996 RAISE SUBSTANTIAL DOUBT ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A
GOING CONCERN.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Amended Prospectus is June , 1996.

<PAGE> 4

INCORPORATION OF DOCUMENTS BY REFERENCE

The following documents have been filed by the Company with the Commission
(File No. 0-13136) and are incorporated herein by reference:

(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1995.

(2) The Company's Quarterly Report on Form 10-Q for the period ended March
31, 1996.

(3) The Company's Current Report on Form 8-K dated June 4, 1996.

COPIES OF THE ABOVE DOCUMENTS (NOT INCLUDING THE EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN
SUCH DOCUMENTS) AND OF THE COMPANY'S 1994 ANNUAL REPORT MAY BE OBTAINED UPON
REQUEST WITHOUT CHARGE FROM THE SECRETARY OF THE COMPANY, ONE MICROWAVE PLAZA,
CINCINNATI, OHIO 45249-8236 (TELEPHONE NUMBER (513) 489-5400).
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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial data appearing elsewhere in or incorporated by
reference into this Amended Prospectus.

RECENT DEVELOPMENTS

The Company's independent accountants have issued an opinion stating that
the Company's recurring losses from operations and substantial debt obligations
due in 1996 raise substantial doubt about the Company's ability to continue as a
going concern.

Effective June 10, 1996, Erika Williams, a director of the Company since
1994, became President and Chief Executive Officer of the Company. Former
President and Chief Executive Officer Jacques A. Robinson will remain on the
board of directors and continue to devote time to the Company's efforts to
develop strategic partnerships.

THE COMPANY

The Company designs, manufactures and markets ultrahigh frequency and
microwave wireless communications products. The Company's principal product line
since its inception has been radar warning detectors. The Company has become a
leader in the radar warning detector market by combining its experience in
ultrahigh frequency and microwave wireless technology, including digital signal
processing, with its high volume manufacturing capabilities. In 1993, the
Company introduced its first digital spread spectrum cordless telephone and its
first wireless data modem. Both of the new product lines leverage the Company's
wireless and digital signal processing expertise and high volume manufacturing
capabilities.

The Company markets its products both under the ESCORT(R) brand name
through direct advertising and as an Original Equipment Manufacturer ("OEM")
supplier. The Company's strategy for entering new markets is to align with
companies that have established sales leadership and market positions. This
strategy is designed to provide broader access to the end user. The Company
produces digital spread spectrum telephones for several leading marketers of
consumer telephones.

THE OFFERING

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Common Shares.......................... Common Shares, without par value. Up to 1,073,610
Common Shares will be issued assuming all
outstanding Warrants are exercised.
Warrants............................... Each Warrant entitles the holder thereof to purchase
one Common Share at an exercise price of $4.00 at
any time prior to 5:00 p.m., Eastern Standard Time,
on December 31, 1998.
Nasdaq National Market Symbol for
Common Shares........................ "CNMW"
Nasdaq National Market Symbol for
Warrants............................. "CNMWW"
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SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

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<CAPTION>
YEAR ENDED THREE MONTHS ENDED
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DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER APRIL 2, MARCH 31,
29, 1991 27, 1992 26, 1993 25, 1994 31, 1995 1995 1996
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STATEMENT OF OPERATIONS DATA:
Net sales................................ $48,292 $51,339 $58,461 $64,708 $79,199 $13,648 $ 20,553
Gross profit............................. 15,129 13,520 18,683 14,349 12,138 4,091 3,923
Operating loss........................... (5,330 ) (7,426 ) (3,084 ) (10,024 ) (13,272 ) (1,704) (2,406)
Net loss................................. (8,821 ) (6,440 ) (1,284 ) (10,260 ) (13,034 ) (582) (2,631)
Net loss per share....................... $ (0.85 ) $ (0.59 ) $ (0.12 ) $ (0.94 ) $ (0.90 ) $ (0.04) $ (0.17)
Weighted average number of shares
outstanding............................ 10,355 10,919 10,691 10,880 14,539 13,868 15,695
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
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ACTUAL AS ADJUSTED(1)
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BALANCE SHEET DATA:
Working capital.......................................................................... $ 6,495 $ 10,789
Total assets............................................................................. 47,666 51,960
Short-term debt.......................................................................... 4,974 2,250
Long-term lease obligations.............................................................. 508 508
Long-term debt........................................................................... -- --
Shareholders' equity..................................................................... 22,076 26,370
</TABLE>

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(1) Adjusted to give effect to 1,073,610 shares issuable at $4.00 per share upon
exercise of the 1,073,610 Warrants outstanding as of June 1, 1996. See "Use
of Proceeds" and "Capitalization."

The Company's executive offices are located at One Microwave Plaza, Cincinnati,
Ohio 45249-8236. Its telephone number is (513) 489-5400.

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RECENT DEVELOPMENTS

RISK FACTORS

Prior to purchasing the Common Shares offered hereby, prospective investors
should carefully consider, together with the other information contained herein,
each of the following risk factors which could, individually or in the
aggregate, have a material adverse effect on the Company's business, financial
condition, including working capital, and results of operations.

HISTORICAL LOSSES; VARIABILITY OF OPERATING RESULTS; SEASONALITY

The Company has not been profitable since 1988. In 1995, the Company had a
significant loss due to a number of factors including: (a) higher than
anticipated component costs; (b) manufacturing inefficiencies in the production
of the high volume of units produced; (c) sales lost or delayed due to delays by
purchasing and engineering; (d) a weakening of the overall consumer electronics
market, which impacted fourth quarter radar detector sales; (e) a significant
increase in the provision for excess and obsolete inventory and (f) certain
other factors. See "Management's Discussion and Analysis of Financial Conditions
and Results of Operations." Specifically, during the third and fourth quarters
of 1995, the Company experienced both poor purchasing performance and
engineering design errors which were the primary origin of the poor financial
performance. In purchasing, component prices were not adequately controlled,
leading to increased product cost and reduced gross margin. Additionally, the
failure to contain the quantities ordered, based on production demand, led to a
significant buildup of component inventory, which both exerted pressure on the
Company's cash flows and, ultimately, contributed to the increase in the
provision for excess and obsolete inventory. Reacting to engineering design
errors created manufacturing inefficiencies as product was reworked to correct
the problems, which increased product cost and reduced gross margin. Further,
these design issues caused delays in meeting production schedules which
ultimately resulted in missed or delayed sales opportunities. During 1994, the
Company experienced a severe supply shortage of inductors (a critical component
of its digital spread spectrum cordless telephone) and, as a result, the
Company's factory production schedule and cost to fill customer orders were
materially and adversely affected.

The Company's future operating results may vary significantly from period
to period as a result of a number of factors, including the volume and timing of
orders received during the period, the timing of new product introductions by
the Company and its competitors, decline in demand for the Company's products,
the impact of price competition on the Company's average selling prices, the
availability and pricing of components for the Company's products, changes in
product or distribution channel mix and product returns. Many of these factors
are beyond the Company's control. The Company's failure to introduce new,
competitive products consistently and in a timely manner could adversely affect
operating results for one or more product cycles. In addition, from time to
time, a significant portion of the Company's sales are derived from a limited
number of customers, the loss of one or more of which could adversely impact
operating results.

The Company must plan production, order components and undertake its
development, sales and marketing activities and other commitments months in
advance. Accordingly, any shortfall in net sales in a given quarter may have a
disproportionately adverse impact on the Company's operating results due to an
inability to adjust expenses or inventory during the quarter to match the level
of net sales for the quarter. Excess inventory could also result in cash flow
difficulties as well as expenses associated with inventory writeoffs.

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The Company's business is highly seasonal with a large portion of sales
occurring during the third and, particularly, the fourth quarters. The Company's
inability to supply its products to its customers during the second half of the
year would adversely affect the Company's business, financial condition and
results of operations. In addition, the results of the Company's operations are
subject to changes in consumer demand associated with general economic
conditions and to changes in consumer preferences.

As a result of the foregoing, there can be no assurance that the Company
will be able to achieve profitability or that difficulties will not occur in the
future and adversely affect the Company's business and financial condition,
including working capital and results of operations. The Company's financial
statements have been prepared on a going concern basis which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. The operations of the Company in recent years have not generated
sufficient funds to meet working capital and capital expenditure needs. The
Company has funded these operating shortfalls through bank borrowings under its
credit facility, through extending vendor terms and through equity offerings.
The Company is presently seeking to refinance its existing bank debt and
negotiations with potential lenders are continuing. Management is reviewing all
facets of the Company's operations with the intent to improve its operating
results and generate additional cash flow for payment of vendor obligations
through such actions as acceleration of accounts receivable receipts and
inventory reductions. The Company's recurring losses from operations and
substantial debt obligations due in 1996 raise substantial doubt about the
Company's ability to continue as a going concern. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

PRODUCT COST REDUCTION

Presently, the Company believes that the cost of manufacturing its products
is too high, largely due to higher than anticipated component costs and
manufacturing inefficiencies. The Company recognizes that it must reduce unit
cost to achieve an adequate gross margin. The Company is taking steps to
decrease component costs and achieve improved manufacturing efficiencies;
however, there is no guarantee that the Company will be able to reduce product
cost and increase its gross margin while achieving and maintaining adequate
market penetration.

COMPONENT SHORTAGES; RELIANCE ON SOLE OR LIMITED SOURCE SUPPLIERS

The Company's products include a number of high-technology components that
are available from only a few suppliers and, in several cases, a single
supplier. The Company frequently requires large volumes of such components. If
the Company's suppliers are unable to fulfill the Company's needs for such
components, the Company may be unable to fill customer orders and its business,
financial condition, including working capital, and results of operations may be
materially and adversely affected. In the past certain of the Company's
suppliers were unable to deliver sufficient quantities of critical components to
allow the Company to manufacture its products at previously anticipated volumes.
These shortages adversely affected the Company's ability to manufacture and
deliver products and, as a result, had a significant adverse effect on the
Company's business, financial condition, including working capital, and results
of operations. Since part of the Company's strategy is to shorten product
development and introduction cycles, occasions may arise in the future where the
Company's ability to produce products outpaces its suppliers' ability to supply
components. There can be no assurance that the Company can continue to obtain
adequate supplies or obtain such supplies at their historical cost levels. The
Company has no guaranteed supply arrangements with any of its sole or limited
source suppliers, does not normally maintain an extensive inventory of
components, and customarily purchases sole or limited source components pursuant
to purchase orders placed from time to time in the ordinary course of business.
Moreover, the Company's suppliers may, from time to time, experience production
shortfalls or interruptions which impair the supply of components to the
Company. There can be no assurance that such shortages will not occur in the
future and adversely affect the Company's business, financial condition,
including working capital, and results of operations.

DEPENDENCE ON RADAR WARNING DETECTORS; RELIANCE ON NEW PRODUCTS

Historically, the Company has derived substantially all of its net sales
and all of its operating profits from radar warning detectors. Radar warning
detectors accounted for 86%, 72%, 65% and 57% of the Company's

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total net sales for 1993, 1994, 1995 and the first three months of 1996,
respectively. The radar warning detector market has matured and is declining,
and competition in this market is intense. The Company's strategy is to reduce
its dependence on radar warning detectors by developing new products, entering
new markets and utilizing its capabilities in the design and mass production of
ultrahigh frequency and microwave wireless communications products; however,
there can be no assurance that the Company's strategy will be successful.

The Company has developed and introduced two new products: digital spread
spectrum cordless telephones with enhanced range, clarity and security compared
to traditional cordless telephones, and a line of wireless data modems to
transmit data over Cellular Digital Packet Data ("CDPD") networks. The Company
believes that its digital spread spectrum cordless telephones are vital to its
future success. The commercial success of the Company's digital spread spectrum
cordless telephone products is dependent upon strategic relationships with key
OEM customers. Certain of these customers currently possess, or may acquire, the
capability to develop, design and manufacture their own digital spread spectrum
cordless telephone products. Moreover, the success of the wireless data modems
is dependent upon the development, deployment and commercial success of CDPD
networks. A consortium of cellular service providers is presently building CDPD
networks to provide wireless data transfer service, but there can be no
assurance that the networks will be deployed nationally and, if so deployed,
that they will be successful. To date, the Company has sold only a limited
number of its wireless data modem units. There can be no assurance that the
Company will be successful in identifying, developing, manufacturing and
marketing new products, that the Company will not experience difficulties that
could delay or prevent the successful development, introduction and marketing of
these products, or that its new products and product enhancements will
adequately meet the requirements of the marketplace and achieve market
acceptance.

CUSTOMER CONCENTRATION

As the Company's sales mix continues to shift from direct retail business
to OEM and reseller business, the Company expects that sales to certain of its
OEM and reseller customers will account for a material percentage of its net
sales in the foreseeable future and believes that its financial results will
depend in significant part upon the success of these customers as well as the
Company's business with these customers. Although the composition of the group
comprising the Company's important customers may vary from period to period, the
loss of a significant customer or any reduction in orders by any significant
customer may have a material adverse affect on the Company's business, financial
condition, including working capital, and results of operations. The Company's
ability to increase its sales in the future will depend in part upon its ability
to obtain orders from new customers as well as the financial condition and
success of its customers and the general economy, of which there can be no
assurance.

SHORT PRODUCT LIFE CYCLES

The market for the Company's products is characterized by frequent new
product introductions and rapid product obsolescence. These factors typically
result in short product life cycles. The Company must continually monitor
industry trends and choose new technologies and features to incorporate into its
products. Each new product cycle presents opportunities for current or
prospective competitors of the Company to gain market share. Life cycles of
individual products are typically characterized by steep declines in sales,
pricing and margins toward the end of a product's life, the precise timing of
which may be difficult to predict. As new products are planned and introduced,
the Company attempts to monitor closely the inventory of older products and to
phase out their manufacture in a controlled manner. Poor purchasing planning and
engineering redesign practices in late 1995 gave rise to charges for obsolete or
excess inventory. To the extent that the Company is unsuccessful in the future
in managing product transitions, its business, financial condition, including
working capital, and results of operations could be materially and adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

GOVERNMENT REGULATION

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prohibit the use of radar warning detectors in large commercial vehicles only
and, in January 1994, the Federal Highway Administration enacted a regulation
banning radar warning detectors from commercial vehicles weighing over 18,000
pounds, from buses carrying 16 or more passengers and from trucks transporting
hazardous materials on highways funded by the Federal Government. This is, in
effect, a ban on use of such radar warning detectors in all large trucks and
buses. Additionally, on November 28, 1995, a federal law was enacted that
eliminated the existing federal requirement that states comply with national
maximum speed limit provisions before receiving certain federal funds. This law
has resulted in higher speed limits in some states, and therefore, a reduction
in the perceived need for radar warning detectors.

COMPETITION

All markets in which the Company participates are highly competitive, and
many current or prospective competitors, including several of the Company's
significant OEM customers, are substantially larger and possess significantly
greater financial, marketing and technical resources than the Company. The
market for high performance cordless telephones, such as those manufactured by
the Company, is relatively new. Competition in this segment currently is based
primarily on product performance, features and price. The market for wireless
data modems is still developing, and there are current or prospective
competitors who are substantially larger than the Company and possess
significantly greater financial, marketing and technical resources. There can be
no assurance that the Company will be able to compete successfully in either of
these markets.

The market for radar warning detectors is highly competitive, has matured
and is declining. As the market has moved toward lower priced products,
competition has been based primarily on price and, to a lesser degree, product
quality, availability and performance. Lower than expected demand for the
Company's radar warning detectors, coupled with intense price competition in the
radar warning detector market, periodically has an adverse effect on the
Company's results. Frequent recurrence of these conditions would have a material
adverse effect on the business, financial condition, including working capital,
and results of operations of the Company.

DEPENDENCE ON KEY PERSONNEL

The Company has previously stated that the success of the Company is
dependent in large part on key management and technical personnel, especially
Jacques A. Robinson. Effective June 10, 1996, Mr. Robinson is no longer the
President and Chief Executive of the Company; however, Mr. Robinson will remain
on the board of directors of the Company and continue to devote time to the
Company's efforts to develop strategic partnerships. Ms. Erika Williams, a
director of the Company since 1994, has assumed the position of President and
Chief Executive Officer of the Company. The loss of the services of any of the
remaining key personnel could have a material adverse effect on the Company.
Many of the Company's key personnel would be difficult to replace, and most are
not subject to employment or noncompetition agreements. There can be no
assurance that the Company will be successful in retaining such personnel. In
addition, the Company's success depends significantly upon its ability to
continue to attract and retain qualified management, manufacturing, technical,
sales and support personnel for its operations. There may be only a limited
number of persons with the requisite skills to serve in these positions, and it
may become more difficult for the Company to hire such personnel. Competition
for such personnel is intense, and there can be no assurance that the Company
will be successful in attracting or retaining such personnel. The failure to
attract or retain such persons would materially adversely affect the Company's
business, financial condition, including working capital, and results of
operations.

INTELLECTUAL PROPERTY

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valid claim against the Company and in the event any required license were not
available on commercially reasonable terms, the Company's business, financial
condition, including working capital, and results of operations could be
materially and adversely affected. Litigation, which could result in substantial
costs to and diversion of resources of the Company, may also be necessary to
enforce intellectual property rights of the Company or to defend the Company
against claimed infringement of the rights of others.

VOLATILITY OF STOCK PRICE

The trading price of the Company's Common Shares is subject to wide
fluctuations in response to the Company's operating results, announcements of
technological innovations or new products by the Company or its competitors,
general conditions in the market, changes in earnings estimates by analysts,
failure to meet the revenues or earnings estimates of analysts or other events
or factors. The public stock market price for the Company's Common Shares has
been highly volatile in recent years. Future announcements concerning the
Company or its competition, including the results of technological innovations,
new commercial products, government regulations, developments concerning
proprietary rights, component shortages, litigation or public concern with
respect to the Company or its products and other factors including those
described above, may have a significant impact on the market price of the Common
Shares. See "Price Range of Common Shares."

