##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
      (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    000-31635
      Endwave Corporation
 (Exact name of registrant as
    specified in its charter)
      Delaware

95-4333817(State of
    incorporation)

(I.R.S. Employer Identification
    No.)130 Baytech Drive
    San Jose, CA

95134(Zip code)(Address of principal executive
    offices)   (408) 522-3100
 (Registrants telephone
    number, including area code)
      Securities registered pursuant
    to Section 12(b) of the Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.001 par
    value per share

The NASDAQ Global
    Market   Securities registered pursuant to Section 12(g) of the
    Act:
    None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K. o
  Rule 12b-2
  o þ o
  Rule 12b-2 o þ




---



##### 



ENDWAVE
    CORPORATION
  FORM 10-K
  Year
    Ended December 31, 2006
  TABLE OF
    CONTENTS
  
  Page No.PART IItem 1.


Business


3Item 1A.


Risk
    Factors


17Item 1B.


Unresolved Staff
    Comments


28Item 2.


Properties


28Item 3.


Legal
    Proceedings


28Item 4.


Submission of
    Matters to a Vote of Security Holders


28PART IIItem 5.


Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


29Item 6.


Selected
    Consolidated Financial Data


30Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


31Item 7A.


Quantitative and
    Qualitative Disclosures About Market Risk


47Item 8.


Financial
    Statements and Supplementary Data


48Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


78Item 9A.


Controls and
    Procedures


78Item 9B.


Other
    Information


80PART IIIItem 10.


Directors,
    Executive Officers and Corporate Governance


80Item 11.


Executive
    Compensation


84Item 12.


Security Ownership
    of Certain Beneficial Owners and Management


93Item 13.


Certain
    Relationships and Related Transactions and Director
    Independence


95Item 14.


Principal
    Accountant Fees and Services


96PART IVItem 15.


Exhibits and
    Financial Statement Schedules


97SIGNATURES


101EXHIBIT 10.28EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1   1




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##### Table of Contents



FORWARD-LOOKING
    INFORMATION
   2




---



##### Table of Contents



PART I  Item 1.
    Business  Introduction
    point-to-point
        Industry
    Background and Markets
  High-Frequency
    RF Technology
     3




---



##### Table of Contents



Telecommunication
    Networks
  Applications of High-Frequency RF Technologies in
    Telecommunication Networks.
  Cellular Backhaul.
  Carrier Class Trunking.
  Private Voice and Data Networks.
  Increased Demand for Microwave Radios in Telecommunication
    Networks.
  Growth of Wireless Telephony in Developing
    Nations.
  Increase in Data-Intensive Cellular
    Traffic.
  Deployment of Third-Generation
    Networks.
 4




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##### Table of Contents



Introduction of Other High Capacity Data-Only
    Telecommunication Networks.
  Defense
    Electronics
    Electronic Warfare Systems.
  Radar Systems.
  Intelligent Battlefield Systems.
  High Capacity Communications.
    Homeland
    Security Systems
   5




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##### Table of Contents



Advanced Personnel Screening Portals.
  Long Distance Personnel
    Detection.
    Our
    Opportunity
        Low Cost. sub-contractors,
  Technical Depth.
  Flexible Production.
  Innovative Technology.
   6




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##### Table of Contents



Our
    Strengths
    Cost-Effective Volume Manufacturing.
  Depth and Breadth of Technical Expertise.
  Scalable and Flexible Manufacturing.
  Next-Generation Technology.
  Our
    Strategy
    Revenue
    Growth
  Increase our Telecommunication Network
    Business.
 7




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##### Table of Contents



Expand into New Growth Markets.
  Grow through Acquisitions.
  Offer
    the Highest Level of Manufacturing Efficiency and
    Flexibility
  Continually Improve Manufacturing
    Efficiency.
  Outsource to Low-Cost, Contract
    Manufacturers.
  Reduce Raw Materials and Component Costs.
  Employ a Fabless Semiconductor
    Model.
 8




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##### Table of Contents



Leverage
    Technical Breadth and Strength
  Broaden our Product Portfolio.
  Develop New Circuit and Packaging
    Technologies.
  Products
    and Technology
  Products
    Single-Function Modules.
  Multi-Function Modules.
  Integrated Subsystem Modules.
  Circuit
    Technologies
   9




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##### Table of Contents



Circuit TechnologiesHMIC

MMIC

MLMSDescription

Individual devices bonded to a
    substrate and then interconnected with bond wires

Monolithic semiconductor substrate
    with patterned devices and interconnections

Individual devices flip chip
    attached using our patented flip chip assembly technology to a
    complex substrateModule Design

Multiple circuits cascaded to form
    a functional block

Multiple circuits cascaded to form
    a functional block

Single substrate can form a
    complete system on a chip functional blockSubstrate

Ceramic with single top layer
    metallization

Semiconductor material, typically
    gallium arsenide

Next generation, multi- layer
    substrate containing metal, capacitive and resistive layersActive Devices

Individual RF devices attached to
    substrate

Devices patterned into various
    areas of the substrate; active device area is a small fraction
    of total substrate area

Individual RF devices especially
    designed for flip chip assemblyApplication

Used for rapid prototyping and low
    volume production

Used for high volume automated or
    third-party assembly

Used for high volume automated or
    third-party assemblyNumber of Bond
    Wires  (which require manual  tuning)

High  Often hundreds
    per module

Moderate   Often tens
    per module

Low  Often fewer than
    10 per modulePerformance

Variable  Units must be
    hand-tuned to required specifications and performance may be
    variable

Good  MMIC circuit
    designed for consistent performance, limited by substrate
    characteristics

Excellent  Very
    consistent performance due to lack of bond wires and improved
    substrate materialDesign Difficulty

Moderate  The most
    flexible circuit technology for customizing RF performance; can
    be designed very quickly by us because of our large library of
    HMIC core elements

Difficult  Complete
    circuit and all interactions must be concurrently analyzed;
    complicated by sub- optimal substrate properties of
    semiconductor materials for interconnection and filter elements;
    single-substrate process must be used for all devices

Moderate  Multi-layer
    properties of substrate facilitate ease of design; layers
    optimized for their functionRelative Cost

High  Material costs
    are modest, but high assembly, test and rework labor costs

High  Material cost of
    large semiconductors is expensive

Moderate  Device and
    substrate costs are lower than MMICs; assembly process automated
    for lower labor costs than HMICsStatus

In production

In production

In early stages of commercial
    production  10




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##### Table of Contents



Circuit
    Packaging Technologies
      Circuit Packaging TechnologiesPlanar

EpsilonDescription

Circuit substrates mounted to
    metal carrier and then enclosed with metal cover; entire
    assembly mounted to conventional printed wiring board

Circuit substrates mounted
    directly to composite printed wiring board using chip on
    board approach and then enclosed with non-metallized
    plastic coverSize and Weight

Metallic parts add significant
    thickness and weight

Significantly thinner and lighter
    than planar packagesPerformance

Good  Good performance
    with adequate RF gasket sealr with interfaces to printed wiring
    board

Excellent  RF cavity
    sealed better than planar packagesDesign Difficulty

Moderate  Requires
    separate design effort for carrier and cove

Low  Fewer elements to
    design and fewer mechanical interfaces to manage than planar
    packagesManufacturability

Eight major assembly steps

Four major assembly stepsRelative Cost

Moderate  Material
    costs are significant

Low  Metal carrier
    eliminated and plastic cover is more cost-effectiveStatus

In production

In early stages of commercial
    production   Sales and
    Marketing
     11




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##### Table of Contents



Customers
    Telecommunication Network

Defense Electronics and Homeland SecurityAllgon Microwave AB

The Boeing CompanyNera ASA

L-3 SafeView, Inc.Nokia

Lockheed Martin CorporationSiemens AG

Northrop Grumman CorporationStratex Networks, Inc.

Raytheon Company      12




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##### Table of Contents



Acquisitions
    Acquisition

Structure

Key BenefitsJCA Technology, Inc., a
    wholly-owned subsidiary of New Focus, Inc., a subsidiary of
    Bookham Technology plc  July 2004

Purchased all of the outstanding
    capital stock of JCA, whose primary product line was microwave
    amplifiers serving the defense electronics industry

 Provided significant market position in RF amplifiers and modules for defense and related applications
 Expanded relationships with existing customers, including Raytheon Company, Lockheed Martin Corporation and BAE Systems plc
 Added new customers, including Thales Group SA, L-3 Communications Corp. and Xicom Technology
 Formed core of Endwave Defense Systems divisionVerticom, Inc.  May 2003

Purchased assets including
    customer contracts, equipment, inventory, product designs and
    other intellectual property required to manufacture and supply
    YIG-based frequency synthesizers

 Enhanced high-performance oscillator technology
 Added new customer relationship in the defense electronics market
 Added new product application in the defense communication satellite terminal marketArcom Wireless Incorporated, a
    subsidiary of Dover Corporation  February 2003

Purchased assets including
    customer contracts, equipment, inventory, product designs and
    other intellectual property required to manufacture and supply a
    58 GHz integrated transceiver

 Expanded relationship with an existing customer
 Enhanced market position as a leading supplier of 58 GHz productsSignal Technology Corp. Fixed
    Wireless Division  September 2002

Purchased assets including
    customer contracts, equipment, inventory, product designs and
    other intellectual property required to manufacture and supply
    several transceiver products

 Expanded relationships with existing customers including Stratex Networks, Inc. and Nera ASA
 Added new customers including Siemens AG and Ceragon Networks Ltd.
 Significantly increased our product portfolio
 Facilitated move to offshore productionM/A-Com Tech, Inc., a subsidiary
    of Tyco Electronics formerly known as Stellex Microwave
    Systems  April 2001

Purchased assets including
    customer contracts, equipment, inventory, product designs and
    other intellectual property required to manufacture and supply
    yttrium iron garnet-based frequency synthesizers

 Added new product capabilities in high performance oscillators
 Added new customer relationship with Stratex Networks, Inc.
 Added new application in high capacity microwave radios  13




