##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ______to ______
 000-31635
 
 ENDWAVE CORPORATION
  
 Delaware
    
    95-4333817(State of incorporation)
    
    (I.R.S. Employer Identification No.)776 Palomar Avenue,
Sunnyvale, CA
(Address of principal executive offices)
    
    94085
(Zip code)
 (408) 522-3100
 þ o
 o þ
 o þ




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ENDWAVE CORPORATION
 INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets as of September
30, 2005 (unaudited) and December 31, 2004
    
    
    3Unaudited Condensed Consolidated Statements of
Operations for the three and nine months ended September
30, 2005 and 2004
    
    
    4Unaudited Condensed Consolidated Statements of Cash
Flows for the nine months ended September 30, 2005 and
2004
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    12Item 3. Qualitative and Quantitative Disclosure about Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    29PART II. OTHER INFORMATIONItem 6. Exhibits
    
    
    30SIGNATURES
    
    
    32EXHIBITS
    
    
    33EXHIBIT 10.14EXHIBIT 10.24EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 ENDWAVE CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
 September 30,
    
    
    December 31,2005
    
    
    2004ASSETS
    
    (unaudited)
    
    
    (1
    )Current assets:Cash and cash equivalents
    
    $
    8,865
    
    
    $
    14,158Restricted cash
    
    
    25
    
    
    
    Short-term investments
    
    
    12,995
    
    
    
    10,979Accounts receivable, net
    
    
    11,449
    
    
    
    8,673Accounts receivable from affiliate
    
    
    10
    
    
    
    15Inventories
    
    
    15,642
    
    
    
    7,866Other current assets
    
    
    343
    
    
    
    477Total current assets
    
    
    49,329
    
    
    
    42,168Property, plant and equipment, net
    
    
    1,574
    
    
    
    2,394Other assets, net
    
    
    105
    
    
    
    125Goodwill and intangible assets
    
    
    4,948
    
    
    
    5,407$
    55,956
    
    
    $
    50,094LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,688
    
    
    $
    2,308Accounts payable to affiliate
    
    
    1,449
    
    
    
    1,279Accrued warranty
    
    
    3,943
    
    
    
    4,488Accrued compensation
    
    
    2,702
    
    
    
    1,370Restructuring liabilities, current
    
    
    40
    
    
    
    274Other current liabilities
    
    
    892
    
    
    
    752Total current liabilities
    
    
    12,714
    
    
    
    10,471Other long-term liabilities
    
    
    423
    
    
    
    559Total liabilities
    
    
    13,137
    
    
    
    11,030Commitments and contingencies (Note 12)Stockholders equity:Common stock, $0.001 par value per
share; 100,000,000 authorized,
11,277,811 and 10,499,944 issued and
outstanding on September 30, 2005 and
December 31, 2004, respectively
    
    
    11
    
    
    
    10Additional paid-in capital
    
    
    309,151
    
    
    
    304,658Treasury stock, at cost, 39,150 shares
    
    
    (79
    )
    
    
    (79
    )Accumulated other comprehensive loss
    
    
    (47
    )
    
    
    (30
    )Accumulated deficit
    
    
    (266,217
    )
    
    
    (265,495
    )Total stockholders equity
    
    
    42,819
    
    
    
    39,064$
    55,956
    
    
    $
    50,094
 
 (1)
    
    Derived from the Companys audited financial statements as of December 31, 2004 The accompanying notes are an integral part of these condensed consolidated financial statements.
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ENDWAVE CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(unaudited)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenues:Product revenues
    
    $
    13,523
    
    
    $
    7,377
    
    
    $
    34,367
    
    
    $
    21,118Product revenues from affiliate
    
    
    12
    
    
    
    63
    
    
    
    26
    
    
    
    105Development fees
    
    
    785
    
    
    
    154
    
    
    
    1,269
    
    
    
    564Total revenues
    
    
    14,320
    
    
    
    7,594
    
    
    
    35,662
    
    
    
    21,787Costs and expenses:Cost of product revenues
    
    
    9,668
    
    
    
    5,395
    
    
    
    23,800
    
    
    
    14,607Cost of product revenues from affiliate
    
    
    1
    
    
    
    12
    
    
    
    3
    
    
    