LEGAL PROCEEDINGS

Four shareholder lawsuits were filed against the Company in October and
November 1995. On January 9, 1996, these lawsuits were consolidated, and, on
February 23, 1996, the plaintiffs filed an Amended Complaint asserting claims,
allegedly on behalf of all purchasers of the Company's common shares on the open
market between July 12, 1995 and October 13, 1995, and who suffered damages, and
on behalf of all persons who purchased the Company's common shares from the
defendants pursuant or traceable to an August 24, 1995 public offering of
4,600,000 common shares between August 24, 1995 and October 13, 1995, and who
suffered damages as a result. Plaintiffs purport to assert claims against the
Company and other defendants for violations of various provisions of the
Securities Act of 1933 and the Securities Exchange Act of 1934 and for
violations of the common law of negligent misrepresentation and fraud. The
Company intends to vigorously defend itself. The failure to achieve a favorable
resolution of this lawsuit could materially adversely affect the Company's
business and financial condition, including working capital, and results of
operations. No accrual for loss has been recorded as the Company is unable to
estimate the range of loss, if any. However, based on damages sought, management
believes that the potential loss could be material and adversely impact the
Company's results of operations or financial condition.

Pursuant to certain contractual obligations, the Company has agreed to
indemnify its directors and officers under certain circumstances against claims
arising from the lawsuit. The Company may be obligated to indemnify certain of
its directors and officers for the costs they may incur as a result of the
lawsuit. In addition, pursuant to certain contractual obligations, the Company
may be obligated to indemnify the underwriter defendants against claims and
expenses arising from the above litigation.

The Company is involved in other legal proceedings arising from the normal
course of business, none of which, in management's opinion, is expected to have
a material impact on the Company's results of operations or financial condition.

CREDIT FACILITY

At year-end 1995, the Company had borrowed $6.9 million (term loan balance
of $2.4 million and $4.5 million on the revolving credit facility) against its
credit facility due June 30, 1996. The $7.5 million credit facility consisted of
(i) the term loan, (ii) a $5.0 million revolving credit facility and (iii) a
standby letter of credit facility not the exceed $1.0 million; however, the sum
of the outstanding principal balance of the revolving credit and the aggregate
amount of the Company's outstanding letters of credit shall not exceed $5.0
million at any time. The credit facility is secured by a first lien on the
Company's inventory, receivables, equipment and a mortgage on the real estate of
the Company.

At year-end, the Company was in violation of certain covenants of the
credit facility agreement (the "Borrowing Agreement") triggered by the net loss
incurred for the fourth quarter and fiscal year 1995, which

8
<PAGE> 11

resulted in financial statement ratios falling below the requirements of the
Borrowing Agreement. As a result of the anticipated net loss for the fourth
quarter and therefore fiscal year 1995, the Bank notified the Company on January
2, 1996 of a default on the covenants. Effective March 31, 1996, the Bank
further reduced the revolving credit facility to $2.5 million. The Company
remained current on all required payments to the lender throughout 1995 and has
remained current in 1996.

Since year end, the Bank has elected to continue to make advances to the
Company under the reduced credit facility, notwithstanding the "Event of
Default" under the Borrowing Agreement. There can be no assurances that the
Bank's election will continue because the Bank has not waived the default and
has reserved all of its rights and remedies under the Borrowing Agreement,
related loan documents and applicable law which include, but are not limited to,
demanding immediate payment of all outstanding balances owed to the Bank.

The Company is presently seeking to refinance its existing bank debt to
obtain, in particular, a higher credit limit, a longer term, less restrictive
covenants and lower interest rates and costs. Although there can be no
assurances that the new financing can be obtained, negotiations with potential
lenders are continuing. In addition, the Company has had discussions with the
Bank about extending the maturity date of the existing credit facility beyond
June 30, 1996 while the Company's negotiations with potential lenders continue.
See "Management's Discussion and Analysis of Financial Conditions and Results of
Operations."

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the Common
Shares offered hereby (assuming exercise of the 1,073,610 Warrants outstanding
as of June 1, 1996) are estimated to be $4.3 million. The Company intends to use
the net proceeds for debt repayment, working capital and general corporate
purposes.

PRICE RANGE OF COMMON SHARES AND WARRANTS

The Common Shares and the Warrants are traded on the Nasdaq National Market
under the symbol CNMW and CNMWW, respectively. The following table sets forth
for the periods indicated the high and low sales prices for the Common Shares
and the Warrants as reported on the Nasdaq National Market.

<TABLE>
<CAPTION>
COMMON SHARES HIGH LOW
------------- --- ----
<S> <C> <C>
1994
First Quarter............................................. 12 7 1/4
Second Quarter............................................ 12 6 1/2
Third Quarter............................................. 10 1/8 5 7/8
Fourth Quarter............................................ 6 1/2 2 1/8
1995
First Quarter............................................. 11 1/4 3 1/2
Second Quarter............................................ 12 1/8 8 3/8
Third Quarter............................................. 21 1/8 13 5/8
Fourth Quarter............................................ 14 3/4 4
1996
First Quarter............................................. 4 3/4 2 1/2
</TABLE>

9
<PAGE> 12

<TABLE>
<CAPTION>
WARRANTS HIGH LOW
-------- --- ----
<S> <C> <C>
1994
Fourth Quarter............................................ 2 3/4 1/16
1995
First Quarter............................................. 7 1/4 1 1/4
Second Quarter............................................ 12 3/4 4 5/8
Third Quarter............................................. 17 1/8 10 1/8
Fourth Quarter............................................ 11 1 3/4
1996
First Quarter............................................. 2 7/8 1 1/4
</TABLE>

On June 1, 1996, the last reported sales price on the Nasdaq National
Market for the Common Shares was $4 3/8 per share and for the Warrants was
$2 3/4 per Warrant. As of June 1, 1996, there were approximately 1,177 holders
of record of the Common Shares and 61 holders of record of the Warrants.

Warrants not exercised prior to 5:00 p.m., Eastern Standard Time, on
December 31, 1998 will expire and become worthless.

DIVIDEND POLICY

Historically the Company has not paid any cash or other dividends. The
Company does not expect to pay dividends in the foreseeable future, but
currently intends to retain any earnings to finance operations and future
growth. Furthermore, the credit facility agreement between the Company and its
bank prohibits the payment of dividends.

10
<PAGE> 13

CAPITALIZATION

The following table sets forth the unaudited capitalization of the Company
at March 31, 1996, and as adjusted to reflect the receipt of $4.3 million from
the exercise of the 1,073,610 Warrants outstanding as of June 1, 1996 and the
application of the net proceeds therefrom. See "Use of Proceeds." This table
should be read in conjunction with the Company's Financial Statements and
related Notes set forth elsewhere herein.

<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
SHORT-TERM DEBT:
Bank indebtedness.................................................. $ 4,974 $ 2,250
======= ===========
LONG-TERM OBLIGATIONS:
Long-term capital lease obligations................................ $ 508 $ 508
------- -----------
SHAREHOLDERS' EQUITY:
Common shares without par value ($.20 stated value);
20,000,000 shares authorized; 18,203,120 shares issued(1)....... $ 3,641 $ 3,641
Paid-in capital.................................................... 23,694 20,881
Retained earnings.................................................. 11,256 11,256
Treasury stock at cost, 2,459,573 shares(2);
1,385,693 shares as adjusted.................................... (16,515) (9,408)
------- -----------
Total shareholders' equity...................................... 22,076 26,370
------- -----------
Total capitalization............................................ $22,584 $ 26,878
======= ===========
</TABLE>

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

(1) Includes treasury stock.

(2) Of the treasury stock, 1,385,693 Common Shares are reserved for stock
options and 1,073,610 Common Shares may be issued upon the exercise of the
Warrants.

11
<PAGE> 14

DILUTION

The net tangible book value of the Company as of March 31, 1996, was
approximately $20.2 million or $1.29 per share. Net tangible book value per
share is equal to the Company's total tangible assets less its total
liabilities, divided by the number of Common Shares outstanding.

The exercise of the Warrants will result in the further increase of
shareholders' equity for the Company's shareholders and dilution to Warrant
holders exercising Warrants. The following table illustrates, as of March 31,
1996, the dilutive effect of the exercise of the 1,073,610 Warrants outstanding
on June 1, 1996.

<TABLE>
<S> <C>
Shareholders' equity per share as of March 31, 1996.................. $1.29
Pro forma shareholders' equity per share after the exercise of
Warrants........................................................... $1.46
Increase per share attributable to exercise of Warrants.............. $ .17
Dilution per share to Warrant holders who exercise Warrants.......... $2.54
</TABLE>

12
<PAGE> 15

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected historical consolidated financial
data of the Company for the fiscal years 1991 through 1995 and for the three
month periods ended April 2, 1995 and March 31, 1996. The selected consolidated
financial data for the five fiscal years in the period ended December 31, 1995
are derived from the consolidated financial statements of the Company which have
been audited by Price Waterhouse LLP, independent accountants. The selected
consolidated financial data for the three month periods ended April 2, 1995 and
March 31, 1996 are derived from the Company's unaudited consolidated financial
statements. In the opinion of management, the interim financial data reflect all
adjustments, consisting only of normal recurring adjustments, necessary for the
fair presentation of such data. The results for the first three months of fiscal
1996 are not necessarily indicative of the results to be expected for the full
year. The information below should be read in conjunction with the Financial
Statements and Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing elsewhere in this
Amended Prospectus. The Company did not pay any cash or other dividends in the
periods presented below.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED (1) -----------------
---------------------------------------------------- MARCH
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER APRIL 31,
29, 1991 27, 1992 26, 1993 25, 1994 31, 1995 2, 1995 1996
-------- -------- -------- -------- -------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................... $48,292 $51,339 $58,461 $64,708 $79,199 $13,648 $20,553
Cost of sales................................ 33,163 37,819 39,778 50,359 67,061 9,557 16,630
-------- -------- -------- -------- -------- ------- -------
Gross profit............................. 15,129 13,520 18,683 14,349 12,138 4,091 3,923
Operating expenses:
Research and development................... 4,843 7,182 8,117 8,449 7,442 1,832 1,580
Selling.................................... 10,838 10,707 10,391 12,671 12,990 2,823 3,170
Administrative............................. 4,778 3,057 3,259 3,253 4,978 1,140 1,579
-------- -------- -------- -------- -------- ------- -------
20,459 20,946 21,767 24,373 25,410 5,795 6,329
-------- -------- -------- -------- -------- ------- -------
Operating loss............................. (5,330 ) (7,426 ) (3,084 ) (10,024 ) (13,272 ) (1,704) (2,406)
Gain on sale of marketable equity
securities................................. -- -- 1,435 -- -- -- --
Interest expense............................. (433 ) (204 ) (521 ) (738 ) (1,207 ) (276) (208)
Other income (expense), net.................. (869 ) (1,128 ) 886 502 7 (40) (17)
-------- -------- -------- -------- -------- ------- -------
Loss from continuing operations before
income taxes............................. (6,632 ) (8,758 ) (1,284 ) (10,260 ) (14,472 ) (2,020) (2,631)
Income tax benefit........................... (725 ) -- -- -- (1,438 ) (1,438) --
-------- -------- -------- -------- -------- ------- -------
Loss from continuing operations............ (5,907 ) (8,758 ) (1,284 ) (10,260 ) (13,034 ) (582) (2,631)
Discontinued operations...................... (2,914 ) 1,449 -- -- -- -- --
-------- -------- -------- -------- -------- ------- -------
Loss before extraordinary item............. (8,821 ) (7,309 ) (1,284 ) (10,260 ) (13,034 ) (582) (2,631)
Realization of net operating loss
carryforward............................... -- 869 -- -- -- -- --
-------- -------- -------- -------- -------- ------- -------
Net loss..................................... $(8,821 ) $(6,440 ) $(1,284 ) $(10,260) $(13,034) $ (582) $(2,631)
========= ========= ========= ========= ========= ======= =======
Net (loss) earnings per share:
Continuing operations...................... $ (0.57 ) $ (0.80 ) $ (0.12 ) $ (0.94 ) $ (0.90 ) $ (0.04) $ (0.17)
Discontinued operations.................... (0.28 ) 0.13 -- -- -- -- --
Realization of net operating loss
carryforward............................. -- 0.08 -- -- -- -- --
-------- -------- -------- -------- -------- ------- -------
Net loss................................. $ (0.85 ) $ (0.59 ) $ (0.12 ) $ (0.94 ) $ (0.90 ) $ (0.04) $ (0.17)
========= ========= ========= ========= ========= ======= =======
Weighted average number of shares
outstanding................................ 10,355 10,919 10,691 10,880 14,539 13,868 15,695
BALANCE SHEET DATA:
Working capital.............................. $ 1,957 $(2,483 ) $ (254 ) $(1,701 ) $ 8,368 $ 8,584 $ 6,495
Total assets................................. 38,247 42,512 32,418 32,839 54,196 35,316 47,666
Short-term debt.............................. 4,000 6,000 6,001 600 6,934 600 4,974
Long-term lease obligations.................. -- -- 418 1,422 753 1,178 508
Long-term debt............................... -- -- -- 7,419 -- 8,729 --
Shareholders' equity......................... 23,368 17,641 16,830 6,902 24,378 15,743 22,076
</TABLE>

13
<PAGE> 16

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

The Company was founded in 1976 to pioneer the development and design of
consumer radar warning detectors using superheterodyne technology, which has now
become the industry standard for these products. The Company experienced
significant growth and profitability in the 1980s due to the performance of its
products, which attracted many competitors. During this period, the Company's
competitors focused on lower prices while the Company focused on technological
improvements. Consequently, the Company lost substantial market share to
competitors in the late 1980s. In 1991 the Company adopted a strategy of
capitalizing on its expertise in the design and manufacture of ultrahigh
frequency and microwave electronic devices by applying it to wireless
communication products. In 1993 the Company introduced its first digital spread
spectrum cordless telephone and wireless data modem products.

RESULTS OF OPERATIONS

The following table sets forth certain operational data of the Company
expressed as a percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
-------------------------------------------- -----------------------
DECEMBER 26, DECEMBER 25, DECEMBER 31, APRIL 2, MARCH 31,
1993 1994 1995 1995 1996
------------ ------------ ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Net sales................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............ 68.0 77.8 84.7 70.0 80.9
------ ------ ------ --------- ----------
Gross profit........ 32.0 22.2 15.3 30.0 19.1
Research & development... 13.9 13.1 9.4 13.4 7.7
Selling.................. 17.8 19.6 16.4 20.7 15.4
Administrative........... 5.6 5.0 6.3 8.4 7.7
------ ------ ------ --------- ----------
Total operating
expenses.......... 37.3 37.7 32.1 42.5 30.8
------ ------ ------ --------- ----------
Operating loss........... (5.3) (15.5) (16.8) (12.5) (11.7)
============ ============ ============ ======== ==========
</TABLE>

The following table shows net sales by product line for the Company, for
the periods indicated (in thousands and as a percentage of total net sales):

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
----------------------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 26, DECEMBER 25, DECEMBER 31, APRIL 2, MARCH 31,
1993 1994 1995 1995 1996
------------- ------------- ------------- ------------- -------------
Radar warning detectors.................... $50,125 86% $46,602 72% $51,484 65% $10,311 76% $11,708 57%
Cordless telephones........................ 2,705 4 14,060 22 26,602 34 2,790 20 8,644 42
Other(1)................................... 5,631 10 4,046 6 1,113 1 547 4 201 1
------- --- ------- --- ------- --- ------- --- ------- ---
Total...................................... $58,461 100% $64,708 100% $79,199 100% $13,648 100% $20,553 100%
======= === ======= === ======= === ======= === ======= ===
</TABLE>

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

(1) Other sales for 1993, 1994 and 1995 represent revenue primarily from
contract manufacturing activities of the Company. This activity ceased
during the first quarter of 1995. For 1994 and 1995, other sales include
sales of wireless data modems of $368,000 and $248,000, respectively.

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED APRIL 2, 1995

NET SALES

In the traditionally weakest period for consumer electronic product sales,
the Company's net sales were up 51% over the comparable prior period. Sales of
the Company's products to OEMs and resellers rose to 71% of net sales from 46%
in the first quarter of 1995, reflecting the continued, planned shift in the
business to reduce dependence on direct retail sales.

14
<PAGE> 17

For the first quarter of 1996, net sales for the Company's radar detectors
rose 14% on a 17% rise in unit volume over the first quarter of 1995, reflecting
continued strong market acceptance of the Company's products and the growth of
the OEM and reseller channels. The 3% decline in the average unit price
reflected the growing significance of major customers, who generally receive
volume discounts.

Net sales for the Company's cordless telephones with SureLink(TM)
technology rose 210% in the first quarter of 1996 compared with the first
quarter of 1995. Unit volume jumped 251% partially offsetting the 12% decline in
the average unit price due to the significantly greater percentage of
OEM/reseller sales and the Company's strategy to reduce the selling prices of
its cordless telephones to enhance market penetration. In addition, the Company
fulfilled orders in the first quarter of 1996 which were delayed due to
purchasing or manufacturing problems or postponed by customers during the fourth
quarter of 1995, contributing to the strong volume increase.

Other sales for the first quarter of 1996 were down versus the first
quarter of 1995 due to the discontinuation of contract sales to BI, Inc. of the
Company's home arrest product line in the first quarter of 1995. CDPD modem
sales were insignificant in both years.

GROSS MARGIN

The Company's gross profit margin was 19% in the first quarter of 1996
versus 30% in the first quarter of 1995, reflecting a rise in cost of goods sold
and the adverse impact of the continued, planned shift in the sales mix from
higher margin direct retail business to OEM and reseller business.