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##### Table of Contents



Competition
      
    Product pricing and the ability to offer low-cost solutions;
    Technical leadership and product performance;
    Product breadth;
    Time-to-market
    in the design and manufacturing of products; and
    Logistical flexibility, manufacturing capability and scalable
    capacity.  Research
    and Development
    Custom Semiconductor Design Capabilities. off-the-shelf
  Breadth of Expertise.
  Computer Modeling Capabilities.
  Extensive Library of Circuit Designs. time-to-market
  Automated Testing Processes.
   14




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Patents
    and Intellectual Property Rights
        Operations
   15




---



##### Table of Contents



9001-2000,
  work-in-process
  Backlog
      Governmental
    Regulation
     16




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##### Table of Contents



Seasonality
    Employees
    Available
    Information
  (408) 522-3100. www.endwave.com. Form 10-K, Form 10-Q, Form 8-K
  1-800-SEC-0330. http://www.sec.gov
  Item 1A.
    Risk
    Factors  You should consider carefully the following risk factors as
    well as other information in this report before investing in 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.
   17




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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 Nera, Nokia
    or Siemens, 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.
      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.
   18




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Our
    operating results may be adversely affected by substantial
    quarterly and annual fluctuations and market
    downturns.
    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;
    surface mount components compliant with the EUs
    Restriction of Hazardous Substances, or RoHS, Directive;
    high-frequency circuit boards;
    custom connectors;
    electromagnetic housings;
    yttrium iron garnet components; and
    magnetic components.   19




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##### Table of Contents



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.
    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.
   20




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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.    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.
   21




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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.
  per-unit
  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.
     22




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##### Table of Contents



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.      Though
    we do have long-term commitments from many of our customers,
    they are not for fixed quantities of product. As a result, we
    must estimate customer demand, and errors in our estimates could
    have negative effects on our inventory levels, revenues and
    results of operations.
   23




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##### Table of Contents



Some
    of our customer contracts require us to manufacture products
    designed by our customers. While we intend to convert many of
    these products to products of our own design, such transitions
    may be difficult
    and/or
    expensive 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.
     24




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##### Table of Contents



Risks
    Relating to Our Industry
  We
    have increased our focus on sales to the United States
    government and other governmental agencies. Our revenues in this
    market largely depend upon the funding and implementation
    decisions of Congress and 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.
     25




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##### Table of Contents



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.
    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 Capital Management, LLC and certain of its
    affiliates, the holders of shares of common stock representing
    approximately 27% of our outstanding capital stock as of
    December 31, 2006, have been placed into receivership by
    the Securities and Exchange Commission, and the receiver may
    dispose of such shares of our common stock. Such disposition may
    adversely affect the trading price of our common
    stock.
    The
    market price of our common stock has fluctuated historically and
    is likely to fluctuate in the future.
    
    our financial performance or the performance of our competitors;
    the purchase or sale of common stock, or short-selling or other
    transactions involving our securities, particularly by Wood
    River or other large stockholders; 26




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##### Table of Contents




    technological innovations or other trends or changes in the
    telecommunication 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
    the low trading volume of our common stock.    We
    have two shareholders that own a large percentage of our
    outstanding capital stock and, as a result of their significant
    ownership, 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.
   27




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##### Table of Contents



2 3
  Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    05-CV-8713,
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   28




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Information
    Relating to our Common Stock
    High


LowFiscal Year Ended
    December 31, 2005First Quarter

$
25.83


$
16.63Second Quarter

$
49.75


$
23.66Third Quarter

$
55.41


$
12.30Fourth Quarter

$
15.34


$
9.46Fiscal Year Ended
    December 31, 2006First Quarter

$
15.50


$
8.98Second Quarter

$
17.15


$
10.11Third Quarter

$
13.90


$
11.36Fourth Quarter

$
13.75


$
10.38     Dividend
    Policy
    Equity
    Compensation Plan Information
    Number of SecuritiesNumber of


Weighted-


Remaining AvailableSecurities to be


Average Exercise


for IssuanceIssued Upon


Price of


Under EquityExercise of


Outstanding


Compensation PlansOutstanding Options,


Options,


(Excluding SecuritiesWarrants and


Warrants and


Reflected inPlan Category

Rights(a)


Rights(b)


Column (a))(c)(1)Equity compensation plans approved
    by security holders


1,732,669


$
13.59



1,559,203
(2)Equity compensation plans not
    approved by security holders


0



0



0Total


1,732,669


$
13.59



1,559,203     (1)
    
    Each year on October 17, starting in 2001 and continuing
    through 2006, the aggregate number of shares of common stock
    that may be issued pursuant to stock awards under the 2000
    Employee Stock Purchase Plan was automatically increased by the
    lesser of 350,000 shares or 1.5% of the total number of
    shares of common stock outstanding on that date or such lesser
    amount as may be determined by the Board of Directors.(2)
    
    Includes 352,871 shares issuable under the 2000 Employee
    Stock Purchase Plan. 29




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##### Table of Contents



Performance
    Measurement Comparison
    COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    
  12/01


12/02


12/03


12/04


12/05


12/06Endwave -NASNM



100.00




20.94




161.40




382.68




258.33




237.50NASDAQ Composite



100.00




71.97




107.18




117.07




120.50




137.02NASDAQ
    Telecommunications



100.00




61.62




110.79




106.16




100.63




127.11     Item 6.
    Selected
    Consolidated Financial Data  The following selected consolidated financial data should be
    read in conjunction with Managements Discussion and
    Analysis of Financial Condition and Results of Operations
    and the consolidated financial statements and the notes thereto
    included elsewhere in this report. The selected consolidated
    statements of operations data for the fiscal years ended
    December 31, 2006, 2005 and 2004 and the selected
    consolidated balance sheet data as of December 31, 2006 and
    2005 are derived from the audited consolidated financial
    statements that are included elsewhere in this report. The
    selected consolidated statements of operations data for the
    fiscal years ended December 31, 2003 and 2002 and the
    selected consolidated balance sheet data as of December 31,
    2004, 2003 and 2002 are derived from our audited consolidated
    financial statements not included in
 30




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##### Table of Contents



this report. The historical results are not necessarily
    indicative of the results of operations to be expected in any
    future periods.
  Year Ended December 31,2006


2005


2004


2003


2002(In thousands, except per share data)Consolidated Statements of
    Operations Data:Revenues

$
62,226


$
48,735


$
33,162


$
33,847


$
22,572Cost of product revenues


44,220



33,586



22,576



24,830



29,777Other operating expenses


21,901



16,799



16,115



17,568



27,995Loss from operations


(3,895
)


(1,650
)


(5,529
)


(8,551
)


(35,200
)Net loss

$
(1,344
)

$
(874
)

$
(4,404
)

$
(7,910
)

$
(31,002
)Basic and diluted net loss per
    share

$
(0.12
)

$
(0.08
)

$
(0.45
)

$
(0.87
)

$
(3.47
)   December 31,2006


2005


2004


2003


2002(In thousands)Consolidated Balance Sheet
    Data:Cash, cash equivalents and
    short-term investments

$
67,587


$
22,415


$
25,137


$
29,298


$
29,025Total assets


100,653



53,149



50,094



53,074



60,049Long-term obligations, less
    current portion


231



385



559



363



1,075Total stockholders equity


89,398



43,083



39,064



41,043



47,506   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion and analysis should be read in
    conjunction with the consolidated financial statements and
    related notes included elsewhere in this report, as well as the
    information set forth in the Risk Factors section of
    this report. In addition to historical consolidated financial
    information, this discussion contains forward-looking statements
    that involve known and unknown risks and uncertainties,
    including statements regarding our expectations, beliefs,
    intentions or strategies regarding the future. All
    forward-looking statements included in this report are based on
    information available to us on the date hereof, and we assume no
    obligation to update any such forward-looking statements. Our
    actual results could differ materially from those discussed in
    the forward-looking statements. You are cautioned not to place
    undue reliance on these forward-looking statements. In the past,
    our operating results have fluctuated and are likely to continue
    to fluctuate in the future.
  Overview
    Markets
    and Growth Strategy
  Telecommunication network market.
   31




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Defense electronics and homeland security system
    markets.
      Growth through acquisitions.
   32




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Seasonality
    Critical
    Accounting Policies
  General
    Revenue
    Recognition
    Allowance
    for Doubtful Accounts
    Warranty
    Reserves
   33




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Inventory
    Valuation
    Stock-Based
    Compensation
      No. D-32
   34




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Deferred
    Taxes
    Long-Lived
    Assets
    Business
    Combinations
      35




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##### Table of Contents



Results
    of Operations
    Year Ended December 31,2006


2005


2004(In thousands)Revenues:Product revenues

$
60,956


$
47,119


$
32,330Development fees


1,270



1,616



832Total revenues


62,226



48,735



33,162Costs and expenses:Cost of product revenues


43,771



33,134



22,389Cost of product revenues,
    amortization of intangible assets


449



452



187Research and development


8,856



6,488



4,957Selling, general and administrative


12,689



9,327



7,527Transaction costs


200



851



In-process research and development










320Amortization of intangible assets


156



179



182Restructuring charges, net






(46
)


2,895Impairment of long-lived assets










389Recovery on building sublease










(359
)Amortization of deferred stock
    compensation










204Total costs and expenses


66,121



50,385



38,691Loss from operations


(3,895
)


(1,650
)


(5,529
)Interest and other income, net


2,648



776



1,125Loss before provision for income
    taxes


(1,247
)


(874
)


(4,404
)Provision for income taxes


97







Net loss

$
(1,344
)

$
(874
)

$
(4,404
)   36




---



##### Table of Contents



Year Ended December 31,2006


2005


2004(As a percentage of total revenues)Revenues:Product revenues


98.0
%


96.7
%


97.5
%Development fees


2.0



3.3



2.5Total revenues


100.0



100.0



100.0Costs and expenses:Cost of product revenues


70.3



68.0



67.5Cost of product revenues,
    amortization of intangible assets


0.7



0.9



0.6Research and development


14.2



13.3



14.9Selling, general and administrative


20.4



19.1



22.7Transaction costs


0.3



1.7



In-process research and development










1.0Amortization of intangible assets


0.3



0.5



0.5Restructuring charges, net






(0.1
)


