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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-KSB
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 for the fiscal year ended March 31, 2007,
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 for the transition period from  to
.
 Commission File No. 0-12719
 GIGA-TRONICS INCORPORATED
  California
    
    94-2656341(State or other jurisdiction of incorporation 
or organization)
    
    (I.R.S. Employer Identification No.)4650 Norris Canyon Road, San Ramon, CA
    
    94583(Address of principal executive offices)
    
    (Zip Code)
 (925) 328-4650
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, No par value
    
    The NASDAQ Stock Market LLC
  o
  þ o
 þ
  o þ




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PART OF FORM 10-KSB
    
    DOCUMENTPART III
    
    Registrants PROXY STATEMENT for
its 2007 Annual Meeting of Shareholders to be filed no later than 120 days after the close of the fiscal
year ended March 31, 2007.
 o þ
 2




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TABLE OF CONTENTS  PART IITEM 1. DESCRIPTION OF BUSINESSITEM 2. DESCRIPTION OF PROPERTYITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERSITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONITEM 7. FINANCIAL STATEMENTSITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURESITEM 8A. CONTROLS AND PROCEDURESITEM 8B. OTHER INFORMATIONPART IIIITEM 9. DIRECTOR, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACTITEM 10. EXECUTIVE COMPENSATIONITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERSITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEITEM 13. EXHIBITSITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESSIGNATURESINDEX TO EXHIBITSEXHIBIT 21EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2    Table of Contents  
 PART I
  
 ITEM 1. DESCRIPTION OF BUSINESS
 General
       Industry Segments
  3




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Products and Markets
 Giga-tronics Instrument Division
  ASCOR Inc.
  Microsource Inc.
  Sources and Availability of Raw Materials and Components
   Patents and Licenses
    4




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Seasonal Nature of Business
  Working Capital Practices
  Importance of Limited Number of Customers
         5




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Backlog of Orders
   Competition
       6




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Sales and Marketing
  Product Development
    Manufacturing
  Environment
  Employees
  Information about Foreign Operations
  Geographic Distribution of Sales(Dollars in thousands)
    
    2007
    
    
    Percent
    
    
    2006
    
    
    PercentDomestic
    
    $
    14,218
    
    
    
    79.0
    %
    
    $
    11,549
    
    
    
    56.0
    %International
    
    
    3,830
    
    
    
    21.0
    %
    
    
    9,071
    
    
    
    44.0
    %
  7




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Certain Factors Which May Adversely Affect Future Operations Or An Investment In
Giga-tronics
 Business climate is volatile
  Giga-tronics sales are substantially dependent on the wireless industry
  Giga-tronics markets involve rapidly changing technology and standards
  Liquidity
  Giga-tronics common stock price is volatile
   8




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Performance problems in our products or problems arising from the use of our products together
with other vendors products may harm our business and reputation
  Competition
  Giga-tronics acquisitions may not be effectively integrated and their integration may be costly
  
 ITEM 2. DESCRIPTION OF PROPERTY
    9




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ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
 Common Stock Market Prices
  2007
    
    
    High
    
    
    Low
    
    
    2006
    
    
    High
    
    
    LowFirst quarter
    
    
    (3/26-6/24
    )
    
    $
    2.89
    
    
    $
    1.78
    
    
    
    (3/27-6/25
    )
    
    $
    4.73
    
    
    $
    3.20Second quarter
    
    
    (6/25-9/30
    )
    
    
    1.94
    
    
    
    1.29
    
    
    
    (6/26-9/24
    )
    
    
    7.87
    
    
    
    3.59Third quarter
    
    
    (10/1-12/30
    )
    
    
    2.45
    
    
    
    1.39
    
    
    
    (9/25-12/24
    )
    
    
    5.34
    
    
    
    2.26Fourth quarter
    
    
    (12/31-3/31
    )
    
    
    2.97
    
    
    
    1.83
    
    
    
    (12/25-3/25
    )
    
    
    3.57
    
    
    
    2.49
   10




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Equity Compensation Plan Information
  Equity Compensation Plan InformationNo. of securities to be
    
    Weighted average
    
    No. of securities remaining availableissued upon exercise of
    
    exercise price of
    
    for future issuance under equityoutstanding option,
    
    outstanding option,
    
    compensation plans (excludingwarrants and rights
    
    warrants and rights
    
    securities reflected in column (a))Plan category
    
    (a)
    
    (b)
    
    (c)Equity compensation plans approved
by securities holders
    
    
    840,900
    
    
    $
    2.0558
    
    
    
    474,975Equity compensation plans not
approved by securities holders
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aTotal
    
    
    840,900
    
    
    $
    2.0558
    
    
    
    474,975
 Selected Financial Data
  11




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##### Table of Contents



SELECTED CONSOLIDATED FINANCIAL DATA
 Summary of Operations:
    
    Years Ended(In thousands except per share data)
    
    March 31, 2007
    
    
    March 25, 2006
    
    
    March 26, 2005
    
    
    March 27, 2004
    
    
    March 29, 2003Net sales
    
    $
    18,048
    
    
    $
    20,620
    
    
    $
    21,477
    
    
    $
    17,491
    
    
    $
    20,822Gross profit
    
    
    7,546
    
    
    
    8,300
    
    
    
    9,598
    
    
    
    4,736
    
    
    
    6,187Operating expenses
    
    
    9,548
    
    
    
    9,316
    
    
    
    8,760
    
    
    
    9,179
    
    
    
    10,412Interest income, net
    
    
    108
    
    
    
    32
    
    
    
    
    
    
    
    7
    
    
    
    60Pre-tax (loss) income from continuing
operations before income taxes
    
    
    (1,894
    )
    
    
    (984
    )
    
    
    849
    
    
    
    (4,440
    )
    