During the fourth quarter of 1995 review of the Company's inventory and
purchasing functions, it was determined that the Company was overpaying for
components and frequently ordering quantities in excess of the sales plan, which
contributed in the 1995 rise in cost of goods sold. As a result of this review,
the Company appointed a new manager of purchasing to oversee a complete
restructuring of the department and increased the fourth quarter provision for
excess and obsolete inventory. In addition to its efforts to improve its
purchasing function and inventory management, in the first quarter of 1996, the
Company restructured manufacturing, including a reconfiguration of the factory
to streamline the production process and reduce manufacturing cycle times.
Manufacturing staffing levels have been reduced approximately 45% since year-end
1995 while factory yield performance has shown continuous improvement.

OPERATING EXPENSE

Although operating expenses for the first quarter of 1996 decreased to 31%
of net sales from 43% in the comparable prior period, the total increased by
$534,000 (9%) due to a $439,000 (39%) increase in administrative expense and a
$347,000 (12%) increase in selling expenses offset by a $252,000 (14%) decline
in research and development expense. The 14% decrease in research and
development expense reflected the lower development requirements for the radar
detector, cordless telephone and CDPD modem models introduced in 1995, which
permitted staff reductions.

Selling expenses were up 12% for the quarter due to increased advertising
expenditures. The Company increased its level of normal advertising and direct
mail efforts to stimulate ESCORT(R) sales.

Administrative expenses for the first quarter of 1996 were up predominantly
because of a rise in legal and professional expenses and fees for consultants.
The Company has reduced the salaried employee staffing levels by approximately
15% since December 1, 1995.

Net interest expense for the first quarter of 1996 declined to $225,000
from $316,000 because of lower average outstanding balances on the Company's
revolving credit facility, partially offset by increased interest rates. In the
first quarter of 1995, the Company recorded a nonoperating gain of $1.4 million
reflecting the release of certain tax reserves to income as a result of the
closure of the Company's 1991 Federal tax return.

15
<PAGE> 18

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 25, 1994

NET SALES

The Company's net sales for 1995 were up 22% over 1994. Sales of the
Company's products to OEMs and resellers rose to 57% of net sales from 46% in
1994, reflecting a planned shift in the business to reduce dependence on direct
retail sales. Eight OEM and reseller customers accounted for $40 million, or
88%, of the sales through these channels, including Lucent Technologies Inc.
(formerly AT&T), which represented 18% of net sales for the year.

For the year 1995, net sales for the Company's radar detectors rose 10% on
a 27% rise in unit volume over 1994, reflecting continued strong market
acceptance of the Company's products and the growth of the OEM and reseller
channels. The 13% decline in the average unit price reflected the growing
significance of major customers, who generally receive volume discounts. The
Company's fourth quarter detector net sales were lower than the third quarter of
this year as well as the comparable prior period for several reasons. First, OEM
and reseller customers tend to make the majority of their purchases earlier in
the fall/holiday selling season than do retail customers. Additionally, the
timing of 1995 radar detector sales was impacted by the relatively earlier
introduction of new products when compared with 1994. Finally, weakness in the
overall consumer electronics market as well as the radar detector market
impacted sales of the Company's Escort brand detectors.

Net sales for the Company's cordless telephones with SureLink(TM)
technology rose 89% in 1995 compared with 1994. Unit volume jumped 141%,
partially offsetting the 22% decline in the average unit price due to the
significantly greater percentage of OEM/reseller sales and the Company's
strategy to reduce the selling prices of its cordless telephones to enhance
market penetration. Sales of cordless telephones, while strong, were slightly
below the levels anticipated by management primarily because of factors that
impacted sales late in the fourth quarter of 1995. Fourth quarter of 1995 sales
grew only 52%, the smallest gain of the year. Factors that impacted results late
in the fourth quarter of 1995 included the delay of a large order which has
since been shipped. This delay was due to the Company's inability to complete
production of a specific cordless telephone model due to delays in purchasing
and engineering. Additionally, in 1995, an OEM customer postponed a large order
scheduled for the second half of December.

Other sales for 1995, which includes sales of the Company's CDPD modems,
were down significantly versus 1994 due to the discontinuation of contract sales
to BI, Inc. of the Company's home arrest product line in the first quarter of
1995. Modem sales were insignificant in both years.

GROSS MARGIN

The Company's gross profit margin was 15.3% in 1995 versus 22.2% in 1994,
reflecting a rise in cost of goods sold and the adverse impact of the continued,
planned shift in the sales mix from higher margin direct retail business to OEM
and reseller business.

Factors that contributed to the rise in the cost of goods sold included
poor purchasing and material management practices that kept the Company from
achieving the cost reductions necessary to reach specific margin targets. These
targets were established in conjunction with the planned reduction in selling
prices of the Company's consumer electronic products to maintain their
competitive position.

The decline also was due to additional material and unanticipated
manufacturing costs incurred by the Company in the third quarter of 1995 and
continuing into the fourth quarter, in order to maintain product quality and
timely production and to meet commitments to customers. To correct a design
difficulty with a key component (battery charge contacts) in certain of its new
cordless telephone models, the Company was required to spend more than expected
to customize replacement parts, to obtain additional parts and to run the
production lines at less than optimum capacity. In addition, as a result of a
vendor's production error and, separately, a production design error relating to
preprogrammed integrated circuits, the Company incurred additional costs to
obtain one-time programmable integrated circuits to use in place of the
preprogrammed integrated circuits and to redesign its cordless telephone and
radar detector models to use these programmable circuits.

16
<PAGE> 19

In the fourth quarter of 1995, the Company undertook a review of all
inventory and purchasing functions. Generally, it was determined that the
Company was overpaying for components and frequently ordering quantities in
excess of the sales plan, which contributed to the rise in cost of goods sold.
As a result of this review, the Company appointed a new manager of purchasing to
oversee a complete restructuring of the department and increased the fourth
quarter 1995 provision for excess and obsolete inventory by $3.2 million over
the prior year, which increased cost of goods sold. Included in the provision
was a $1.7 million write-down of previously purchased and/or noncancelable
orders of components for earlier-generation CDPD modems and a write-down
totalling $1.3 million of the remaining inventory of earlier-generation cordless
telephones. The modems to be built with the components on-hand and the
earlier-generation cordless telephones will be marketable in the U.S. or
internationally at the new cost levels.

In addition to its efforts to improve its purchasing function and inventory
management, since year-end 1995, the Company has restructured manufacturing,
including a reconfiguration of the factory to streamline the production process
and reduce manufacturing cycle times. Manufacturing staffing levels have been
reduced approximately 45% since year-end 1995 while factory yield performance
has shown continuous improvement.

OPERATING EXPENSES

Although operating expenses for 1995 decreased to 32.1% of net sales from
37.7% in the comparable prior period, the total increased by $1.0 million (4%)
reflecting a $1.7 million rise in administrative expense and a $0.3 million
increase in selling expenses offset by a $1.0 million decline in research and
development expense. The 12% decrease in research and development expense
reflected the lower development requirements, which permitted staff reductions,
for the radar detector, cordless telephone and CDPD modem models introduced in
1995.

Selling expenses were up only 3% for the full year, reflecting a benefit of
the Company's shift to OEM/ reseller business, which requires proportionately
less selling effort. To support the retail sales effort, however, the Company
initiated substantial advertising in the fourth quarter to stimulate ESCORT(R)
sales. In comparison to a very low level of advertising in 1994's fourth
quarter, selling expenses in the fourth quarter of 1995 rose 33%.

Administrative expenses for the year were up $1.7 million, or 53%,
predominantly due to a rise in legal and professional expenses, a change in the
method of allocating certain benefit-related expenses between cost of sales,
administrative, selling, and research and development expenses and higher
staffing levels. In light of results for the second half of 1995, the Company
reevaluated the required staffing levels and has reduced head count of salaried
employees by approximately 15% since December 1, 1995.

Net interest expense for the year rose to $1.2 million versus $.7 million
due to higher average outstanding balances on the Company's revolving credit
facility caused primarily by the build-up of inventory during 1995. During the
year, the Company recorded a nonoperating gain of $1.4 million reflecting the
release of certain tax reserves to income as a result of the closure of the
Company's 1991 Federal tax return. The 1994 results included a nonoperating gain
of $657,000 from the sale of land.

YEAR ENDED DECEMBER 25, 1994 COMPARED TO YEAR ENDED DECEMBER 26, 1993

The Company's net sales of $64.7 million for 1994 were 10.7% higher than
1993 net sales. This increase was due entirely to increased sales of the digital
spread spectrum cordless telephone product line, offsetting a 7% sales decline
in the radar warning detector product line. The digital spread spectrum cordless
telephone was introduced during the second quarter of 1993 and had modest sales
in 1993. The decline in the radar warning detector net sales was due to lower
unit volume for these products and lower pricing. The Company's wireless data
modem sales for 1994 were insignificant. Testing of the CDPD networks continued
with end-users testing the system for its compatibility with their business
applications. The Company's wireless data modem was tested for various
industrial and commercial CDPD applications.

The Company's gross profit margin decreased to 22.2% in 1994 from 32.0% in
1993. This decline was caused by two significant factors. During 1994, the
Company experienced significant component delivery

17
<PAGE> 20

problems relating to its digital spread spectrum cordless telephone product
line. This impacted the factory production schedule and increased the cost to
fill customer orders. For much of the fourth quarter, the Company operated its
digital spread spectrum cordless telephone production line in a stop and start
mode, as and when parts became available, in order to expedite deliveries to its
customers. Secondly, several competing radar warning detector manufacturers made
substantial price reductions during 1994. In order to maintain its market
position, the Company reacted to these developments by introducing a major sales
promotional program for its retail customers for the month of December.

1994 research and development expenses increased $332,000 from 1993. The
Company continued to focus its efforts on new product development and product
improvements. Selling expenses increased $2.3 million from 1993 primarily as a
result of increased advertising for its digital spread spectrum cordless
telephone. Administrative expenses did not fluctuate significantly from the
prior year.

QUARTERLY RESULTS OF OPERATIONS

The following tables set forth certain unaudited quarterly financial
information for the past eight quarters (in thousands except for per share data
and as a percentage of net sales):

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------
JUNE 26, SEPTEMBER DECEMBER APRIL 2, JULY 2, OCTOBER 1, DECEMBER 31, MARCH 31,
1994 25, 1994 25, 1994 1995 1995 1995 1995 1996
-------- --------- -------- -------- ------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales................................... $ 13,692 $15,299 $23,367 $ 13,648 $19,017 $ 22,117 $ 24,417 20,553
Gross profit................................ 4,509 2,987 2,828 4,091 5,148 3,726 (827) 3,923
Net loss.................................... (1,757) (3,995) (3,941 ) (582) (783) (2,637) (9,032) (2,631)
Net loss per share.......................... (0.16) (0.37) (0.36 ) (0.04) (0.06) (0.18) (0.58) (0.17)
</TABLE>

<TABLE>
<CAPTION>
AS A PERCENTAGE OF NET SALES
-------------------------------------------------------------------------------------
QUARTER ENDED
-------------------------------------------------------------------------------------
JUNE 26, SEPTEMBER DECEMBER APRIL 2, JULY 2, OCTOBER 1, DECEMBER 31, MARCH 31,
1994 25, 1994 25, 1994 1995 1995 1995 1995 1996
-------- --------- -------- -------- ------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales................................... 100.0% 100.0% 100.0 % 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit................................ 32.9 19.5 12.1 30.0 27.1 16.8 3.3 19.1
Net loss.................................... (12.8) (26.1) (16.9 ) (4.3) (4.1) (11.9) (37.0) (12.8)
</TABLE>

Quarterly earnings per share calculations are based on the weighted average
number of shares outstanding for the quarter then ended. Annual earnings per
share calculations are based on weighted average number of shares outstanding
for the twelve month period then ended. Due to fluctuations in the weighted
average number of shares outstanding, the sum of the earnings per share
calculations for each quarter will not necessarily equal the calculated earnings
per share for the twelve month period.

LIQUIDITY AND CAPITAL RESOURCES

In the first quarter of 1995, the Company completed a rights offering of
1,482,435 units for $7 per unit; each unit consisted of two Common Shares and
one Warrant entitling the holder to purchase one additional Common Share for $4.
The Rights Offering generated net proceeds of $9.3 million. During 1995, 408,822
Warrants were exercised. At December 31, 1995, the Company had 1,073,613
outstanding Warrants which expire on December 31, 1998. The proceeds from the
Rights Offering were used to reduce debt and to increase working capital.

During the third quarter of 1995, the Company completed an equity offering
that generated $19.1 million in net proceeds. The funds were used to pay off the
existing revolving credit line and to fund the growth in working capital that
occurred during the third and fourth quarters of 1995, including expenses
associated with a planned increase in production to support higher sales for the
third and fourth quarters. In addition, during 1995, the Company incurred
$483,000 of capital lease obligations and utilized $4.0 million of cash flow for
capital expenditures for additional production equipment.

The primary contributors to a $10.0 million increase in working capital
between year-end 1994 and year-end 1995 were a $5.8 million (113%) rise in
accounts receivable, a $16.2 million (177%) increase in

18
<PAGE> 21

inventories offset by a $7.1 million (82%) increase in accounts payable and a
shift to current liabilities of the entire $6.9 million outstanding balance on
the Company's credit facility at December 31, 1995.

The increase in accounts receivable to $10.9 million at the end of 1995
reflected the upward sales trend of cordless telephones during 1995, with 74%
total unit volume of cordless telephones shipped in the last four months of the
year. OEMs and resellers, for which typical credit terms (e.g., payment within
30 to 45 days after delivery) are made available on their large volume orders,
represented a significantly larger proportion of sales in 1995 versus 1994.
Retail customers generally have paid for their purchases at the time it was
shipped or delivered.

The $16.2 million increase in inventories between year-end 1994 and
year-end 1995 was driven by a $4.0 million increase in raw materials and work in
process and a $14.9 million increase in finished goods inventory, offset in part
by a $2.7 million increase in the inventory valuation reserve. Poor purchasing
practices were the primary reason for the excess inventory and the previously
mentioned delay in certain sales.

During the first quarter of 1996, the Company generated cash from operating
activities of $2.5 million as compared to the utilization of cash of $9.4
million in the prior year period. The primary source of cash from operations was
the $6.1 million decrease in inventory. This decrease included a $3.1 million
decrease in raw materials and work in process and a $3.0 million decrease in
finished goods inventory. Reflecting the emphasis being placed on improving the
purchasing function, raw material and work in process inventory has been further
reduced since the end of the first quarter by $1.3 million to $8.8 million at
May 12, 1996. The $17.4 million in finished goods inventory at year-end has been
reduced to $14.5 million at May 12, 1996.

During the first quarter of 1996, the Company utilized $103,000 of cash
flow for capital expenditures for additional production equipment.

Reflecting the emphasis being placed on improving the purchasing function,
raw material and work in process inventory has been reduced since year-end 1995
to approximately $10.1 million at March 31, 1996 from $12.3 million at year-end
1995. The $17.4 million in finished goods inventory at year-end 1995, which has
since been reduced to $14.4 million at March 31, 1996, was impacted by lower
than anticipated sales in December, 1995.

At the end of the first quarter of 1996, the Company had borrowed $5.0
million (term loan balance of $2.3 million and $2.7 million on the revolving
credit facility) against its credit facility due June 30, 1996.

At year-end 1995, the Company was in violation of certain covenants of the
Borrowing Agreement triggered by the net loss incurred for the fourth quarter
and total year 1995, which resulted in financial statement ratios falling below
the requirements of the Borrowing Agreement. The Company remained current on all
required payments to the lender throughout 1995 and has remained current in
1996. The lending institution waived similar violations for the third quarter of
1995; however, as a result of the anticipated net loss for the fourth quarter
and therefore for the full year 1995, the Bank notified the Company on January
2, 1996 of a default on the covenants and further reduced the revolving credit
facility to $3.0 million.

On February 28, 1996, the Bank notified the Company that it had elected to
further reduce the revolving credit facility to $2.5 million effective March 31,
1996, and retroactive from February 1, 1996, increase the interest rate charged
to the default rate of interest, as stipulated in the Borrowing Agreement, to
prime plus 5.0% from prime plus 2.0% for the revolving credit facility and to
prime plus 5.25% from prime plus 2.25% on the term loan.

Since year end, the Bank has elected to continue to make advances to the
Company under the reduced credit facility, notwithstanding the "Event of
Default" under the Borrowing Agreement. The reductions in the revolving credit
facility, however, caused the Company to have less cash than previously
anticipated and heightened the Company's need to manage cash balances very
carefully, particularly in light of the higher than normal inventory levels and
slowdown in year-end sales. There can be no assurances that the Bank's election
will continue because the Bank has not waived the default and has reserved all
of its rights and remedies under the Borrowing Agreement, related loan documents
and applicable law which include, but are not limited to, demanding immediate
payment of all outstanding balances owed to the Bank. The Company continues to

19
<PAGE> 22

work with the Bank and has informed the Bank of its efforts and progress in
pursuing an alternative financing institution to replace the Bank.

Due to the reduced levels of available cash as a result of the increase in
inventories and accounts receivable, as well as the reduced credit facility,
accounts payable at year-end were $15.7 million versus $8.6 million at year-end
1994. Despite the reduced credit facility, accounts payable at the end of the
first quarter of 1996 had been reduced to $13.3 million versus $15.7 million at
year-end 1995. The Company is currently in communication with its key suppliers
and vendors to maintain good relationships as it seeks additional financing and
uses cash flow to make payments on the accounts payable balances. Since the end
of the first quarter of 1996, the accounts payable balance has been reduced to
$10.6 million at May 12, 1996. At present, the Company estimates that suppliers
and creditors can be brought close to normal payment terms, although there can
be no assurance that such objectives will be accomplished. Although the
Company's suppliers and creditors have generally been very supportive, the
Company is currently purchasing approximately 30% of its material requirements
on a cash basis, which has periodically created scheduling and downtime
problems.