    28Cost of product revenues, amortization of
intangible assets
    
    
    113
    
    
    
    75
    
    
    
    339
    
    
    
    75Research and development
    
    
    1,708
    
    
    
    1,395
    
    
    
    4,819
    
    
    
    3,452Selling, general and administrative
    
    
    2,386
    
    
    
    2,204
    
    
    
    7,119
    
    
    
    5,738Transaction costs
    
    
    773
    
    
    
    
    
    
    
    773
    
    
    
    In-process research and development
    
    
    
    
    
    
    320
    
    
    
    
    
    
    
    320Amortization of intangible assets
    
    
    39
    
    
    
    73
    
    
    
    140
    
    
    
    73Restructuring charges, net
    
    
    
    
    
    
    (4
    )
    
    
    (46
    )
    
    
    2,895Recovery on building sublease
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (359
    )Impairment of long-lived assets and other
    
    
    
    
    
    
    389
    
    
    
    
    
    
    
    389Amortization of deferred stock compensation*
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204Total costs and expenses
    
    
    14,688
    
    
    
    9,859
    
    
    
    36,947
    
    
    
    27,422Loss from operations
    
    
    (368
    )
    
    
    (2,265
    )
    
    
    (1,285
    )
    
    
    (5,635
    )Interest and other income, net
    
    
    175
    
    
    
    231
    
    
    
    563
    
    
    
    993Net loss
    
    $
    (193
    )
    
    $
    (2,034
    )
    
    $
    (722
    )
    
    $
    (4,642
    )Basic and diluted net loss per share
    
    $
    (0.02
    )
    
    $
    (0.21
    )
    
    $
    (0.07
    )
    
    $
    (0.48
    )Shares used in computing basic and diluted net
loss per share
    
    
    11,078,344
    
    
    
    9,897,077
    
    
    
    10,752,423
    
    
    
    9,674,842* Amortization of deferred stock compensation:Cost of product revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    109Research and development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44Selling, general and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51$
    
    
    
    $
    
    
    
    $
    
    
    
    $
    204
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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ENDWAVE CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
 Nine months endedSeptember 30,2005
    
    
    2004Operating activities:Net loss
    
    $
    (722
    )
    
    $
    (4,642
    )Adjustments to reconcile net loss to net cash used in
operating activities:In-process research and development
    
    
    
    
    
    
    320Depreciation and amortization
    
    
    1,145
    
    
    
    1,232Amortization of intangible assets
    
    
    479
    
    
    
    148Impairment of long-lived assets and other
    
    
    
    
    
    
    389Amortization of deferred stock compensation
    
    
    
    
    
    
    204Restructuring charges, net
    
    
    (46
    )
    
    
    (4
    )Gain on the sale of land and equipment
    
    
    (121
    )
    
    
    (469
    )Recovery on building sublease
    
    
    
    
    
    
    (359
    )Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (2,771
    )
    
    
    1,737Inventories
    
    
    (7,776
    )
    
    
    851Other assets
    
    
    154
    
    
    
    345Accounts payable
    
    
    1,550
    
    
    
    (1,055
    )Accrued warranty
    
    
    (545
    )
    
    
    (1,128
    )Accrued compensation and other current and long-term liabilities
    
    
    1,263
    
    
    
    (126
    )Net cash used in operating activities
    
    
    (7,390
    )
    
    
    (2,557
    )Investing activities:Cash paid in business combinations
    
    
    (20
    )
    
    
    (6,067
    )Purchases of equipment
    
    
    (349
    )
    
    
    (340
    )Proceeds on sales of property and equipment
    
    
    30
    
    
    
    5,056Purchases of short term investments
    
    
    (21,666
    )
    
    
    (13,037
    )Decrease (increase) in restricted cash
    
    
    (25
    )
    
    
    778Proceeds on maturities of short term investments
    
    
    19,633
    
    
    
    17,911Net cash provided by (used in) investing activities
    
    
    (2,397
    )
    
    
    4,301Financing activities:Payments on notes payable
    
    
    
    
    
    
    (778
    )Proceeds from stock issuance
    
    
    230
    
    
    
    92Proceeds from exercises of stock options
    
    
    4,264
    
    
    
    1,163Net cash provided by financing activities
    
    
    4,494
    
    
    