    
    (4,328
    )Provision for income taxes
    
    
    1
    
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    4,098(Loss) income from continuing operations
    
    
    (1,895
    )
    
    
    (988
    )
    
    
    845
    
    
    
    (4,444
    )
    
    
    (8,426
    )Income (loss) on discontinued operations,
net of income taxes
    
    
    28
    
    
    
    27
    
    
    
    (233
    )
    
    
    (2,377
    )
    
    
    (2,336
    )Net (loss) income
    
    $
    (1,867
    )
    
    $
    (961
    )
    
    $
    612
    
    
    $
    (6,821
    )
    
    $
    (10,762
    )Basic (loss) earnings per share:From continuing operations
    
    $
    (0.40
    )
    
    $
    (0.21
    )
    
    $
    0.18
    
    
    $
    (0.94
    )
    
    $
    (1.81
    )On discontinued operations
    
    
    0.01
    
    
    
    0.01
    
    
    
    (0.05
    )
    
    
    (0.51
    )
    
    
    (0.50
    )Net (loss) earnings per share  basic
    
    $
    (0.39
    )
    
    $
    (0.20
    )
    
    $
    0.13
    
    
    $
    (1.45
    )
    
    $
    (2.31
    )Diluted (loss) earnings per share:From continuing operations
    
    $
    (0.40
    )
    
    $
    (0.21
    )
    
    $
    0.18
    
    
    $
    (0.94
    )
    
    $
    (1.81
    )On discontinued operations
    
    
    0.01
    
    
    
    0.01
    
    
    
    (0.05
    )
    
    
    (0.51
    )
    
    
    (0.50
    )Net (loss) earnings per share  diluted
    
    $
    (0.39
    )
    
    $
    (0.20
    )
    
    $
    0.13
    
    
    $
    (1.45
    )
    
    $
    (2.31
    )Shares of common stock  basic
    
    
    4,809
    
    
    
    4,782
    
    
    
    4,725
    
    
    
    4,704
    
    
    
    4,663Shares of common stock  diluted
    
    
    4,809
    
    
    
    4,782
    
    
    
    4,741
    
    
    
    4,704
    
    
    
    4,663
  Financial Position:(In thousands except ratio)
    
    March 31, 2007
    
    
    March 25, 2006
    
    
    March 26, 2005
    
    
    March 27, 2004
    
    
    March 29, 2003Current ratio
    
    
    3.09
    
    
    
    3.93
    
    
    
    4.29
    
    
    
    2.92
    
    
    
    3.50Working capital
    
    $
    7,280
    
    
    $
    8,856
    
    
    $
    9,337
    
    
    $
    7,997
    
    
    $
    13,697Total assets
    
    $
    11,161
    
    
    $
    12,346
    
    
    $
    12,961
    
    
    $
    13,733
    
    
    $
    21,875Shareholders equity
    
    $
    7,393
    
    
    $
    9,098
    
    
    $
    9,812
    
    
    $
    9,196
    
    
    $
    15,960
  Percentage Data:Percent of net sales
    
    March 31, 2007
    
    
    March 25, 2006
    
    
    March 26, 2005
    
    
    March 27, 2004
    
    
    March 29, 2003Gross profit
    
    
    41.8
    %
    
    
    40.3
    %
    
    
    44.7
    %
    
    
    27.1
    %
    
    
    29.7
    %Operating expenses
    
    
    52.9
    
    
    
    45.2
    
    
    
    40.8
    
    
    
    52.5
    
    
    
    50.0Interest income, net
    
    
    0.6
    
    
    
    0.1
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.3Pre-tax (loss) income
from continuing
operations
    
    
    (10.5
    )
    
    
    (4.8
    )
    
    
    4.0
    
    
    
    (25.4
    )
    
    
    (20.8
    )Income (loss) on
discontinued operations,
net of income taxes
    
    
    0.2
    
    
    
    0.1
    
    
    
    (1.1
    )
    
    
    (13.6
    )
    
    
    (11.2
    )Net (loss) income
    
    
    (10.3
    )
    
    
    (4.7
    )
    
    
    2.8
    
    
    
    (39.0
    )
    
    
    (51.7
    )
 12




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SELECTED CONSOLIDATED FINANCIAL DATA
  Quarterly Financial Information (Unaudited)
 2007(In thousands except per share data)
    
    First
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    YearNet sales
    
    $
    3,386
    
    
    $
    3,934
    
    
    $
    5,564
    
    
    $
    5,164
    
    
    $
    18,048Gross profit
    
    
    1,199
    
    
    
    1,857
    
    
    
    2,394
    
    
    
    2,096
    
    
    
    7,546Operating expenses
    
    
    2,258
    
    
    
    2,306
    
    
    
    2,378
    
    
    
    2,606
    
    
    
    9,548Interest income, net
    
    
    29
    
    
    
    37
    
    
    
    25
    
    
    
    17
    
    
    
    108Pre-tax (loss) income from continuing operations
    
    
    (1,030
    )
    
    
    (412
    )
    
    
    41
    
    
    
    (493
    )
    
    
    (1,894
    )Provision for income taxes
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1(Loss) income from continuing operations
    
    
    (1,030
    )
    
    
    (413
    )
    
    
    41
    
    
    
    (493
    )
    
    
    (1,895
    )Income (loss) on discontinued operations, net
of income tax
    
    
    3
    
    
    
    10
    
    
    
    17
    
    
    
    (2
    )
    
    
    28Net (loss) income
    
    $
    (1,027
    )
    
    $
    (403
    )
    
    $
    58
    
    
    $
    (495
    )
    
    $
    (1,867
    )Basic (loss) earnings per share:From continuing operations
    
    $
    (0.21
    )
    
    $
    (0.08
    )
    
    $
    0.01
    
    
    $
    (0.10
    )
    
