8-K/A

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

December 16, 2004

Date of Report (Date of earliest event reported)

SIRENZA MICRODEVICES, INC.

(Exact name of Registrant as specified in its charter)

DELAWARE	000-30615	77-0073042
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

303 S. TECHNOLOGY COURT, BROOMFIELD, CO 80021

(Address of principal executive offices, including zip code)

(303) 327-3030

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

This Amended Current Report on Form 8-K/A amends and supplements the Amended Current Report on Form 8-K/A filed with the Commission on December 21, 2004 as set forth below.

Item 2.01 Completion of Acquisition or Disposition of Assets

Effective December 16, 2004, Sirenza Microdevices, Inc., a Delaware corporation (the “Company”), completed the acquisition of ISG Broadband, Inc., a California corporation (“ISG”), pursuant to the terms of an Agreement and Plan of Reorganization, by and among the Company, Comet Acquisition Corporation, a California corporation and wholly owned subsidiary of the Company, ISG, California Eastern Laboratories, a California corporation (“CEL”), U.S. Bank, N.A. as escrow agent, and CEL as securityholder agent (the “Merger Agreement”). Prior to the acquisition, ISG designed RF gateway module and IC products to enable the delivery of broadband communication services to the home.

The aggregate consideration payable by the Company to the former ISG shareholders at closing consisted of $6,169,335 in cash. An additional $700,000 in cash was deposited by the Company into an escrow fund established to satisfy any indemnification claims from the Company that may arise prior to December 31, 2006. In addition to the consideration paid at closing, additional cash consideration of up to $7,150,000 may become due and payable for the achievement of margin contribution objectives attributable to sales of selected products for periods through December 31, 2007. Ten percent (10%) of any additional cash consideration earned during the period that the escrow fund remains in effect will be deposited into the escrow fund.

The summary of the transaction described above is qualified by reference to the Merger Agreement, which is attached as an exhibit hereto and incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits

(a) Financial Statements of Business Acquired. The required financial statements are attached hereto as Exhibits 99.1 and 99.2 and are incorporated herein by reference.

(b) Pro Forma Financial Information. The required pro forma financial information is attached hereto as Exhibit 99.3 and is incorporated herein by reference.

(c) Exhibits. The following exhibits are being filed herewith.

Exhibit Number	Description
2.1	Agreement and Plan of Reorganization dated as of December 7, 2004, by and among ISG Broadband, Inc., Sirenza Microdevices, Inc., Comet Acquisition Corporation, California Eastern Laboratories, U.S. Bank, N.A, as escrow agent and California Eastern Laboratories, as securityholder agent, filed as Exhibit 2.1 to the Current Report on Form 8-K of the Registrant dated December 10, 2004 and incorporated herein by this reference. (Pursuant to Item 601(b)(2) of the Regulation S-K, the exhibits to the Reorganization Agreement have been omitted. Sirenza Microdevices, Inc. agrees to furnish such exhibits supplementally upon the request of the Commission.)
23.1	Consent of Ernst & Young LLP
99.1	ISG Broadband, Inc. Financial Statements
99.2	ISG Broadband, Inc. Interim Financial Statements
99.3	Pro Forma Financial Statements

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SIRENZA MICRODEVICES, INC.
By:	/s/ Robert Van Buskirk
	Robert Van Buskirk Chief Executive Officer

Date: February 11, 2005

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-46108, 333-57896, 333-87164, 333-106189, and 333-114003 and Form S-3 Nos. 333-106706, 333-112376 and 333-112382) of Sirenza Microdevices, Inc. of our report dated January 10, 2005, with respect to the financial statements of ISG Broadband, Inc. as of March 31, 2004 and for the year then ended, included in this Current Report on Form 8-K/A of Sirenza Microdevices, Inc.

/s/ Ernst & Young LLP

Denver, Colorado

February 10, 2005

EX-99.1

Exhibit 99.1

ISG Broadband, Inc.

Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Sirenza Microdevices, Inc.

We have audited the accompanying balance sheet of ISG Broadband, Inc. as of March 31, 2004, and the related statements of operations, shareholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ISG Broadband, Inc. at March 31, 2004, and the results of its operations and its cash flows for the year ended March 31, 2004, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Denver, Colorado

January 10, 2005

ISG Broadband, Inc.

Balance Sheet

(In thousands, except share data)

	March 31, 2004
Assets
Current assets:
Cash	$	1,250
Accounts receivable, net		900
Receivable from related party		285
Inventories		156
Deferred tax assets		248
Other current assets		46
Total current assets		2,885
Property and equipment, net		171
Other assets		52
Deferred tax assets, non-current		156
Total assets	$	3,264
Liabilities and Shareholders’ equity
Current liabilities:
Accounts payable	$	791
Accrued payroll and related benefits		398
Restructuring		141
Other accrued liabilities		54
Total current liabilities		1,384
Shareholders’ equity:
Preferred stock, no par value: Authorized shares - 15,000,000 at March 31, 2004
Series A convertible preferred stock:
Authorized shares - 12,000,000 at March 31, 2004
Issued and outstanding shares - 10,000,000 at March 31, 2004		3,757
Undesignated preferred stock:
Authorized shares - 3,000,000 at March 31, 2004
Issued and outstanding shares - none at March 31, 2004		—
Common stock, no par value:
Authorized shares - 30,000,000 at March 31, 2004
Issued and outstanding shares - 10,000 at March 31, 2004		6
Accumulated deficit		(1,883	)
Total shareholders’ equity		1,880
Total liabilities and shareholders’ equity	$	3,264

See Accompanying Notes.

ISG Broadband, Inc.

Statement of Operations

(In thousands)

	Year Ended March 31, 2004
Net Revenues	$	9,402
Cost of revenues:
Cost of product revenues		6,208
Gain on reimbursement for destroyed inventory		(561	)
Total cost of revenues		5,647
Gross Profit		3,755
Operating expenses:
Research and development		1,551
Selling and marketing		919
General and administrative		1,023
Total operating expenses		3,493
Income from operations		262
Interest and other income, net		3
Interest expense		—
Income before income taxes		265
Provision for income taxes		109
Net income	$	156

See Accompanying Notes.

ISG Broadband, Inc.

Statement of Shareholders’ Equity

(In thousands, except share data)

	Preferred Stock			Common Stock			Accumulated			Total Shareholders’
	Shares	Amount		Shares	Amount		Deficit			Equity
Balance at March 31, 2003 (Unaudited)	10,000,000	$	3,757	10,000	$	6	$	(2,039	)	$	1,724
Net income and comprehensive net income								156			156
Balance at March 31, 2004	10,000,000	$	3,757	10,000	$	6	$	(1,883	)	$	1,880

See Accompanying Notes.

ISG Broadband, Inc.

