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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

VL DISSOLUTION CORPORATION

(Exact name of Registrant as specified in its charter.)

1625 Broadway
Suite 990
Denver, Colorado 80202

(Address of principal executive offices)

(303) 592-5700
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes____X______ No___________

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes___________ No____X______

     At February 3, 2004, 9,348,572 shares of Common Stock were outstanding. The aggregate market value of the Common Stock held by non-affiliates on February 3, 2004 was $7,198,400 based on the Pink Sheets Electronic Quotation System closing price of $0.77 per share on that date.

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VL DISSOLUTION CORPORATION

December 31, 2003

Index

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VL DISSOLUTION CORPORATION

Statements of Net Assets in Liquidation

(in thousands of dollars)

See accompanying notes to financial statements.

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VL DISSOLUTION CORPORATION

Statements of Changes in Net Assets in Liquidation
(in thousands of dollars)

See accompanying notes to financial statements.

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VL DISSOLUTION CORPORATION

Statements of Operations

(in thousands of dollars, except share and per share data)

See accompanying notes to financial statement

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VL DISSOLUTION CORPORATION

Statement of Cash Flows

(in thousands of dollars)

See accompanying notes to financial statements.

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VL DISSOLUTION CORPORATION
 
Notes to Financial Statements (Unaudited)

Three and six months ended December 31, 2003

(1)

Liquidation Basis of Accounting and Sale of Substantially All Assets

The accompanying financial statements of the Company have been prepared without audit (except for the balance sheet information as of June 30, 2003, which is derived from the Company’s audited financial statements). Certain information and note disclosures normally included in financial statements have been omitted. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2003.

The Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Significant assumptions inherent in the preparation of the accompanying financial statements include, but are not limited to, accrued cost of liquidation and commitments and contingencies. Actual results could differ from those estimates.

On December 2, 2002, the Company entered into a definitive asset purchase agreement (the “Asset Purchase Agreement”) to sell substantially all of its assets to a wholly owned subsidiary of Sirenza Microdevices, Inc. (“Sirenza”).

On May 5, 2003, the asset sale contemplated by the Asset Purchase Agreement was consummated. Pursuant to the amended plan of dissolution, which was approved by the shareholders at the special shareholders’ meeting on May 5, 2003, the Company’s operations were limited to winding-up its business and affairs, selling certain of its remaining assets, discharging its known liabilities, establishing a contingency reserve for payment of expenses and contingent liabilities, and distributing any remaining assets to its shareholders, all in accordance with the amended plan of dissolution. As a result, the Company changed its basis of accounting to the liquidation basis as of May 5, 2003, which assumes that assets and liabilities are reflected at the estimated amounts to be paid or received; however actual costs could differ from those estimates. Distributions ultimately made to shareholders upon liquidation will differ from the net assets in liquidation recorded in the accompanying statement of net assets in liquidation as a result of future events/activities, the change in the fair market value of an investment in the common stock of Sirenza, the proceeds ultimately received by the Company from the sale of Sirenza common stock and other assets, and adjustments, if any, to estimated costs of liquidation.

It is the Company’s intention to settle its outstanding obligations and sell its remaining assets as expeditiously as possible. Any cash not used to satisfy liabilities and expenses will eventually be distributed to shareholders. Final dissolution of the Company and related distributions to its shareholders will occur upon obtaining final resolution of all liquidation issues and expiration of the period during which Sirenza may make an indemnity claim. During the three months ended December 31, 2003, the Company made an initial distribution (or conversion to cash in the case of fractional shares) of approximately 1.4 million shares of Sirenza’s common stock to its shareholders. Following the initial distribution, the Company held approximately 1.3 million shares of Sirenza’s common stock. No other distributions have been made to the Company’s shareholders.

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VL DISSOLUTION CORPORATION

Notes to Financial Statements (Unaudited)

Three and six months ended December 31, 2003

In connection with the asset sale and subsequent dissolution of the Company, the Company filed articles of amendment to change its name from Vari-L Company, Inc. to VL Dissolution Corporation, effective May 5, 2003.

As further described in the following notes, during the six months ended December 31, 2003, the Company sold 550,000 shares of Sirenza’s common stock generating proceeds of approximately $2.1 million, extinguished $1.5 million of its accounts payable and accrued costs of liquidation, issued 2.0 million shares of its common stock valued at $1.2 million pursuant to the settlement of the private securities class action and distributed 1.4 million shares of Sirenza’s common stock valued at $6.5 million as of the date of distribution to its shareholders.

(2)

Restricted Cash

At December 31, 2003, $1.475 million of cash is restricted as to withdrawal and is retained in a separate bank account designated for such purpose. This cash will remain restricted until the later of March 31, 2004 or the date at which all indemnification claims against the Company made by Sirenza and its indemnified parties are paid or otherwise resolved.