    $
    (0.40
    )On discontinued operations
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    ( 0.00
    )
    
    
    0.01Net (loss) earnings per share  basic
    
    $
    (0.21
    )
    
    $
    (0.08
    )
    
    $
    0.01
    
    
    $
    (0.10
    )
    
    $
    (0.39
    )Diluted (loss) earnings per share:From continuing operations
    
    $
    (0.21
    )
    
    $
    (0.08
    )
    
    $
    0.01
    
    
    $
    (0.10
    )
    
    $
    (0.40
    )On discontinued operations
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    (0.00
    )
    
    
    0.01Net (loss) earnings per share  diluted
    
    $
    (0.21
    )
    
    $
    (0.08
    )
    
    $
    0.01
    
    
    $
    (0.10
    )
    
    $
    (0.39
    )Shares of common stock  basic
    
    
    4,809
    
    
    
    4,809
    
    
    
    4,809
    
    
    
    4,809
    
    
    
    4,809Shares of common stock  diluted
    
    
    4,809
    
    
    
    4,809
    
    
    
    4,884
    
    
    
    4,809
    
    
    
    4,809
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Quarterly Financial Information (Unaudited)
 2006(In thousands except per share data)
    
    First
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    YearNet sales
    
    $
    5,783
    
    
    $
    3,614
    
    
    $
    5,537
    
    
    $
    5,686
    
    
    $
    20,620Gross profit
    
    
    2,645
    
    
    
    1,223
    
    
    
    2,334
    
    
    
    2,098
    
    
    
    8,300Operating expenses
    
    
    2,419
    
    
    
    2,374
    
    
    
    2,317
    
    
    
    2,206
    
    
    
    9,316Interest income, net
    
    
    5
    
    
    
    9
    
    
    
    10
    
    
    
    8
    
    
    
    32Pre-tax income (loss) from continuing operations
    
    
    231
    
    
    
    (1,142
    )
    
    
    27
    
    
    
    (100
    )
    
    
    (984
    )Provision for income taxes
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Income (loss) from continuing operations
    
    
    227
    
    
    
    (1,142
    )
    
    
    27
    
    
    
    (100
    )
    
    
    (988
    )Income on discontinued operations, net of income
tax
    
    
    6
    
    
    
    5
    
    
    
    3
    
    
    
    13
    
    
    
    27Net income (loss)
    
    $
    233
    
    
    $
    (1,137
    )
    
    $
    30
    
    
    $
    (87
    )
    
    $
    (961
    )Basic earnings (loss) per share:From continuing operations
    
    $
    0.05
    
    
    $
    (0.24
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    (0.21
    )On discontinued operations
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.01Net earnings (loss) per share  basic
    
    $
    0.05
    
    
    $
    (0.24
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    (0.20
    )Diluted earnings (loss) per share:From continuing operations
    
    $
    0.05
    
    
    $
    (0.24
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    (0.21
    )On discontinued operations
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.01Net earnings (loss) per share  diluted
    
    $
    0.05
    
    
    $
    (0.24
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    (0.20
    )Shares of common stock  basic
    
    
    4,731
    
    
    
    4,778
    
    
    
    4,809
    
    
    
    4,809
    
    
    
    4,782Shares of common stock  diluted
    
    
    4,912
    
    
    
    4,778
    
    
    
    4,917
    
    
    
    4,809
    
    
    
    4,782
 14




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ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
  Overview
      Results of Operations
  New Orders(Dollars in thousands)
    
    2007
    
    
    % change
    
    
    2006
    
    
    % change
    
    
    2005Instrument Division
    
    $
    8,677
    
    
    
    (3
    %)
    
    $
    8,943
    
    
    
    (23
    %)
    
    $
    11,545ASCOR
    
    
    4,390
    
    
    
    30
    %
    
    
    3,389
    
    
    
    (25
    %)
    
    
    4,536Microsource
    
    
    3,091
    
    
    
    9
    %
    
    
    2,825
    
    
    
    (42
    %)
    
    
    4,833Total
    
    $
    16,158
    
    
    
    7
    %
    
    $
    15,157
    
    
    
    (28
    %)
    
    $
    20,914
    15




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##### Table of Contents



(Dollars in thousands)
    
    2007
    
    
    % change
    
    
    2006
    
    
    % change
    
    
    2005Backlog of unfilled orders
    
    $
    8,439
    
    
    
    (18
    %)
    
    $
    10,329
    
    
    
    (35
    %)
    
    $
    15,792Backlog of unfilled
orders shippable within
one year
    
    
    5,294
    
    
    
    (10
    %)
    
    
    5,863
    
    
    
    (28
    %)
    
    
    8,161Previous fiscal year end
(FYE) one-year backlog
reclassified during year
as shippable later than
one year
    
    
    303
    
    
    
    (88
    %)
    
    
    2,439
    
    
    
    79
    %
    
    
    1,364Net cancellations during
year of previous FYE
one-year backlog
    
    
    904
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25
    Allocation of Net Sales(Dollars in thousands)
    
    2007
    
    
    % change
    
    
    2006
    
    
    % change
    
    
    2005Commercial
    
    $
    7,054
    
    
    
    (40
    %)
    
    $
    11,657
    
    
    
    (13
    %)
    
    $
    13,336Government/defense
    
    
    10,994
    
    
    
    23
    %
    
    
    8,963
    
    
    
    10
    %
    
    
    8,141
  Allocation of Net Sales by Segment(Dollars in thousands)
    
    2007
    
    
    % change
    
    
    2006
    
    
    % change
    
    
    2005Instrument
DivisionCommercial
    
    $
    4,870
    
    
    
    (33
    %)
    
    $
    7,319
    
    
    
    (10
    %)
    
    $
    8,170Government/defense
    
    
    4,096
    
    
    