    477Net change in cash and cash equivalents
    
    
    (5,293
    )
    
    
    2,221Cash and cash equivalents at beginning of period
    
    
    14,158
    
    
    
    13,408Cash and cash equivalents at end of period
    
    $
    8,865
    
    
    $
    15,629
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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ENDWAVE CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Business and Basis of Presentation
  °
    integrated transceivers  combinations of electronic devices that
combine both the transmit and receive functions necessary or a bi-directional radio
link;°
    amplifiers  electronic devices used to increase the amplitude and
power of an electronic signal;°
    synthesizers  electronic devices that can be used to generate several
different radio frequency signals from a single source;°
    oscillators  electronic devices that generate alternating increasing
and decreasing signals at specific intervals;°
    up and down converters  electronic devices that shift the center
frequency of a radio signal without altering the signals data modulation;°
    frequency multipliers  electronic devices that increase the frequency
of a radio signal in integer multiples; and°
    microwave switch arrays  electronic devices that can switch the
routing of a radio signal.
  2. Warranty
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2005
    
    
    2004(in thousands)Balance at January 1
    
    $
    4,488
    
    
    $
    5,835Warranties accrued
    
    
    533
    
    
    
    996Warranties settled or reversed
    
    
    (1,078
    )
    
    
    (1,800
    )Balance at September 30
    
    $
    3,943
    
    
    $
    5,031
 3. Stock-Based Compensation
     Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(in thousands)Net loss, as reported
    
    $
    (193
    )
    
    $
    (2,034
    )
    
    $
    (722
    )
    
    $
    (4,642
    )Add: Stock-based employee compensation expense
included in reported net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204Deduct: Stock-based employee compensation
expense determined under the fair value method
for all awards
    
    
    (1,265
    )
    
    
    (693
    )
    
    
    (3,270
    )
    
    
    (2,427
    )Net loss, pro forma
    
    $
    (1,458
    )
    
    $
    (2,727
    )
    
    $
    (3,992
    )
    
    $
    (6,865
    )Basic and diluted net loss per share, as reported
    
    $
    (0.02
    )
    
    $
    (0.21
    )
    
    $
    (0.07
    )
    
    $
    (0.48
    )Basic and diluted net loss per share, pro forma
    
    $
    (0.13
    )
    
    $
    (0.28
    )
    
    $
    (0.37
    )
    
    $
    (0.71
    )
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4. Goodwill and Intangible Assets
 Goodwill
   Intangible Assets
  Gross Carrying
    
    
    Accumulated
    
    
    Net Carrying AmountAmount
    
    
    AmortizationDeveloped technology
    
    $
    2,250
    
    
    $
    (526
    )
    
    $
    1,724Tradename
    
    
    1,060
    
    
    
    
    
    
    
    1,060Customer relationships
    
    
    780
    
    
    
    (182
    )
    
    
    598Customer backlog
    
    
    140
    
    
    
    (140
    )
    
    
    Intangible assets
    
    $
    4,230
    
    
    $
    (848
    )
    
    $
    3,382
    Years Ending December 312005 (October 1  December 31)
    
    $
    1512006
    
    
    6062007
    
    
    6062008
    
    
    6062009
    
    
    353$
    2,322
 5. Inventories
  September 30,
    
    
    December 31,2005
    
    
    2004Raw materials
    
    $
    12,153
    
    
    $
    7,139Work in process
    
    
    1,915
    
    
    
    432Finished goods
    
    
    1,574
    
    
    
    295$
    15,642
    
    
    $
    7,866
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6. Restricted Cash
  7. Restructuring Charges, Net
  Severance BenefitsThird Quarter 2004 Plan
    
    (In thousands)Accrual at December 31, 2004
    
    $
    193Cash payments
    
    
    (147
    )Restructuring charge adjustment
    
    
    (46
    )Accrual at September 30, 2005
    
    $
    
  8. Recovery on Building Sublease
  9. Net Loss Per Share
   9




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10. Comprehensive Income (Loss)
   11. Segment Disclosures
  Three months ended September 30,2005
    
    
    2004United States
    
    $
    2,043
    
    
    
    14.3
    %
    
    $
    1,813
    
    
    
    23.8
    %Finland
    
    
    6,858
    
    
    
    47.9
    %
    
    
    4,152
    
    
    