The Company is presently seeking to refinance its existing bank debt to
obtain, in particular, a higher credit limit, a longer term, less restrictive
covenants and lower interest rates and costs. Although there can be no
assurances that the new financing can be obtained, negotiations with potential
lenders are continuing. Proceeds from the new credit facility would be used to
pay off the existing credit facility with the Bank and would be used going
forward to fund working capital requirements, including the reduction of
accounts payable. Any agreement would be secured by substantially all of the
Company's assets. In addition, the Company has had discussions with the Bank
about extending the maturity date of the existing credit facility beyond June
30, 1996 while the Company's negotiations with potential lenders continue.

At March 31, 1996, shareholders' equity was $22.1 million and the ratio of
debt-to-equity was 1.26 versus equity of $24.4 million and a debt-to-equity
ratio of 1.33 at December 31, 1995. The Company believes that its working
capital and refinanced credit facilities, along with cash generated from
operations, will be sufficient to fund its operations for the foreseeable
future.

ACCOUNTING DEVELOPMENTS

The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed of," which is required to
be adopted by 1996. The implementation of this Statement is not anticipated to
have a material impact on the Company's financial statements.

The provisions of SFAS No. 123, "Accounting for Stock-Based Compensation,"
will be effective for the Company in 1996. This standard requires that
stock-based compensation either continue to be determined under Accounting
Principles Board Opinion (APB) No. 25, "Accounting for Stock Issued to
Employees," or in accordance with the provisions of SFAS No. 123 whereby
compensation expense is recognized based on the fair value of stock-based awards
on the grant date. The Company currently expects to continue to account for such
awards under the provisions of APB No. 25. Although SFAS No. 123 will require
additional disclosures beginning in 1996, management believes the impact of SFAS
No. 123 will not be material to the Company's financial statements.

20
<PAGE> 23

BUSINESS

The Company markets its products both under the ESCORT(R)brand name through
direct advertising and as an OEM supplier. The Company's strategy for entering
new markets is to align with companies that have established sales leadership
and market positions. This strategy is designed to provide broader access to the
end user. The Company produces digital spread spectrum telephones for several
leading marketers of consumer telephones.

BUSINESS STRATEGY

The Company's business strategy is to use its core technology in ultrahigh
frequency and microwave circuit design, digital signal processing, digital
spread spectrum capability and digital communication techniques, together with
its experience in short product development cycles and mass production, to
introduce leading edge products early in new market life cycles. Using the early
introduction as a platform to gain a leading market share, the Company strives
to aggressively introduce subsequent versions of the product at lower prices
made possible by greater production volume and manufacturing efficiencies.

The Company's business strategy includes the following elements:

- - Leverage core technology

The Company has considerable experience in the design, development and
manufacture of portable electronic wireless communication devices that operate
in the ultrahigh frequency radio and microwave spectrum, having utilized this
technology in its radar detection products since 1978. The Company is committed
to capitalizing upon its core technology base, as shown by its development of
new products and the expansion and enhancement of its technology base through
significant and ongoing research and development expenditures.

- - Emphasize short product development cycles

The Company believes that short product development cycles are essential to
its success. Such cycles enable the Company to capitalize upon the higher
margins that are associated with the introduction of new products and positions
the Company to establish itself as a leader in new markets. Since 1991, the
Company has developed and introduced more than 16 radar warning detector
products, four generations of digital spread spectrum cordless telephones and a
series of wireless data modems.

- - Increase manufacturing efficiencies, improve quality and lower product cost

The Company uses surface mount technology ("SMT") extensively to
manufacture its products. The Company was among the first to utilize SMT to
manufacture consumer radar detection products. SMT is the automated
manufacturing process used to place micro electronic components on printed
circuit boards with a high level of accuracy at a high speed. The use of SMT
enables the Company to design and manufacture products that are compact,
portable and reliable and allows it to achieve manufacturing efficiencies that
result in lower costs. The Company has also developed high speed automated
testing capabilities in order to ensure quality and improve manufacturing
efficiency. Testing procedures have become an integral part of the Company's
manufacturing process encompassing all aspects of the manufacture of its
products, from component to sub-assembly and finished product testing.

21
<PAGE> 24

- - Develop strategic alliances

The Company's strategy for entering new markets is to align with companies
that have established sales leadership and market positions. This strategy is
designed to provide broader access to retailers and end users. The Company
developed its digital spread spectrum cordless telephones and wireless data
modems utilizing this teaming approach. With respect to the Company's digital
spread spectrum cordless telephones, this strategy involves selling to major
cordless telephone vendors. With respect to the Company's wireless modems, this
strategy involves working with cellular service providers as well as vendors of
services utilizing the CDPD networks.

PRODUCTS AND MARKETS

The Company's products are ultrahigh frequency wireless communication
products that operate in the UHF radio and microwave spectrum. At the present
time, the Company has developed and introduced radar warning detectors, digital
spread spectrum cordless telephones and wireless data modems that utilize the
CDPD networks. These three products are described in more detail below.

CORDLESS TELEPHONES

The market for cordless telephones has grown over the past few years and,
according to industry sources, sales of all cordless telephones exceeded 18
million units in 1995, with approximately 900,000 units in the 900 megahertz
("MHz") segment. Conventional cordless phones, which operate in the 46-49 MHz
segment, may be nearing the mature phase of their product life cycle. The
Company believes that the growth area is in high performance telephones, which
operate in the 900 MHz segment. These high performance telephones can deliver to
a consumer the superior range and clarity required for cordless telephones to
become a true substitute for the traditional corded telephone.

In May 1993, the Company introduced its first digital spread spectrum high
performance cordless telephone. These telephones are sold both under the
ESCORT(R) brand name (the ESCORT(R) 9000 series) and to OEM customers. The
Company's digital spread spectrum cordless telephones offer superior performance
over traditional cordless telephones, specifically in the areas of improved
voice clarity, range and communication security. The term "spread spectrum"
refers to a communications technique that encodes signals to be transceived over
multiple frequencies. Spread spectrum transceivers cause substantially less
interference and are less susceptible to interference than conventional
transceivers such as those used in traditional cordless telephones. Due to the
substantially lower interference, the Federal Communications Commission has
specified operating parameters for the 902-928 MHz band that are highly
advantageous to spread spectrum products. The lower susceptibility to
interference together with the advantageous Federal Communications Commission
operating parameters have enabled the Company to design products that can
achieve significantly greater range than traditional cordless telephones. The
Company has combined spread spectrum technology with digital signal processing
technology, thereby digitizing the speech and transmitting it as a high speed
data transmission. By using a high speed data transmission, no voice compression
is required, resulting in a voice clarity that is comparable to a traditional
corded telephone. Finally, spread spectrum encoding by its nature scrambles
voice and data resulting in very secure communications.

The Company introduced a new generation of digital spread spectrum cordless
telephone models in 1995, both for the Company's retail and OEM channels. These
digital spread spectrum cordless telephones are less expensive to manufacture
and are being sold by the Company at a lower price than its previous digital
spread spectrum cordless telephone products to penetrate the market.

WIRELESS DATA MODEMS

In July 1993, the Company announced that it had developed a series of
wireless data modems to be used in conjunction with the CDPD networks being
deployed by a consortium of cellular telephone carriers. CDPD, one of the
recognized leading technologies in wide area wireless data communications, is a
digital system that overlays the cellular voice network and uses the idle times
between cellular voice calls to transmit data. The Company's Mobile Cellular
Data Access Radio Transceiver ("MC-DART") wireless data modems enable

22
<PAGE> 25

data to be sent and received using the CDPD networks without the burden of wires
or the costs of circuit switched connections (the traditional method used for a
voice call).

CDPD has uses in three broad applications of data networking: mobile
applications -- exchanging data with data sources in motion, such as truck
fleets, portable point of sale devices and credit card verification units; fixed
wireless applications -- exchanging data with data sources which are difficult
or prohibitively expensive to reach, such as utility meters, vending machines
and pipe line pumps; and portable applications -- such as portable computers.

The wireless data market, which includes CDPD, has been slow to develop for
several reasons including, but not limited to, the multitude of competing
technologies, none of which has emerged as the market leader, that can provide
transmission of wireless data. The Company continues to believe that CDPD can
offer significant advantages over alternative means of wireless data
transmission, in part because it is supported by the cellular carriers. The
Telecommunications Act of 1996 includes provisions that should provide the
cellular carriers with additional incentives to complete the CDPD infrastructure
and actively market CDPD-based products and services.

RADAR WARNING DETECTORS

The Company's principal product since its formation has been radar warning
detectors, which use microwave and other technologies to detect and amplify
police radar transmissions. During 1992, the Company also began manufacturing
and selling a laser detection product. The Company's superheterodyne radar
warning detectors use digital signal processing and high gain laser detectors to
detect police radar and laser signals and reject unwanted signals so that early
identification is enhanced.

Beginning in 1995, the Company's radar warning detectors were also being
used in conjunction with the Safety Alert1 system. The Safety Alert system
utilizes small transmitters that emit a low power K-band microwave signal and
can be mounted on anything that may constitute traffic hazards, (such as
speeding emergency vehicles, road construction sites or locomotives). The Safety
Alert signal is encoded and when detected and decoded by an appropriately
equipped radar warning detector, the signal can provide the driver with more
specific information as to the nature of the traffic hazard, thereby enhancing
driver safety. The Company was the first to offer products specifically designed
to decode Safety Alert signals for drivers and commenced shipping such radar
warning detectors in August 1994 (the PASSPORT(R) 5000) in anticipation of the
system's implementation. The Company has added this capability to its entire
radar warning detector product line. The Company believes that the Safety Alert
systems are in limited use at present.

On November 28, 1995, a federal law was enacted that eliminated the
existing federal requirement that states comply with the national maximum speed
before receiving certain federal funds. This law has resulted in higher speed
limits in some states and may reduce the perceived need for radar detectors
among drivers in states that raise speed limits.

MARKETING AND SALES

The Company's marketing and sales efforts are differentiated into two
distinct categories: Consumer Products and Commercial Products.

CONSUMER PRODUCTS

The Company's radar warning detector products have traditionally been
marketed under the ESCORT(R) brand name by direct advertising. Through
advertisements placed in national publications, such as "Car and Driver" and
"Road & Track," consumers can reach a dedicated telemarketing staff (via a
toll-free phone number) to obtain additional information or place orders for the
Company's products. The successful introduction of the evolving series of
ESCORT(R) radar warning detectors has provided the Company with a loyal customer
base that can be reached by direct mail efforts for new radar warning detector
products as they become available.

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

1"Safety Alert" is a trademark of COBRA Electronics Corporation.

23
<PAGE> 26

To augment this direct sales channel, the Company has developed a strategic
alliance with Home Shopping Network ("HSN"). The Company's radar warning
detector products are marketed to subscribers of HSN's cable shopping networks.
HSN purchased a substantial part of the Company's radar warning detector output
in 1994 and accounted for 14% of the Company's total net sales. For 1995, HSN
purchases have accounted for 8% of the Company's total net sales. The Company
also sells its radar warning detectors as an OEM supplier to COBRA Electronics
Corporation.

The Company sells its digital spread spectrum cordless telephone primarily
as an OEM as well as under its ESCORT(R) brand. As an OEM, the Company designs,
develops and manufactures digital spread spectrum cordless telephones for
specific customers on a private label basis based upon their specifications.
Based on industry statistics regarding market share, in 1995 three of the
largest eight telephone companies were customers of the Company.

For 1995, purchases of digital spread spectrum cordless telephones by
Lucent Technologies Inc. (formerly AT&T) accounted for 18% of the Company's
total net sales. Lucent Technologies Inc. is currently undergoing a major
reorganization that may impact its ability to compete in, or influence its
decision to pursue, the cordless telephone market in the future.

In early 1996, a new major OEM customer for the Company's digital spread
spectrum cordless telephones was added. The new customer has indicated that it
intends to pursue a long-term relationship with the Company as the supplier of
leading-edge cordless telephone products although there are no guarantees
regarding the volume of cordless telephones this new customer will purchase in
the future. The first shipments to this customer are scheduled to occur in the
second quarter of 1996.

COMMERCIAL PRODUCTS

The Company's commercial product marketing and sales efforts have evolved
out of its OEM approach to consumer products. At present the Company's one
commercial product is its wireless data modem. The Company was an early active
participant with the CDPD consortium, with its engineers being consulted in the
formation of the CDPD standards. The Company took advantage of this early start
by aligning itself with certain cellular carriers for the marketing of its
wireless data modem. The Company has established marketing arrangements with
five leading cellular service providers: Ameritech Mobile Services, Bell
Atlantic Mobile Services, GTE Mobile Communications, McCaw Cellular
Communications, Inc. and Sprint Cellular Communications. However, the CDPD
market has been slow to develop and sales of the Company's modems, to date, have
been limited although production of the Company's wireless data modem products
commenced in June 1994.

In June 1995, Bell Atlantic Mobile Services, Firstnet Corporation and the
Company announced that the Company's wireless data modems will provide the
wireless communication link for AireTrans, the nation's first large-scale
deployment of wireless credit card verification using CDPD.

RESEARCH AND DEVELOPMENT

The Company believes that continued strong investment in research and
development is critical to its long term growth and success. Utilizing its
expertise in ultrahigh frequency and microwave wireless communications and
digital signal processing, the Company intends to continue to develop new
products that strengthen its position in its current markets as well as to enter
new markets. The research and development activities of the Company are directed
toward product development, product improvement, new product screening,
technology development and manufacturing process development. All of the costs
of such research and development activities are expensed as incurred.

As of March 31, 1996, the Company employed 70 people in research and
development functions. The Company's research and development expenditures (in
dollars and as a percentage of net sales) were $8.4 million (13.1%) for fiscal
year 1994; and $7.4 million (9.4%) for fiscal year 1995 and $1.6 million (7.7%)
for the first quarter of 1996.

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<PAGE> 27

MANUFACTURING

The Company designs, manufactures, tests and packages its products at its
plant near Cincinnati, Ohio. All of the Company's products are designed around
the Company's manufacturing processes, which particularly emphasize SMT. SMT is
the automated manufacturing process used to place micro electronic components on
printed circuit boards with a high level of accuracy and at high speed. The use
of SMT enables the Company to design and manufacture products that are compact,
portable and reliable and to achieve manufacturing efficiencies that result in
lower costs. The Company believes that it is important to maintain competitive
manufacturing facilities by investing in advanced manufacturing equipment
(particularly SMT and automated test equipment) and by improving existing and
developing new manufacturing processes.

The Company's products include a number of high-technology components that
are available from only a few suppliers and, in several cases, a single
supplier. The Company frequently requires large volumes of such components and,
if the Company's suppliers are unable to fulfill the Company's needs for such
components, the Company may be unable to fill customer orders and its business,
financial condition, including working capital, and results of operations may be
materially and adversely affected. In the past, certain of the Company's
suppliers were unable to deliver sufficient quantities of critical components to
allow the Company to manufacture its products at previously anticipated volumes.
These shortages adversely affected the Company's ability to manufacture and
deliver products and, as a result, had a significant adverse effect on the
Company's business, financial condition, including working capital, and results
of operations. Since part of the Company's strategy is to shorten product
development and introduction cycles, occasions may arise in the future where the
Company's ability to produce products outpaces its suppliers' ability to supply
components. There can be no assurance that the Company can continue to obtain
adequate supplies or obtain such supplies at their historical cost levels. The
Company has no guaranteed supply arrangements with any of its sole or limited
source suppliers, does not maintain an extensive inventory of components and
customarily purchases sole or limited source components pursuant to purchase
orders placed from time to time in the ordinary course of business. Moreover,
the Company's suppliers may, from time to time, experience production shortfalls
or interruptions which impair the supply of components to the Company. There can
be no assurance that such shortages will not occur in the future and adversely
affect the Company's business, financial condition, including working capital,
and results of operations.

TRADEMARKS AND PATENTS

The Company has a variety of patents, patent applications, registered and
unregistered trademarks and registered trade names. The Company does not believe
that its ability to compete in any of its product markets is currently dependent
on its patents or patent applications, but does believe that its rights to, and
the goodwill associated with, its ESCORT(R), PASSPORT(R) and SOLO(R) registered
trademarks and Courier(TM) and SureLink(TM) trademarks provide it with a
marketing advantage. This coupled with the Company's knowledge and accumulated
experience in the design and mass production of ultrahigh frequency wireless
transmitters and receivers incorporating digital signal processing provide it
with a competitive advantage.

Although the Company has protected its technologies and products by patent,
copyright, trademark and trade secret laws to the extent that it believes
necessary, the Company's intellectual property rights may be subject to
infringement. There can be no assurance that the Company's measures to protect
its proprietary rights will deter or prevent unauthorized use of the Company's
technology. Furthermore, the laws of certain countries may not protect the
Company's proprietary rights to the same extent as do the laws of the United
States. In addition, the Company may, from time to time, become subject to legal
claims asserting that the Company has violated intellectual property rights of
third parties. In the event a third party were to sustain a valid claim against
the Company and in the event any required license were not available on
commercially reasonable terms, the Company's business, financial condition,
including working capital, and results of operations could be materially and
adversely affected. Litigation, which could result in substantial costs to and
diversion of resources of the Company, may also be necessary to enforce
intellectual property rights of the Company or to defend the Company against
claimed infringement of the rights of others.

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<PAGE> 28

COMPETITION

All markets in which the Company participates are highly competitive. The
market for conventional cordless telephones is largely driven by Lucent
Technologies Inc., followed by four major brands (Bell South, GE, Panasonic and
Sony), several other Regional Bell brands and a host of minor brands. The market
for high performance cordless telephones, such as those manufactured by the
Company, is relatively new. The Company's major competitors in the high
performance cordless telephone market segment are Panasonic, Uniden and Vtech.
Competition in this segment is currently based primarily on product performance,
features and price. Many current or prospective competitors serving this market
are substantially larger than the Company and possess significantly greater
financial, marketing and technical resources than the Company. There can be no
assurance that the Company will be successful against its competition in this
market. The cordless telephone market may undergo additional disruption in 1996
as market leader Lucent Technologies Inc. completes its reorganization. The
reorganization may have an impact on its ability, or interest, in competing in
this area. Lucent Technologies Inc. accounted for 18% of the Company's sales in
1995.