8.7Impairment of long-lived assets










1.2Recovery on building sublease










(1.1
)Amortization of deferred stock
    compensation










0.7Total costs and expenses


106.3



103.4



116.7Loss from operations


(6.3
)


(3.4
)


(16.7
)Interest and other income, net


4.3



1.6



3.4Loss before provision for income
    taxes


(2.0
)


(1.8
)


(13.3
)Provision for income taxes


0.2







Net loss


(2.2
)%


(1.8
)%


(13.3
)%   Results
    of Operations
  Year
    ended December 31, 2006 compared to year ended
    December 31, 2005
  Total
    revenues
  Year EndedDecember 31,2006


2005


% Change(In thousands)Total revenues

$
62,226


$
48,735



27.7
%Product revenues

$
60,956


$
47,119



29.4
%Development fees

$
1,270


$
1,616



(21.4
)%      37




---



##### Table of Contents



Cost of
    product revenues
  Year Ended December 31,2006


2005


% Change(In thousands)Cost of product revenues

$
43,771


$
33,134



32.1
%Percentage of revenues


70.3
%


68.0
%         Research
    and development expenses
  Year Ended December 31,2006


2005


% Change(In thousands)Research and development expenses

$
8,856


$
6,488



36.5
%Percentage of revenues


14.2
%


13.3
%    38




---



##### Table of Contents



Selling,
    general and administrative expenses
  Year Ended December 31,2006


2005


% Change(In thousands)Selling, general and
    administrative expenses

$
12,689


$
9,327



36.0
%Percentage of revenues


20.4
%


19.1
%         Transaction
    costs
  Year EndedDecember 31,2006


2005


% Change(In thousands)Transaction costs

$
200


$
851



(76.5
)%       Amortization
    of intangible assets
  Year EndedDecember 31,2006


2005


% Change(In thousands)Cost of product revenues,
    amortization of intangible assets

$
449


$
452



(0.7
)%Amortization of intangible assets

$
156


$
179



(12.8
)%    39




---



##### Table of Contents



Restructuring
    charges, net
  Year EndedDecember 31,2006


2005


% Change(In thousands)Restructuring charges, net

$



$
(46
)


(100.0
)%     Interest
    and other income, net
  Year EndedDecember 31,2006


2005


% Change(In thousands)Interest and other income, net

$
2,648


$
776



241.2
%       Year
    ended December 31, 2005 compared to year ended
    December 31, 2004
  Total
    revenues
  Year EndedDecember 31,2005


2004


% Change(In thousands)Total revenues

$
48,735


$
33,162



47.0
%Product revenues

$
47,119


$
32,330



45.7
%Development fees

$
1,616


$
832



94.2
%    40




---



##### Table of Contents



10-15%
    Cost of
    product revenues
  Year Ended December 31,2005


2004


% Change(In thousands)Cost of product revenues

$
33,134


$
22,389



48.0
%Percentage of revenues


68.0
%


67.5
%       Research
    and development expenses
  Year Ended December 31,2005


2004


% Change(In thousands)Research and development expenses

$
6,488


$
4,957



30.9
%Percentage of revenues


13.3
%


14.9
%     Selling,
    general and administrative expenses
  Year Ended December 31,2005


2004


% Change(In thousands)Selling, general and
    administrative expenses

$
9,327


$
7,527



23.9
%Percentage of revenues


19.1
%


22.7
%    41




---



##### Table of Contents



Transaction
    costs
  Year EndedDecember 31,2005


2004


% Change(In thousands)Transaction costs

$
851


$




     In-process
    research and development
  Year EndedDecember 31,2005


2004


% Change(In thousands)In-process research and development

$



$
320



(100.0
)%     Amortization
    of intangible assets
  Year EndedDecember 31,2005


2004


% Change(In thousands)Cost of product revenues,
    amortization of intangible assets

$
452


$
187



141.7
%Amortization of intangible assets

$
179


$
182



(1.6
)%      42




---



##### Table of Contents



Restructuring
    charges, net
  Year EndedDecember 31,2005


2004


% Change(In thousands)Restructuring charges, net

$
(46
)

$
2,895



101.6
%       Impairment
    of long-lived assets
  Year EndedDecember 31,2005


2004


% Change(In thousands)Impairment of long-lived assets

$



$
389



(100.0
)%   held-for-sale held-for-sale
  Loss
    (recovery) on building sublease
  Year EndedDecember 31,2005


2004


% Change(In thousands)Loss (recovery) on building
    sublease

$



$
(359
)


(100.0
)%     Amortization
    of deferred stock compensation
  Year EndedDecember 31,2005


2004


% Change(In thousands)Amortization of deferred stock
    compensation

$



$
204



(100.0
)%    43




---



##### Table of Contents



Interest
    and other income, net
  Year EndedDecember 31,2005


2004


% Change(In thousands)Interest expense

$



$
19



(100.0
)%Interest and other income, net

$
776


$
1,144



(32.2
)%       held-for-sale
  Liquidity
    and Capital Resources
    Year Ended December 31,2006


2005


2004(In thousands)Net cash provided by (used in)
    operating activities

$
2,776


$
(7,036
)

$
(4,822
)Net cash provided by (used in)
    investing activities


(29,343
)


5,758



1,751Net cash provided by financing
    activities


44,287



4,926



1,471Cash, cash equivalents, restricted
    cash and short-term investments at end of period

$
67,848


$
22,440


$
25,137        44




---



##### Table of Contents



Payment Due by PeriodLess Than








More ThanTotal


1 Year


1-3 Years


3-5 Years


5 Years(In thousands)Contractual
    Obligations:Operating lease obligations

$
2,454


$
614


$
1,572


$
268


$
Purchase obligations


4,028



4,028











Total

$
6,482


$
4,642


$
1,572


$
268


$
     Other
    Long-Term Liabilities
   45




---



##### Table of Contents



Years Ending December 31,

Deferred Gain(In thousands)2007


1542008


1542009


77Total minimum payments required

$
385   Recent
    Accounting Pronouncements
  instrument-by-instrument
       46




---



##### Table of Contents



06-3, 06-3, 06-3
    Item 7A.
    Qualitative
    and Quantitative Disclosures about Market Risk  Qualitative
    and Quantitative Disclosures about Market Risk
     47




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageNumberReport of
    Independent Registered Public Accounting Firm


49Consolidated
    Balance Sheets


50Consolidated
    Statements of Operations


51Consolidated
    Statements of Changes in Stockholders Equity


52Consolidated
    Statements of Cash Flows


53Notes to
    Consolidated Financial Statements


54  48




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM             Internal Control 
    Integrated Framework
  Burr,
    Pilger, & Mayer LLP
    49




---



##### Table of Contents



ENDWAVE
    CORPORATION



CONSOLIDATED
    BALANCE SHEETS  December 31,2006


2005(In thousands, except share and per share data)ASSETSCurrent assets:Cash and cash equivalents

$
26,176


$
8,456Short-term investments


41,411



13,959Accounts receivable, net of
    allowance for doubtful accounts of $131 in 2006 and $296 in 2005


8,713



10,487Inventories


17,127



13,448Other current assets


640



560Total current assets


94,067



46,910Property and equipment, net


2,024



1,321Other assets


110



97Restricted cash


261



25Goodwill and intangible assets, net


4,191



4,796Total assets

$
100,653


$
53,149LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
4,280


$
2,954Accrued warranty


2,928



3,257Accrued compensation


2,652



2,494Restructuring liabilities






20Other current liabilities


1,164



956Total current liabilities


11,024



9,681Other long-term liabilities


231



385Total liabilities


11,255



10,066Commitments and contingencies
    (Note 10)Stockholders equity:Convertible preferred stock,
    $0.001 par value; 5,000,000 shares authorized; 300,000
    and zero shares issued and outstanding in 2006 and 2005,
    respectively






Common stock, $0.001 par
    value; 100,000,000 shares authorized; 11,556,946 and
    11,358,816 shares issued and outstanding in 2006 and 2005,
    respectively


12



11Additional paid-in capital


357,203



309,583Treasury stock, at cost
    (39,150 shares in 2006 and 2005, respectively)


(79
)


(79
)Accumulated other comprehensive
    loss


(25
)


(63
)Accumulated deficit


(267,713
)


(266,369
)Total stockholders equity


89,398



43,083Total liabilities and
    stockholders equity

$
100,653


$
53,149    50




---



##### Table of Contents



ENDWAVE
    CORPORATION



CONSOLIDATED
    STATEMENTS OF OPERATIONS  Year Ended December 31,2006


2005


2004(In thousands, except share and per share data)Revenues:Product revenues ($0, $61, and $86
    from affiliate, respectively)

$
60,956


$
47,119


$
32,330Development fees


1,270



1,616



832Total revenues


62,226



48,735



33,162Costs and expenses:Cost of product revenues ($0, $39
    and $51 related to revenues from affiliate, respectively)**


43,771



33,134



22,389Cost of product revenues,
    amortization of intangible assets


449



452



187Research and development**


8,856



6,488



4,957Selling, general and
    administrative**


12,689



9,327



7,527Transaction costs


200



851



In-process research and development










320Amortization of intangible assets


156



179



182Restructuring charges, net






(46
)


2,895Impairment of long-lived assets










389Recovery on building sublease










(359
)Amortization of deferred stock
    compensation*










204Total costs and expenses


66,121



50,385



38,691Loss from operations


(3,895
)


(1,650
)


(5,529
)Interest and other income, net


2,648



776



1,144Interest expense










(19
)Loss before provision for income
    taxes


(1,247
)


(874
)


(4,404
)Provision for income taxes


97







Net loss

$
(1,344
)

$
(874
)

$
(4,404
)Basic and diluted net loss per
    share

$
(0.12
)