Statement of Cash Flows

(In thousands)

	Year Ended March 31, 2004
Operating Activities
Net Income	$	156
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		151
Loss on disposal of equipment		23
Deferred tax assets		445
Recovery of sales discounts previously accrued		(511	)
Gain on reimbursement for destroyed inventory		(561	)
Changes in operating assets and liabilities:
Accounts receivable		(331	)
Accounts receivable from related party		(285	)
Inventories		1,653
Accounts payable		468
Accrued payroll and related benefits		(413	)
Accounts payable to related party		(236	)
Accrued restructuring		(131	)
Other accrued liabilities		(215	)
Net cash provided by operating activities		213
Investing Activities
Purchases of property and equipment		(11	)
Net cash used in investing activities		(11	)
Increase in cash		202
Cash at March 31, 2003 (unaudited)		1,048
Cash at March 31, 2004	$	1,250
Supplemental disclosures of cash flow information:
Cash paid for interest	$	—
Cash paid to CEL for income tax	$	109
Supplemental disclosure of non-cash investing activities
Net book value of property and equipment disposed of	$	71

See Accompanying Notes.

Notes to Financial Statements

1. The Company

Until December 16, 2004 ISG Broadband Inc. (the “Company”), was a majority-owned subsidiary of California Eastern Laboratories (“CEL”) and was incorporated in California on October 7^th, 1999. The Company offers radio frequency (“RF”) gateway module and IC products to enable the delivery of broadband communication services to the home. The Company utilizes third party contract manufacturers to build its products.

CEL acted exclusively as the North American sales, marketing, and product development organization for telecommunication semiconductors and components manufactured by NEC Compound Semiconductor Devices, Ltd. In 1999, the Company was formed as a separate division of CEL. It was subsequently incorporated as a California corporation.

On December 16, 2004, the Company was sold to Sirenza Microdevices, Inc., a Delaware corporation (“Sirenza”) pursuant to the terms of an Agreement and Plan of Reorganization, by and among Sirenza, Comet Acquisition Corporation, a California corporation and wholly owned subsidiary of Sirenza, the Company, CEL, U.S. Bank, N.A. as escrow agent, and CEL as securityholder agent (the “Merger Agreement”).

The aggregate consideration payable by Sirenza to the former shareholders of the Company at closing consisted of $6,169,335 in cash. An additional $700,000 in cash was deposited into an escrow fund established to satisfy any indemnification claims from Sirenza that may arise prior to December 31, 2006. In addition to the consideration paid at closing, additional cash consideration of up to $7,150,000 may become due and payable for the achievement of margin contribution objectives attributable to sales of selected products for periods through December 31, 2007. Ten percent (10%) of any additional cash consideration earned during the period that the escrow fund remains in effect will be deposited into the escrow fund.

In connection with the acquisition of the Company by Sirenza, the preferred shareholders of the Company converted 10,000,000 shares of issued and outstanding preferred stock into 10,000,000 shares of common stock of the Company prior to the closing. See Note 6 for more details.

2. Summary of Significant Accounting Policies

Fiscal Year

The Company’s fiscal year begins on April 1 and ends on March 31. References in the financial statements to the Company’s fiscal year refer to this period.

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

Notes to Financial Statements (continued)

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosure of contingent assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.

Revenue Recognition

Revenue from product sales is generally recognized at the time the product is shipped, title has transferred, and no obligations remain. In circumstances where a customer delays acceptance of product, the Company defers recognition of the revenue until acceptance. The Company has not had customers delay acceptance of its products.

In fiscal 2003, the Company had accrued for volume related sales discounts based on negotiations with its largest original equipment manufacturing customer. The majority of the discount accrued in 2003 was paid in that year; however, as sales decreased substantially in late fiscal 2003 and into fiscal 2004, the Company and this original equipment manufacturing customer agreed that no additional discounts were required to be paid. As a result, the Company relieved its remaining accrual for the discount and recorded an increase to sales of approximately $511,000 in fiscal 2004.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense was $43,000 for the year ended March 31, 2004.

Shipping and Handling

Costs related to the shipping and handling of the Company’s products are included in cost of sales for the period presented.

Research and Development Costs

Research and development costs are expensed as incurred.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of accounts receivable. Accounts receivable are primarily derived from revenue earned from customers located in the United States, Canada, Mexico and Asia. Sales to foreign customers are denominated in U.S. dollars, minimizing currency risk to the Company. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral from its customers.

Notes to Financial Statements (continued)

The Company maintains an allowance for doubtful accounts ($3,000 as of March 31, 2004) based on the expected collectibility of accounts receivable. Historically, such losses have been within the Company’s expectations. At March 31, 2004, one customer located in the Philippines accounted for approximately 72% of accounts receivable.

Supplier and Customer Concentrations

A limited number of customers historically have accounted for a substantial portion of the Company’s revenues. For the year ended March 31, 2004, sales to one customer located in the Philippines represented approximately 64% of the Company’s net revenues. Sales to another customer located in Mexico represented approximately 16% of the Company’s net revenues in fiscal 2004. No other customers represented greater than 10% of net revenues for the year ended March 31, 2004.

The Company has relied upon a limited number of suppliers of materials for product inventory and substantially all of its manufacturing is performed by a contract manufacturer in the Philippines.

Inventories

Inventories are stated at the lower of cost or market. Cost is computed on a currently adjusted standard basis (which approximates actual costs on a first-in, first out basis). Market value is based upon estimated average selling prices reduced by estimated selling costs (net realizable value).

The valuation of inventories at the lower of cost or market requires the use of estimates regarding the amounts of current inventories that will be sold. These estimates are dependent on the Company’s assessment of current and expected orders from its customers, including consideration that orders are subject to cancellation with limited advance notice prior to shipment. Because the Company’s markets are volatile, and are subject to technological risks and price changes there is a risk that the Company will forecast incorrectly and produce excess inventories of particular products. As a result, actual demand will differ from forecasts, and such a difference may have a material adverse effect on actual results of operations.

The components of inventories, net of reserves are as follows (in thousands):

	March 31, 2004
Inventories:
Raw materials	$	121
Finished goods		35
Total	$	156

The company consigns raw material components to its contract manufacturers, which it purchases primarily from CEL, and to a lesser extent, from other suppliers.

Notes to Financial Statements (continued)

In May of 2003, a factory fire at the Company’s primary contract manufacturer destroyed the Company’s entire consigned inventory at that location. The contract manufacturer reimbursed the Company in fiscal 2004 for the cost of this inventory, which approximated $1.2 million. A portion of that inventory had been previously deemed excess by the Company and had been written-down by $561,000. A gain of $561,000 was recognized by the Company in fiscal 2004 and recorded in cost of revenues. The impact of the fire and loss of inventory did not have a significant or material impact on the Company’s ongoing business operations.

Property and Equipment

Property and equipment are carried at cost and are depreciated using the straight-line method over their estimated useful lives of two to seven years. Leasehold improvements are amortized using the straight-line method over the shorter of the useful lives of the assets or the term of the lease. Repair and maintenance costs are expensed as incurred.