    54.7
    %Italy
    
    
    2,021
    
    
    
    14.1
    %
    
    
    21
    
    
    
    0.3
    %Norway
    
    
    1,868
    
    
    
    13.0
    %
    
    
    
    
    
    
    0.0
    %Other
    
    
    1,530
    
    
    
    10.7
    %
    
    
    1,608
    
    
    
    21.2
    %Total
    
    $
    14,320
    
    
    
    100.0
    %
    
    $
    7,594
    
    
    
    100.0
    %
 Nine months ended September 30,2005
    
    
    2004United States
    
    $
    6,216
    
    
    
    17.4
    %
    
    $
    4,475
    
    
    
    20.5
    %Finland
    
    
    18,583
    
    
    
    52.1
    %
    
    
    11,693
    
    
    
    53.7
    %Italy
    
    
    4,802
    
    
    
    13.5
    %
    
    
    1,048
    
    
    
    4.8
    %Norway
    
    
    2,647
    
    
    
    7.4
    %
    
    
    33
    
    
    
    0.2
    %Other
    
    
    3,414
    
    
    
    9.6
    %
    
    
    4,538
    
    
    
    20.8
    %Total
    
    $
    35,662
    
    
    
    100.0
    %
    
    $
    21,787
    
    
    
    100.0
    %
   12. Commitments and Contingencies
  10




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13. Related Party Transactions
     14. Recent Accounting Pronouncements
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Overview
     °
    In January 2005, we announced the formation of Endwave Defense Systems
Incorporated (EDSI) to provide focus on the defense electronics and homeland
security markets. The business consists of JCA Technology, Inc. (JCA), which we
purchased in July 2004, and our legacy defense electronics business. We plan to
continue to use the JCA tradename while providing highly integrated, value-added
subsystem solutions for the defense electronics and homeland security markets.°
    During 2005, we have continued to manufacture products based on our customers
designs at the location of our offshore partner in Southeast Asia. We believe that
this has allowed us to increase market share, establish relationships with new
customers, increase revenues and absorb fixed costs.
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Results of Operations
 Three and nine months ended September 30, 2005 and 2004
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of product revenues
    
    
    67.5
    
    
    
    71.2
    
    
    
    66.7
    
    
    
    67.2Cost of product revenues, amortization of
intangible assets
    
    
    0.8
    
    
    
    1.0
    
    
    
    0.9
    
    
    
    0.3Research and development
    
    
    11.9
    
    
    
    18.4
    
    
    
    13.5
    
    
    
    15.8Selling, general and administrative
    
    
    16.7
    
    
    
    29.0
    
    
    
    20.0
    
    
    
    26.3Transaction costs
    
    
    5.4
    
    
    
    
    
    
    
    2.2
    
    
    
    In-process research and development
    
    
    
    
    
    
    4.2
    
    
    
    
    
    
    
    1.5Amortization of intangible assets
    
    
    0.3
    
    
    
    1.0
    
    
    
    0.4
    
    
    
    0.4Restructuring charges, net
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    13.3Recovery on building sublease
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.6
    )Impairment of long-lived assets and other.
    
    
    
    
    
    
    5.1
    
    
    
    
    
    
    
    1.8Amortization of deferred stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.9Total costs and expenses
    
    
    102.6
    
    
    
    129.8
    
    
    
    103.6
    
    
    
    125.9Loss from operations
    
    
    (2.6
    )
    
    
    (29.8
    )
    
    
    (3.6
    )
    
    
    (25.9
    )Interest and other income, net
    
    
    1.3
    
    
    
    3.0
    
    
    
    1.6
    
    
    
    4.6Net loss
    
    
    (1.3
    )%
    
    
    (26.8
    )%
    
    
    (2.0
    )%
    
    
    (21.3
    )%
 Revenues
    13




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Cost and Expenses
 Cost of product revenues .
   Research and development expenses
   Selling, general and administrative expenses.
 14




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Transaction costs.
 In-process research and development.
 Amortization of intangible assets .
   Restructuring charges, net .
   15




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Amortization of deferred stock compensation.
 Recovery on building sublease .
 Impairment of long-lived assets.
 Interest and other income, net .
  Liquidity and Capital Resources
    16




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OperatingLeasesYears Ending December 31,
    