$
(0.08
)

$
(0.45
)Shares used in computing basic and
    diluted net loss per share


11,429,860



10,891,431



9,824,633* Amortization of deferred
    stock compensation:Cost of product revenues

$



$



$
109Research and development










44Selling, general and administrative










51$



$



$
204** Includes the following
    amounts related to stock-based compensation:Cost of product revenues

$
435


$



$
Research and development


540







Selling, general and administrative


2,337







$
3,312


$



$
    51




---



##### Table of Contents



ENDWAVE
    CORPORATION



CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY  AccumulatedShares of





Shares of





Additional





Deferred


OtherPreferred


Preferred


Common


Common


Paid-In


Treasury


Stock


Comprehensive


AccumulatedStock


Stock


Stock


Stock


Capital


Stock


Compensation


Income (Loss)


Deficit


Total(In thousands, except share data)Balance as of December 31, 2003





$




9,347,585


$
9


$
302,427


$
(79
)

$
(221
)

$
(2
)

$
(261,091
)

$
41,043Unrealized gain on short-term
    investments






























(28
)






(28
)Net loss


































(4,404
)


(4,404
)Comprehensive loss






































(4,432
)Exercise of stock options










936,991



1



2,047



















2,048Amortization of deferred stock
    compensation


























204











204Reversal of deferred stock
    compensation due to forfeited options


















(17
)






17











Issuance of common stock under
    employee stock purchase plan










215,368







201



















201Balance as of December 31, 2004










10,499,944



10



304,658



(79
)






(30
)


(265,495
)


39,064Unrealized loss on short-term
    investments






























(33
)






(33
)Net loss


































(874
)


(874
)Comprehensive loss






































(907
)Exercise of stock options










793,444



1



4,339



















4,340Issuance of common stock under
    employee stock purchase plan and other










65,428







586



















586Balance as of December 31, 2005










11,358,816



11



309,583



(79
)






(63
)


(266,369
)


43,083Unrealized gain on short-term
    investments






























38







38Net loss


































(1,344
)


(1,344
)Comprehensive loss






































(1,306
)Exercise of stock options










120,395



1



428



















429Issuance of common stock under
    employee stock purchase plan










77,735







751



















751Stock-based compensation


















3,321



















3,321Tax benefit from employee stock
    transactions


















13



















13Issuance of preferred stock and
    warrant, net of issuance of $1,927


300,000















43,107



















43,107Balance as of December 31, 2006


300,000


$




11,556,946


$
12


$
357,203


$
(79
)

$



$
(25
)

$
(267,713
)

$
89,398    52




---



##### Table of Contents



ENDWAVE
    CORPORATION



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended December 31,2006


2005


2004(In thousands)Operating activities:Net loss

$
(1,344
)

$
(874
)

$
(4,404
)Adjustments to reconcile net loss
    to net cash provided by (used in) operating activities:In-process research and development










320Depreciation


858



1,465



1,619Stock compensation expense


3,312







Restructuring charge, net






(46
)


(4
)Recovery on building sublease










(359
)Impairment of long-lived assets
    and other










389Tax benefit from employee stock
    transactions


13







Amortization of intangible assets


605



631



369Amortization of deferred stock
    compensation










204Amortization of investments


55



148



148Loss (gain) on the sale of land
    and equipment


77



(159
)


(535
)Changes in operating assets and
    liabilities:Accounts receivable


1,774



(1,799
)


(1,493
)Inventories


(3,670
)


(5,582
)


610Other assets


(93
)


(55
)


160Accounts payable


1,326



(633
)


400Accrued warranty


(329
)


(1,231
)


(1,456
)Accrued compensation,
    restructuring and other current and long term liabilities


192



1,099



(790
)Net cash provided by (used in)
    operating activities


2,776



(7,036
)


(4,822
)Investing activities:Cash paid in business combinations






(20
)


(6,067
)Purchases of property and equipment


(1,650
)


(416
)


(460
)Proceeds on sale of property and
    equipment


12



30



5,115Decrease (increase) in restricted
    cash


(236
)


(25
)


778Purchases of short term investments


(36,319
)


(14,528
)


(15,535
)Proceeds on maturities of
    short-term investments


8,850



20,717



17,920Net cash provided by (used in)
    investing activities


(29,343
)


5,758



1,751Financing activities:Payments on notes payable










(778
)Proceeds from the sale of
    Series B preferred stock and warrants, net of issuance costs


43,107







Proceeds from exercises of stock
    options


429



4,340



2,048Proceeds from issuance of common
    stock


751



586



201Net cash provided by financing
    activities


44,287



4,926



1,471Net increase (decrease) in cash
    and cash equivalents


17,720



3,648



(1,600
)Cash and cash equivalents at
    beginning of year


8,456



4,808



6,408Cash and cash equivalents at end
    of year

$
26,176


$
8,456


$
4,808Supplemental disclosure of cash
    flow information:Cash paid for interest

$



$



$
19Non-cash
    transactions:Unrealized gain (loss) on
    investments

$
38


$
(33
)

$
(28
)Capitalized stock-based
    compensation

$
9


$



$
    53




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    The
    Company    
    integrated transceivers  combinations of
    electronic devices that combine both the transmit and receive
    functions necessary for 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.
    Summary
    of Significant Accounting Policies  Basis
    of Consolidation
    Reclassification
    Use of
    Estimates
    Revenue
    Recognition
   54




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Warranty
          2006


2005(In thousands)Balance at January 1

$
3,257


$
4,488Warranties accrued


2,150



700Warranties settled or reversed


(2,479
)


(1,931
)Balance at December 31

$
2,928


$
3,257   Allowance
    for Doubtful Accounts
   55




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Cash
    Equivalents and Short-Term Investments
    available-for-sale Available-for-sale other-than-temporary
  Restricted
    Cash
      Inventory
    Valuation
  first-in,
  Property
    and Equipment
    DepreciableLifeSoftware


3 yearsLeasehold improvements


2 to 5 yearsMachinery and equipment


5 to 7 years  56




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Goodwill
    and Intangible Assets
    Impairment
    of Long-Lived Assets
      held-for-sale
  Income
    Taxes
    Restructuring
    Charges
  No. 94-3, EITF 94-3.
  Stock-Based
    Compensation
   57




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      No. D-32
  No. 96-18,
  Research
    and Development Expenses
    Concentration
    of Risk
       58




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              Fair
    Value of Financial Instruments
   59




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31, 2006Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair Value(In thousands)Short-term investments:United States government agencies

$
2,000


$



$
(11
)

$
1,989Corporate securities


3,871







(9
)


3,862Obligations of states and
    political subdivisions


29,750











29,750Commercial paper


5,815







(5
)

$
5,810Total

$
41,436


$



$
(25
)

$
41,411Cash equivalents:Commercial paper

$
21,799


$



$



$
21,799   December 31, 2005Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair Value(In thousands)Short-term investments:United States government agencies

$
2,000


$



$
(19
)

$
1,981Corporate securities


3,122







(44
)


3,078Obligations of states and
    political subdivisions


8,900











8,900Total

$
14,022


$



$
(63
)

$
13,959Cash equivalents:Commercial paper

$
1,898


$



$



$
1,898         Comprehensive
    Income (Loss)
   60




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  available-for-sale
  Net
    Loss Per Share
        Advertising
    Costs
    Recent
    Accounting Pronouncements
  instrument-by-instrument
     61




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      06-3, 06-3, 06-3
    3.
    Goodwill
    and Other Intangible Assets  Goodwill
   62




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Intangible
    Assets
    December 31, 2006Gross Carrying


Accumulated


Net CarryingAmount


Amortization


AmountDeveloped technology

$
2,250


$
(1,088
)

$
1,162Tradename


1,060







1,060Customer relationships


780



(377
)


403Customer backlog


140



(140
)


Intangible assets

$
4,230


$
(1,605
)

$
2,625   December 31, 2005Gross Carrying


Accumulated


Net CarryingAmount


Amortization


AmountDeveloped technology

$
2,250


$
(639
)

$
1,611Tradename


1,060







1,060Customer relationships


780



(221
)


559Customer backlog


140



(140
)


Intangible assets

$
4,230


$
(1,000
)

$
3,230         Years Ending December 31,2007

$
6062008


6062009


353Total

$
1,565   4.
    Inventories    2006


2005Raw materials

$
10,174


$
10,181Work in process


1,829



1,509Finished goods


5,124



1,758Total

$
17,127


$
13,448  63




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  5.
    Property
    and Equipment    2006


2005Machinery and equipment

$
11,773


$
11,032Software


702



618Leasehold improvements


350



9312,825



11,743Less accumulated depreciation


(10,801
)


(10,422
)Property and equipment, net

$
2,024


$
1,321       6.
    Restructuring
    Charges, Net and Loss on Sublease  No. 95-3,
  Severance Benefits(In thousands)Restructuring charge

$
431Cash payments


(238
)Accrual at December 31, 2004


193Cash payments


(147
)Restructuring charge adjustment


(46
)Accrual at December 31, 2005

$
    64




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Loss
    on Sublease
    7.
    Segment
    Disclosures    2006


2005


2004United States

$
9,812



15.8
%

$
8,917



18.3
%

$
6,538



19.7
%Finland


26,332



42.3
%


23,717



48.8
%


18,545



55.9
%Italy


14,074



22.6
%


7,754



15.9
%


1,672



5.0
%Norway


7,777



12.5
%


3,762



7.7
%


155



0.5
%Rest of the world


4,231



6.8
%


4,585



9.3
%


6,252



18.9
%Total

$
62,226



100.0
%

$
48,735



100.0
%

$
33,162



100.0
%       8.
    Stock-Based
    Compensation  Prior
    to the Adoption of SFAS No. 123(R)
   65




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2005


2004Net loss, as reported

$
(874
)

$
(4,404
)Add: Stock-based employee
    compensation expense included in reported net loss






204Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for stock option awards and employee stock purchase rights


(7,969
)


(2,925
)Net loss, pro forma

$
(8,843
)