Property and equipment are as follows (in thousands):

	March 31, 2004
Machinery and equipment	$	612
Leasehold Improvements		118
Computer equipment and software		126
Furniture and fixtures		73
Total		929
Less: accumulated depreciation and amortization		758
Property and equipment	$	171

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”). SFAS 109 prescribes the use of the liability method. Deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and the tax basis of assets and liabilities and are measured using the enacted statutory tax rates in effect at the balance sheet date. The Company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their realization exists. The Company’s operating results are included in the consolidated federal income tax return of the Company’s parent, CEL, as of March 31, 2004. The Company provides for federal taxes in its financial statements as if it filed a separate return. The Company has not recorded a valuation allowance against its net deferred tax assets as it believes these deferred tax assets will more likely than not be realized as part of the CEL federal consolidated group for tax purposes. Current benefit has been taken for tax losses that will be surrendered to the consolidated CEL group. Please refer to Note 7 and Note 9 for more information pertaining to the Company’s income taxes.

Notes to Financial Statements (continued)

Stock-Based Compensation

The Company has elected to account for its employee stock option plan in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB Opinion No. 25), as amended by Financial Accounting Standards Board (FASB) Interpretation No. 44 (FIN 44), “Accounting for Certain Transactions involving Stock Compensation an interpretation of APB Opinion No. 25,” and to adopt the disclosure-only provisions as required under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123). Under APB Opinion No. 25, as amended by FIN 44, when the exercise price of the stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.

Pro forma information regarding net income (loss) and net income (loss) per share is required by FAS 123, which also requires that the information be determined as if the Company has accounted for its employee stock options granted subsequent to March 31, 1995, under the fair-value method of FAS 123. There were no stock option grants in 2004. In prior years, the fair value of options was estimated at the date of grant using the minimum-value method.

The following table illustrates the effect on net income if the Company had applied the elective fair value recognition provisions to stock-based employee compensation under SFAS 123, as amended by Statement of Financial Accounting Standards No. 148 “Accounting for Stock Based Compensation, Transition and Disclosures” (SFAS 148) (in thousands).

	Year Ended March 31, 2004
Net income - as reported	$	156
Deduct: stock-based employee compensation expense determined under the fair value method for all awards, net of related tax effects		(168	)
Pro forma net loss	$	(12	)

Comprehensive Income

The Company’s comprehensive net income was the same as its net income for the year ended March 31, 2004.

Recent Accounting Pronouncements

The following recent accounting pronouncements did not have a material impact on the Company’s financial condition and results of operations for fiscal 2004:

• FASB Interpretation No. 151, “Inventory Costs—An Amendment of ARB No. 43, Chapter 4”;

Notes to Financial Statements (continued)

• FASB Interpretation No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”);

SFAS 123R requires share based payments be recorded at fair value beginning July 1, 2005.

3. Bank Financing Arrangements

In February 2004, the Company entered into a revolving credit agreement with a bank, as a co-Borrower along with CEL. CEL was also the Agent in the agreement through which all loans were to be solely requested. The credit agreement, as it relates to the Company, provides for: working capital advances up to $10,000,000 through February 23, 2006, a portion of which could be used by the Company per an agreement with the Agent.

At March 31, 2004, no amounts were outstanding under the working capital line of credit and all amounts were available for borrowing under the working capital line, subject to Agent approval. The interest rate on the working capital line is prime plus 2.0% (6.00% as of March 31, 2004).

As collateral for the line of credit, the Company granted to the bank a security interest of first priority in all of the Company’s accounts receivable and inventory. The terms of the line-of-credit agreement require the Company and CEL to meet certain financial covenants, including certain minimum tangible net worth levels. As of March 31, 2004 the Company and CEL were in compliance with all financial covenants.

The revolving credit agreement between the Company and the bank was subsequently terminated as a result of the acquisition of the Company by Sirenza in December of 2004.

4. Commitments

The Company leases its facility, located in Milpitas, California, under a noncancelable operating lease with an expiration date of May, 14, 2005. Total rent expense under this operating lease was $400,000 for the year ended March 31, 2004.

Future minimum lease payments under this leasing agreement as of March 31, 2004 are as follows (in thousands):

2005	$	613
2006		77
Total minimum lease payments	$	690

Notes to Financial Statements (continued)

5. Restructuring

During the year ended March 31, 2003, management approved and initiated plans to restructure its operations to eliminate excess facility requirements given the economic conditions at that time. As a result, in fiscal 2003, the Company incurred a restructuring charge of $283,000 (unaudited) related to noncancelable lease costs. The Company estimated the fair value of the cost of excess facilities based on the remaining contractual lease payments, reduced by estimated sublease rentals at the cease-use date, or March 15, 2003. These costs were accounted for under Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (SFAS 146).

The following table summarizes the activity related to the Company’s accrued restructuring balance during the year ended March 31, 2004 (in thousands):

	Accrued Restructuring Balance at April 1, 2003		Cash Payments		Non-cash Charges			Accrued Restructuring Balance at March 31, 2004
Noncancelable lease commitments	$	272	$	138	$	(7	)	$	141
	$	272	$	138	$	(7	)	$	141

The following table summarizes the Company’s restructuring costs and activities from inception through March 31, 2004 (in thousands):

	Amount Charged to Restructuring		Cash Payments		Non-cash Charges			Accrued Restructuring Balance at March 31, 2004
Noncancelable lease commitments	$	283	$	150	$	(8	)	$	141
	$	283	$	150	$	(8	)	$	141

Notes to Financial Statements (continued)

6. Shareholders’ Equity

Series A Convertible Preferred Stock (“Series A Stock”)

Conversion

Each share of the Series A stock is convertible, at the option of the holder, at any time into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing $3.22 by the then applicable Conversion Price for the Series A stock. The Conversion Price is subject to adjustment for dilution.

Each share of Series A stock is automatically convertible into shares of Common Stock at the then applicable Conversion Price, subject to adjustment for dilution, in the event of the closing of a public offering of at least $15,000,000 in aggregate net proceeds at a minimum price of $7.50 per common share.

Liquidation

In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the holders of Series A stock are entitled to receive, prior and in preference to any distribution to the holders of Common Stock, $3.22 per share (adjusted for any stock dividend, stock split, recapitalization, consolidation or the like of the Series A stock) for each share of Series A stock then held plus an amount equal to all declared but unpaid dividends. If upon the occurrence of such an event, the assets and funds distributed are insufficient to enable the holders of Series A stock to recover the full aforesaid preference amount, then the assets and funds available for distribution will distributed ratably to the holders of Series A stock. Any assets and funds remaining after payment in full to the holders of Series A stock, if any, shall be distributed on a pro rata basis to the holders of Common Stock and Series A stock, after consideration of the Common Stock the holders of Series A stock have the right to acquire upon the conversion of the Series A stock then held by them.

Redemption

The Series A stock does not have any redemption provisions.

Voting

The holder of each share of the Series A stock is entitled to the number of votes equal to the number of shares of Common Stock into which such shares of Series A stock could be converted and has voting rights and powers equal to the voting rights and powers of the Common Stock holders, voting together with the Common Stock holders as a single class.

Dividends

Holders of Series A stock are entitled to receive, when and as declared by the Board of Directors, noncumulative dividends at a rate of $0.1932 per share per annum, payable out of funds legally available therefore and prior to any dividends declared and paid on the Common Stock. The right to such dividend on Series A stock, is non-cumulative and therefore, no right shall accrue to holders of the Series A stock. No dividends were declared or paid in fiscal year 2004 on Series A stock or Common Stock.