    (in thousands)2005 (October 1  December 31)
    
    $
    1762006
    
    
    4222007
    
    
    3002008
    
    
    3002009
    
    
    105Total minimum payments required
    
    $
    1,303
 Recent Accounting Pronouncements
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RISK FACTORS
 You should consider carefully the following risk factors as well as other information in this
report and the documents incorporated by reference herein or therein, before investing any of our
securities. If any of the following risks actually occur, our business, operating results and
financial condition could be adversely affected. This could cause the market price of our common
stock to decline, and you may lose all or part of your investment.
 Risks Relating to Our Business
 We have had a history of losses and may not be profitable in the future.
  We depend on a small number of key customers in the telecommunications industry for a large portion
of our revenues. If we lose any of our major customers, particularly Nokia, or there is any
material reduction in orders for our products from any of these customers, our business, financial
condition and results of operations would be adversely affected.
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We depend on the telecommunications industry for most of our revenues. If this industry suffers
another downturn or fails to grow as anticipated, our revenues could decrease and our profitability
could suffer. In addition, consolidation in this industry could result in delays or cancellations
of orders for our products, adversely impacting our results of operations.
    Our future success depends in part on our ability to further penetrate into new markets, such as
defense electronics and homeland security, and we may be unable to do so.
  Our operating results fluctuate significantly based on seasonal factors in the telecommunications
network market.
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Because of the shortages of some components and our dependence on single source suppliers and
custom components, we may be unable to obtain an adequate supply of components of sufficient
quality in a timely fashion, or we may be required to pay higher prices or to purchase components
of lesser quality.
   
    
    semiconductor devices;
    
    application-specific monolithic microwave integrated circuits;
    
    voltage-controlled oscillators;
    
    voltage regulators;
    
    lead-free surface mount components;
    
    high-frequency circuit boards;
    
    custom connectors;
    
    electromagnetic housings;
    
    yttrium iron garnet components; and
    
    magnetic components.
  Our cash requirements will be impacted by our need to increase inventories.
  We rely heavily on a Thailand facility of HANA Microelectronics Co., Ltd., a contract manufacturer,
to produce our RF modules. If HANA is unable to produce these modules in sufficient quantities or
with adequate quality, or it chooses to terminate our manufacturing arrangement, we will be forced
to find an alternative manufacturer and may not be able to fulfill our production commitments to
our customers, which could cause sales to be delayed or lost and could harm our reputation.
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We rely on Velocium and other third-party semiconductor foundries to manufacture the semiconductors
contained in our products. The loss of our relationship with any of these foundries, particularly
Velocium, without adequate notice would adversely impact our ability to fill customer orders and
could damage our customer relationships.
   Implementing our acquisition strategy could result in dilution to our stockholders and operating
difficulties leading to a decline in revenues and operating profit.
  
    
    diversion of our management from the operation of our core business;
    
    assimilating the acquired operations and personnel;
    
    integrating information technology and reporting systems;
    
    retention of key personnel;
    
    retention of acquired customers; and
    
    implementation of controls, procedures and policies in the acquired business.
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Our products may contain component, manufacturing or design defects or may not meet our customers
performance criteria, which could cause us to incur significant repair expenses, harm our customer
relationships and industry reputation, and reduce our revenues and profitability.
    We depend on our key personnel. Skilled personnel in our industry can be in short supply. If we are
unable to retain our current personnel or hire additional qualified personnel, our ability to
develop and successfully market our products would be harmed.
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Competitive conditions may require us to reduce prices in the future and, as a result, we may need
to reduce our costs in order to be profitable.
  The length of our sales cycle requires us to invest substantial financial and technical resources
in a potential sale before we know whether the sale will occur. There is no guarantee that the sale
will ever occur and if we are unsuccessful in designing a high-frequency RF module for a particular
generation of a customers products, we may need to wait until the next generation of that product
to sell our products to that particular customer.
  We may not be able to design our products as quickly as our customers require, which could cause us
to lose sales and may harm our reputation.
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We may not be able to manufacture and deliver our products as quickly as our customers require,
which could cause us to lose sales and would harm our reputation.
  