The Company's wireless data modems have been proven fully operational on
commercial CDPD networks. The market for wireless data modems is still
developing, and there are current or prospective competitors, such as Motorola
and PCSI, a subsidiary of Cirrus Logic, who are substantially larger than the
Company and possess significantly greater financial and technical resources.
There can be no assurance that the Company will compete successfully in this
market.

The market for radar warning detectors is highly competitive, mature and
declining. As the market has moved toward lower priced products offering fewer
features, competition has been based primarily on price and, to a lesser degree,
product quality, availability and performance. Lower than expected demand for
the Company's radar warning detectors, coupled with intense price competition in
the radar warning detector market, has adversely affected the Company's
quarterly results at various times in the past several years. A recurrence of
these conditions would have a material adverse effect on the Company.

GOVERNMENT REGULATION

Existing, pending or future legislation prohibiting the use, possession or
sale of radar warning detectors or future legislation by states increasing speed
limits could have a material adverse effect on the Company's business.
Currently, there are two jurisdictions in the United States which have specific
prohibitions against the use, possession or sale of radar warning detectors in
automobiles. In addition, two other jurisdictions prohibit the use of radar
warning detectors in large commercial vehicles only and, in January 1994, the
Federal Highway Administration enacted a regulation banning radar warning
detectors from commercial vehicles weighing over 18,000 pounds, from buses
carrying 16 or more passengers and from trucks transporting hazardous materials
on highways funded by the Federal Government. This is, in effect, a ban on use
of such radar warning detectors in all large trucks and buses. On November 28,
1995, a federal law was enacted that eliminated the existing federal requirement
that states comply with national maximum speed limit provisions before receiving
certain federal funds. This law has resulted in higher speed limits in some
states. Industry analysts have speculated that the higher speed limits may have
an impact on the perceived need for radar detectors and accelerate the decline
in this market, which has contracted steadily since 1989.

In addition, radio communications are subject to regulation by United
States and foreign laws and international treaties. The Company's digital spread
spectrum cordless telephones and wireless data modems must conform to domestic
and international requirements established to avoid interference among users of
radio frequencies. Therefore, the Company's opportunities to introduce new
products may be limited to the extent that suitable radio frequencies are not
available.

EMPLOYEES

As of March 31, 1996 the Company had 527 employees: 70 employees in
research and development, 320 employees in manufacturing, 91 employees in sales
and marketing and 46 employees in administration. The Company believes that its
relations with its employees are good. None of the Company's employees is
represented by a labor union or covered by a collective bargaining agreement,
and the Company has never experienced a work stoppage as a result of its
employee relations.

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<PAGE> 29

PROPERTIES

The Company owns its manufacturing and research facilities and executive
offices located on 13 acres of land near the intersection of Fields-Ertel Road
and I-71, approximately twenty miles north of Cincinnati, Ohio. The building at
One Microwave Plaza, built in 1982 and expanded in 1986, is a modern 172,000
square foot, one-story building.

During 1993, the Company sold 4.3 acres of land adjacent to its facilities.
Proceeds of $900,000 were received and a gain of $741,000 was recorded in the
fourth quarter. During 1994, the Company sold an additional 7.7 acres of land
adjacent to its facilities that was held for sale. Proceeds of $820,000 were
received and a gain of $657,000 was recorded in the first quarter of 1994.

The Company owns substantially all of the equipment associated with its
manufacturing, research and testing operations. The Company has acquired certain
equipment through leasing arrangements. All equipment is modern, in good
operating condition and well-maintained and, except for leased equipment, is
currently used as collateral for the line of credit with the current lender.

LEGAL PROCEEDINGS

The Company is involved in other legal proceedings arising from the normal
course of business, none of which, in management's opinion, is expected to have
a material adverse impact on the Company's results of operations or financial
condition.

27
<PAGE> 30

MANAGEMENT

The following table sets forth certain information with respect to the
executive officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------- --- -------------------------------------------------------------
<S> <C> <C>
James L. Jaeger 48 Chairman of the Board
Erika Williams 49 President, Chief Executive Officer and Director
R. Gregory Blair 49 Vice President/Product Management
Carroll Halva 58 Vice President/Manufacturing Operations
Anita L. Hromish 41 Vice President/Chief Information Officer
Thomas H. Perszyk 48 Vice President/Engineering
Craig V. Wolf 47 Vice President/Chief Financial Officer
Charles M. Fullgraf 77 Director
Joseph M. O'Donnell 49 Director
Jacques A. Robinson 49 Director
Gilbert L. Wachsman 48 Director
</TABLE>

James L. Jaeger is a founder of the Company. In May 1985 he was elected
Chairman of the Board. He also served as Chief Executive Officer of the Company
from June 1983 until June 1988 and from January 1990 through April 22, 1991. He
has been a Director of the Company since 1976. Mr. Jaeger spends substantially
all of his time on activities outside of the Company.

Erika Williams has been President and Chief Executive Officer of the
Company since June 10, 1996. Ms. Williams was Chief Operating Officer of System
Integrators, Inc. (a company that designs, manufactures and markets services
publishing systems to the newspaper publishing industry) from July 1995 to June
1996, and served as Chief Executive Officer of that company since March 1996.
From 1993 to March 1995, Ms. Williams was Senior Vice President and General
Manager of Enterprise Storage Systems of Amdahl Corporation (a developer and
manufacturer of mainframe computers) of Sunnyvale, California. Since 1978, Ms.
Williams held various positions with Amdahl Corporation including the Corporate
Officer responsible for product management of the main frame business, Vice
President of Processor Technology and Development and Director of Product
Software and Diagnostics. She has been a Director of the Company since 1994.

R. Gregory Blair is Vice President/Products Management. Mr. Blair joined
the Company in December 1984 as its Director of Manufacturing and in October
1985 was appointed Vice President-Operations. He also served as President and
Chief Operating Officer of Guardian Technologies, Inc., a wholly owned
subsidiary of the Company, from March 1987 to November 1988, and as President
and Chief Operating Officer of CMI Technologies, Inc., a wholly owned subsidiary
of the Company, from November 1988 until September 1991.

Carroll Halva is Vice President/Manufacturing Operations. Prior to joining
the Company on April 12, 1996, Mr. Halva was the Assistant Vice President for
Hughes Network Systems located in Germantown, Maryland. Mr. Halva spent 10 years
as General Manager/Technical Director of Manufacturing for Data General.
Additionally, Mr. Halva spent 12 years with Rockwell Collins in the Technical
Manager role. Mr. Halva's experience has been in the computer, network, disc
drive and PCB assembly and fabrication areas.

Anita L. Hromish is Vice President/Chief Information Officer of the
Company. Ms. Hromish joined the Company in March 1986 and has assumed positions
of increasing responsibility during this time. From 1979 to 1984, Ms. Hromish
was employed by The Procter & Gamble Company ("P&G") (a diversified manufacturer
of household and industrial products headquartered in Cincinnati, Ohio) in the
Management Systems Division. Ms. Hromish was appointed Vice President in July
1993.

Thomas H. Perszyk is Vice President/Engineering. Prior to joining the
Company in December 1994, Mr. Perszyk was Senior Resource Manager-Engineering
for Motorola and had 24 years of experience with Motorola in the
electrical/electronics engineering field. Recent product responsibilities
included a wide range of portable communication equipment and involved worldwide
assignments in engineering and manufacturing.

28
<PAGE> 31

Craig V. Wolf is Vice President/Chief Financial Officer. Prior to joining
the Company on December 12, 1995, Mr. Wolf was General Manager of Armco
Financial Group and President of Armco Financial Services Corporation, two units
of Pittsburgh-based Armco, Inc. Prior to that, Mr. Wolf was corporate director
of internal audit for Armco, Inc. Between 1977 and 1989, Mr. Wolf served in a
number of domestic and international financial capacities for FMC Corporation.

Charles M. Fullgraf retired from P&G in 1982 after a 42-year career serving
P&G in various management positions. From 1978 to 1982 Mr. Fullgraf was a Group
Vice President of P&G and served on its Board of Directors. He also served as a
trustee of the P&G Profit Sharing Trust. He has been a Director of the Company
since 1985.

Joseph M. O'Donnell has served as President, Chief Executive Officer and
Director of Computer Products, Inc. (a manufacturer of electronic products and
subsystems) since July 1994. Mr. O'Donnell served as Managing Director of
O'Donnell Associates (a consulting firm) from March 1994 to June 1994 and from
October 1992 to September 1993; as Chief Executive Officer of Savin Corporation
(an office products distributor) from October 1993 to February 1994; and as
President and Chief Executive Officer of GO/DAN Industries (a manufacturer of
automotive parts) from June 1990 to September 1992. He is a Director of V-Band
Corporation (a manufacturer of computer systems). He has been a Director of the
Company since 1991.

Jacques A. Robinson was President and Chief Executive Officer of the
Company from April 23, 1991 to June 10, 1996, Chief Operating Officer of the
Company from December 1, 1995 to June 10, 1996 and President of The Scotcrest
Group since its incorporation in 1989. From July 1987 through February 1991, Mr.
Robinson served as President of Carillon Technology, Inc. (a California company
that manufactured consumer audio technology products). From 1979 through June
1987, Mr. Robinson held various positions with the General Electric Company; his
most recent position with that company was Vice President and General Manager of
the Consumer Electronics Business Operations. He has been a Director of the
Company since 1991.

Gilbert L. Wachsman is currently Senior Vice President of Kmart Corporation
and President of Wachsman Management Consulting, Inc., which provides consulting
services to retailers and consumer oriented manufacturers, since 1990. Pursuant
to his consulting practice, Mr. Wachsman served as Vice Chairman of Universal
International, Inc. (a wholesaler/retailer of close-out merchandise) from
October 1992 to February 1995. From December 1988 to July 1990, Mr. Wachsman was
President of Lieberman Enterprises (a distributor of pre-recorded music, video
and personal computer software); from January 1986 to December 1988 he was
President of Child World, Inc. (one of the largest U.S. toy chains). He has been
a Director of the Company since 1991.

29
<PAGE> 32

DESCRIPTION OF CAPITAL STOCK AND WARRANTS

The Company's authorized capital stock consists of 20,000,000 Common
Shares, without par value, and 100,000 Preferred Shares. As of June 1, 1996 the
issued and outstanding capital stock of the Company consisted of 15,749,797
Common Shares. In addition, as of June 1, 1996, the Company had 1,073,610
Warrants issued and outstanding as described below.

The following summary of certain matters relating to the capital stock of
the Company is qualified in its entirety by the provisions of the Company's
Articles of Incorporation and Regulations.

COMMON STOCK

The Company had 15,749,797 Common Shares issued and outstanding on June 1,
1996. Holders of Common Shares are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. Shareholders have the
right to cumulate their votes in the election of directors.

Holders of Common Shares are entitled to share in such dividends as the
Board of Directors, in its discretion, may validly declare from funds legally
available. In the event of liquidation, each outstanding Common Share entitles
its holder to participate ratably in the assets remaining after payment of
liabilities.

Shareholders have no preemptive or other rights to subscribe for or
purchase additional shares of any class of stock or any other securities of the
Company, and there are no redemption or sinking fund provisions with regard to
the Common Shares. All outstanding Common Shares are fully paid, validly issued
and non-assessable.

The vote of the holders of 66 2/3% of all outstanding Common Shares is
required to amend the Articles of Incorporation and to approve mergers,
reorganizations, and similar transactions.

PREFERRED STOCK

The Articles authorize the Board of Directors to designate and issue, from
time to time, Preferred Shares in one or more series. The Board of Directors is
authorized, to the extent permitted by applicable law, to fix and determine the
relative rights and preferences of the shares of any series so established with
respect to, among other things, dividend or distribution rights, the dates of
payments of dividends or distributions and the dates from which they are
cumulative, liquidation price, redemption rights and price, sinking fund
requirements, conversion or exchange rights and certain other terms of the
Preferred Shares. Because the rights and preferences set by the Board of
Directors for a series of Preferred Shares may be superior to the rights and
preferences of the Common Shares, the issuance of such series may adversely
affect the rights of the holders of Common Shares. As of the date of this
Amended Prospectus, the Board of Directors had not authorized or issued any
series of Preferred Shares and had no plans, agreements or understandings for
such authorization or issuance.

While issuance of Preferred Shares could provide needed flexibility in
connection with possible acquisitions and other corporate purposes, such
issuance also could make it more difficult for a prospective acquiror to acquire
a majority of the outstanding voting shares of the Company and could discourage
an attempt to gain control of the Company. Such authority granted to the Board
of Directors could adversely affect the market price of the Common Shares.

WARRANTS

Each Warrant entitles the holder thereof to purchase one of the Company's
Common Shares at an exercise price of $4.00 at any time prior to 5:00 p.m.,
Eastern Standard Time, on December 31, 1998. As of June 1, 1996, 1,073,610
Warrants were outstanding. The number of shares purchasable upon exercise of the
Warrants and the exercise price shall be subject to adjustment to reflect, among
other things, stock dividends on or stock splits of the Common Shares or
reclassification of the Common Shares. In such situations, the number of shares
purchasable upon exercise will be adjusted so that the Warrant holder shall be
entitled to receive the kind and number of shares which the holder thereof would
have owned or been entitled to receive after the occurrence of any of such
events if the Warrants had been exercised prior thereto. The exercise price

30
<PAGE> 33

will be adjusted accordingly. The Warrants do not confer upon the holders
thereof any of the rights or privileges of a shareholder. Accordingly, the
Warrants do not entitle holders thereof to receive any dividends, to vote, to
call meetings or to receive any distribution upon a liquidation of the Company.
The Company has authorized and reserved for issuance a number of Common Shares
sufficient to provide for the exercise of the rights represented by the
Warrants. Shares issued upon exercise of the Warrants will be fully paid and
non-assessable. Warrants not exercised prior to 5:00 p.m., Eastern Standard
Time, on December 31, 1998, shall become null and void.

The Warrants may be exercised during the exercise period stated above by
delivery of the Warrant Certificate, with the subscription form on the reverse
side of the Warrant Certificate fully executed, to the Company's transfer agent,
the State Street Bank And Trust Company, together with a check payable to the
State Street Bank And Trust Company in an amount equal to the Warrant exercise
price multiplied by the number of Common Shares being purchased. The Company or
its transfer agent will issue a new Warrant Certificate representing the
unexercised but not expired Warrants.

A complete statement of the terms and conditions pertaining to the Warrants
is contained in the Warrant Certificate, copies of which can be obtained from
the Company. This description is qualified in its entirety by the text of the
Warrant Certificate.

PROVISIONS EFFECTING BUSINESS COMBINATIONS

Chapter 1704 of the Ohio Revised Code may be viewed as having an
anti-takeover effect. This statute, in general, prohibits an "issuing public
corporation" (the definition of which would include the Company) from entering
into a "Chapter 1704 Transaction" with the beneficial owner (or affiliates of
such beneficial owner) of 10% or more of the outstanding shares of the
corporation (an "interested shareholder") for at least three years following the
date on which the interested shareholder attains such 10% ownership, unless the
board of directors of the corporation approves, prior to such person becoming an
interested shareholder, either the transaction or the acquisition of shares
resulting in a 10% ownership. A "Chapter 1704 Transaction" is broadly defined to
include, among other things, a merger or consolidation with, sale of substantial
assets to, or the receipt of a loan, guaranty or other financial benefit (which
is not proportionately received by all shareholders) by the interested
shareholder. Following the expiration of such three-year period, a Chapter 1704
Transaction with the interested shareholder is permitted only if either (i) the
transaction is approved by the holders of at least two-thirds of the voting
power of the corporation (or such different proportion as set forth in the
corporation's articles of incorporation), including a majority of the
outstanding shares, excluding those owned by the interested shareholder, or (ii)
the business combination results in the shareholders other than the interested
shareholder receiving a prescribed "fair price" for their shares. One
significant effect of Chapter 1704 is to cause an interested shareholder to
negotiate with the board of directors of a corporation prior to becoming an
interested shareholder.

In addition, Section 1707.043 of the Ohio Revised Code requires a person or
entity that makes a proposal to acquire the control of a corporation to repay to
that corporation any profits made from trades in the corporation's stock within
18 months after making the control proposal.

TRANSFER AGENT AND REGISTRAR

The registrar and transfer agent for the Company's Common Shares is the
State Street Bank and Trust Company, Boston, Massachusetts.

PLAN OF DISTRIBUTION

The Units offered pursuant to the Offering were offered by the Company
directly to holders of its Common Shares. Roney & Co. ("Roney") was retained by
the Company to act as Dealer Manager in connection with the Offering. The Dealer
Manager coordinated all aspects of marketing of the Offering through the conduct
of informational meetings, the direct solicitation of certain identified
shareholders and the management of Soliciting Dealers that also solicited the
exercise of Rights. For acting as Dealer Manager, the Company paid the Dealer
Manager a fee equal to 3.0% of the Subscription Price per Unit received for
Units

31
<PAGE> 34

sold in this Offering with a minimum Dealer Manager fee of $175,000 and an
expense allowance equal to 0.25% of the Subscription Price received for the
Units. In addition, the Company reimbursed certain of the Dealer Manager's
expenses, including legal and other out-of-pocket expenses not to exceed
$90,000. The Company paid each Soliciting Dealer designated by an exercising
Right Holder on the Subscription Rights Certificate, including the Dealer
Manager, a fee (the "Solicitation Fee") up to 3.5% in respect of each Unit
purchased by such Right Holder, excluding those Units purchased by directors,
officers, employees and their affiliates.