Notes to Financial Statements (continued)

Stock Option Plan

Under the Company’s 2000 Stock Option Plan (“the 2000 Plan”), the Company may grant options to purchase up to 3,000,000 shares of common stock of the Company at not less than 100% of the fair value on the date of grant. The Board of Directors of the Company determined the fair value of stock options on the date of grant. Options generally vest ratably over a five-year period commencing with the grant date and expire no later than ten years from the date of grant. At March 31, 2004, 2,990,000 shares of common stock were reserved for issuance under the 2000 Plan.

Sirenza did not assume any outstanding stock options in connection with its acquisition of the Company.

A summary of activity under the 2000 Plan is as follows:

		Outstanding Options
	Shares Available	Number of Shares		Weighted- Average Exercise Price
Balance at March 31, 2003 (unaudited)	727,300	2,262,700		$	1.64
Granted	—	—		$	—
Exercised	—	—		$	—
Canceled	71,500	(71,500	)	$	2.95
Balance at March 31, 2004	798,800	2,191,200		$	1.60

A summary by exercise price for options outstanding and exercisable as of March 31, 2004, is as follows:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life	Number of Shares	Weighted- Average Exercise Price
$0.64 – $0.64	998,100	$	0.64	1.00	926,996	$	0.64
$2.00 – $2.99	796,000	$	2.00	2.99	668,000	$	2.00
$3.18 – $3.36	397,100	$	3.19	1.96	297,825	$	3.19
	2,191,200	$	1.60	1.90	1,892,821	$	1.52

Notes to Financial Statements (continued)

7. Related Party Transactions

The Company purchases a significant amount of raw material inventory products from CEL. Purchases of inventory products from CEL approximated $259,000 during the year ended March 31, 2004.

The Company also had an agreement with CEL that includes support services provided by CEL as follows: selling activities, warehouse and material handling, accounting, human resources, information technology and marketing communications. CEL support service charges totaled $334,000 during the year ended March 31, 2004 and are included in general and administrative expenses in the statement of operations.

In addition, the Company and CEL operate under a tax sharing agreement, whereby the Company is charged or refunded by CEL for its portion of any income taxes payable or any income tax benefit.

At March 31, 2004, net amounts owed to the Company by CEL totaled $285,000.

8. Employee Benefit Plan

The Company’s employees are allowed to participate in CEL’s 401(k) retirement plan, which allows eligible employees to make contributions from their respective salaries, subject to certain limitations. During fiscal 2004, the Company made matching contributions of approximately $71,000, based upon matching criteria in the 401(k) plan.

9. Income Taxes

For the year ended March 31, 2004, the Company had pretax book income of $265,000 and an income tax provision of $109,000. The income provision is related to several items, including, (1) income tax expense generated on the current year book income, and (2) permanent items disallowed.

The provision for (benefit from) income taxes is summarized as follows (in thousands):

	Year Ended March 31, 2004
Current:
Federal	$	(292	)
State	$	(44	)
	$	(336	)
Deferred:
Federal	$	511
State	$	(66	)
	$	445
Total	$	109

Notes to Financial Statements (continued)

Deferred income taxes reflect the net tax effect of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company’s deferred tax assets are as follows (in thousands):

	March 31, 2004
Inventory reserves	$	133
Other Accrued liabilities and reserves	$	111
Other	$	160
	$	404

The Company’s operating results are included in the consolidated federal income tax return of the Company’s parent, CEL, as of March 31, 2004. The Company provides for federal taxes in its financial statements as if it filed a separate return. The Company has not recorded a valuation allowance against its net deferred tax assets as it believes these deferred tax assets will more likely than not be realized as part of the CEL federal consolidated group for tax purposes. Current benefit has been taken for tax losses that will be surrendered to the consolidated CEL group.

EX-99.2

Exhibit 99.2

ISG Broadband, Inc.

Interim Financial Statements

ISG Broadband, Inc.

Balance Sheet

(In thousands)

	September 30, 2004
	(Unaudited)
Assets
Current assets:
Cash	$	654
Accounts receivable, net		1,898
Inventories		590
Deferred tax assets		248
Other current assets		78
Total current assets		3,468
Property and equipment, net		136
Deferred tax assets, non-current		156
Total assets	$	3,760
Liabilities and Shareholders’ equity
Current liabilities:
Accounts payable	$	1,216
Payable to related party		3
Accrued payroll and related benefits		370
Loss on unconditional purchase obligations		211
Restructuring		76
Other accrued liabilities		53
Total current liabilities		1,929
Shareholders’ equity:
Preferred stock		3,757
Common stock		6
Accumulated deficit		(1,932	)
Total shareholders’ equity		1,831
Total liabilities and shareholders’ equity	$	3,760

See Accompanying Notes.

ISG Broadband, Inc.

Statement of Operations

(In thousands)

	Six Months Ended September 30, 2004			Six Months Ended September 30, 2003
	(Unaudited)			(Unaudited)
Net Revenues	$	6,109		$	6,136
Cost of revenues		4,599			4,140
Gross Profit		1,510			1,996
Operating expenses:
Research and development		773			779
Selling and marketing		271			530
General and administrative		551			479
Total operating expenses		1,595			1,788
Income (loss) from operations		(85	)		208
Interest and other income, net		—			26
Interest expense		—			—
Income (loss) before income taxes		(85	)		234
Provision for (benefit from) income taxes		(35	)		149
Net income (loss)	$	(50	)	$	85

See Accompanying Notes.

ISG Broadband, Inc.

Statement of Cash Flows

(In thousands)

	Six Months Ended September 30, 2004			Six Months Ended September 30, 2003
	(Unaudited)			(Unaudited)
Operating Activities
Net Income (loss)	$	(50	)	$	85
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		66			78
Loss on disposal of equipment		—			23
Changes in operating assets and liabilities:
Accounts receivable		(998	)		(240	)
Accounts receivable from related party		285			—
Inventories		(434	)		897
Other assets		20			(562	)
Accounts payable		425			193
Accrued payroll and related benefits		(28	)		(251	)
Accounts payable to related party		3			(208	)
Accrued restructuring		(65	)		(65	)
Income taxes payable		—			149
Other accrued liabilities		210			(198	)
Net cash used in operating activities		(566	)		(99	)
Investing Activities
Purchases of property and equipment		(30	)		(11	)
Net cash used in investing activities		(30	)		(11	)
Decrease in cash		(596	)		(110	)
Cash at beginning of period		1,250			1,048
Cash at end of period	$	654		$	938
Supplemental disclosure of non-cash investing activities
Net book value of disposal of property and equipment	$	—		$	71

See Accompanying Notes.

Notes to Financial Statements

1. The Company

Until December 16, 2004, ISG Broadband Inc. (the “Company”), was a majority-owned subsidiary of California Eastern Laboratories (“CEL”) and incorporated in California on October 7^th, 1999. The Company offers radio frequency (“RF”) gateway module and IC products to enable the delivery of broadband communication services to the home. The Company utilizes third party contract manufacturers to build its products.