    
    the failure of a supplier to deliver needed components on a timely basis or with acceptable quality;
    
    lack of sufficient capacity;
    
    poor manufacturing yields;
    
    equipment failures;
    
    manufacturing personnel shortages;
    
    labor disputes;
    
    transportation disruptions;
    
    changes in import/export regulations;
    
    infrastructure failures at the facilities of our offshore contract manufacturer;
    
    natural disasters;
    
    acts of terrorism; and
    
    political instability.
   Because we do not have long-term commitments from many of our customers, we must estimate customer
demand, and errors in our estimates could have negative effects on our inventory levels and
revenues.
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Some of our customer contracts require us to manufacture products designed by our customers. While
we intend to convert these products to products of our own design, such transitions may be
difficult to implement and delays or difficulties in doing so could harm our operating results.
  Any failure to protect our intellectual property appropriately could reduce or eliminate any
competitive advantage we have.
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Risks Relating to Our Industry
 Our acquisition of JCA Technology and our own marketing and sales efforts have increased the volume
of our products used by the United States government. Our revenues in this market largely depend
upon the funding and implementation decisions of Congress and United States government agencies.
These decisions could change abruptly and without notice, unexpectedly reducing our current or
future revenues in this market.
  Our failure to compete effectively could reduce our revenues and margins.
   Our failure to comply with any applicable environmental regulations could result in a range of
consequences, including fines, suspension of production, excess inventory, sales limitations and
criminal and civil liabilities.
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Government regulation of the communications industry could limit the growth of the markets that we
serve or could require costly alterations of our current or future products.
  Risks Relating to Ownership of Our Stock
 The assets of Wood River Partners, L.P. and certain of its affiliates, the holders of
approximately 37.9% of our outstanding common stock as of November 3, 2005, have been placed into
receivership by the Securities and Exchange Commission, and the receiver may dispose of the shares
of our common stock held by Wood River Partners, L.P. and its affiliates in a manner that adversely
affects the trading price of our common stock.
  The market price of our common stock has historically fluctuated and is likely to fluctuate in the
future.
  
    
    our financial performance or the performance of our competitors;
    
    the sale of common stock by Wood River, Northrop Grumman or other stockholders;
    
    technological innovations or other trends or changes in the telecommunications
network, defense electronics or homeland security markets;
    
    successes or failures at significant product evaluations or site demonstrations;
    
    the introduction of new products by us or our competitors;
    
    acquisitions, strategic alliances or joint ventures involving us or our competitors;
    
    decisions by major participants in the communications industry not to purchase
products from us or to pursue alternative technologies;
    
    decisions by investors to de-emphasize investment categories, groups or strategies
that include our company or industry;
    
    market conditions in the industry, the financial markets and the economy as a whole; and
    
    low trading volume of our common stock.
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Wood River and Northrop Grumman control a large percentage of our common stock and are able to
significantly affect the outcome of matters requiring stockholder approval.
  Our certificate of incorporation, bylaws and arrangements with executive officers contain
provisions that could delay or prevent a change in control.
  
 Item 3. Qualitative and Quantitative Disclosures about Market Risk
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Item 4. Controls and Procedures.
 (a) Evaluation of disclosure controls and procedures.
   (b) Changes in internal controls over financial reporting.
  29




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PART II. OTHER INFORMATION
 
 Item 6. Exhibits
 Number
    
    Description3.1(1)
    
    Amended and Restated Certificate of Incorporation effective October 20, 2000.3.2(2)
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation effective June 28,
2002.3.3(1)
    
    Amended and Restated Bylaws effective October 20, 2000.4.1(1)
    
    Form of specimen Common Stock Certificate.4.2(1)
    
    Investors Rights Agreement by and among Endwave Corporation and certain investors named therein
dated March 31, 2000.4.3(3)
    
    Amended and Restated Registration Rights Agreement by and between Northrop Grumman Space & Mission
Systems Corp. and Endwave Corporation dated September 14, 2005.10.1(1)
    
    Form of Indemnity Agreement entered into by Endwave Corporation with each of its directors and
officers.10.2(1)*
    