    77
    %
    
    
    2,309
    
    
    
    (46
    %)
    
    
    4,279ASCORCommercial
    
    
    485
    
    
    
    (26
    %)
    
    
    659
    
    
    
    (73
    %)
    
    
    2,455Government/defense
    
    
    3,087
    
    
    
    (21
    %)
    
    
    3,900
    
    
    
    186
    %
    
    
    1,366MicrosourceCommercial
    
    
    1,699
    
    
    
    (54
    %)
    
    
    3,679
    
    
    
    36
    %
    
    
    2,711Government/defense
    
    
    3,811
    
    
    
    38
    %
    
    
    2,754
    
    
    
    10
    %
    
    
    2,496
  16




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##### Table of Contents



Cost of Sales(Dollars in thousands)
    
    2007
    
    
    % change
    
    
    2006
    
    
    % change
    
    
    2005Cost of sales
    
    $
    10,502
    
    
    
    (15
    %)
    
    $
    12,320
    
    
    
    4
    %
    
    $
    11,879
    Operating Expenses(Dollars in thousands)
    
    2007
    
    
    % change
    
    
    2006
    
    
    % change
    
    
    2005Product development
    
    $
    3,731
    
    
    
    (1
    %)
    
    $
    3,760
    
    
    
    12
    %
    
    $
    3,370Selling, general and administrative
    
    
    5,456
    
    
    
    (2
    %)
    
    
    5,556
    
    
    
    3
    %
    
    
    5,390Restructuring
    
    
    361
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total operating expenses
    
    $
    9,548
    
    
    
    3
    %
    
    $
    9,316
    
    
    
    6
    %
    
    $
    8,760
       17




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##### Table of Contents



Net Inventories(In thousands)
    
    March 31, 2007
    
    
    % change
    
    
    March 25, 2006Raw materials
    
    $
    3,163
    
    
    
    5
    %
    
    $
    3,025Work-in-progress
    
    
    2,128
    
    
    
    63
    %
    
    
    1,309Finished goods
    
    
    209
    
    
    
    15
    %
    
    
    246Demonstration inventory
    
    
    341
    
    
    
    46
    %
    
    
    233$
    5,841
    
    
    
    21
    %
    
    $
    4,813
  Critical Accounting Policies
  Revenues
  Product Warranties
  Accounts Receivable
  18




---



##### Table of Contents



Inventory
  Deferred Income Taxes
  Product Development Costs
  Share-Based Compensation
  Financial Condition and Liquidity
    19




---



##### Table of Contents



Contractual Obligations
    (In thousands)
    
    Under one year
    
    
    One to three years
    
    
    Three to five years
    
    
    More than five yearsOperating leases
    
    $
    1,217
    
    
    $
    2,263
    
    
    $
    1,785
    
    
    $
    57Purchase obligations
    
    
    1,062
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    2,279
    
    
    $
    2,263
    
    
    $
    1,785
    
    
    $
    57
 Off-Balance-Sheet Arrangements
   Recently Issued Accounting Pronouncements
  20




---



##### Table of Contents



21




---



##### Table of Contents



ITEM 7. FINANCIAL STATEMENTS
  Form 10-KSB(Page No.)Financial
StatementsConsolidated Balance Sheets -
    
    23As of March 31, 2007 and
March 25, 2006Consolidated Statements of Operations -
    
    24Years Ended March 31, 2007 and
March 25, 2006Consolidated Statements of Shareholders Equity -
    
    25Years Ended March 31, 2007 and
March 25, 2006Consolidated Statements of Cash Flows -
    
    26Years Ended March 31, 2007 and
March 25, 2006Notes to Consolidated Financial Statements
    

27
- 36Report of Independent Registered Public Accounting Firm
    
    37
 22




---



##### Table of Contents



CONSOLIDATED BALANCE SHEETS
 (In thousands except share data)
    
    March 31, 2007
    
    
    March 25, 2006AssetsCurrent assetsCash and cash equivalents
    
    $
    1,804
    
    
    $
    3,412Notes receivable, net of allowance of $250 and $250,
respectively
    
    
    
    
    
    
    3Trade accounts receivable, net of allowance
of $62 and $63, respectively
    
    
    2,750
    
    
    
    3,435Inventories, net
    
    
    5,841
    
    
    
    4,813Prepaid expenses and other current assets
    
    
    360
    
    
    
    219Total current assets
    
    
    10,755
    
    
    
    11,882Property and equipmentLeasehold improvements
    
    
    373
    
    
    
    373Machinery and equipment
    
    
    15,426
    
    
    
    15,592Office furniture and fixtures
    
    
    736
    
    
    
    723Total property and equipment
    
    
    16,535
    
    
    
    16,688Less accumulated depreciation and amortization
    
    
    16,211
    
    
    
    16,351Property and equipment, net
    
    
    324
    
    
    
    337Other assets
    
    
    82
    
    
    
    127Total assets
    
    $
    11,161
    
    
    $
    12,346Liabilities and shareholders equityCurrent liabilitiesAccounts payable
    
    $
    1,106
    
    
    $
    870Accrued commissions
    
    
    192
    
    
    
    171Accrued payroll and benefits
    
    
    666
    
    
    
    781Accrued warranty
    
    
    207
    
    
    
    250Customer advances
    
    
    681
    
    
    
    521Other current liabilities
    
    
    623
    
    
    
    433Total current liabilities
    
    
    3,475
    
    
    
    3,026Deferred rent
    
    
    293
    
    
    
    222Total liabilities
    
    
    3,768
    
    
    
    3,248CommittmentsShareholders equityPreferred stock of no par value;Authorized 1,000,000 shares; no shares outstanding
at March 31, 2007 and March 25, 2006
    
    
    
    
    