CEL acted exclusively as the North American sales, marketing, and product development organization for telecommunication semiconductors and components manufactured by NEC Compound Semiconductor Devices, Ltd. In 1999, the Company was formed as a separate division of CEL. It was subsequently incorporated as a California corporation.

On December 16, 2004, the Company was sold to Sirenza Microdevices, Inc., a Delaware corporation (“Sirenza”) pursuant to the terms of an Agreement and Plan of Reorganization, by and among Sirenza, Comet Acquisition Corporation, a California corporation and wholly owned subsidiary of Sirenza, the Company, CEL, U.S. Bank, N.A. as escrow agent, and CEL as securityholder agent (the “Merger Agreement”).

The aggregate consideration payable by Sirenza to the former shareholders of the Company at closing consisted of $6,169,335 in cash. An additional $700,000 in cash was deposited into an escrow fund established to satisfy any indemnification claims from Sirenza that may arise prior to December 31, 2006. In addition to the consideration paid at closing, additional cash consideration of up to $7,150,000 may become due and payable for the achievement of margin contribution objectives attributable to sales of selected products for periods through December 31, 2007. Ten percent (10%) of any additional cash consideration earned during the period that the escrow fund remains in effect will be deposited into the escrow fund.

In connection with the acquisition of the Company by Sirenza, the preferred shareholders of the Company converted 10,000,000 shares of issued and outstanding preferred stock into 10,000,000 shares of common stock of the Company prior to the closing.

2. Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included.

Notes to Financial Statements (continued)

The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended March 31, 2004, which are included in this report on Form 8-K/A.

The Company’s fiscal year begins on April 1 and ends on March 31. References in the financial statements to the Company’s fiscal year refer to this period.

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

Stock-Based Compensation

The Company has elected to account for its employee stock option plan in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB Opinion No. 25), as amended by Financial Accounting Standards Board (FASB) Interpretation No. 44 (FIN 44), “Accounting for Certain Transactions involving Stock Compensation an interpretation of APB Opinion No. 25,” and to adopt the disclosure-only provisions as required under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123). The following table illustrates the effect on net income if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation, as amended by Statement of Financial Accounting Standards No. 148 “Accounting for Stock Based Compensation, Transition and Disclosures” (SFAS 148) (in thousands).

	Six Months Ended September 30, 2004			Six Months Ended September 30, 2003
Net income (loss) - as reported	$	(50	)	$	85
Deduct: stock-based employee compensation expense determined under the fair value method for all awards, net of related tax effects		(118	)		(84	)
Pro forma net income (loss)	$	(168	)	$	1

Recent Accounting Pronouncements

The following recent accounting pronouncements did not have a material impact on the Company’s financial condition and results of operations for fiscal 2004:

• FASB Interpretation No. 151, “Inventory Costs—An Amendment of ARB No. 43, Chapter 4”;

Notes to Financial Statements (continued)

• FASB Interpretation No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”);

SFAS 123R requires share based payments be recorded at fair value beginning July 1, 2005.

3. Customer Discounts

In fiscal 2003, the Company had accrued for volume related sales discounts based on negotiations with its largest original equipment manufacturing customer. The majority of the discount accrued in 2003 was paid in that year; however, as sales decreased substantially in late fiscal 2003 and into fiscal 2004, the Company and its original equipment manufacturing customer agreed that no additional discounts were required to be paid. As a result, the Company relieved its remaining accrual for the discount and recorded an increase to sales of approximately $511,000 in the six months ended September 30, 2003.

4. Inventories

Inventories are stated at the lower of cost or market. Cost is computed on a currently adjusted standard basis (which approximates actual costs on a first-in, first out basis). Market value is based upon estimated average selling prices reduced by estimated selling costs (net realizable value).

The valuation of inventories at the lower of cost or market requires the use of estimates regarding the amounts of current inventories that will be sold. These estimates are dependent on the Company’s assessment of current and expected orders from its customers, including consideration that orders are subject to cancellation with limited advance notice prior to shipment. Because the Company’s markets are volatile, and are subject to technological risks and price changes there is a risk that the Company will forecast incorrectly and produce excess inventories of particular products. As a result, actual demand will differ from forecasts, and such a difference may have a material adverse effect on actual results of operations.

The components of inventories, net of reserves are as follows (in thousands):

	September 30, 2004
Inventories:
Raw materials	$	403
Finished goods		187
Total	$	590

The company consigns raw material components to its contract manufacturers, which it purchases primarily from CEL and to a lesser extent, from other suppliers.

Notes to Financial Statements (continued)

5. Bank Financing Arrangements

In February 2004, the Company entered into a revolving credit agreement with a bank, as a co-Borrower along with CEL. CEL was also the Agent in the agreement through which all loans were to be solely requested. The credit agreement, as it relates to the Company, provides for: working capital advances up to $10,000,000 through February 23, 2006, a portion of which could be used by the Company per an agreement with the Agent.

At September 30, 2004, no amounts were outstanding under the working capital line of credit and all amounts were available for borrowing under the working capital line, subject to Agent approval. The interest rate on the working capital line is prime plus 2.0% (6.75% as of September 30, 2004).

As collateral for the line of credit, the Company granted to the bank a security interest of first priority in all of the Company’s accounts receivable and inventory. The terms of the line-of-credit agreement require the Company and CEL to meet certain financial covenants, including certain minimum tangible net worth levels. As of September 30, 2004 the Company and CEL were in compliance with all financial covenants.

The revolving credit agreement between the Company and the bank was terminated as a result of the acquisition of the Company by Sirenza in December of 2004.

6. Restructuring

During the year ended March 31, 2003, management approved and initiated plans to restructure its operations to eliminate excess facility requirements given the economic conditions at that time. As a result, in fiscal 2003, the Company incurred a restructuring charge of $283,000 (unaudited) related to noncancelable lease costs. The Company estimated the fair value of the cost of excess facilities based on the remaining contractual lease payments, reduced by estimated sublease rentals at the cease-use date, or March 15, 2003. These costs were accounted for under Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (SFAS 146).

The following table summarizes the activity related to the Company’s accrued restructuring balance during the six month period ended September 30, 2004 (in thousands):

	Accrued Restructuring Balance at March 31, 2004		Cash Payments		Non-cash Charges			Accrued Restructuring Balance at September 30, 2004 (Unaudited)
Noncancelable lease commitments	$	141	$	69	$	(4	)	$	76
	$	141	$	69	$	(4	)	$	76

Notes to Financial Statements (continued)

The following table summarizes the Company’s restructuring costs and activities from inception through September 30, 2004 (in thousands):

	Amount Charged to Restructuring		Cash Payments		Non-cash Charges			Accrued Restructuring Balance at September 30, 2004
Noncancelable lease commitments	$	283	$	219	$	(12	)	$	76
	$	283	$	219	$	(12	)	$	76

7. Loss on Unconditional Purchase Obligations

The Company has a contractual arrangement with its contract manufacturing partner whereby the Company is committed to pay for inventory components ordered by its contract manufacturing partner for use in the production of the Company’s products, to the extent such inventory components are unique. At September 30, 2004 the Company had accrued for a loss of approximately $211,000 related to certain inventory products that are to be used for a specific application for which the Company has not been qualified by the customer to manufacture such products.