(3)

Marketable Securities

Marketable securities, consisting of an investment in Sirenza’s common stock, are classified as held for trading and are recorded at fair value. At June 30, 2003, the Company held approximately 3.3 million shares with a fair market value of $6.6 million. During the six months ended December 31, 2003, the Company sold 550,000 shares generating proceeds of approximately $2.1 million, realizing net gains of $973,000. On October 31, 2003, the Company made an initial distribution to its shareholders (or conversion to cash in the case of fractional shares) of approximately 1.4 million shares of Sirenza’s common stock that had a fair market value on that date of $6.5 million. At December 31, 2003, the Company held approximately 1.3 million shares with a fair market value of $6.2 million. Except for approximately 21,000 of such shares, all of the remaining shares held by the Company are restricted as to withdrawal or distribution. The shares will remain restricted until the later of March 31, 2004 or the date at which all indemnification claims against the Company made by Sirenza and its indemnified parties are paid or otherwise resolved.

Unrealized gains and losses are reported as mark to market adjustment on investment in common stock of Sirenza in the Statement of Changes in Net Assets in Liquidation.

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VL DISSOLUTION CORPORATION

Notes to Financial Statements (Unaudited)

Three and six months ended December 31, 2003

(4)

Stockholders’ Equity

In October 2003, the Company issued an aggregate of 2.0 million shares of its common stock to the shareholders in the plaintiff class pursuant to the settlement of the private securities class action. The Company recorded a liability of $1.2 million for the issuance of the settlement shares in June 2002, when all substantive aspects of the settlement were agreed upon, based upon the fair market value of the shares on such date.

(5)

Litigation, Commitments and Contingencies

The Company is subject to legal proceedings and claims in the ordinary course of its business. The Company believes that the outcome of these matters will not have a material adverse effect on its financial condition, results of operations or liquidity. The Company may in the future be subject to legal disputes, which, even if not meritorious, could result in the expenditure of significant financial resources.

The Company is a beneficiary to a life insurance policy in which a former officer is named as the insured. Under the policy, the Company is entitled to 100% of the net death benefits. In January 2004, the Company was notified of the death of this former officer. The Company anticipates receiving net proceeds from the life insurance policy of approximately $320,000 during February 2004.

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VL DISSOLUTION CORPORATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

The Management’s Discussion and Analysis of Financial Condition and Results of Operations contains “forward looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on a number of assumptions by us about the future, usually based on current conditions. These assumptions may or may not prove to be correct and, as a result, our own forward-looking statements may also be inaccurate. On the other hand, based on what we know today and what we expect in the future, we believe that the forward-looking statements we make in this report are reasonable. In most cases, when we use words like “believe,” “expect,” “estimate,” “anticipate,” “project,” “plan,” or “predict” to describe something which has not yet occurred, we are making a forward-looking statement.

We cannot list here all of the risks and uncertainties that could cause our actual future financial and operating results to differ materially from our historical experience and our present expectations or projections but we can identify many of them. For example, our future results could be affected by the cost of satisfying currently known liabilities, the need to satisfy unanticipated liabilities that might arise in the future, the expenses of dissolving and winding up the Company, and the price at which Sirenza stock may be held or sold. It is important to remember that forward-looking statements speak only as of the date when they are made and we do not promise that we will publicly update or revise those statements whenever conditions change or future events occur. Accordingly, we do not recommend that any person seeking to evaluate our Company should place undue reliance on any forward-looking statement in this report.

Critical Accounting Policies and Estimates

Our discussion and analysis of our historical and liquidation based financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, we evaluated our estimates, including those related to accrued costs of liquidation and commitments and contingencies. We based our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies impacted our more significant judgments and estimates used in the preparation of our historical and liquidation based financial statements.

Commitments and Contingencies

We were party to various legal proceedings and claims, as well as various other commitments and contingencies. We recorded a liability if it was (1) probable that an obligation was incurred because of a transaction or event happening on or before the date of the financial statements and (2) the amount of the obligation could be reasonably estimated.

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Accrued Costs of Liquidation and Effects of Change to Liquidation Basis

Pursuant to the amended plan of dissolution, which was approved by the shareholders at the special meeting on May 5, 2003, our operations were limited to winding-up our business and affairs, selling our remaining assets, discharging our known liabilities, establishing a contingency reserve for payment of expenses and contingent liabilities, and distributing any remaining assets to our shareholders, all in accordance with the amended plan of dissolution. As a result, we changed our basis of accounting to the liquidation basis as of May 5, 2003, which assumes that assets and liabilities are reflected at the estimated amounts to be paid or received; however, actual costs could differ from those estimates. Distributions ultimately made to shareholders upon liquidation will differ from the “net assets in liquidation” recorded in the accompanying Statement of Net Assets in Liquidation as a result of future events/activities, the change in the fair market value of our investment in the common stock of Sirenza, the proceeds ultimately received by us from the sale of the Sirenza common stock and other assets, and adjustments, if any, to estimated costs of liquidation.

Comparison of our Results of Operations

On May 5, 2003, we completed the sale of all of our operating assets to Sirenza and ceased preparing our financial statements on a going concern basis under generally accepted accounting principles. Accordingly, results of operations for the three and six months ended December 31, 2003 are not comparable to the three and six months ended December 31, 2002.