Roney acted as financial advisor in connection with the Offering, including
providing assistance to the Company in determining the Subscription Price. The
Company agreed to pay Roney a financial advisory fee of $50,000. The $50,000
advisory fee was credited against fees received for Units sold in the Offering
in excess of $125,000. Roney acted as a co-underwriter in an offering of
1,150,000 Common Shares by the Company and 3,450,000 Common Shares by James L.
Jaeger, Chairman of the Board of Directors. In addition, Roney may perform other
financial advisory and investment banking services for the Company in the future
for which it may receive compensation.

Other than the Dealer Manager and the Soliciting Dealers, the Company did
not employ any brokers, dealers or underwriters to solicit the exercise of
Rights in the Offering and, except as described herein, no other commissions,
fees or discounts were paid in connection with the Offering.

The Company has agreed to indemnify the Dealer Manager and the Soliciting
Dealers against certain liabilities, including civil liabilities under the
Securities Act, or contribute to payments which the Dealer Manager or the
Soliciting Dealers may be required to make in respect thereof.

The Company paid the fees and expenses of State Street Bank and Trust
Company, as Subscription Agent, and also agreed to indemnify the Subscription
Agent from certain liabilities in connection with the Offering.

The Company offered up to 20,000 Units at the Subscription Price to certain
members of Company management and other Company employees other than Jacques A.
Robinson, who was at that time the President of the Company, and James L.
Jaeger, Chairman of the Board.

LEGAL MATTERS

The validity of the Common Shares and Warrants were passed upon for the
Company by Frost & Jacobs, 201 East Fifth Street, Cincinnati, Ohio 45202.

EXPERTS

The consolidated financial statements as of December 31, 1995 and December
25, 1994 and for each of the three years in the period ended December 31, 1995
included in this Amended Prospectus have been so included in reliance on the
report (which contains an explanatory paragraph relating to the Company's
ability to continue as a going concern as described in Note 1 to the financial
statements) of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933 with respect to the Common Shares offered hereby.
This Amended Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and such Common Shares, reference is
hereby made to such Registration Statement and to the exhibits and schedules
thereto. The Registration Statement can be inspected without charge at the
office of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and copies may be obtained therefrom at prescribed rates.

32
<PAGE> 35

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities of the SEC, Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as the following SEC
Regional Offices: Seven World Trade Center, New York, NY 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies
can be obtained from the SEC by mail at prescribed rates. Requests should be
directed to the SEC's Public Reference Section, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. The Company's Common Shares are included
in the NASDAQ National Market system and reports and other information
concerning the Company may also be inspected and copied at the offices of The
Nasdaq Stock Market, Inc. at 1735 K Street, N.W. Washington, D.C. 20006.

33
<PAGE> 36

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants.................................................... F-2
Balance Sheet as of December 25, 1994, December 31 1995 and
March 31, 1996 (unaudited)......................................................... F-3
Statement of Operations for the years ended December 26, 1993, December 25, 1994 and
December 31, 1995 and the unaudited three month periods ended April 2, 1995 and
March 31, 1996..................................................................... F-4
Statement of Cash Flows for the years ended December 26, 1993, December 25, 1994 and
December 31, 1995 and the unaudited three month periods ended April 2, 1995 and
March 31, 1996..................................................................... F-5
Statement of Shareholders' Equity as of December 26, 1993, December 25, 1994 and
December 31, 1995.................................................................. F-6
Notes to Financial Statements........................................................ F-7
</TABLE>

F-1
<PAGE> 37

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Shareholders of Cincinnati Microwave, Inc.

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Cincinnati
Microwave, Inc. (the "Company") and its subsidiaries as of December 31, 1995 and
December 25, 1994, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has reported recurring losses from operations
and has substantial obligations due in 1996 that raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

/s/ Price Waterhouse LLP

PRICE WATERHOUSE LLP

Cincinnati, Ohio

March 15, 1996

F-2
<PAGE> 38

CINCINNATI MICROWAVE, INC.

BALANCE SHEET

(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 31, MARCH 31,
1994 1995 1996
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents............................. $ 40 $ 11 $ 11
Accounts receivable (less allowances of $523 - 1995
and $43 - 1994)..................................... 5,137 10,923 10,897
Inventories, net (Note 5)............................. 9,159 25,370 19,219
Other................................................. 602 779 1,160
-------- -------- --------
Total Current Assets................................ 14,938 37,083 31,287
-------- -------- --------
Restricted cash....................................... 505 429 929
Property, plant and equipment, less accumulated
depreciation (Note 6)............................... 14,543 14,649 13,620
Patents, trade names and other identifiable intangible
assets, net of accumulated amortization of
$4,059 - 1995 and $3,759 - 1994..................... 1,045 745 670
Excess of purchase price over fair value of net assets
acquired, net of accumulated amortization of
$6,491 - 1995 and $5,973 - 1994..................... 1,808 1,290 1,160
-------- -------- --------
Total Assets........................................ $ 32,839 $ 54,196 $ 47,666
======== ======== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Accounts payable...................................... $ 8,627 $ 15,729 $ 13,257
Current Portion of long-term debt (Note 9)............ 600 6,934 4,974
Accrued taxes......................................... 1,468 81 38
Unearned revenue...................................... 709 684 600
Current lease obligations (Note 7).................... 1,164 1,075 1,066
Other................................................. 4,071 4,212 4,857
-------- -------- --------
Total Current Liabilities........................... 16,639 28,715 24,792
-------- -------- --------
Long term debt (Note 9)............................... 7,419 -- --
Lease obligations (Note 7)............................ 1,422 753 508
Unearned revenue - noncurrent......................... 457 350 290
Contingencies (Note 14)............................... --
Common shares, without par value ($.20 stated value);
20,000,000 shares authorized; 18,203,120 shares
issued in 1995; 17,053,120 shares issued in 1994.... 3,411 3,641 3,641
Paid-in capital....................................... 17,578 24,182 23,694
Retained earnings..................................... 26,921 13,887 11,256
Treasury stock at cost, 2,582,326 shares - 1995;
6,110,264 shares - 1994............................. (41,008) (17,332) (16,515)
-------- -------- --------
Total Shareholders' Equity.......................... 6,902 24,378 22,076
-------- -------- --------
Total Liabilities and Shareholders' Equity.......... $ 32,839 $ 54,196 $ 47,666
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE> 39

CINCINNATI MICROWAVE, INC.

STATEMENT OF OPERATIONS

(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED THREE MONTHS ENDED
----------------------------------------------- ---------------------------
DECEMBER 26, DECEMBER 25, DECEMBER 31, APRIL 2, MARCH 31,
1993 1994 1995 1995 1996
------------ ------------ ------------- ------------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales............................ $ 58,461 $ 64,708 $ 79,199 $13,648 $20,553
Cost of sales........................ 39,778 50,359 67,061 9,557 16,630
------------ ------------ ------------- ------------- ---------
Gross profit....................... 18,683 14,349 12,138 4,091 3,923
------------ ------------ ------------- ------------- ---------
Operating expenses:
Research & development............. 8,117 8,449 7,442 1,832 1,580
Selling............................ 10,391 12,671 12,990 2,823 3,170
Administrative..................... 3,259 3,253 4,978 1,140 1,579
------------ ------------ ------------- ------------- ---------
21,767 24,373 25,410 5,795 6,329
------------ ------------ ------------- ------------- ---------
Operating loss................... (3,084) (10,024) (13,272) (1,704) (2,406)
Gain on sale of marketable equity
securities......................... 1,435 -- -- -- --
Interest expense..................... (521) (738) (1,207) (276) (208)
Other income (expense), net
(Note 13).......................... 886 502 7 (40) (17)
------------ ------------ ------------- ------------- ---------
Loss from continuing operations
before income taxes............ (1,284) (10,260) (14,472) (2,020) (2,631)
Income tax benefit (Note 8).......... -- -- (1,438) (1,438) --
------------ ------------ ------------- ------------- ---------
Net loss......................... $ (1,284) $(10,260) $ (13,034) $ (582) $(2,631)
============ ============ ============ ============ =========
Net loss per share (Note 2).......... $ (0.12) $ (0.94) $ (0.90) $ (0.04) $ (0.17)
============ ============ ============ ============ =========
Weighted average number of shares
outstanding........................ 10,691 10,880 14,539 13,868 15,695
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE> 40

CINCINNATI MICROWAVE, INC.

STATEMENT OF CASH FLOWS
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED THREE MONTHS ENDED
---------------------------------------- -------------------
DECEMBER 26, DECEMBER 25, DECEMBER 31, APRIL 2, MARCH 31,
1993 1994 1995 1995 1996
------------ ------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss....................................... $ (1,284) $(10,260) $(13,034) $ (582 ) $(2,631)
------------ ------------ ------------ -------- ---------
Adjustments to reconcile net loss to net cash
provided by (used in) operations:
Depreciation................................. 3,346 3,697 3,965 1,012 1,135
Amortization................................. 819 819 818 205 205
Loss (gain) on disposition of property, plant
and equipment.............................. (738) (658) (2) (1 ) --
Gain on sale of marketable equity
securities................................. (1,435) -- -- -- --
Net assets of discontinued operations........ (175) (61) -- -- --
Issuance of shares as compensation........... 183 68 72 -- --
Other non-cash charges (credits), net........ (142) 118 (97) -- --
Changes in operating assets and liabilities
excluding discontinued operations:
Accounts receivable.......................... 262 (1,501) (5,786) 481 26
Inventories.................................. 2,515 (1,860) (16,211) (3,322 ) 6,151
Other current assets......................... (401) (58) (177) 163 (381)
Accounts payable............................. (9,103) 4,743 7,102 (5,109 ) (2,472)
Accrued taxes................................ (353) 7 (1,387) (1,435 ) (43)
Unearned revenue............................. 13 384 (132) (23 ) (144)
Other current liabilities.................... (535) 1,436 183 (828 ) 645
Other non-current operating assets and
liabilities................................ 227 (7) -- (8 ) (3)
------------ ------------ ------------ -------- ---------
Total adjustments/changes.................... (5,517) 7,127 (11,652) (8,865 ) 5,119
------------ ------------ ------------ -------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES..................................... (6,801) (3,133) (24,686) 9,447 2,488
------------ ------------ ------------ -------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment... (1,766) (4,222) (4,016) (300 ) (103)
Proceeds from sale of assets................... 976 820 2 1 --
Proceeds from sale of marketable equity
securities................................... 7,315 -- -- -- --
(Increase) decrease in restricted cash......... (134) (371) 76 (495 ) (500)
------------ ------------ ------------ -------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES................................. 6,391 (3,773) (3,938) (794 ) (603)
------------ ------------ ------------ -------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from notes payable.................... 1,500 12,125 15,731 9,228 191
Payments on notes payable...................... (1,499) (10,107) (16,816) (7,825 ) (2,151)
Proceeds from lease obligations................ 1,213 2,526 483 -- --
Payments on lease obligations.................. (297) (704) (1,241) (279 ) (254)
Proceeds from exercise of stock options........ 290 264 425 136 329
Proceeds from exercise of Warrants............. -- -- 1,574 -- --
Proceeds from rights and Stock Offerings....... -- -- 28,439 9,287 --
------------ ------------ ------------ -------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES..................................... 1,207 4,104 28,595 10,547 (1,885)
------------ ------------ ------------ -------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.................................... 797 (2,802) (29) 306 --
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD......................................... 2,045 2,842 40 40 11
------------ ------------ ------------ -------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD....... $ 2,842 $ 40 $ 11 $ 346 $ 11
============== ============== ============== ======== ==========
Supplemental cash flow disclosure:
Interest paid.................................. $ 521 $ 738 $ 1,207 276 208
============== ============== ============== ======== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE> 41

CINCINNATI MICROWAVE, INC.

STATEMENT OF SHAREHOLDERS' EQUITY

(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON SHARES TREASURY STOCK
----------------------- PAID-IN RETAINED -----------------------
SHARES VALUE CAPITAL EARNINGS SHARES VALUE TOTAL
----------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 27, 1992............. 17,053,120 $ 3,411 $ 18,973 $ 38,465 (6,434,691) $ (43,208) $ 17,641
Net loss.............................. (1,284) (1,284)
Shares issued under stock option
plan................................ (643) 151,850 933 290
Issuance of shares as compensation.... (167) 57,183 350 183
----------- ---------- ---------- ---------- ---------- ---------- ----------
Balance December 26, 1993............. 17,053,120 3,411 18,163 37,181 (6,225,658) (41,925) 16,830
Net loss.............................. (10,260) (10,260)
Shares issued under stock option
plan................................ (553) 109,625 817 264
Issuance of shares as compensation.... (32) 5,769 100 68
----------- ---------- ---------- ---------- ---------- ---------- ----------
Balance December 25, 1994............. 17,053,120 3,411 17,578 26,921 (6,110,264) (41,008) 6,902
Net loss.............................. (13,034) (13,034)
Shares issued under stock option
plan................................ (607) 145,825 1,032 425
Shares issued under warrants.......... (1,114) 408,822 2,688 1,574
Shares issued pursuant to rights and
stock offering...................... 1,150,000 230 8,311 2,964,870 19,898 28,439
Issuance of shares as compensation.... 14 8,421 58 72
----------- ---------- ---------- ---------- ---------- ---------- ----------
Balance December 31, 1995............. 18,203,120 $ 3,641 $ 24,182 $ 13,887 (2,582,326) $ (17,332) $ 24,378
========== ====== ======== ======== ========== ========= ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE> 42

CINCINNATI MICROWAVE, INC.

NOTES TO FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS EXCEPT SHARE DATA)

NOTE 1 -- BASIS OF PRESENTATION

The Company's financial statements have been prepared on a going concern
basis which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The operations of the Company in
recent years have not generated sufficient funds to meet working capital and
capital expenditure needs. The Company has funded these operating shortfalls
through bank borrowings under its credit facility, through extending vendor
terms and through equity offerings. The Company is currently working with a
lending institution to refinance the amounts under its current credit facility
and to provide additional credit availability. Management is reviewing all
facets of the Company's operations with the intent to improve its operating
results and generate additional cash flows for payment of vendor obligations
through such actions as acceleration of accounts receivable receipts and
inventory reductions. The Company's ability to continue as a going concern is
dependent upon its ability to achieve a satisfactory level of profitable
operations and renew or replace its existing credit facility.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

The Company designs, manufactures and markets ultrahigh frequency and
microwave wireless communications products. The Company's three main product
lines include radar warning detectors, digital spread spectrum cordless
telephones, and wireless data modems.

The Company markets its products both under the Escort(R) brand name
through direct retail advertising and resellers and as an original equipment
manufacturer (OEM) supplier. Substantially all of the Company's operations are
domestic with the exception of a minimal amount of international sales
facilitated through distributor relationships.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash in the bank, commercial paper and
various money market instruments with maturities of three months or less and are
carried at cost which approximates market value.

INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined
by the FIFO (first-in, first-out) method.

RESTRICTED CASH

Restricted cash consists of cash in the bank restricted as to its use for
customer credit card processing and lease commitments.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets.
Buildings and improvements are depreciated over 5 to 40 years. Manufacturing,
test, and engineering equipment are depreciated over 1 to 7 years, while office,
computer and other equipment is depreciated over 1 to 5 years. Gain or loss
realized on disposition of properties is included in income. Major additions and
improvements are capitalized while maintenance and repairs are expensed.

F-7
<PAGE> 43

CINCINNATI MICROWAVE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INTANGIBLE ASSETS

Intangible assets are amortized using the straight-line method. Patents,
trade names and the excess of the purchase price over the fair value of net
assets acquired are being amortized over periods not to exceed fifteen years.
Intangible assets are considered impaired if net assets exceed the projected
future cash flows from the sales of related products. To date, no impairments
have been recorded.

REVENUE RECOGNITION

Revenue is recognized from sales when the product is shipped. The Company
provides a 30 day, money-back guarantee on the majority of its products. The
Company also provides, at no cost to its customers, a one year warranty on the
majority of its products. The Company records the estimated future costs of
returns and warranties in the year of the sale.

UNEARNED REVENUE

The Company offers two and five year warranties for a fee to certain
customers. Unearned revenue is amortized on a straight-line basis over the
warranty period.

EARNINGS PER SHARE

Earnings per share are computed based on the weighted average number of
shares of common stock outstanding during each period.

INCOME TAXES

In accordance with SFAS 109 "Accounting for Income Taxes" deferred tax
assets and liabilities are recognized for the expected future tax consequences
of temporary differences between the carrying amounts and the tax bases of
assets and liabilities. SFAS 109 also requires that a valuation allowance be
established for deferred tax assets when it is more likely than not that they
will not be realized.

USE OF ESTIMATES

The financial statements, which are prepared in conformity with generally
accepted accounting principles, require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates. In particular, management has utilized
estimates based on the facts and circumstances existing at the date of the
financial statements which are sensitive to change in the near term. These
significant estimates include the estimated net realizable value of inventories
and litigation exposure.

SOURCES OF SUPPLY

The Company currently sole sources certain of its important components for
its products. Although there are a limited number of manufacturers of these
components, management believes that other suppliers could provide similar
components. A change in suppliers, however, could cause a delay in manufacturing
and a possible postponement or loss of sales, which could adversely affect
operating results.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable, accrued expenses and debt approximate fair value.

F-8
<PAGE> 44

CINCINNATI MICROWAVE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

STOCK BASED COMPENSATION

RECLASSIFICATION

Certain prior year amounts have been reclassified to conform to the 1995
presentation.

UNAUDITED FINANCIAL INFORMATION

In the opinion of management, the unaudited financial information as of
March 31, 1996, and for the three months ended April 2, 1995 and March 31, 1996
contain all adjustments consisting only of normal, recurring adjustments,
necessary to present fairly the results for the periods presented.

NOTE 3 -- RIGHTS AND STOCK OFFERING

In the first quarter of 1995, the Company completed a Rights Offering (the
"Offering") of 1,482,435 units for $7 per unit; each unit consisted of two
Common Shares and one warrant entitling the holder to purchase one additional
Common Share for $4. The Offering generated net proceeds of $9.3 million.