The Company has additional raw material inventory components of approximately $295,000, which it had purchased for use in the same application outlined above and is recorded in the Company’s inventory as of September 30, 2004. In the same period, the Company recorded a write-down of this inventory of 50%, or approximately $147,000, in the event that this inventory is not sold.

8. Comprehensive Income (Loss)

The Company’s comprehensive net income (loss) was the same as its net income (loss) for six months ended September 30, 2004 and September 30, 2003.

EX-99.3

Exhibit 99.3

SIRENZA UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information gives effect to the acquisition of ISG by Sirenza accounted for as a business combination, using the purchase method of accounting and the acquisition of certain assets and liabilities of Vari-L Company, Inc. (“Vari-L”) by Sirenza using the purchase method of accounting. Under the purchase method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. Independent valuation specialists conducted an independent valuation of a significant portion of these assets, which has been considered in preparing the following unaudited pro forma condensed combined financial information. Estimates of the fair values of the acquired assets and liabilities of ISG and Vari-L have been combined with the recorded values of the assets and liabilities of Sirenza in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined balance sheet as of September 30, 2004 gives effect to the acquisition of ISG by Sirenza as if the acquisition occurred on September 30, 2004. The Sirenza consolidated balance sheet information included in the unaudited pro forma condensed combined balance sheet as of September 30, 2004 was derived from Sirenza’s unaudited September 30, 2004 consolidated balance sheet, and includes the effects of the acquisition of certain assets and liabilities of Vari-L by Sirenza, which was consummated on May 5, 2003. The ISG balance sheet information included in the unaudited pro forma condensed combined balance sheet as of September 30, 2004 was derived from ISG’s unaudited September 30, 2004 balance sheet.

The unaudited pro forma condensed combined statement of operations for the fiscal year ended December 31, 2003 gives pro forma effect to the acquisition of ISG by Sirenza and pro forma effect to the acquisition of certain assets and liabilities of Vari-L by Sirenza as if the transactions were consummated on January 1, 2003. The information included in the unaudited pro forma condensed combined statement of operations for the fiscal year ended December 31, 2003 includes the condensed consolidated statement of operations of Sirenza for the year ended December 31, 2003 and the statement of operations of ISG for the year ended March 31, 2004, which were derived from their respective audited statements of operations for each of those years. The acquisition of certain assets and liabilities of Vari-L by Sirenza was completed on May 5, 2003. The unaudited pro forma condensed combined statement of operations for the fiscal year ended December 31, 2003 includes the unaudited pro forma condensed statement of operations of Vari-L from January 1, 2003 through May 5, 2003 (the consummation date of the acquisition of certain assets and liabilities of Vari-L by Sirenza).

The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2004 gives pro forma effect to the acquisition of ISG by Sirenza as if the transaction was consummated on January 1, 2003. The information

included in the unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2004 includes the condensed consolidated statement of operations of Sirenza for the nine months ended September 30, 2004 and the statement of operations of ISG for the nine months ended September 30, 2004, which were derived from their respective unaudited statements of operations for such periods. Due to the different fiscal years, ISG’s results of operations for the three months ended March 31, 2004 have been included in both the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2003 and in the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2004. ISG’s unaudited condensed statement of operations for the three months ended March 31, 2004 was as follows (in thousands):

Net revenues	$	1,979
Cost of sales		1,366
Gross profit		613
Research and development		392
Sales and marketing		176
General and administrative		322
Total operating expenses		890
Loss from operations		(277	)
Interest income and other, net		(23	)
Loss before income taxes		(300	)
Benefit from income taxes		(123	)
Net loss	$	(177	)

The unaudited pro forma condensed combined financial information has been prepared by Sirenza’s management for illustrative purposes only. The unaudited pro forma condensed combined financial statements are not intended to represent or be indicative of the financial position or results of operations in future periods or the results that actually would have been realized had Sirenza, ISG and Vari-L been a combined company during the specified periods. Additionally, the unaudited pro forma results do not give effect to any potential costs savings or other synergies that could result from the combination of Sirenza and ISG or that could have resulted had Sirenza and Vari-L combined on January 1, 2003 instead of May 5, 2003. The pro forma adjustments are based on the information available at the time of this Amended Current Report on Form 8-K/A. The unaudited pro forma condensed combined financial information, including the notes thereto, is qualified in its entirety by reference to, and should be read in conjunction with, the historical consolidated financial statements of Sirenza included in its Form 10-K filed on March 24, 2004 and most recent Form 10-Q filed on November 12, 2004 with the SEC, the historical financial statements of Vari-L included in Sirenza’s Form 8-K filed with the SEC on January 30, 2004, and the historical financial statements of ISG included in this Form 8-K/A.

SIRENZA MICRODEVICES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2004

(In thousands)

	Historical						Pro Forma Adjustments			Pro Forma Combined
	Sirenza			ISG
Assets
Current assets:
Cash and cash equivalents	$	10,522		$	654		$	(6,869	)(1)	$	4,307
Accounts receivable, net		8,428			1,898			—			10,326
Inventories		9,831			590			289	(2)		10,710
Deferred tax assets, net		—			248			(248	)(3)		—
Other current assets		707			78			—			785
Total current assets		29,488			3,468			(6,828	)		26,128
Property and equipment, net		8,475			136			(26	)(4)		8,585
Long-term investments		6,022			—			—			6,022
Investment in GCS		4,600			—			—			4,600
Other non-current assets		1,408			—			—			1,408
Net deferred tax assets, non-current		—			156			(156	)(3)		—
Acquisition-related intangibles, net		4,364			—			2,930	(5)		7,294
Goodwill		4,219			—			1,083	(6)		5,302
Total assets	$	58,576		$	3,760		$	(2,997	)	$	59,339
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,519		$	1,216		$	—		$	5,735
Payable to related party		—			3			—			3
Loss on unconditional purchase obligations		—			211			—			211
Accrued compensation and other expenses		3,328			423			789	(7)		4,540
								(42	)(8)		(42	)
Deferred margin on distributor inventory		1,301			—			—			1,301
Accrued restructuring		366			76			(43	)(9)		399
								310	(10)		310
Capital lease obligations, current portion		73			—			—			73
Total current liabilities		9,587			1,929			1,014			12,530
Other long-term liabilities		18			—			—			18
Total liabilities		9,605			1,929			1,014			12,548
Stockholders’ equity:
Common stock		35			6			(6	)(11)		35
Preferred stock		—			3,757			(3,757	)(11)		—
Additional paid-in capital		135,578			—			—			135,578
Deferred stock compensation		—			—			—			—
Accumulated deficit		(86,477	)		(1,932	)		1,932	(11)
								(2,180	)(12)		(88,657	)
Treasury stock, at cost		(165	)		—			—			(165	)
Total stockholders’ equity		48,971			1,831			(4,011	)		46,791
Total liabilities and stockholders’ equity	$	58,576		$	3,760		$	(2,997	)	$	59,339