    
    Common stock of no par value;Authorized 40,000,000 shares; 4,809,021 shares
at March 31, 2007 and March 25, 2006
issued and outstanding
    
    
    13,165
    
    
    
    13,003Accumulated deficit
    
    
    (5,772
    )
    
    
    (3,905
    )Total shareholders equity
    
    
    7,393
    
    
    
    9,098Total liabilities and shareholders equity
    
    $
    11,161
    
    
    $
    12,346
 See Accompanying Notes to Consolidated Financial Statements
 23




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##### Table of Contents



CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended(In thousands except per share data)
    
    March 31, 2007
    
    
    March 25, 2006Net sales
    
    $
    18,048
    
    
    $
    20,620Cost of sales
    
    
    10,502
    
    
    
    12,320Gross profit
    
    
    7,546
    
    
    
    8,300Product development
    
    
    3,731
    
    
    
    3,760Selling, general and administrative
    
    
    5,456
    
    
    
    5,556Restructuring
    
    
    361
    
    
    
    Operating expenses
    
    
    9,548
    
    
    
    9,316Operating loss from continuing operations
    
    
    (2,002
    )
    
    
    (1,016
    )Interest income, net
    
    
    108
    
    
    
    32Loss from continuing operations before income taxes
    
    
    (1,894
    )
    
    
    (984
    )Provision for income taxes
    
    
    1
    
    
    
    4Loss from continuing operations
    
    
    (1,895
    )
    
    
    (988
    )Income on discontinued operations, net of income
taxes of nil for 2007 and 2006
    
    
    28
    
    
    
    27Net loss
    
    $
    (1,867
    )
    
    $
    (961
    )Basic and diluted net (loss) earnings per share:From continuing operations
    
    $
    (0.40
    )
    
    $
    (0.21
    )On discontinued operations
    
    
    0.01
    
    
    
    0.01Basic net loss per share
    
    $
    (0.39
    )
    
    $
    (0.20
    )Shares used in per share calculation:Basic
    
    
    4,809
    
    
    
    4,782Diluted
    
    
    4,809
    
    
    
    4,782
 See Accompanying Notes to Consolidated Financial Statements
 24




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##### Table of Contents



CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Common Stock
    
    
    Accumulated(In thousands except share data)
    
    Shares
    
    
    Amount
    
    
    Deficit
    
    
    TotalBalance at March 26, 2005
    
    
    4,728,646
    
    
    $
    12,756
    
    
    $
    (2,944
    )
    
    $
    9,812Comprehensive loss  netNet loss
    
    
    
    
    
    
    
    
    
    
    (961
    )
    
    
    (961
    )Stock issuance under stock option
and employee stock purchase plans
    
    
    80,375
    
    
    
    247
    
    
    
    
    
    
    
    247Balance at March 25, 2006
    
    
    4,809,021
    
    
    
    13,003
    
    
    
    (3,905
    )
    
    
    9,098Comprehensive loss  netNet loss
    
    
    
    
    
    
    
    
    
    
    (1,867
    )
    
    
    (1,867
    )Share based compensation
    
    
    
    
    
    
    162
    
    
    
    
    
    
    
    162Balance at March 31, 2007
    
    
    4,809,021
    
    
    $
    13,165
    
    
    $
    (5,772
    )
    
    $
    7,393
 See Accompanying Notes to Consolidated Financial Statements
 25




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended(In thousands)
    
    March 31, 2007
    
    
    March 25, 2006Cash flows from operations:Net loss
    
    $
    (1,867
    )
    
    $
    (961
    )Adjustments to reconcile net loss to net cash
(used in) provided by operations:Net provision for doubtful accounts and note
receivable
    
    
    (1
    )
    
    
    (14
    )Depreciation and amortization
    
    
    215
    
    
    
    452Share based compensation
    
    
    162
    
    
    
    Deferred rent
    
    
    71
    
    
    
    (88
    )Changes in operating assets and liabilities:Notes receivable
    
    
    3
    
    
    
    4Trade accounts receivable
    
    
    686
    
    
    
    (276
    )Inventories
    
    
    (1,028
    )
    
    
    1,444Prepaid expenses and other assets
    
    
    (96
    )
    
    
    (8
    )Accounts payable
    
    
    236
    
    
    
    (205
    )Accrued commissions
    
    
    21
    
    
    
    (29
    )Accrued payroll and benefits
    
    
    (115
    )
    
    
    61Accrued warranty
    
    
    (43
    )
    
    
    (128
    )Customer advances
    
    
    160
    
    
    
    519Other current liabilities
    
    
    190
    
    
    
    (31
    )Net cash (used in) provided by operations
    
    
    (1,406
    )
    
    
    740Cash flows from investing activities:Proceeds from sales of equipment
    
    
    2
    
    
    
    Purchases of property and equipment
    
    
    (204
    )
    
    
    (115
    )Net cash used in investing activities
    
    
    (202
    )
    
    
    (115
    )Cash flows from financing activities:Issuance of common stock
    
    
    
    
    
    
    247Net cash provided by financing activities
    
    
    
    
    
    
    247(Decrease) increase in cash and cash equivalents
    
    
    (1,608
    )
    
    
    872Beginning cash and cash equivalents
    
    
    3,412
    
    
    
    2,540Ending cash and cash equivalents
    
    $
    1,804
    
    
    $
    3,412Supplementary disclosure of cash flow information:Cash paid for income taxes
    
    $
    1
    
    
    $
    4Cash paid for interest
    
    
    
    
    
    
    
 See Accompanying Notes to Consolidated Financial Statements
 26




---



##### Table of Contents



1 Summary of Significant Accounting Policies
 The Company
 Principles of Consolidation
 Use of Estimates
 Fiscal Year
 Reclassifications
 Revenue Recognition
  (In thousands)
    