The proceeds from the Offering were used to reduce debt and to increase
working capital. Offering costs of $175,000 included as a prepaid asset at
December 25, 1994 reduced Paid-in capital upon completion of the Offering.
2,964,870 shares of Treasury stock were reissued as part of the Offering.
Paid-in capital was reduced by the excess cost of the Treasury stock over the
net proceeds of the Offering.

In the third quarter of 1995, the Company completed a Stock Offering of
4,600,000 Common Shares, of which 1,150,000 shares were sold by the Company and
3,450,000 were sold by a selling shareholder. The 1,150,000 shares sold by the
Company generated net proceeds of $19.1 million. The funds were used to pay
amounts outstanding under the existing revolving credit line and to fund an
anticipated growth in working capital. Paid-in Capital was reduced by offering
costs of $1,580.

NOTE 4 -- SIGNIFICANT CUSTOMERS

The following table summarizes net sales for all customers who accounted
for more than 10% of the Company's net sales for 1995, 1994 or 1993. No other
customer accounted for 10% or more of the Company's net sales.

<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------
DECEMBER DECEMBER DECEMBER
31, 25, 26,
CUSTOMER NAME 1993 1994 1995
- ------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Lucent Technologies Inc. (formerly AT&T)........ 0 4,029 14,389
Cobra Electronics Corporation................... 7,426 2,547 5,494
Home Shopping Network........................... 4,739 9,193 6,564
</TABLE>

F-9
<PAGE> 45

CINCINNATI MICROWAVE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5 -- INVENTORIES

Inventories consisted of:

<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 31, MARCH 31,
1994 1995 1996
------------ ------------ ---------
(UNAUDITED)
<S> <C> <C> <C>
Materials and supplies............................. $ 6,314 $ 8,363 $ 7,802
Work in process.................................... 1,933 3,906 2,311
Finished goods..................................... 2,516 17,425 14,394
Inventory valuation reserve........................ (1,604) (4,324) (5,288)
------------ ------------ ---------
$ 9,159 $ 25,370 $19,219
============ ============ =========
</TABLE>

In the fourth quarter of 1995, the Company recorded a lower of cost or
market reserve of $3,000 related to modems and cordless telephones.

NOTE 6 -- PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of:

<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 31,
1994 1995
------------ ------------
<S> <C> <C>
Land and improvements......................................... $ 829 $ 875
Building and improvements..................................... 12,030 12,094
Manufacturing, test and engineering equipment................. 17,455 21,055
Office and computer equipment................................. 6,071 5,983
Transportation equipment...................................... 57 57
------------ ------------
36,442 40,064
------------ ------------
Accumulated depreciation...................................... 21,899 25,415
------------ ------------
$ 14,543 $ 14,649
============ ============
</TABLE>

NOTE 7 -- LEASE OBLIGATIONS

The Company has entered into leasing arrangements for certain manufacturing
equipment under capital leases. The Company has the option to purchase certain
leased equipment for $1,322 upon expiration of the lease. The cost and
accumulated depreciation under capital leases included in property, plant, and
equipment are as follows:

<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 31,
1994 1995
------------ ------------
<S> <C> <C>
Manufacturing, test and engineering equipment................. $ 3,548 $ 4,065
Accumulated depreciation...................................... (1,063) (2,221)
------------ ------------
$ 2,485 $ 1,844
============ ============
</TABLE>

F-10
<PAGE> 46

CINCINNATI MICROWAVE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Future minimum lease payments under capital leases and the net present
value of the minimum lease payments as of December 31, 1995 are as follows:

<TABLE>
<S> <C>
1996....................................................................... $ 1,208
1997....................................................................... 715
1998....................................................................... 112
1999....................................................................... 0
2000 and beyond............................................................ 0
------------
Total minimum lease payments................................................. 2,035
Amount representing interest................................................. (207)
------------
Net present value of minimum lease payments.................................. 1,828
Less current maturities...................................................... (1,075)
------------
Long-term maturities......................................................... $ 753
============
</TABLE>

NOTE 8 -- INCOME TAXES

Income taxes related to continuing operations were as follows for the
years:

<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Provision for income taxes (benefit):
Current federal....................................... $ (416) $(2,481 ) $(4,878 )
Deferred federal...................................... 416 2,481 3,440
-------- -------- --------
$ 0 $ 0 $(1,438 )
========= ========= =========
</TABLE>

Deferred income taxes are provided for those items for which the income tax
bases and the carrying amount of the assets and liabilities differ. The sources
of these differences and the tax effects of each are as follows:

<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Deferred income tax components:
Change in valuation allowance......................... $ 157 $ 3,546 $ 4,904
Inventories........................................... 31 (399 ) (859 )
Plant and equipment................................... (116) (123 ) (193 )
Accounts receivable................................... 5 (14 ) (163 )
Investment in CDI..................................... 680 0 0
Marketable equity securities.......................... (382) 0 0
Other................................................. 41 (529 ) (249 )
-------- -------- --------
Income tax expense (benefit)............................ $ 416 $ 2,481 $ 3,440
========= ========= =========
</TABLE>

F-11
<PAGE> 47

CINCINNATI MICROWAVE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Reconciliations between the statutory and effective income tax rates are as
follows:

<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Statutory U.S. federal income tax rate.................. (34.0)% (34.0)% (34.0)%
Release of tax revenue.................................. 0.0 0.0 (9.9)
Change in valuation allowance........................... 12.2 31.0 33.9
Goodwill and other intangible amortization.............. 21.8 3.0 2.1
Other................................................... 0.0 0.0 (2.0)
-------- -------- --------
Effective income tax rate............................. (0.0)% (0.0)% (9.9)%
========= ========= =========
</TABLE>

The components of deferred income tax assets and liabilities at December
25, 1994 and December 31, 1995 are as follows:

<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 31,
1994 1995
------------ ------------
<S> <C> <C>
Deferred tax assets:
Current
Inventories.............................................. $ 727 $ 1,586
Unearned revenue......................................... 397 352
Accrued warranty......................................... 131 205
Allowance for bad debts.................................. 15 178
Accrued vacation......................................... 142 151
Sales returns............................................ 114 94
Other.................................................... 42 50
------------ ------------
1,568 2,616
Noncurrent
NOL carryforward......................................... 6,113 9,833
Alternative minimum tax credit........................... 117 117
Other.................................................... 76 20
------------ ------------
6,306 9,970
Deferred tax assets valuation allowance....................... (7,118) (12,022)
------------ ------------
Deferred tax assets net of valuation allowance................ 756 564
Deferred tax liabilities:
Noncurrent
Plant and equipment...................................... (756) (564)
------------ ------------
Net deferred tax assets....................................... $ 0 $ 0
============ ============
</TABLE>

As required by SFAS 109, the Company has recorded a valuation allowance to
the extent that deferred tax assets exceed deferred tax liabilities as it is not
considered more likely than not that the assets will be realized.

At December 31, 1995, the Company had net operating loss (NOL)
carryforwards for federal income tax purposes of approximately $28,921, which
expire beginning in 2006. In 1991, the Company generated an alternative minimum
tax (AMT) credit of $117. This amount is allowable as a credit against the
excess of regular tax over AMT in future years. Under current federal tax laws,
this credit may be carried forward indefinitely.

F-12
<PAGE> 48
CINCINNATI MICROWAVE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

In March 1995, as a result of the closure of the Company's 1991 Federal tax
return, the Company released certain tax reserves to income. The adjustment
increased net income for the first quarter of 1995 by $1.4 million.

NOTE 9 -- NOTES PAYABLE

At December 31, 1995, the Company had borrowed $6,934 (term loan balance of
$2,450 and $4,484 on the revolving credit facility) against its credit facility
due June 30, 1996. The $7,500 credit facility consisted of (i) the term loan,
(ii) a $5,000 revolving credit facility and (iii) a standby letter of credit
facility not to exceed $1,000; however, the sum of the outstanding principal
balance of the revolving credit and the aggregate amount of the Company's
outstanding letters of credit shall not exceed $5,000 at any time. At December
31, 1995, the term loan and revolving credit facility interest rates were
10 3/4% and 10 1/2%, respectively. The credit facility is secured by first and
exclusive liens on all accounts receivable, inventory, machinery, equipment,
other personal property, real estate and intangibles owned by the Company.

At December 25, 1994, the financing agreement with the Bank included (i) a
revolving line of credit for general working capital and standby letters of
credit maturing on June 30, 1996 in the amount of up to $6,000 based upon a
receivables and inventory formula, bearing interest at the Bank's prime rate
plus 3/4% per annum or 9 3/4%; and (ii) a term loan from the Bank in the amount
of up to $4,000 initially due December 25, 1994, bearing interest at the Bank's
prime rate plus 1% per annum or 10%. At December 25, 1994, the Company had
borrowed $8.0 million (term loan balance of $3,000 and revolving credit facility
balance of $5,019).

The credit facility requires compliance with certain affirmative and
negative covenants including, without limitation, a prohibition of payment of
dividends for the term of the credit facility without the prior consent of the
Bank, covenants regarding the Company's financial condition and achievement of
profitability levels.

As a result of violations of covenants in the borrowing agreement in the
third and fourth fiscal quarters of 1995, the Bank decreased the revolving
credit facility limit and increased the interest rates applicable to both the
revolving credit facility and the term loan. These covenants require positive
accounting income in the third and fourth quarters of 1995 and the maintenance
of a certain cash flow coverage ratio.

The Bank waived the Company's violation for the third quarter; however, on
January 2, 1996, the Bank declared the Company in default due to the loss
incurred in the fourth quarter and violation of the cash flow coverage ratio
covenant. As a result of these defaults, the Bank can accelerate the
indebtedness owed by the Company.

Effective February 1, 1996, the term loan and revolving credit facility
interest rates were increased to prime plus 5 1/4% and prime plus 5%,
respectively, from prime plus 2 1/4% and prime plus 2%, respectively,
established on October 31, 1995. Effective March 31, 1996, the revolving credit
facility was reduced to $2,500.

(UNAUDITED SUBSEQUENT EVENTS)

Since year end, the Bank has elected to continue to make advances to the
Company under the reduced credit facility, notwithstanding the "Event of
Default" under the Borrowing Agreement. The reductions in the revolving credit
facility, however, caused the Company to have less cash than previously
anticipated and heightened the Company's need to manage cash balances very
carefully, particularly in light of the higher than normal inventory levels and
slowdown in year-end sales. There can be no assurances that the Bank's election
will continue because the Bank has not waived the default and has reserved all
of its rights and remedies under the Borrowing Agreement, related loan documents
and applicable law which include, but are not limited to, demanding immediate
payment of all outstanding balances owed to the Bank. The Company continues to
work with the Bank and has informed the Bank of its efforts and progress in
pursuing alternative financing institutions to replace the Bank.

F-13
<PAGE> 49

CINCINNATI MICROWAVE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 10 -- CAPITAL SHARES

STOCK OPTIONS

The Company's 1991 Stock Option Plan (Plan) has reserved 2,000,000 shares
for issuance pursuant to incentive or non-qualified stock options to be granted
at a price equal to or greater than the market value at the date of grant. These
options become exercisable ratably over a four year period beginning six months
and one day from the date of grant and expire ten years after the date of grant.
The following is a summary of option activity under the Plan:

<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 31,
1994 1995
---------------- ---------------
<S> <C> <C>
Options outstanding at the beginning of year.............. 931,625 953,625
Options granted........................................... 304,000 483,000
Options exercised......................................... 109,625 145,825
Options cancelled......................................... 172,375 256,750
Options outstanding at end of year........................ 953,625 1,034,050
Options exercisable at end of year........................ 319,375 511,425
Common shares available for options to be granted at end
of year................................................. 773,250 547,000
Option price range for options granted.................... $4.125 - $11.625 $4.50 - $9.625
Option price range for options exercised.................. $2.00 - $3.00 $2.00 - $7.875
Option price range for options exercisable at end of
year.................................................... $2.00 - $7.50 $2.00 - $11.625
</TABLE>

In April 1991, the Company also granted options to purchase 500,000 shares
to the Scotcrest Group, Inc. (Scotcrest) in conjunction with a contract with
Scotcrest to provide the services of Jacques A. Robinson, President and Chief
Executive Officer of the Company. These options were granted at a price of $1.25
per share (market value at date of grant) and are exercisable at any time. In
addition, on May 15, 1995, the Company granted options to purchase 150,000
shares to Scotcrest in conjunction with the contract renewal with Scotcrest.
These options were granted at $12.25 per share (market value at date of grant)
and are exercisable ratably over a four-year period. These options expire ten
years from the date of grant. None of these options were exercised or cancelled
during 1995, 1994 or 1993.

In May 1992, the Company established the 1992 Stock Option Plan for
Non-Employee Directors. Under this plan, an option to purchase 5,000 common
shares shall be granted to each non-employee director on the date of the
Company's annual meeting of shareholders at or above the fair market value of
the stock. These options become exercisable six months from the date of issuance
and expire ten years after the date of grant. The Company has reserved for
issuance upon the exercise of options granted under this plan 150,000 Common
Shares. During 1995, 20,000 options to purchase common shares were issued to the
Company's four non-employee directors at a price of $17.125. During 1994, 20,000
options to purchase common shares were issued to the Company's four non-employee
directors at a price of $8.375.

DIRECTORS' STOCK COMPENSATION

In July 1991, the Company established a Directors' Restricted Share Plan.
This plan provides that each director shall receive seventy percent of his total
annual compensation in the form of stock, restricted as to

F-14
<PAGE> 50
CINCINNATI MICROWAVE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

disposition for six months. The stock will be granted at a price equal to the
average market price for the prior twelve months. This plan has a term of ten
years and provides that the aggregate number of shares of common stock which may
be awarded may not exceed 500,000 shares. Shares issued and related expense
recorded under the plan were 8,421 and $72 during 1995, 5,769 and $47 during
1994 and 15,186 and $47 during 1993.

EXECUTIVE STOCK COMPENSATION

During 1993, Jacques A. Robinson and James L. Jaeger, Chairman of the
Board, agreed to receive certain compensation in the form of the Company's stock
in lieu of cash payments. Total treasury shares issued were 30,992 for Mr.
Robinson and 11,005 for Mr. Jaeger with market values of $78 and $27,
respectively.

WARRANTS

In the first quarter of 1995 and in conjunction with the rights offering,
the Company issued 1,482,435 warrants entitling the holder to purchase one
Common Share of the Company's stock for $4.00. During 1995, 408,822 warrants
were exercised. At December 31, 1995, the Company had warrants outstanding of
1,073,613 that expire December 31, 1998.

NOTE 11 -- EMPLOYEE BENEFIT PLANS

The Company has a defined contribution retirement savings plan and a
defined contribution profit sharing plan covering substantially all of its
employees. The Company generally contributes to the retirement savings plan on
behalf of each participant based upon the employee's contributions to the plan.
The Company may change its contributions at its discretion. The Company
generally contributes 5% of eligible compensation earned by participants to the
profit sharing plan. The costs of employee benefit plans are charged to expense
and funded throughout the year. Total costs for these plans were $836 in 1995,
$769 in 1994, and $881 in 1993.

NOTE 12 -- RELATED PARTY TRANSACTIONS

Until June 21, 1993, the President and Chief Executive Officer of the
Company was a director of BI Incorporated ("BI"), an OEM customer of the
Company. Net revenues generated from the sale of products to BI amounted to
$420, $3,567 and $2,596 for the years ended December 31, 1995, December 25, 1994
and December 26, 1993, respectively. The Company had outstanding accounts
receivable from BI of $42, $497 and $390 at December 31, 1995, December 25, 1994
and December 26, 1993, respectively. Subsequent to December 25, 1994, the
Company and BI terminated their manufacturing agreement.

The Company owned approximately 6% of the stock of Cellular Data Inc.
("CDI"). CDI was a development stage company formed to develop and market a
technology to transmit data over cellular telephone networks without using or
interfering with the radio spectrum allocated for voice transmission on those
networks. In accordance with an agreement with CDI, the Company provided
engineering services of $0, $0 and $374 to CDI in 1995, 1994 and 1993,
respectively. These costs are included in research and development expenses.

NOTE 13 -- OTHER INCOME (EXPENSE), NET

Other income (expense), net consists of the following:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
----------------------------------------------
DECEMBER 26, DECEMBER 25, DECEMBER 31,
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Gain on disposition of fixed assets........... $738 $ 658 $ 2
Interest and dividend income.................. 189 7 150
Other income/(expense)........................ (41) (163) (145)
---- ------ ------
$886 $ 502 $ 7
==== ====== ======
</TABLE>

F-15
<PAGE> 51

CINCINNATI MICROWAVE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 14 -- CONTINGENCIES

Four shareholder lawsuits were filed against the Company in October and
November 1995. On January 9, 1996, these lawsuits were consolidated, and, on
February 23, 1995, the plaintiffs filed an Amended Complaint asserting claims,
allegedly on behalf of all purchasers of the Company's common shares on the open
market between July 12, 1995 and October 13, 1995, and who suffered damages, and
on behalf of all persons who purchased the Company's common shares from the
defendants pursuant or traceable to an August 24, 1995 public offering of
4,600,000 common shares between August 24, 1995 and October 13, 1995, and who
suffered damage as a result. Plaintiffs purport to assert claims against the
Company and other defendants for violations of various provisions of the
Securities Act of 1933 and the Securities Exchange Act of 1934 and for
violations of the common law of negligent misrepresentation and fraud. The
Company is presently evaluating the allegations contained in this lawsuit and
intends to vigorously defend itself. The failure to achieve a favorable
resolution of this lawsuit could materially adversely affect the Company's
business and financial condition, including working capital, and results of
operations. No accrual for loss has been recorded as the Company is unable to
estimate the range of loss, if any. However, based on damages sought, management
believes that the potential loss could be material and adversely impact the
Company's results of operations or financial condition.