    1992 Stock Option Plan.10.3(1)*
    
    Form of Incentive Stock Option under 1992 Stock Option Plan.10.4(1)*
    
    Form of Nonstatutory Stock Option under 1992 Stock Option Plan.10.5(1)*
    
    2000 Equity Incentive Plan, as amended.10.6(1)*
    
    Form of Stock Option Agreement under 2000 Equity Incentive Plan.10.7(1)*
    
    2000 Employee Stock Purchase Plan.10.8(1)*
    
    Form of 2000 Employee Stock Purchase Plan Offering.10.9(4)*
    
    2000 Non-Employee Directors Stock Option Plan, as amended.10.10(1)*
    
    Form of Nonstatutory Stock Option Agreement under the 2000 Non-Employee Director Plan.10.11(5)*
    
    Description of Compensation Payable to Non-Employee Directors.10.12(5)*
    
    2005 Base Salaries for Named Executive Officers.10.13(5)*
    
    2005 Executive Incentive Compensation Plan.10.14*
    
    Executive Officer Severance and Retention Plan.10.15(6)*
    
    Transaction Incentive Plan.10.16(1)
    
    License Agreement by and between TRW Inc. and TRW Milliwave Inc. dated February 28, 2000.10.17(1)
    
    Production Agreement by and between TRW Inc. and Endwave Corporation dated March 31, 2000 for the
performance of the Development Agreement by and between TRW Inc. and Nokia Telecommunications OY
dated January 28, 1999.10.18(1)
    
    Services Agreement by and between TRW Inc. and Endwave Corporation dated March 31, 2000.
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Number
    
    Description10.19(7)
    
    Development Agreement by and between Nokia and Endwave Corporation dated August 14, 2003.10.20(8)
    
    Purchase Agreement by and between Nokia Corporation and Endwave Corporation dated December 31,
2003.10.21(2)
    
    Industrial Lease by and between The Irvine Company and Endwave Corporation dated January 28, 2004.10.22(2)
    
    Amended and Restated Supply Agreement by and between Northrop Grumman Space and Mission Systems
Corp. and Endwave Corporation dated March 26, 2004.10.23(9)
    
    Settlement and Release Agreement by and between Northrop Grumman Space & Mission Systems Corp. and
Endwave Corporation dated March 23, 2005.10.24
    
    Manufacturing and Supply Agreement by and between HANA Microelectronics and Endwave Corporation
dated September 18, 2002.31.1
    
    Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Previously filed with Endwave Corporations Registration Statement on Form S-1
(Registration No. 333-41302).(2)
    
    Previously filed with Endwave Corporations Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004.(3)
    
    Previously filed as an exhibit to Endwave Corporations Current Report on Form 8-K filed on
September 15, 2005.(4)
    
    Previously filed with Endwave Corporations Annual Report on Form 10-K for the fiscal year
ended December 31, 2004.(5)
    
    Previously filed as an exhibit to Endwave Corporations Current Report on Form 8-K filed on
February 3, 2005.(6)
    
    Previously filed with Endwave Corporations Quarterly Report on Form 10-Q for the quarter
ended September 30, 2003.(7)
    
    Previously filed with an amendment to Endwave Corporations Quarterly Report on Form 10-Q for
the quarter ended September 30, 2003 filed on August 4, 2004.(8)
    
    Previously filed with an amendment to Endwave Corporations Annual Report on Form 10-K for
the fiscal year ended December 31, 2003 filed on August 4, 2004.(9)
    
    Previously filed as an exhibit to Endwave Corporations Current Report on Form 8-K filed on
March 25, 2005.*
    
    Indicates a management contract or compensatory plan or arrangement.
    
    Confidential treatment has been requested for a portion of this exhibit. 31




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SIGNATURES
  ENDWAVE CORPORATION
 Date: November 14, 2005By:
    
    /s/ Edward A. Keible, Jr.Edward A. Keible, Jr.President and Chief Executive OfficerBy:
    
    /s/ Julianne M. BiaginiJulianne M. BiaginiExecutive Vice President
and Chief Financial Officer (Duly Authorized Officer and Principal Financial
and Accounting Officer)
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Index to Exhibits
 Number
    
    Description10.14*
    
    Executive Officer Severance and Retention Plan.10.24
    
    Manufacturing and Supply Agreement by and between HANA Microelectronics and Endwave
Corporation dated September 18, 2002.31.1
    
    Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Indicates a management contract or compensatory plan or arrangement.
    
    Confidential treatment has been requested for a portion of this exhibit. 33