$
(7,125
)Basic and diluted net loss per
    share, as reported

$
(0.08
)

$
(0.45
)Basic and diluted net loss per
    share, pro forma

$
(0.81
)

$
(0.73
)       Impact
    of the Adoption of SFAS No. 123(R)
    Year EndedDecember 31,2006Stock-based compensation expense
    by type of award:Employee stock options

$
2,900Employee stock purchase plan


421Amounts capitalized as inventory


(9
)Total stock-based compensation


3,312Tax effect on stock-based
    compensation


Total stock-based compensation
    expense

$
3,312Impact on basic and diluted net
    loss per share

$
(0.29
)    66




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Valuation
    Assumptions
      Year Ended December 31,2006


2005


2004Stock Option PlansExpected dividend yield


0.0
%


0.0
%


0.0
%Expected stock price volatility


79
%


78
%


82
%Risk free interest rate


4.69
%


4.04
%


3.36
%Expected life of options in years


5 years



5 years



5 years     Year Ended December 31,2006


2005


2004Employee Stock Purchase
    PlanExpected dividend yield


0.0
%


0.0
%


0.0
%Expected stock price volatility


51
%


72
%


79
%Risk free interest rate


4.79
%


3.58
%


1.57
%Expected life of options in years


1.3 years



0.5 years



0.5 years    67




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Deferred
    Stock Compensation
    9.
    Stockholders
    Equity  Preferred
    Stock and Warrant Purchase Agreement
           68




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    No. 00-27, No. 98-5
  and/or
  Common
    Stock
    Shareholder
    Rights Plan
         69




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Employee
    Stock Purchase Plan
    Stock
    Option Plans
         70




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     WeightedWeighted


AverageAverage


Remaining


AggregateNumber of


Exercise


Contractual


IntrinsicShares


Price


Term (Years)


Value(In thousands)Outstanding at December 31,
    2003


1,922,161


$
3.22Options granted


705,025



10.51Options exercised


(936,991
)


2.18Options cancelled


(101,835
)


11.44Outstanding at December 31,
    2004


1,588,360



6.55Options granted


561,650



23.21Options exercised


(793,444
)


5.47Options cancelled


(63,689
)


12.18Outstanding at December 31,
    2005


1,292,877



14.19Options granted


608,300



10.25Options exercised


(120,395
)


3.55Options cancelled


(48,113
)


12.63Outstanding at December 31,
    2006


1,732,669


$
13.59



8.11


$
2,470Options vested and exercisable and
    expected to be exercisable at December 31, 2006


1,579,484


$
13.87



8.04


$
2,341Options vested and exercisable at
    December 31, 2006


874,019


$
16.62



7.70


$
1,573       Options Outstanding at December 31, 2006


Options Vested and ExercisableWeighted-Average


at December 31, 2006Weighted-Average


Remaining





Weighted-AverageRange of Exercise Price

Shares


Exercise Price


Contractual Life


Shares


Exercise Price$ 0.76-$ 2.92


174,644


$
1.65



6.19



141,629


$
1.60$ 3.20-$ 9.75


161,671


$
8.88



8.50



44,897


$
8.21$ 9.77-$ 9.77


365,439


$
9.77



9.10



66,275


$
9.77$10.20-$10.20


158,075


$
10.20



7.59



66,589


$
10.20$10.22-$10.22


184,063


$
10.22



7.09



92,495


$
10.22$10.50-$12.90


205,255


$
12.18



8.71



55,364


$
12.04$15.14-$20.32


117,121


$
16.62



8.34



40,369


$
16.79$21.47-$21.47


193,051


$
21.47



8.09



193,051


$
21.47$24.00-$45.80


163,350


$
34.33



8.56



163,350


$
34.33$56.00-$56.00


10,000


$
56.00



3.57



10,000


$
56.001,732,669


$
13.59



8.11



874,019


$
16.62    71




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##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   10.
    Commitments
    and Contingencies  Commitments
        Years Ending December 31,2007

$
6142008


6812009


4942010


3972011


268Total

$
2,454   Purchase
    Obligations
    Contingencies
    11.
    Related
    Party Transactions     72




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##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   12.
    Income
    Taxes    Years Ended December 31,2006


2005


2004Current provision:Federal

$
90


$



$
State


7







97







Deferred provision:Federal

$



$



$
State


















Total provision for income taxes

$
97


$



$
        73




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2006


2005Deferred tax assets:Net operating loss carryforwards

$
69,600


$
70,000Research credit


3,200



2,700Capitalized research and
    development


200



500Other


6,300



5,100Total deferred tax assets


79,300



78,300Valuation allowance for deferred
    tax assets


(78,200
)


(77,000
)Deferred tax assets


1,100



1,300Deferred tax liabilities:Intangible assets


(1,100
)


(1,300
)Net deferred tax assets
    (liabilities)

$



$
         2006


2005


2004Income tax benefit at statutory
    rate


(35
)%


(35
)%


(35
)%State, net of federal effect


1



(6
)


(6
)Change in valuation allowance


(42
)


41



36Alternative minimum tax


7







Nondeductible deferred compensation


77







5Effective income tax rate


8
%



%



%   13.
    401(k)
    Plan   74




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   14.
    Business
    Combinations          EITF 95-3.
 75




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Tangible assets acquired

$
1,057Liabilities assumed


(655
)In-process research and development


320Developed technology


2,250Tradename


1,060Customer relationships and backlog


920Other


1,261Goodwill


1,546Deferred tax liability


(1,692
)Total purchase price

$
6,067     Pro
    forma financial information
    Total revenues

$
36,422Net loss

$
(6,564
)Net loss per share 
    basic and diluted

$
(0.67
)    76




---



##### Table of Contents



ENDWAVE
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   16.
    Quarterly
    Financial Information (unaudited)  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In thousands, except per share data)2006:Total revenues

$
13,746


$
16,326


$
18,836


$
13,318Cost of product revenues


10,109



11,545



12,928



9,638Net income (loss)(1)


(1,178
)


(207
)


911



(870
)Basic net income (loss) per share

$
(0.10
)

$
(0.02
)

$
0.08


$
(0.08
)Diluted net income (loss) per share

$
(0.10
)

$
(0.02
)

$
0.06


$
(0.08
)2005:Total revenues

$
9,100


$
12,242


$
14,320


$
13,073Cost of product revenues


6,288



8,072



9,782



9,444Net income (loss)(2)


(847
)


318



(193
)


(152
)Basic net income (loss) per share

$
(0.08
)

$
0.03


$
(0.02
)

$
(0.01
)Diluted net income (loss) per share

$
(0.08
)

$
0.03


$
(0.02
)

$
(0.01
)     (1)
    
    Net income (loss) for the first quarter, second quarter, third
    quarter and fourth quarter of 2006 includes net charges of
    $866,000, $1.1 million, $1.1 million and
    $1.1 million, respectively, for amortization of intangible
    assets, loss on sale of fixed assets related to the relocation
    of the Companys corporate headquarters, transaction costs
    and non-cash stock compensation expense.(2)
    
    Net income (loss) for the first quarter, second quarter, third
    quarter and fourth quarter of 2005 includes net charges of
    $175,000, $106,000, $925,000 and $230,000, respectively, for a
    restructuring benefit, amortization of intangible assets and
    expensing of transaction costs for a suspended secondary
    offering. 77




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
    Managements
    Annual Report on Internal Control Over Financial
    Reporting
          Changes
    in Internal Controls Over Financial Reporting
   78




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
  Internal Control  Integrated Framework
            
    79




---



##### Table of Contents



Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Name

Age

PositionEdward A. Keible, Jr.


63


Chief Executive Officer, President
    and DirectorJohn J. Mikulsky


61


Chief Operating Officer and
    Executive Vice PresidentBrett W. Wallace


42


Chief Financial Officer, Executive
    Vice President and SecretaryEdward C.V. Winn(1)(2)(3)


68


Chairman of the Board of DirectorsJoseph J. Lazzara(1)(2)(3)


55


DirectorJohn F. McGrath, Jr.(1)


42


DirectorWade Meyercord(2)(3)


66


DirectorEric Stonestrom(2)(3)


45


Director     (1)
    
    Member of the Audit Committee(2)
    
    Member of the Nominating and Governance Committee(3)
    
    Member of the Compensation Committee  Edward A. Keible, Jr.
  John J. Mikulsky
  Brett W. Wallace
  Edward C.V. Winn
 80




---



##### Table of Contents



Joseph J. Lazzara
  John F. McGrath, Jr.
  Wade Meyercord e-commerce and/or
  Eric D. Stonestrom
 81




---



##### Table of Contents



Section 16(a)
    Beneficial Ownership Reporting Compliance
      
    one report, covering one transaction, was filed late by
    Mr. Mikulsky;
    one report, covering one transaction, was filed late by
    Mr. Keible; and
    one report, covering one transaction, was filed late by
    Ms. Biagini.  Committees
    of the Board of Directors
    Audit
    Committee
   82




---



##### Table of Contents



Compensation
    Committee
    Nominating
    and Governance Committee
    Code of
    Business Conduct and Ethics
    Endwave
    Corporation
    Attention: Investor Relations
    130 Baytech Drive
    San Jose, CA 95134
 83




---



##### Table of Contents



Item 11.
    Executive
    Compensation  COMPENSATION
    OF EXECUTIVE OFFICERS
  COMPENSATION
    DISCUSSION AND ANALYSIS
  Overview
    Role
    of Compensation Committee
  Rule 16b-3
    
    Developing compensation policies that will attract and retain
    the highest quality executives, that will clearly articulate the
    relationship of corporate performance to executive compensation
    and will reward executives for Endwaves progress;
    Proposing to the Board of Directors the adoption, amendment and
    termination of stock option plans, stock appreciation rights
    plans, pension and profit sharing plan, stock bonus plans, stock
    purchase plans, bonus plans, deferred compensation plans and
    other similar plans;
    Granting rights, participation and interests in such plans to
    eligible participants, subject in certain cases to ratification
    by the Board of Directors;
    Reviewing and approving such other compensation matters as may
    be necessary or appropriate in view of the Compensation
    Committees overall responsibility.   84




---



##### Table of Contents




    The amount of bonus to be awarded to each executive officer in
    respect of the prior years performance;
    Whether to raise, lower or maintain the executive officers
    base salary for the current year;
    The bonus targets to be set for the executive officers for the
    current year; and
    Option grants, if any, to be awarded to each executive officer.    Peer
    Company Comparisons
      Elements
    of Executive Compensation
    Base Salary:
  Annual Cash Incentive:
 85




---



##### Table of Contents



sub-par
  Stock Options:
    Other Benefits:
 86




---



##### Table of Contents



Chief
    Executive Officer Compensation
    Employment,
    Severance and Change in Control Agreements
  Executive Officer Severance and Retention
    Plan: change-of-control
  Potential
    2006 Severance and Retention Benefits assuming no Change of
    Control
    COBRA


Option


TotalName

Salary(1)


Benefits(2)


Awards(3)


BenefitEdward A. Keible, Jr.