F-16
<PAGE> 52

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

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
AMENDED PROSPECTUS IN CONNECTION WITH THE OFFER MADE HEREBY. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE AGENT. THIS AMENDED PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN ANY SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS AMENDED PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Recent Developments.................... 4
Risk Factors........................... 4
Use of Proceeds........................ 9
Price Range of Common Shares
and Warrants......................... 9
Dividend Policy........................ 10
Capitalization......................... 11
Dilution............................... 12
Selected Consolidated Financial Data... 13
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 14
Business............................... 21
Management............................. 28
Description of Capital Stock and
Warrants............................. 30
Plan of Distribution................... 31
Legal Matters.......................... 32
Experts................................ 32
Additional Information................. 32
Available Information.................. 33
</TABLE>

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

Up to 1,073,610 Common Shares

CINCINNATI MICROWAVE, INC.

------------------------
AMENDED PROSPECTUS
------------------------

June , 1996

------------------------------------------------------
------------------------------------------------------
<PAGE> 53

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. (1)

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.................... $ 10,614.38
NASDAQ Listing Fees.................................................... 3,000.00
NASD Filing Fee........................................................ 2,297.39
Printing and Engraving................................................. 180,000.00
Counsel fees and expenses.............................................. 210,000.00
Accountant's fees and expenses......................................... 85,000.00
Blue Sky Qualification fees and expenses............................... 5,000.00
Miscellaneous fees and expenses........................................ 4,088.23
-----------
Total............................................................. $500,000.00
===========
<FN>

- ---------

(1) Estimated, other than Registration Fee and NASD Filing Fee.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

There is no provision in the Company's Amended Articles of Incorporation by
which an officer or director of the Company may be indemnified against any
liability which he may incur in his capacity as such. However, the Company has
indemnification provisions in its Amended Regulations. These provisions provide
that each person who was or is a party or is threatened to be made a party to or
is involved in any threatened, pending or completed action, suit or proceeding,
("Proceeding") by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director or officer, employee, or
agent of the corporation or, as a director or officer of the Corporation, is or
was serving at the request of the corporation as a director, officer, trustee,
employee, or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether the basis of such Proceeding is alleged action in an official capacity
as a director, officer, trustee, employee or agent or in any other capacity,
shall be indemnified by the Company to the fullest extent authorized by law,
including but not limited to the Ohio General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Company to provide broader
indemnification rights than such law permitted the Company to provide prior to
such amendment), against all expenses, liability and loss (including attorneys'
fees, and in respect of claims not made by or in the right of the Company,
judgments, fines, ERISA, excise taxes or penalties and amounts paid or to be
paid in settlement) actually and reasonably incurred by such person in
connection with any such Proceeding; provided, however, that the Company shall
indemnify any such person seeking indemnity in connection with an action, suit
or proceeding initiated by such person only if such action, suit or proceeding
initiated by such person was authorized by the Board of Directors.

In the event that any claim for indemnification is not paid in full by the
Company within 30 days, the claimant is entitled to bring suit against the
Company to recover the amount not paid and, if the claimant is successful, the
cost of the Proceeding that was required to order that payment. In addition, the
rights to reimbursement under these indemnification provisions represent a
contract right that entitles the indemnified party to bring suit to enforce the
indemnification provisions as if such provisions were set forth in a separate
written contract between the Company and the party to be indemnified. The
Company may purchase and maintain insurance or furnish similar protection on
behalf of any person (qualified to be indemnified) against any liability
asserted against him, and incurred by him in or arising out of his indemnifiable
status, whether or not the Company would have the power to indemnify him against
such liability.

The Company provides liability insurance for its directors and officers for
certain losses arising from certain claims and charges, including claims and
charges under the Securities Act, which may be made against such persons while
acting in their capacities as directors and officers of the Company.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Company pursuant to

II-1
<PAGE> 54

the provisions referred to herein, or otherwise, the Company has been advised
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT NO. TITLE OF EXHIBIT
- ---------------------- ----------------------------------------------------------------------
<S> <C>
(1) Dealer Manager Agreement
(4)(i) Articles of Incorporation of Cincinnati Microwave, Inc., as amended
(incorporated by reference to Exhibit 4(i) of Registration Statement
No. 33-61775).
(4)(ii) Regulations of Cincinnati Microwave, Inc., as amended (incorporated by
reference to Exhibit 4(ii) of Registration Statement No. 33-61775).
(5) Opinion of Frost & Jacobs, counsel for the Company, as to the legality
of the Securities being registered.
(10)(i) Copy of Loan and Security Agreement dated as of May 27, 1994 between
The Huntington National Bank and Cincinnati Microwave, Inc., as
amended (incorporated by reference to Exhibit (10)(ii) of Registration
Statement No. 33-61775).
(10)(iii)(A)(1)* Copy of the Cincinnati Microwave, Inc. 1991 Stock Option Plan for
Employees (incorporated by reference to Exhibit 10.1 to Form 10-K for
1991, File No. 0-13136).
(10)(iii)(A)(2)* Form of stock option agreement used previously in connection with the
options granted under the Cincinnati Microwave, Inc. 1991 Stock Option
Plan for Employees (incorporated by reference to Exhibit 10.2 to Form
10-K for 1991, File No. 0-13136).
(10)(iii)(A)(3)* Copy of resolutions pertaining to Directors' fees (incorporated by
reference to Exhibit 10(k) of Registration Statement No. 2-86869).
(10)(iii)(A)(4)* Copy of Employment Agreement dated as of December 22, 1988 by and
between R. Gregory Blair and Cincinnati Microwave, Inc. (incorporated
by reference to Exhibit 10.10 to Form 10-K for 1988, File No.
0-13136).
(10)(iii)(A)(5)* Copy of Employment Agreement dated as of October 2, 1992 by and
between John W. Noland and Cincinnati Microwave, Inc. (incorporated by
reference to Exhibit 10(5) to Form 10-K for 1992, File No. 0-13136).
(10)(iii)(A)(6)* Copy of the Cincinnati Microwave Deferred Compensation Plan
(incorporated by reference to Exhibit (10)(26) to Form 10-K for 1987,
File No. 0-13136).
(10)(iii)(A)(7)* Copy of the Cincinnati Microwave, Inc. Retirement Savings Plan
(incorporated by reference to Exhibit (10)(19) to Form 10-K for 1991,
File No. 0-13136).
(10)(iii)(A)(8)* Copy of the Cincinnati Microwave, Inc. Employees Stock Ownership Trust
(incorporated by reference to Exhibit (10)(21) to Form 10-K for 1988,
File No. 0-13136).
(10)(iii)(A)(9)* Copy of the Cincinnati Microwave, Inc. Profit Sharing Plan
(incorporated by reference to Exhibit (10)(21) to Form 10-K for 1991,
File No. 0-13136).
(10)(iii)(A)(10)(i)* Copy of the Services Agreement with the Scotcrest Group, Inc.
effective March 25, 1991 (incorporated by reference to Exhibit
(10)(22) to Form 10-K for 1991, File No. 0-13136).
(10)(iii)(A)(10)(ii)* Copy of Amended Service Agreement with the Scotcrest Group, Inc.
effective March 27, 1992 (incorporated by reference to Exhibit 1 to
Form 10-Q for the quarter ended March 27, 1992, File No. 0-13136).
(10)(iii)(A)(10)(iii)* Copy of Amended Service Agreement with the Scotcrest Group, Inc.
effective May 16, 1995 (incorporated by reference to Exhibit 10(i) of
Registration Statement No. 33-61775).
</TABLE>

II-2
<PAGE> 55

<TABLE>
<CAPTION>
EXHIBIT NO. TITLE OF EXHIBIT
- ---------------------- ----------------------------------------------------------------------
<S> <C>
(10)(iii)(A)(11)* Copy of Cincinnati Microwave, Inc. 1992 Stock Option Plan for
Non-Employee Directors effective May 19, 1992 (incorporated by
reference to Exhibit 1 to Form 10-Q for the quarter ended September
27, 1992, File No. 0-13136).
(10)(iii)(A)(12)* Copy of stock option agreement used in connection with Cincinnati
Microwave, Inc. 1992 Stock Option Plan for Non-Employee Directors
(incorporated by reference to Exhibit 2 to Form 10-Q for the quarter
ended September 27, 1992, File No. 0-13136).
(10)(iii)(A)(13)* Copy of stock option agreement with the Scotcrest Group, Inc.
effective May 16, 1995 (incorporated by reference to Exhibit
10(iii)(A)(13) to Form 10-K for the year ended December 31, 1995, File
No. 0-13136).
(23)(A) Consent of Price Waterhouse LLP.
(23)(B) Consent of Frost & Jacobs is contained in opinion of counsel filed as
Exhibit 5.
(24) Powers of Attorney executed by directors and officers other than Erika
Williams.
(24)(i) Power of Attorney executed by Erika Williams.
(99)(i) Form of Subscription Rights Certificate
(99)(ii) Form of Instructions as to Use of Subscription Rights Certificate
(99)(iii) Form of Letter to Shareholders
(99)(iv) Form of Letter to Shareholders with Addresses Outside the United
States and Canada or APO or FPO Addresses
(99)(v) Form of Letter to Nominee Holders
(99)(vi) Form of Certification and Request for Additional Rights
(99)(vii) Form of Nominee Holder Oversubscription Certification
(99)(viii) Form of Letter from Nominee Holders to Beneficial Owners
(99)(ix) Form of Notice of Guaranteed Delivery
(99)(x) Form of DTC Participant Oversubscription Exercise Form
(99)(xi) Executed Standby Purchase Agreements
(99)(xii) Form of Subscription Agent Agreement
(99)(xiii) Form of Information Agent Agreement
(99)(xiv) Form of Warrant
(99)(xv) Form of Warrant Agent Agreement
(99)(xvi) Form of Certificate of Amendment
(99)(xvii) Form of Instructions as to Use of Certificate of Amendment
(99)(xviii) Form of Letter to Shareholders or Right Holders
(99)(xix) Form of Letter to Persons Who Have Exercised Rights
</TABLE>

- ---------

* Management contract on compensatory plan or arrangement.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i)To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the most recent post-effective amendment which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.

II-3
<PAGE> 56

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

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. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a 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-4
<PAGE> 57

Pursuant to 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 has duly caused this amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Cincinnati, State of Ohio on the 20th day of
June, 1996.

CINCINNATI MICROWAVE, INC.

By: /s/ ERIKA WILLIAMS
----------------------------------
Erika Williams
President and Chief Executive
Officer

As required by the Securities Act of 1933, this amendment to this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated below.

<TABLE>
<S> <C>
Principal Executive Officer:

/s/ ERIKA WILLIAMS Dated: June 20, 1996
- -------------------------------------
Erika Williams, President,
Chief Executive Officer and Director

Principal Financial and
Accounting Officer:

/s/ CRAIG V. WOLF Dated: June 20, 1996
- -------------------------------------
Craig V. Wolf, Vice President
and Chief Financial Officer
</TABLE>

Directors:

CHARLES M. FULLGRAF
JOSEPH M. O'DONNELL

GILBERT L. WACHSMAN

/s/ JACQUES A. ROBINSON
------------------------------------
Jacques A. Robinson, Director and
as attorney-in-fact

Dated: June 20, 1996

<TABLE>
<S> <C>
/s/ JAMES L. JAEGER Dated: June 20, 1996
- -------------------------------------
James L. Jaeger, Director
</TABLE>

II-5
<PAGE> 58

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. TITLE OF EXHIBIT
- ---------------------- -----------------------------------------------------------
<S> <C> <C>
(1) Dealer Manager Agreement A
(4)(i) Articles of Incorporation of Cincinnati Microwave, Inc., as
amended (incorporated by reference to Exhibit 4(i) of
Registration Statement No. 33-61775).
(4)(ii) Regulations of Cincinnati Microwave, Inc., as amended
(incorporated by reference to Exhibit 4(ii) of Registration
Statement No. 33-61775).
(5) Opinion of Frost & Jacobs, counsel for the Company, as to A
the legality of the Securities being registered.
(10)(i) Copy of Loan and Security Agreement dated as of May 27,
1994 between The Huntington National Bank and Cincinnati
Microwave, Inc., as amended (incorporated by reference to
Exhibit (10)(ii) of Registration Statement No. 33-61775).
(10)(iii)(A)(1)* Copy of the Cincinnati Microwave, Inc. 1991 Stock Option
Plan for Employees (incorporated by reference to Exhibit
10.1 to Form 10-K for 1991, File No. 0-13136).
(10)(iii)(A)(2)* Form of stock option agreement used previously in
connection with the options granted under the Cincinnati
Microwave, Inc. 1991 Stock Option Plan for Employees
(incorporated by reference to Exhibit 10.2 to Form 10-K for
1991, File No. 0-13136).
(10)(iii)(A)(3)* Copy of resolutions pertaining to Directors' fees
(incorporated by reference to Exhibit 10(k) of Registration
Statement No. 2-86869).
(10)(iii)(A)(4)* Copy of Employment Agreement dated as of December 22, 1988
by and between R. Gregory Blair and Cincinnati Microwave,
Inc. (incorporated by reference to Exhibit 10.10 to Form
10-K for 1988, File No. 0-13136).
(10)(iii)(A)(6)* Copy of the Cincinnati Microwave Deferred Compensation Plan
(incorporated by reference to Exhibit (10)(26) to Form 10-K
for 1987, File No. 0-13136).
(10)(iii)(A)(7)* Copy of the Cincinnati Microwave, Inc. Retirement Savings
Plan (incorporated by reference to Exhibit (10)(19) to Form
10-K for 1991, File No. 0-13136).
(10)(iii)(A)(8)* Copy of the Cincinnati Microwave, Inc. Employees Stock
Ownership Trust (incorporated by reference to Exhibit
(10)(21) to Form 10-K for 1988, File No. 0-13136).
(10)(iii)(A)(9)* Copy of the Cincinnati Microwave, Inc. Profit Sharing Plan
(incorporated by reference to Exhibit (10)(21) to Form 10-K
for 1991, File No. 0-13136).
(10)(iii)(A)(10)(i)* Copy of the Services Agreement with the Scotcrest Group,
Inc. effective March 25, 1991 (incorporated by reference to
Exhibit (10)(22) to Form 10-K for 1991, File No. 0-13136).
(10)(iii)(A)(10)(ii)* Copy of Amended Service Agreement with the Scotcrest Group,
Inc. effective March 27, 1992 (incorporated by reference to
Exhibit 1 to Form 10-Q for the quarter ended March 27,
1992, File No. 0-13136).
</TABLE>
<PAGE> 59

<TABLE>
<CAPTION>
EXHIBIT NO. TITLE OF EXHIBIT
- ---------------------- -----------------------------------------------------------
<S> <C> <C>
(10)(iii)(A)(10)(iii)* Copy of Amended Service Agreement with the Scotcrest Group,
Inc. effective May 16, 1995 (incorporated by reference to
Exhibit 10(i) of Registration Statement No. 33-61775).
(10)(iii)(A)(11)* Copy of Cincinnati Microwave, Inc. 1992 Stock Option Plan
for Non-Employee Directors effective May 19, 1992
(incorporated by reference to Exhibit 1 to Form 10-Q for
the quarter ended September 27, 1992, File No. 0-13136).
(10)(iii)(A)(12)* Copy of stock option agreement used in connection with
Cincinnati Microwave, Inc. 1992 Stock Option Plan for
Non-Employee Directors (incorporated by reference to
Exhibit 2 to Form 10-Q for the quarter ended September 27,
1992, File No. 0-13136).
(10)(iii)(A)(13)* Copy of stock option agreement with the Scotcrest Group,
Inc. effective May 16, 1995 (incorporated by reference to
Exhibit 10(iii)(A)(13) to Form 10-K for the year ended
December 31, 1995, File No. 0-13136).
23(A) Consent of Price Waterhouse LLP.
23(B) Consent of Frost & Jacobs is contained in opinion of A
counsel filed as Exhibit 5.
(24) Powers of Attorney executed by directors and officers other A
than Erika Williams.
(24)(i) Power of Attorney executed by Erika Williams. A
(99)(i) Form of Subscription Rights Certificate A
(99)(ii) Form of Instructions as to Use of Subscription Rights A
Certificate
(99)(iii) Form of Letter to Shareholders A
(99)(iv) Form of Letter to Shareholders with Addresses Outside the A
United States and Canada or APO or FPO Addresses
(99)(v) Form of Letter to Nominee Holders A
(99)(vi) Form of Certification and Request for Additional Rights A
(99)(vii) Form of Nominee Holder Oversubscription Certification A
(99)(viii) Form of Letter from Nominee Holders to Beneficial Owners A
(99)(ix) Form of Notice of Guaranteed Delivery A
(99)(x) Form of DTC Participant Oversubscription Exercise Form A
(99)(xi) Executed Standby Purchase Agreements A
(99)(xii) Form of Subscription Agent Agreement A
(99)(xiii) Form of Information Agent Agreement A
(99)(xiv) Form of Warrant A
(99)(xv) Form of Warrant Agent Agreement A
(99)(xvi) Form of Certificate of Amendment A
(99)(xvii) Form of Instructions as to Use of Certificate of Amendment A
(99)(xviii) Form of Letter to Shareholders or Right Holders A
(99)(xix) Form of Letter to Persons Who Have Exercised Rights A
</TABLE>

- ---------

* Management contract on compensatory plan or arrangement.

A Previously filed.

<PAGE> 1

EXHIBIT 23(A)

CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------

We hereby consent to the use in the Amended Prospectus constituting part of
this Registration Statement on Form S-2 of our report dated March 15, 1996
relating to the financial statements of Cincinnati Microwave, Inc. for the year
ended December 31, 1995, which appears in such Prospectus. We also consent to
the references to us under the headings "Experts" and "Selected Consolidated
Financial Data" in such Prospectus. However, it should be noted that Price
Waterhouse LLP has not prepared or certified such "Selected Consolidated
Financial Data."

/s/ Price Waterhouse LLP
- --------------------------------
Price Waterhouse LLP
Cincinnati, Ohio
June 19, 1996