SIRENZA MICRODEVICES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED

STATEMENT OF OPERATIONS

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

(In thousands, except per share data)

	Historical									Pro Forma Adjustments			Pro Forma Combined
	Sirenza			ISG			Vari-L
Net revenues	$	38,510		$	9,402		$	5,620		$	—		$	53,532
Cost of revenues:
Cost of product revenues		21,246			6,208			4,036			—			31,490
Amortization of deferred stock compensation		90			—			—			—			90
Gain on reimbursement for destroyed inventory		—			(561	)		—			—			(561	)
Total cost of revenues		21,336			5,647			4,036			—			31,019
Gross profit		17,174			3,755			1,584			—			22,513
Operating expenses:
Research and development		8,611			1,551			902			—			11,064
Sales and marketing		6,365			919			831			—			8,115
General and administrative		6,696			1,023			1,733			—			9,452
Amortization of deferred stock compensation		541			—			—			—			541
Amortization of acquisition-related intangible assets		1,213			—			—			957	(13)		2,170
Restructuring		434			—			—			—			434
Expenses related to workforce reductions and the proposed transaction with Sirenza		—			—			566			—			566
Expenses relating to accounting restatements and related legal matters, net of recoveries		—			—			45			—			45
Total operating expenses		23,860			3,493			4,077			957			32,387
Income (loss) from operations		(6,686	)		262			(2,493	)		(957	)		(9,874	)
Interest expense		39			—			483			—			522
Interest income and other, net		422			3			378			—			803
Income (loss) before taxes		(6,303	)		265			(2,598	)		(957	)		(9,593	)
Provision for (benefit from) income taxes		(125	)		109			—			(109	)(14)		(125	)
Net income (loss)	$	(6,178	)	$	156		$	(2,598	)	$	(848	)	$	(9,468	)
Net loss per share
Basic	$	(0.19	)	$	—		$	—		$	—		$	(0.28	)(7)
Diluted	$	(0.19	)	$	—		$	—		$	—		$	(0.28	)(7)
Shares used to compute net loss per share
Basic		32,383			—			—			1,127			33,510
Diluted		32,383			—			—			1,127			33,510

SIRENZA MICRODEVICES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED

STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004

(In thousands, except per share data)

	Historical						Pro Forma Adjustments			Pro Forma Combined
	Sirenza			ISG
Net revenues	$	46,191		$	8,088		$	—		$	54,279
Cost of revenues		23,607			5,965			—			29,572
Gross profit		22,584			2,123			—			24,707
Operating expenses:
Research and development		6,777			1,165			—			7,942
Sales and marketing		5,883			447			—			6,330
General and administrative		5,938			873			—			6,811
Amortization of deferred stock compensation		3			—			—			3
Amortization of acquisition-related intangible assets		1,165			—			334	(15)		1,499
Restructuring		(98	)		—			—			(98	)
Total operating expenses		19,668			2,485			334			22,487
Income (loss) from operations		2,916			(362	)		(334	)		2,220
Interest expense		12			—			—			12
Interest income and other, net		152			(22	)		—			130
Income (loss) before taxes		3,056			(384	)		(334	)		2,338
Provision for (benefit from) income taxes		135			(158	)		158	(14)		135
Net income (loss)	$	2,921		$	(226	)	$	(492	)	$	2,203
Net income per share
Basic	$	0.08								$	0.06
Diluted	$	0.08								$	0.06
Shares used to compute net income per share
Basic		34,446									34,446
Diluted		37,270									37,270

SIRENZA MICRODEVICES, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED

FINANCIAL INFORMATION

Note 1: ISG Acquisition

Effective December 16, 2004, Sirenza, a Delaware corporation, completed the acquisition of ISG, a California corporation pursuant to the terms of an Agreement and Plan of Reorganization, by and among Sirenza, Comet Acquisition Corporation, a California corporation and wholly owned subsidiary of Sirenza, ISG, California Eastern Laboratories, a California corporation (“CEL”), U.S. Bank, N.A. as escrow agent, and CEL as securityholder agent (the “Merger Agreement”). Prior to the acquisition, ISG designed RF gateway module and IC products to enable the delivery of broadband communication services to the home.

The preliminary purchase price consisted of approximately $6.9 million in cash paid at closing and estimated direct transaction costs of approximately $789,000 for a total preliminary purchase price of $7.7 million. Additional cash consideration of up to $7.15 million may become due and payable by Sirenza upon the achievement of margin contribution objectives attributable to sales of selected products for periods through December 31, 2007. To the extent sales of the selected products achieve a minimum gross margin percentage, Sirenza will be required to make additional payments to the shareholders of ISG for a portion or all of the gross profit earned on such sales, up to a pre-defined maximum, as outlined below. The future cash payout of additional consideration, if any, will be payable in the quarter following the end of the applicable earn-out period, as outlined below, and will be recorded as additional goodwill. The range of possible payment is as follows (in thousands):

	Possible Payment Range
Earn-out Period	Low End of Range		High End of Range
Fiscal year ending December 31, 2005	$	—	$	1,150
Fiscal year ending December 31, 2006	$	—	$	3,000
Fiscal year ending December 31, 2007	$	—	$	3,000
	$	—	$	7,150

The acquisition has been accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations.” Under the purchase method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. Preliminary estimates based on Sirenza’s best estimates of the fair values of the assets

and liabilities of ISG have been combined with the recorded values of the assets and liabilities of Sirenza in the unaudited pro forma condensed combined financial information.

The allocation of the purchase price is preliminary until finalization of all direct transaction cost and pre-acquisition contingencies. Sirenza has identified a pre-acquisition contingency related to certain inventory products that are to be used for a specific application for which ISG was not qualified by the customer to manufacture such products as of the consummation date of the acquisition. Prior to the closing of the acquisition, ISG had accrued approximately $358,000 for a potential loss in the event this inventory is not sold. To the extent Sirenza determines it is unable to sell this inventory because of a lack of qualification, an additional accrual of up to $350,000 would be required. Likewise, to the extent Sirenza is able to sell this inventory for this specific application, a reduction to the accrual of up to $358,000 would be required. Adjustments to the aforementioned inventory accrual related to this specific contingency prior to December 16, 2005, the estimated end of the allocation period, will be included in the allocation of the purchase price, resulting in an increase or decrease to goodwill. Any adjustment to the aforementioned inventory accrual subsequent to December 16, 2005 or related to events occurring subsequent to December 16, 2004 will be included in the determination of net income in the period in which the adjustment is determined.

Sirenza does not anticipate direct transaction costs to be materially different than the current estimate of $789,000.

The allocation of the preliminary purchase price is summarized below (in thousands):

Cash	$	654
Accounts Receivable		1,898
Inventories		879
Other current assets		78
Property, plant and equipment		110
Accounts payable		(1,216	)
Payable to related party (CEL)		(3	)
Accrued payroll and related benefits		(328	)
Loss on unconditional purchase obligations		(211	)
Accrued restructuring		(33	)
Other accrued liabilities		(53	)
Fair value of net tangible assets acquired	$	1,775
In-process research and development		2,180
Amortizable intangible assets:
Developed product technology		1,970
Core technology leveraged		860
Customer relationships		100
Goodwill		1,083
Restructuring		(310	)
Total	$	7,658

Of the total estimated purchase price, approximately $1.1 million was allocated to goodwill. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying net tangible and intangible assets. The goodwill resulting from this acquisition is not deductible for tax purposes.

In accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” goodwill will not be amortized but instead will be tested for impairment at least annually (more frequently if certain indicators are present). In the event that Sirenza management determines that the goodwill has become impaired, Sirenza will incur an accounting charge for the amount of impairment during the period in which the determination is made.

Note 2: Vari-L Acquisition

On May 5, 2003, Sirenza acquired substantially all of the assets of Vari-L and assumed specified liabilities of Vari-L in exchange for approximately 3.3 million shares of Sirenza common stock, valued at approximately $4.7 million, approximately $9.1 million in cash and incurred $2.4 million in estimated direct transaction costs for an aggregate purchase price of $16.2 million. The fair value of Sirenza’s common stock issued in connection with the Vari-L acquisition was derived using an average market price per share of Sirenza common stock of $1.43, which was based on an average of the closing prices for a range of three trading days (April 30, 2003, May 1, 2003 and May 2, 2003) prior to the closing date of the acquisition. Of the $9.1 million in cash, approximately $3.8 million was paid to Vari-L at closing and $5.3 million related to loans Sirenza made to Vari-L prior to the closing. All of the $5.3 million of Vari-L loans have been included in the calculation of the purchase price of Vari-L. Sirenza’s results of operations include the effect of Vari-L subsequent to May 5, 2003. Vari-L was a designer and manufacturer of RF and microwave components and devices for use in wireless communications. The acquisition strengthened Sirenza’s product portfolio of RF components, in particular, signal source processing and aerospace and defense products and enabled Sirenza to achieve significant cost synergies in the highly competitive wireless communication RF component industry.

Sirenza allocated the purchase price of its acquisition of Vari-L to the tangible assets, liabilities and intangible assets acquired, based on their estimated fair values. The excess purchase price over those fair values has been recorded as goodwill. The fair value assigned to intangible assets acquired was determined through established valuation techniques using estimates made by management.

The allocation of the purchase price is summarized below (in thousands):

Accounts receivable	$	2,202
Inventories		2,018
Other current assets		96
Property and equipment, net		3,660
Accounts payable		(817	)
Accrued liabilities		(483	)
Capital lease obligations		(7	)
Fair value of net tangible assets acquired	$	6,669
Amortizable intangible assets:
Developed product technology		4,840
Customer relationships		870
Committed customer backlog		310
Goodwill		3,511
Total	$	16,200

Note 3: Pro Forma Adjustments

Pro forma adjustments are necessary to reflect the estimated purchase price for the ISG acquisition, to adjust amounts related to ISG’s tangible and intangible net assets to the preliminary estimate of their fair value, to reflect the amortization expense related to the estimated amortizable intangible assets, and to reflect the income tax effect related to the pro forma adjustments.

Pro forma adjustments are also required to reflect the impact of amortization expense of acquired intangible assets related to the acquisition of certain assets and liabilities of Vari-L for the period in the accompanying statement of operations prior to the closing of the Vari-L acquisition.

There were no inter-company balances or transactions between Sirenza and ISG or between Sirenza and Vari-L for the periods presented.

The pro forma adjustments included in the unaudited pro forma condensed combined financial statements are as follows:

(1) Adjustment to reflect cash consideration of approximately $6.9 million paid by Sirenza to the shareholders of ISG.

(2) To adjust the historical amount of ISG’s inventory to its estimated fair value.

(3) To adjust the pro forma deferred tax assets of the combined company.

(4) To adjust the historical amount of ISG net property and equipment to its estimated fair value.

(5) Adjustment to reflect the preliminary estimate of the fair value of ISG intangible assets acquired of approximately $2.9 million. Those assets consist of developed product technology, core technology leveraged and a customer relationship.

(6) Adjustment to reflect the preliminary estimate of the fair value of ISG goodwill of approximately $1.1 million.

(7) Adjustment to reflect estimated ISG direct transaction costs of $789,000.

(8) To adjust the historical amount of certain accrued liabilities of ISG to the estimated fair value.

(9) To adjust the historical amount of accrued restructuring of ISG to its estimated fair value.

(10) Adjustment to reflect ISG employee termination costs and duplicative facilities costs in accordance with Emerging Issues Task Force Issue No. 95-3.

(11) Adjustment to eliminate ISG’s historical shareholders’ equity.

(12) Adjustment to reflect the preliminary estimate of the fair value of ISG in-process research and development of approximately $2.2 million. Sirenza recorded an immediate write-off of in-process research and development at the consummation of the acquisition of ISG. The unaudited pro forma condensed combined statements of operations do not include the estimated charge for in-process research and development of approximately $2.2 million since it is considered a non-recurring charge.

(13) Adjustment to reflect the amortization of intangible assets of approximately $445,000 related to the acquisition of ISG by Sirenza and to reflect the amortization of intangible assets of approximately $512,000 related to the acquisition of certain assets and liabilities of Vari-L by Sirenza.

The intangible assets related to the acquisition of ISG will be amortized over the estimated period in which the related revenues are anticipated to be recognized, or between 49 and 73 months. The estimated effect on Sirenza’s results of operations of intangible asset amortization related to the acquisition of ISG is estimated to be as follows (in thousands):

Year 1	$	445
Year 2		798
Year 3		687
Year 4		530
Year 5		318
Thereafter		152
Total	$	2,930

Intangible assets related to the acquisition of certain assets and liabilities of Vari-L are being amortized on a straight-line basis over a period of between 12 and 68 months, which represents the estimate useful life of those intangible assets.

(14) To reflect the estimated tax provision of the combined companies.

(15) Adjustment to reflect the amortization of intangible assets of approximately $334,000 related to the acquisition of ISG by Sirenza.

Note 4: Pro Forma Earnings Per Share

The pro forma basic and diluted loss per share for the fiscal year ended December 31, 2003 is based on the historical weighted average number of shares of Sirenza common stock outstanding adjusted for the weighted average impact of approximately 3.3 million shares issued in connection with the acquisition of certain assets and liabilities of Vari-L, assuming the transaction closed on January 1, 2003.

Note 5: Unusual, Infrequent or Non-recurring Charges

The unaudited pro forma financial information above includes the following material, unusual, infrequent or non-recurring charges related to the fiscal year ended December 31, 2003: relocation costs to move Sirenza personnel and its manufacturing operations to Broomfield, Colorado of $1.1 million, Sirenza restructuring charges of $434,000, Vari-L expenses related to workforce reductions of $566,000, Vari-L proceeds from the sale of life insurance contracts of $368,000, an ISG gain related to sales discounts not redeemed of $511,000 and an ISG gain related to the reimbursement of written-down inventories due to a factory fire at a subcontractor of approximately $561,000.

Reclassifications

Certain amounts in ISG’s historical condensed financial information and Vari-L’s historical condensed financial information have been reclassified to conform to Sirenza’s historical consolidated financial statement presentation.