$
712,000


$
22,014


$
111,316


$
845,330John J. Mikulsky

$
315,000


$
19,699


$
40,608


$
375,307Brett W. Wallace

$
157,500


$
11,819


$
67,950


$
237,269  87




---



##### Table of Contents



(1)
    
    Reflects 2 months salary for each full year of employment
    for Mr. Keible (24 months total), 1.5 months
    salary for each full year of employment for Mr. Mikulsky
    (15 months total) and 9 months salary for
    Mr. Wallace.(2)
    
    Reflects 2 months coverage for each full year of employment
    for Mr. Keible (24 months total), 1.5 months
    coverage for each full year of employment for Mr. Mikulsky
    (15 months total) and 9 months coverage for
    Mr. Wallace.(3)
    
    Reflects value of options accelerated in the event of
    termination without cause without a change of control. The value
    set forth above represents the difference between the option
    exercise price and the closing price of Endwaves common
    stock on December 29, 2006, multiplied by the number of
    shares as to which vesting would have been accelerated.  Potential
    2006 Severance and Retention Benefits assuming a change of
    control
    COBRA


Option


TotalName

Salary(1)


Benefits(2)


Awards(3)


BenefitEdward A. Keible, Jr.

$
1,424,000


$
22,014


$
111,316


$
1,557,330John J. Mikulsky

$
630,000


$
19,699


$
50,297


$
699,996Brett W. Wallace

$
315,000


$
11,819


$
135,900


$
462,719     (1)
    
    Reflects 4 months salary for each full year of employment
    for Mr. Keible (48 months total), 3.0 months
    salary for each full year of employment for Mr. Mikulsky
    (30 months total) and 18 months salary for
    Mr. Wallace.(2)
    
    Reflects 2 months coverage for each full year of employment
    for Mr. Keible (24 months total), 1.5 months
    coverage for each full year of employment for Mr. Mikulsky
    (15 months total) and 9 months coverage for
    Mr. Wallace.(3)
    
    Reflects value of options accelerated in the event of
    termination without cause in connection with a change of
    control. The value set forth above represents the difference
    between the option exercise price and the closing price of
    Endwaves common stock on December 29, 2006,
    multiplied by the number of shares as to which vesting would
    have been accelerated.  Transaction Incentive Plan:
 88




---



##### Table of Contents



Named
    Executive Officer Compensation
    2006
    Summary Compensation Table
  Non-EquityOption


Incentive Plan


All Other


TotalName and Principal Position

Salary(1)


Bonus(2)


Awards(3)


Compensation(4)


Compensation(5)


Compensation(6)Edward A. Keible, Jr.

$
325,631






$
431,546


$
178,000


$
10,089


$
945,266President and Chief Executive
    OfficerJohn J. Mikulsky

$
250,846






$
190,347


$
94,500


$
7,267


$
542,960Chief Operating Officerand Executive Vice PresidentBrett W. Wallace(7)

$
170,038






$
349,168


$
65,625


$
315


$
582,146Chief Financial Officer,Executive Vice President andCorporate SecretaryJulianne M. Biagini(8)

$
78,654






$
188,964






$
3,555


$
271,173Senior Vice PresidentFormerly Chief Financial Officer     (1)
    
    The amounts in this column include any salary contributed by the
    named executive officer to our 401(k) plan.(2)
    
    Bonus amounts paid in 2007 were made under our executive
    incentive plan and are included in the Non-Equity
    Incentive Plan Compensation column.(3)
    
    The amounts included in the Option Awards column
    represent the compensation cost recognized by Endwave in 2006
    related to stock option awards to named executive officers,
    computed in accordance with SFAS No. 123(R). For
    purposes of this table, the value excludes the impact of
    estimated forfeitures. For a discussion of other valuation
    assumptions, see Note 8 to our consolidated financial
    statements included elsewhere in this report.(4)
    
    The amounts in this column represent total performance-based
    bonuses earned for services rendered during 2006.(5)
    
    All Other Compensation represents group life insurance payments
    and 401(k) employer matching contributions made by Endwave for
    2006.(6)
    
    The dollar value in this column for each named executive officer
    represents the sum of all compensation reflected in the
    preceding columns.(7)
    
    Mr. Wallace joined Endwave on March 1, 2006, as
    Executive Vice President. He was promoted to Chief Financial
    Officer on April 25, 2006. Mr. Wallaces
    annualized base salary for 2006 was $210,000.(8)
    
    Ms. Biagini is currently on a leave of absence that began
    on April 25, 2006. During such leave, Ms. Biagini is
    not eligible for any compensation or benefits. However, as
    Ms. Biagini continues to serve as Endwaves
    representative on the Board of Directors of the American
    Electronics Association and its Executive Committee of the Board
    of Directors, the Compensation Committee has determined that
    Ms. Biaginis options should continue to vest during
    her leave of absence. 89




---



##### Table of Contents



Grants of
    Plan-Based Awards in Fiscal 2006 (1)
  All Other





Grant DateOption





Closing


Grant DateAwards:


Exercise or


Market


FairNumber of


Base


Price of


Value ofSecurities


Price of


Securities


Stock andEstimated Possible Payouts Under Non-Equity Incentive Plan
    Awards


Underlying


Option


Underlying


OptionThreshold


Target


Maximum


Options


Awards


Option


AwardsName

Grant Date


($)


($)


($)


(#)


($/Sh)


($/Sh)(1)


($)(2)Edward A. Keible, Jr.


2/7/06


$
0


$
356,000


$
498,400



75,000


$
9.77


$
9.57


$
476,250John J. Mikulsky


2/7/06


$
0


$
189,000


$
264,600



30,000


$
9.77


$
9.57


$
190,500Brett W. Wallace


3/1/06


$
0


$
131,250


$
183,750



120,000


$
9.32


$
10.96


$
762,000Julianne M. Biagini


2/7/06















30,000


$
9.77


$
9.57


$
190,500     (1)
    
    The exercise price for option awards is determined as the
    closing price on the day prior to grant. Therefore, the grant
    date closing price of the security underlying the option can
    differ materially, positively or negatively, from the exercise
    price of the option award.(2)
    
    The amounts included in the Grant Date Fair Value of
    Option Awards column represent the compensation cost
    recognized by Endwave in 2006 related to stock option awards to
    named executive officers, computed in accordance with
    SFAS No. 123(R). For purposes of this table, the value
    excludes the impact of estimated forfeitures. For a discussion
    of other valuation assumptions, see Note 8 to our
    consolidated financial statements.    Outstanding
    Equity Awards at December 31, 2006
  Number of Securities UnderlyingUnexercised Options(1)


Option


OptionName and Principal Position

Exercisable


Unexercisable


Exercise Price


Expiration DateEdward A. Keible, Jr.


75,000



0


$
9.77



2/6/201637,500



0


$
10.20



8/2/201442,500



0


$
10.22



2/2/201432,813



0


$
21.47



2/3/201537,500



0


$
34.89



7/31/2015John J. Mikulsky


5,860



0


$
1.17



1/30/201313,894



0


$
1.93



6/5/201330,000



0


$
9.77



2/6/201615,000



0


$
10.20



8/2/201425,000



0


$
10.22



2/2/20144,923



0


$
11.75



1/5/201115,000



0


$
21.47



2/3/201530,000



0


$
34.89



7/31/2015Brett W. Wallace


120,000



0


$
9.32



2/29/2016Julianne M. Biagini


30,000



0


$
9.77



2/6/201615,000



0


$
10.20



8/2/201425,000



0


$
10.22



2/2/201413,126



0


$
21.47



2/3/201515,000



0


$
34.89



7/31/2015  90




---



##### Table of Contents



(1)
    
    Each option vests as to 1/8 of the shares of common stock
    underlying it on the six month anniversary of the grant date,
    with the remaining seven-eighths of the grant vesting in equal
    quarterly installments over the remaining four-year vesting
    period. All options described in the above table are reflected
    as exercisable because all options granted to our executive
    officers have an early exercise feature that allows
    optionees to exercise unvested options, subject to our right to
    repurchase the unvested shares at cost upon the optionees
    termination of employment. Each option expires ten years after
    the date of grant or, if earlier, three months after termination
    of employment in most cases.  2006
    Option Exercises
    SharesAcquired


ValueName and Principal Position

Upon Exercise


Realized(1)Edward A. Keible, Jr.