    March 31, 2007
    
    
    March 25, 2006Beginning balance
    
    $
    63
    
    
    $
    77Provision for doubtful accounts
    
    
    5
    
    
    
    20Recoveries of doubtful accounts
    
    
    
    
    
    
    Write-off of doubtful accounts
    
    
    (6
    )
    
    
    (34
    )Ending balance
    
    $
    62
    
    
    $
    63
 27




---



##### Table of Contents



Accrued
Warranty
 Inventories
 Property and Equipment
  Deferred Rent
 Income Taxes
 Product Development Costs
 Software Development Costs
 Share-based Compensation  Share Based Payment Accounting for Stock Based
Compensation,
 28




---



##### Table of Contents



Accounting
for Stock Issued to Employees
    Year Ended(In thousands except per share data)
    
    March 25, 2006Net loss, as reported
    
    $
    (961
    )Deduct:Stock-based compensation expense included in reported net loss
    
    
    Add:Total stock-based employee compensation determined under fair
value based method for all awards, net of related tax effect
    
    
    (123
    )Pro forma net loss
    
    $
    (1,084
    )Loss per share  basic and diluted:As reported
    
    $
    (0.20
    )Pro forma
    
    
    (0.23
    )
  Years Ended
    
    March 31, 2007
    
    March 25, 2006Dividend yield
    
    Zero
    
    ZeroExpected volatility
    
    51% to 88%
    
    79%Risk-free interest rate
    
    4.50% to 4.97%
    
    3.77% to 4.72%Expected term (years)
    
    3.75
    
    5
  Discontinued Operations
 29




---



##### Table of Contents



Earnings (Loss) Per Share
 Comprehensive Loss
 Financial Instruments and Concentration of Credit Risk
 Fair Value of Financial Instruments
 Recently Issued Accounting Pronouncements
   30




---



##### Table of Contents



2 Cash Equivalents
  3 Inventories
  (In thousands)
    
    March 31, 2007
    
    
    March 25, 2006Raw materials
    
    $
    3,163
    
    
    $
    3,025Work-in-progress
    
    
    2,128
    
    
    
    1,309Finished goods
    
    
    209
    
    
    
    246Demonstration inventory
    
    
    341
    
    
    
    233$
    5,841
    
    
    $
    4,813
 4 Selling Expenses
  5 Significant Customers and Industry Segment Information
    31




---



##### Table of Contents



March 31, 2007 (In thousands):
    
    Instrument Division
    
    
    ASCOR
    
    
    Microsource
    
    
    Corporate
    
    
    TotalRevenue
    
    $
    8,966
    
    
    $
    3,572
    
    
    $
    5,510
    
    
    $
    
    
    
    $
    18,048Interest income
    
    
    6
    
    
    
    17
    
    
    
    75
    
    
    
    1,375
    
    
    
    1,473Interest expense
    
    
    (349
    )
    
    
    (71
    )
    
    
    (945
    )
    
    
    
    
    
    
    (1,365
    )Depreciation and amortization
    
    
    153
    
    
    
    30
    
    
    
    32
    
    
    
    
    
    
    
    215(Loss) income from continuing operations
before income taxes
    
    
    (1,975
    )
    
    
    (734
    )
    
    
    (345
    )
    
    
    1,160
    
    
    
    (1,894
    )Assets
    
    
    4,948
    
    
    
    1,968
    
    
    
    3,922
    
    
    
    323
    
    
    
    11,161
 March 25, 2006(In thousands):
    
    Instrument Division
    
    
    ASCOR
    
    
    Microsource
    
    
    Corporate
    
    
    TotalRevenue
    
    $
    9,628
    
    
    $
    4,559
    
    
    $
    6,433
    
    
    $
    
    
    
    $
    20,620Interest income
    
    
    8
    
    
    
    3
    
    
    
    11
    
    
    
    1,116
    
    
    
    1,138Interest expense
    
    
    (258
    )
    
    
    (40
    )
    
    
    (806
    )
    
    
    (2
    )
    
    
    (1,106
    )Depreciation and amortization
    
    
    280
    
    
    
    38
    
    
    
    134
    
    
    
    
    
    
    
    452(Loss) income from continuing operations
before income taxes
    
    
    (1,092
    )
    
    
    (350
    )
    
    
    (639
    )
    
    
    1,097
    
    
    
    (984
    )Assets
    
    
    4,417
    
    
    
    2,262
    
    
    
    4,950
    
    
    
    717
    
    
    
    12,346
   (In thousands)
    
    March 31, 2007
    
    
    March 25, 2006Americas
    
    $
    360
    
    
    $
    104Europe
    
    
    2,233
    
    
    
    4,191Asia
    
    
    748
    
    
    
    1,950Rest of the world
    
    
    489
    
    
    
    2,826$
    3,830
    
    
    $
    9,071
 6 Earnings (loss) per Share
  (In thousands except per share data)
    
    March 31, 2007
    
    
    March 25, 2006Net loss
    
    $
    (1,867
    )
    
    $
    (961
    )Weighted average:Common shares outstanding
    
    
    4,809
    
    
    
    4,782Potential common shares
    
    
    
    
    
    
    Common shares assuming dilution
    
    
    4,809
    
    
    
    4,782Net loss per share of common stock
    
    
    (0.39
    )
    
    
    (0.20
    )Net loss per share of common stock assuming
dilution
    
    
    (0.39
    )
    
    
    (0.20
    )Stock options not included in computation
    
    
    841
    
    
    
    439
 32




---



##### Table of Contents



7 Income Taxes
  Years ended (in thousands)
    
    March 31, 2007
    
    
    March 25, 2006CurrentFederal
    
    $
    
    
    
    $
    State
    
    
    1
    
    
    
    41
    
    
    
    4Deferred
    
    
    
    
    