Results of Operations for the Three Months Ended December 31, 2003

For the three months ended December 31, 2003, we recorded a mark-to market adjustment of $1.8 million due to an increase in value in our investment in the common stock of Sirenza and we received a use tax settlement from the State of Colorado in the amount of $60,000. Additionally we made an initial distribution to our shareholders (or conversion to cash in the case of fractional shares) of approximately 1.4 million shares of Sirenza’s common stock with a fair market value on the date of distribution of $6.5 million.

Results of Operations for the Six Months Ended December 31, 2003

For the six months ended December 31, 2003, we recorded a mark-to market adjustment of $7.2 million due to an increase in value in our investment in the common stock of Sirenza. We sold 550,000 shares of Sirenza common stock realizing net gains of $973,000. We received a use tax settlement from the State of Colorado in the amount of $60,000 and we issued 2 million shares of our common stock valued at $1.2 million, pursuant to the settlement of the private securities class action. Additionally we made an initial distribution to our shareholders (or conversion to cash in the case of fractional shares) of approximately 1.4 million shares of Sirenza’s common stock with a fair market value on the date of distribution of $6.5 million.

Liquidity and Capital Resources

At December 31, 2003, our net assets in liquidation were $7.4 million, including cash, cash equivalents and restricted cash totaling $2.1 million. During the six months ended December 31, 2003, we sold 550,000 shares of Sirenza common stock generating proceeds of $2.1 million and extinguished $1.5 million of our accounts payable and accrued costs of liquidation.

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The Company is a beneficiary to a life insurance policy in which a former officer is named as the insured. Under the policy, we are entitled to 100% of the net death benefits. In January 2004, we were notified of the death of this former officer. We anticipate receiving net proceeds from the life insurance policy of approximately $320,000 during February 2004.

Outstanding Liabilities and Investment in Common Stock of Sirenza

At December 31, 2003, we had $1.0 million in accounts payable and accrued costs of liquidation and held 1.3 million shares of Sirenza’s common stock with a fair market value of $6.2 million. We intend to settle our outstanding obligations and sell our remaining assets as expeditiously as possible. Any cash not used to satisfy liabilities and expenses will eventually be distributed to our shareholders. Final dissolution of the Company and related distributions to our shareholders will occur upon obtaining final resolution of all liquidation issues and expiration of the period during which Sirenza may make an indemnity claim.

Item 3. Qualitative and Quantitative Disclosures about Market Risk

We are exposed to certain market risks, including the effects of adverse changes in interest rates. Our exposure to such changes results from cash deposits managed by Colorado Business Bank. As of June 30, 2003 and December 31, 2003, we have no financial instruments in place to manage the impact of changes in interest rates. We estimate that a 1% increase or decrease in interest rates would have impacted our income from these assets by less than $1,000 for the year ended June 30, 2003 and for the six months ended December 31, 2003. Additionally, as of June 30, 2003 and December 31, 2003, we are exposed to the effects of adverse changes in the fair value of marketable securities. We currently have an investment in the common stock of Sirenza acquired in connection with the asset sale with no financial instrument in place to manage the impact of a change in the fair market value. We estimate that a 10% increase or decrease in the fair value would have impacted the change in net assets in liquidation by approximately $661,000 at June 30, 2003 and $627,000 at December 31, 2003.

Item 4. Controls and Procedures

As of May 5, 2003, VL Dissolution Corp. (the “Company”) sold substantially all of its assets and began the orderly dissolution and liquidation of its assets. As the Company currently has no ongoing operations, chief executive officer, principal financial officers, principal accounting officer or employees, it is unable to perform the evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e).

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VL DISSOLUTION CORPORATION

PART II OTHER INFORMATION

Item 1. Legal Proceedings

The Company is subject to legal proceedings and claims in the ordinary course of its business. The Company believes that the outcome of these matters will not have a material adverse effect on its financial condition, results of operations or liquidity. We may in the future be subject to legal disputes, which, even if not meritorious, could result in the expenditure of significant financial resources.

Item 2. Changes in Securities and Use of Proceeds

Issuance of Class Action Settlement Shares. Pursuant to the settlement of the private securities class action, we issued 2.0 million shares of our common stock to the members of the plaintiff class in early October 2003. Because the terms and conditions of the issuance of the shares were approved by the United States District Court for the District of Colorado as fair and reasonable to the members of the class, the shares were issued in reliance upon Section 3(a)(10) of the Securities Act of 1933, as amended.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

     None

(b) Reports on Form 8-K

A report on Form 8-K dated November 25, 2003 under Items 5 and 7 was filed with the Commission on November 26, 2003.

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SIGNATURES

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

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CERTIFICATIONS

As of May 5, 2003, VL Dissolution Corp. (the “Company”) sold substantially all of its assets and began the orderly dissolution and liquidation of its remaining assets. As the Company currently has no ongoing operations, chief executive officer, principal financial officers, principal accounting officer or employees, it is unable to make the certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act.

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