51,256


$
540,952John J. Mikulsky






Brett W. Wallace






Julianne M. Biagini






     (1)
    
    The aggregate dollar amount realized upon the exercise of an
    option represents the difference between the aggregate market
    price of the shares of our common stock underlying that option
    on the date of exercise and the aggregate exercise price of the
    option.  Compensation
    of Non-Employee Directors
    Fees Paid


Option


TotalName

in Cash


Awards(1)


CompensationEdward C.V. Winn, Chairman

$
43,000


$
69,075


$
112,075Joseph J. Lazzara

$
33,000


$
90,039


$
123,039John F. McGrath

$
42,000


$
118,849


$
160,849Wade Meyercord

$
29,250


$
88,079


$
117,329Eric D. Stonestrom(2)

$
9,000


$
43,790


$
52,790     (1)
    
    The amounts included in the Option Awards column
    represent the compensation cost recognized by Endwave in 2006
    related to stock option awards to each member of our Board of
    Directors, computed in accordance with
    SFAS No. 123(R). For purposes of this table, the value
    excludes the impact of estimated forfeitures. For a discussion
    of other valuation assumptions, see Note 8 to our
    consolidated financial statements.(2)
    
    Mr. Stonestrom was appointed to the Endwave Board of
    Directors on July 19, 2006. 91




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##### Table of Contents



Board Membership Fees Payable
    to Non-Employee DirectorsNon-Employee Director Annual
    Retainer

$
20,000Board Chair Annual Retainer

$
10,000Audit Committee Chair Annual
    Retainer

$
16,000Audit Committee Member Annual
    Retainer

$
6,000Compensation Committee Chair
    Annual Retainer

$
8,000Compensation Committee Member
    Annual Retainer

$
3,000Nominating and Governance
    Committee Chair Annual Retainer

$
3,000Nominating and Governance
    Committee Member Annual Retainer

$
0Board Meeting Fee (in person)

$
1,000Board Meeting Fee (telephonic)

$
0Committee Meeting Fee (in person)

$
0Committee Meeting Fee (telephonic)

$
0     Report of
    the Compensation
    Committee1
      1
 92




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##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and
    Management    Shares BeneficiallyOwned(1)Name and Address

Number


Percent(2)Entities affiliated with Wood River


4,102,247



35.48
%Management LLC(3)c/o Arthur Steinberg, Esq,Kaye Scholer LLP425 Park AvenueNew York, NY 10022Entities affiliated with EagleRock


757,363



6.55Capital Management(4)551 Fifth Avenue, 34(th) FloorNew York, NY 10176Entities affiliated with Potomac
    Capital


1,076,586



9.31Management(5)825 Third AvenueNew York, NY 10022Entities affiliated with Oak
    Management


3,900,000



25.22Corporation, XI, LLC(6)One Gorham IslandWestport, CT 06880Pate Capital Partners, LP


800,000



6.90555 Montgomery Street, Ste. 603(7)San Francisco, CA 94111Edward A. Keible, Jr.(8)


390,550



3.38John J. Mikulsky(9)


237,664



2.06Brett W. Wallace(10)


160,000



1.38Edward C.V. Winn(11)


19,988



*Joseph J. Lazzara(12)


16,756



*John F. McGrath, Jr.(11)


13,153



*Wade Meyercord(11)


15,224



*Eric Stonestrom(11)


3,333All directors and executive
    officers as a group (9 persons)(13)


856,668



7.40     *
    
    Less than one percent.(1)
    
    This table is based upon information supplied to us by our
    officers, directors and principal stockholders and upon any
    Schedules 13D or 13G filed with the Securities and Exchange.
    Unless otherwise indicated in the footnotes to this table, and
    subject to community property laws where applicable, we believe
    that each of the 93




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##### Table of Contents



stockholders named in this table has sole voting and investment
    power with respect to the shares indicated as beneficially owned.(2)
    
    Applicable percentages are based on 11,563,209 shares
    outstanding on February 16, 2007, adjusted as required by
    rules promulgated by the Securities and Exchange Commission.(3)
    
    Includes 1,980,071 shares held by Wood River Partners, L.P.
    (the Partnership) and 2,122,176 shares held by
    Wood River Partners Offshore, Ltd. (the Offshore
    Fund). Wood River Capital Management, L.L.C. (the
    Adviser) is an investment adviser and is the
    management company for the partnership and the Offshore Fund and
    as such may be deemed to beneficially own 4,102,247 shares.
    Wood River Associates, L.L.C. (the General Partner)
    is the general partner of the Partnership and as such may be
    deemed to beneficially own 2,122,176 shares. Pursuant to an
    order of the United States District Court for the Southern
    District of New York dated October 13, 2005, Arthur
    Steinberg, Esq. (the Receiver) was appointed as
    the Receiver of the Wood River Entities. Due to the powers and
    authority conveyed upon the Receiver by the order, the Receiver
    may be deemed to share beneficial ownership of the shares.(4)
    
    The shares are held by EagleRock Master Fund, L.P.
    (ERMF) and EagleRock Institutional Partners LP
    (ERIP). EagleRock Capital Management, LLC
    (EagleRock) is the investment manager of ERMF and
    ERIP and has sole power to vote and dispose of the shares held
    by ERMF and ERIP and may be deemed to beneficially own such
    shares. Nader Tavakoli is the Manager of EagleRock and may
    direct the voting and disposition of the shares held by ERMF and
    ERIP and may be deemed to beneficially own such shares.(5)
    
    Potomac Capital Partners LP is a private investment partnership
    formed under the laws of the State of Delaware. Potomac Capital
    Management LLC is the General Partner of Potomac Capital Parters
    LP. Mr. Paul J. Solit is the Managing Member of Potomac
    Capital Management LLC.(6)
    
    300,000 shares of Series B Stock are held of record by
    Oak Investment Partners XI, Limited Partnership, a Delaware
    limited partnership (Oak Investment Partners XI,).
    Oak Associates XI LLC, a Delaware limited liability company
    (Oak Associates XI), is the general partner of Oak
    Investment Partners XI and as such may be deemed to beneficially
    own the shares held by Oak Investment XI. Oak Management
    Corporation, a Delaware corporation (Oak
    Management), is the investment advisor to Oak Investment
    Partners XI and as such may be deemed to beneficially own the
    shares held by Oak Investment XI. Bandel L. Carano, Gerald R.
    Gallagher, Edward F. Glassmeyer, Fredric W. Harman, Ann H.
    Lamont and David B. Walrod are general partners, managing
    members, shareholders, directors
    and/or
    officers of Oak Investment XI and as such may be deemed to
    beneficially own the shares held by Oak Investment XI.  The number of shares of Series B Stock beneficially owned
    by Oak Investment XI includes 90,000 shares of
    Series B Stock issuable within 60 days of the date of
    this table upon exercise of a warrant held by Oak Investment XI.
    The number of shares of common stock beneficially owned by Oak
    Investment XI includes 3,900,000 shares of common issuable
    within 60 days of the date of this table upon conversion of
    390,000 shares of Series B Stock beneficially owned by
    Oak Investment XI.  (7)
    
    The shares are beneficially held by Pate Capital Partners, LP .
    Bruce A. Pate, General Partner has the sole power to vote or
    direct the vote of said shares. In addition, Mr. Bruce A.
    Pate has the sole power to dispose or to direct the disposition
    of said shares.(8)
    
    Includes 326,313 shares issuable upon exercise of options
    exercisable within 60 days of the date of this table. If
    exercised in full within 60 days of the date of this table,
    197,857 shares would be subject to repurchase by us.
    Includes 4,857 shares held in escrow and that are subject
    to repurchase. Also includes 59,380 shares held by the
    Keible Family Trust, of which Mr. Keible is co-trustee.(9)
    
    Includes 179,677 shares issuable upon exercise of options
    exercisable within 60 days of the date of this table. If
    exercised in full within 60 days of the date of this table,
    82,316 shares would be subject to repurchase by us. Also
    includes 600 shares owned by Mr. Mikulskys
    daughter.(10)
    
    Includes 160,000 shares issuable upon exercise of options
    exercisable within 60 days of the date of this table. If
    exercised in full within 60 days of the date of this table,
    130,000 shares would be subject to repurchase by us.(11)
    
    Represents shares issuable upon exercise of options exercisable
    within 60 days of the date of this table. 94




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##### Table of Contents



(12)
    
    Includes 15,756 shares issuable upon exercise of options
    exercisable within 60 days of the date of this table. Also
    includes 1,000 shares held by the Joseph J. and Nancy B.
    Lazzara Family Trust, of which Mr. Lazzara is co-trustee.(13)
    
    See footnotes 8 through 12 above, as applicable. Includes
    733,444 shares issuable upon exercise of options
    exercisable within 60 days of the date of this table. If
    exercised in full within 60 days of the date of this table,
    410,173 shares would be subject to a repurchase right by us.  Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence  Indemnification
    Transactions
    with Northrop Grumman Corporation
        Related-Person
    Transactions policy and Procedures
   95




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##### Table of Contents



Item 14.
    Principal
    Accountant Fees and Services    2005


2006Audit Fees(1)

$
464


$
558Tax Fees(2)


0



0All Other Fees(3)


96



20Total

$
560


$
578     (1)
    
    Audit fees represent fees for professional services provided in
    connection with the audit of our annual consolidated financial
    statements and review of our quarterly condensed consolidated
    financial statements.(2)
    
    Tax fees consisted primarily of income tax compliance and
    related services.(3)
    
    Represents fees for services provided in connection with other
    miscellaneous items not otherwise included in the categories
    above including $20,000 primarily related to the issuance of
    preferred shares in 2006 and $96,000 related to the filing of a
    registration statement on
    Form S-3
    in fiscal 2005.    Audit
    Committee Pre-Approval Policy
   96




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##### Table of Contents



Item 15.
    Exhibits
    and Financial Statement Schedules                          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, 2000.3
.4(9)

Certificate of Designation for
    Series A Junior Participating Preferred Stock.3
.5(12)

Certificate of Designation for
    Series B Preferred Stock.4
.1(1)

Form of specimen Common Stock
    Certificate.4
.2(8)

Amended and Restated Registration
    Rights Agreement by and between Northrop Grumman
    Space & Mission Systems Corp. and the Registrant dated
    September 14, 2005.4
.3(9)

Rights Agreement dated as of
    December 1, 2005 between Endwave Corporation and
    Computershare Trust Company, Inc.4
.4(9)

Form of Rights Certificate.4
.5(12)

Preferred Stock and Warrant
    Purchase Agreement by and between Oak Investment Partners XI,
    Limited Partnership and the Registrant dated April 24, 2006.4
.6(12)