    
    Federal
    
    
    
    
    
    
    State
    
    
    
    
    
    
    Provision for income taxes
    
    $
    1
    
    
    $
    4
  Years ended(in thousands)
    
    March 31, 2007
    
    
    March 25, 2006Net operating loss carryforwards
    
    $
    13,625
    
    
    $
    14,083Income tax credits
    
    
    2,196
    
    
    
    2,293Inventory reserves and additional costs capitalized
    
    
    2,486
    
    
    
    2,515Fixed assets depreciation
    
    
    163
    
    
    
    151Accrued vacation
    
    
    122
    
    
    
    133Accrued warranty
    
    
    88
    
    
    
    107Deferred rent
    
    
    98
    
    
    
    159Other accrued liabilities
    
    
    235
    
    
    
    155Future state tax effect
    
    
    (220
    )
    
    
    (597
    )Allowance for doubtful accounts
    
    
    27
    
    
    
    27Subtotal
    
    
    18,820
    
    
    
    19,026Valuation allowances
    
    
    (18,820
    )
    
    
    (19,026
    )$
    
    
    
    $
    
  Years ended(In thousands except percentages)
    
    March 31, 2007
    
    
    March 25, 2006Statutory federal income tax expense (benefit)
    
    $
    (635
    )
    
    
    (34.0
    )%
    
    $
    (335
    )
    
    
    (34.0
    )%Valuation allowance
    
    
    (206
    )
    
    
    (11.0
    )
    
    
    149
    
    
    
    15.2Net operating loss generated from dissolution of
subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expiration of net operating losses
    
    
    805
    
    
    
    43.1
    
    
    
    437
    
    
    
    44.5State income tax, net of federal benefit
    
    
    (109
    )
    
    
    (5.8
    )
    
    
    (57
    )
    
    
    (5.8
    )Other, net
    
    
    146
    
    
    
    7.8
    
    
    
    (190
    )
    
    
    (19.8
    )Effective income tax expense
    
    $
    1
    
    
    
    .1
    %
    
    $
    4
    
    
    
    .4
    %
 33




---



##### Table of Contents



8 Stock Options and Employee Benefit Plans
 Stock Option Plans
  Weighted
    
    
    Weighted Average
    
    
    AggregateAverage
    
    
    Remaining Contractual
    
    
    IntrinsicShares
    
    
    Exercise Price
    
    
    Term (Years)
    
    
    ValueOutstanding at March 26, 2005
    
    
    648,100
    
    
    $
    3.09
    
    
    
    3.11
    
    
    $
    1,202,209Granted
    
    
    
    
    
    
    Exercised
    
    
    80,375
    
    
    
    3.07Forfeited/Expired
    
    
    128,750
    
    
    
    4.88Outstanding at March 25, 2006
    
    
    438,975
    
    
    $
    2.57
    
    
    
    2.7
    
    
    $
    122,173Granted
    
    
    541,400
    
    
    
    1.85Exercised
    
    
    
    
    
    
    Forfeited/Expired
    
    
    139,475
    
    
    
    2.85Outstanding at March 31, 2007
    
    
    840,900
    
    
    $
    2.06
    
    
    
    3.6
    
    
    $
    149,624Exercisable at March 31, 2007
    
    
    214,750
    
    
    $
    2.35
    
    
    
    1.9
    
    
    $
    8,128
  34




---



##### Table of Contents



Options
    
    
    Total Options
    
    
    Weighted Average FairExercisable
    
    
    Outstanding
    
    
    ValueOutstanding as of March 26, 2005
    
    
    239,013
    
    
    
    648,100
    
    
    $
    3.089Exercised
    
    
    
    
    
    
    (80,375
    )
    
    
    3.074Forfeited
    
    
    
    
    
    
    (128,750
    )
    
    
    4.884Granted
    
    
    
    
    
    
    
    
    
    
    Outstanding as of March 25, 2006
    
    
    203,475
    
    
    
    438,975
    
    
    $
    2.565Exercised
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    (139,475
    )
    
    
    2.845Granted
    
    
    
    
    
    
    541,400
    
    
    
    1.846Outstanding as of March 31, 2007
    
    
    214,750
    
    
    
    840,900
    
    
    $
    2.056
 Employee Stock Purchase Plan
 401(k) Plans
 9 Commitments
    35




---



##### Table of Contents



Fiscal years (in thousands)2008
    
    $
    1,2172009
    
    
    1,2272010
    
    
    1,0362011
    
    
    9712012
    
    
    814Thereafter
    
    
    57$
    5,322
   10 Warranty Obligations
  (In thousands)
    
    March 31, 2007
    
    
    March 25, 2006Balance at beginning of year
    
    $
    250
    
    
    $
    378Provision for current year sales
    
    
    130
    
    
    
    159Warranty costs incurred
    
    
    (173
    )
    
    
    (287
    )Balance at end of year
    
    $
    207
    
    
    $
    250
 11 Restructuring
  12 Line of Credit
  36




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37




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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
  
 ITEM 8A. CONTROLS AND PROCEDURES
  
 ITEM 8B. OTHER INFORMATION
  
 PART III
 
 ITEM 9. DIRECTOR, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
  38




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EXECUTIVE OFFICERS
 Name
    
    Age
    
    PositionGeorge H. Bruns, Jr.
    
    
    88
    
    
    Chairman of the Board of Directors. Mr.
Bruns was the Chief Executive Officer from
January 1995 to April 2006. He provided
seed financing for the Company in 1980 and
has been a Director since inception. Mr.
Bruns is General Partner of The Bruns
Company, a private venture investment and
management consulting firm. Mr. Bruns is a
Director of Testronics, Inc. of McKinney,
Texas.John R. Regazzi
    
    
    52
    
    
    Chief Executive Officer and a Director of
the Company since April 2006. Mr. Regazzi
had been President and General Manager of
Instrument Division since September 2005,
and prior to that, was Vice President of
Operations for Instrument Division from
October 2004 through September 2005. Prior
to that, he was Vice President of
Engineering for Instrument Division from
June 2001 through October 2004. Previous
experience includes 22 years at Hewlett
Packard and Agilent Technologies in various
design and management positions associated
with their microwave sweeper and synthesizer
product lines. His final position at Agilent
Technologies was as a senior engineering
manager.Patrick J. Lawlor
    
    
    56
    
    
    Vice President, Finance, Chief Financial
Officer and Secretary of Giga-tronics, Inc.
since February 2007. Mr. Lawlor was
previously a Consultant to PDL BioPharma,
Inc, and before that was the Vice
President, Chief Financial Officer at
SaRonix, LLC, a $90 million private company
with international facilities. Prior to
that he was the Chief Financial Officer with
Aerojet Fine Chemicals, LLC, a $65 million
subsidiary of GenCorp, and Vice President of
Finance with Systems Chemistry, Inc. Mr.
Lawlor spent 23 years with Westinghouse
Electric Corporation, where he rose through
numerous positions among various divisions,
with his final position as Vice President of
Finance and Controller.Jeffrey T. Lum
    
    
    61
    
    
    President and a Director of the Board of
ASCOR, Inc. since November 1987. Mr. Lum
founded ASCOR in 1987 and has been President
since inception. He was a founder and Vice
President of Autek Systems Corporation, a
manufacturer of precision waveform
analyzers. Mr. Lum serves as Treasurer and
a member of the Board of Directors for the
Santa Clara Aquamaids, a non-profit
organization dedicated to advancing athletes
in synchronized swimming to the Olympics
games.
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ITEM 10. EXECUTIVE COMPENSATION
  
 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
  
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
  
 ITEM 13. EXHIBITS
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Audit Fees
  Audit-Related Fees
  Tax Fees
  All Other Fees
  Audit Committee Pre-Approval Policy
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##### Table of Contents



GIGA-TRONICS INCORPORATEDBy
    
    /s/ JOHN R. REGAZZIJohn R. RegazziChief Executive Officer
  /s/ GEORGE H. BRUNS, JR.

George H. Bruns, Jr.
    
    Chairman of the Board
of Directors
    
    6/14/07

(Date)/s/ JOHN R. REGAZZI

John R. Regazzi
    
    Chief Executive Officer
(Principal Executive Officer)
and Director
    
    6/14/07

(Date)/s/ PATRICK J. LAWLOR

Patrick J. Lawlor
    
    Vice President, Finance/Chief
Financial Officer and Secretary
(Principal Accounting Officer)
    
    6/14/07
 
(Date)/s/ JAMES A. COLE

James A. Cole
    
    Director
    
    6/14/07

(Date)/s/ KENNETH A. HARVEY
    
    Director
    
    6/15/07Kenneth A. Harvey
    
    
    
    (Date)/s/ ROBERT C. WILSON
    
    Director
    
    6/15/07Robert C. Wilson
    
    
    
    (Date)/s/ GARRETT A. GARRETTSON
    
    Director
    
    6/14/07Garrett A. Garretson
    
    
    
    (Date)
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INDEX TO EXHIBITS
 3.1
    
    Articles of Incorporation of the Registrant, as amended, previously filed as Exhibit 3.1 to
Form 10-K for the fiscal year ended March 27, 1999 and incorporated herein by reference.3.2
    
    By-laws of Registrant, as amended, previously filed as Exhibit 3.2 to Form 10-K for the
fiscal year ended March 28, 1998, and incorporated herein by reference.10.1
    
    1990 Restated Stock Option Plan and form of Incentive Stock Option Agreement, previously
filed on November 3, 1997 as Exhibit 99.1 to Form S-8 (33-39403) and incorporated herein by
reference.*10.2
    
    Standard form Indemnification Agreement for Directors and Officers, previously filed on June
21, 1999, as Exhibit 10.2 to Form 10-K for the fiscal year ended March 27, 1999 and
incorporated herein by reference.*10.3
    
    Lease between Giga-tronics Incorporated and Calfront Associates for 4650 Norris Canyon Road,
San Ramon, CA, dated December 6, 1993, previously filed as Exhibit 10.12 to Form 10-K for the
fiscal year ended March 26, 1994 and incorporated herein by reference.10.4
    
    Employee Stock Purchase Plan, previously filed on August 29, 1997, as Exhibit 99.1 to Form
S-8 (33-34719), and incorporated herein by reference.*10.5
    
    2000 Stock Option Plan and form of Incentive Stock Option Agreement, previously filed on
September 8, 2000 as Exhibit 99.1 to Form S-8 (33-45476) and incorporated herein by
reference.*10.6
    
    Amendment No. 1 to Employee Stock Purchase Plan, previously filed on September 24, 2001, as
Exhibit 99.1 to Form S-8 (33-69688), and incorporated herein by reference.*10.7
    
    2005 Equity Incentive Plan incorporated herein by reference to Attachment A of the
Registrants Proxy Statement filed July 21, 2005.*21
    
    Significant Subsidiaries. (See page 43 of this Annual Report on Form 10-KSB.)23.1
    
    Consent of Independent Registered Public Accounting Firm Perry-Smith LLP. (See page 44 of
this Annual Report on Form 10-KSB.)31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act.
(See page 45 of this Annual Report on Form 10-KSB.)31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act.
(See page 46 of this Annual Report on Form 10-KSB.)32.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act.
(See page 47 of this Annual Report on Form 10-KSB.)32.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act.
(See page 48 of this Annual Report on Form 10-KSB.)
 
 *
    
    Management contract or compensatory plan or arrangement. 42