Warrant issued to Oak Investment
    Partners XI, Limited Partnership.10
.1(1)

Form of Indemnity Agreement
    entered into by the Registrant 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(10)*

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(4),(11)*

Description of Compensation
    Payable to Non-Employee Directors.10
.12(11)*

2006 Base Salaries for Named
    Executive Officers. 97




---



##### Table of Contents



Number

Description10
.13(11)*

2006 Executive Incentive
    Compensation Plan.10
.14(5)*

Executive Officer Severance and
    Retention 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 the Registrant 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 the Registrant dated March 31, 2000.10
.19(6)

Development Agreement by and
    between Nokia and the Registrant dated August 14, 2003.10
.20(7)

Purchase Agreement by and between
    Nokia Corporation and the Registrant dated December 31,
    2003.10
.22(2)

Amended and Restated Supply
    Agreement by and between Northrop Grumman Space and Mission
    Systems Corp. and the Registrant dated March 26, 2004.10
.23(3)

Settlement and Release Agreement
    by and between Northrop Grumman Space & Mission Systems
    Corp. and the Registrant dated March 23, 2005.10
.24(10)

Purchase Agreement between Nokia
    and Endwave Corporation dated January 1, 2006.10
.25(10)

Frame Purchase Agreement by and
    between Endwave Corporation and Siemens Mobile Communications
    Spa dated January 16, 2006.10
.26(13)

Lease Agreement by and between
    Legacy Partners I San Jose, LLC and the Registrant dated
    May 24, 2006.10
.27(13)

Supply Agreement by and between
    Northrop Grumman Space and Mission Systems Corp. and the
    Registrant dated July 25, 2006.10
.28

Services Agreement by and between
    Hana Microelectronics Co., Ltd. and the Registrant dated
    October 15, 2006.23
.1

Consent of Burr, Pilger &
    Mayer LLP, independent registered public accounting firm.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 the Registrants Registration
    Statement on
    Form S-1
    (Registration
    No. 333-41302)
    and incorporated herein by reference.(2)
    
    Previously filed with the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2004 and incorporated
    herein by reference.(3)
    
    Previously filed as an exhibit to the Registrants Current
    Report on
    Form 8-K
    filed on March 25, 2005 and incorporated herein by
    reference.(4)
    
    Previously filed as an exhibit to the Registrants Current
    Report on
    Form 8-K
    filed on February 3, 2005 and incorporated herein by
    reference.(5)
    
    Previously filed with the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2003 and incorporated
    herein by reference.(6)
    
    Previously filed with an amendment to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2003 filed on
    August 4, 2004 and incorporated herein by reference.(7)
    
    Previously filed with an amendment to the Registrants
    Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2003 filed on
    August 4, 2004 and incorporated herein by reference.(8)
    
    Previously filed as an exhibit to the Registrants Current
    Report on
    Form 8-K
    filed on September 15, 2005 and incorporated herein by
    reference. 98




---



##### Table of Contents



(9)
    
    Previously filed as an exhibit to the Registrants Current
    Report on
    Form 8-K
    filed on December 5, 2005 and incorporated herein by
    reference.(10)
    
    Previously filed as an exhibit with the Registrants Annual
    Report on
    Form 10-K
    for the fiscal year ended December 31, 2005 and
    incorporated herein by reference.(11)
    
    Previously filed as an exhibit to the Registrants Current
    Report on
    Form 8-K
    filed on February 8, 2006 and incorporated herein by
    reference.(12)
    
    Previously filed as an exhibit to the Registrants Current
    Report on
    Form 8-K
    filed on April 26, 2006 and incorporated herein by
    reference.(13)
    
    Previously filed with an amendment to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006 and incorporated herein
    by reference.*
    
    Indicates a management contract or compensatory plan or
    arrangement.
    
    Confidential treatment has been requested for a portion of this
    exhibit.   99




---



##### Table of Contents



ENDWAVE
    CORPORATION
  SCHEDULE II
  VALUATION
    AND QUALIFYING ACCOUNTS
    Additions(Reductions)Balance at


Charged to


Deductions


BalancesBeginning


Costs and


and


at End ofof Period


Expense


Write-offs


Period(In thousands)Year ended December 31, 2006

$
296


$
(124
)

$
(41
)

$
131Year ended December 31, 2005

$
243


$
59


$
(6
)

$
296Year ended December 31, 2004

$
284


$
66


$
(107
)

$
243  100




---



##### Table of Contents



SIGNATURES      By:
    /s/  BRETT
    W. WALLACE     POWER OF
    ATTORNEY
  KNOW ALL PERSONS BY THESE PRESENTS, attorneys-in-fact, Form 10-K, attorneys-in-fact,
  Signatures

Title

Date/s/  EDWARD
    A.
    KEIBLE, JR.Edward
    A. Keible, Jr.

President, Chief Executive Officer
    and Director (Principal Executive Officer)

March 13, 2007/s/  EDWARD
    C.V. WINNEdward
    C.V. Winn

Chairman of the Board of Directors

March 13, 2007/s/  JOSEPH
    J. LAZZARAJoseph
    J. Lazzara

Director

March 13, 2007/s/  JOHN
    F.
    MCGRATH, JR.John
    F. McGrath, Jr.

Director

March 13, 2007/s/  WADE
    MEYERCORDWade
    Meyercord

Director

March 13, 2007/s/  ERIC
    STONESTROMEric
    Stonestrom

Director

March 13, 2007  101




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##### Table of Contents



INDEX TO
    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, 2000.3
.4(9)

Certificate of Designation for
    Series A Junior Participating Preferred Stock.3
.5(12)

Certificate of Designation for
    Series B Preferred Stock.4
.1(1)

Form of specimen Common Stock
    Certificate.4
.2(8)

Amended and Restated Registration
    Rights Agreement by and between Northrop Grumman
    Space & Mission Systems Corp. and the Registrant dated
    September 14, 2005.4
.3(9)

Rights Agreement dated as of
    December 1, 2005 between Endwave Corporation and
    Computershare Trust Company, Inc.4
.4(9)

Form of Rights Certificate.4
.5(12)

Preferred Stock and Warrant
    Purchase Agreement by and between Oak Investment Partners XI,
    Limited Partnership and the Registrant dated April 24, 2006.4
.6(12)

Warrant issued to Oak Investment
    Partners XI, Limited Partnership.10
.1(1)

Form of Indemnity Agreement
    entered into by the Registrant 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(10)*

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(4),(11)*

Description of Compensation
    Payable to Non-Employee Directors.10
.12(11)*

2006 Base Salaries for Named
    Executive Officers.10
.13(11)*

2006 Executive Incentive
    Compensation Plan.10
.14(5)*

Executive Officer Severance and
    Retention 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 the Registrant 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 the Registrant dated March 31, 2000.10
.19(6)

Development Agreement by and
    between Nokia and the Registrant dated August 14, 2003.10
.20(7)

Purchase Agreement by and between
    Nokia Corporation and the Registrant dated December 31,
    2003.10
.22(2)

Amended and Restated Supply
    Agreement by and between Northrop Grumman Space and Mission
    Systems Corp. and the Registrant dated March 26, 2004.10
.23(3)

Settlement and Release Agreement
    by and between Northrop Grumman Space & Mission Systems
    Corp. and the Registrant dated March 23, 2005.10
.24(10)

Purchase Agreement between Nokia
    and Endwave Corporation dated January 1, 2006.10
.25(10)

Frame Purchase Agreement by and
    between Endwave Corporation and Siemens Mobile Communications
    Spa dated January 16, 2006.10
.26(13)

Lease Agreement by and between
    Legacy Partners I San Jose, LLC and the Registrant dated
    May 24, 2006.




---



##### Table of Contents



Number

Description10
.27(13)

Supply Agreement by and between
    Northrop Grumman Space and Mission Systems Corp. and the
    Registrant dated July 25, 2006.10
.28

Services Agreement by and between
    Hana Microelectronics Co., Ltd. and the Registrant dated
    October 15, 2006.23
.1

Consent of Burr, Pilger &
    Mayer LLP, independent registered public accounting firm.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 the Registrants Registration
    Statement on Form
    S-1
    (Registration
    No. 333-41302)
    and incorporated herein by reference.(2)
    
    Previously filed with the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2004 and incorporated
    herein by reference.(3)
    
    Previously filed as an exhibit to the Registrants Current
    Report on
    Form 8-K
    filed on March 25, 2005 and incorporated herein by
    reference.(4)
    
    Previously filed as an exhibit to the Registrants Current
    Report on
    Form 8-K
    filed on February 3, 2005 and incorporated herein by
    reference.(5)
    
    Previously filed with the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2003 and incorporated
    herein by reference.(6)
    
    Previously filed with an amendment to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2003 filed on
    August 4, 2004 and incorporated herein by reference.(7)
    
    Previously filed with an amendment to the Registrants
    Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2003 filed on
    August 4, 2004 and incorporated herein by reference.(8)
    
    Previously filed as an exhibit to the Registrants Current
    Report on
    Form 8-K
    filed on September 15, 2005 and incorporated herein by
    reference.(9)
    
    Previously filed as an exhibit to the Registrants Current
    Report on
    Form 8-K
    filed on December 5, 2005 and incorporated herein by
    reference.(10)
    
    Previously filed as an exhibit with the Registrants Annual
    Report on
    Form 10-K
    for the fiscal year ended December 31, 2005 and
    incorporated herein by reference.(11)
    
    Previously filed as an exhibit to the Registrants Current
    Report on
    Form 8-K
    filed on February 8, 2006 and incorporated herein by
    reference.(12)
    
    Previously filed as an exhibit to the Registrants Current
    Report on
    Form 8-K
    filed on April 26, 2006 and incorporated herein by
    reference.(13)
    
    Previously filed with an amendment to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006 and incorporated herein
    by reference.*
    
    Indicates a management contract or compensatory plan or
    arrangement.
    
    Confidential treatment has been requested for a portion of this
    exhibit.