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UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549

FORM 10-K

|           |  |                                                                                          
|---------- |  | -----------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                          
|[X]        |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934     
|           |  |                                                                                          
|           |  | for the fiscal year ended March 30, 2002, or                                             
|           |  |                                                                                          
|[   ]      |  | 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
(Exact name of registrant as specified in its charter)


|                                                                                |  |                                                
|------------------------------------------------------------------------------- |  | -----------------------------------------------
|California
(State or other jurisdiction of
incorporation or organization)       |  | 94-2656341
(I.R.S. Employer Identification No.)
|                                                                                |  |                                                
|4650 Norris Canyon Road, San Ramon, CA
(Address of principal executive offices) |  | 94583
(Zip Code)                               

Registrants telephone number: (925) 328-4650

Securities registered pursuant to Section 12(b) of the Act:

|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which registered
|None                |  | None                                     

Securities registered pursuant to Section 12(g) of the Act:



Common Stock, No par value

(Title of class)


Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]  No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.  [X]

The aggregate market value of voting stock held by non-affiliates of the
Registrant calculated on the closing average bid and asked prices as of May 16,
2002 was $11,733,699. For purposes of this determination only, directors and
officers of the Registrant have been assumed to be affiliates. There were a
total of 4,661,132 shares of the Registrants Common Stock outstanding as of
May 16, 2002.





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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents have been incorporated by reference into
the parts indicated:

|                                  |  |                                                                                                                                                                     
|--------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|PART OF FORM 10-K                 |  | DOCUMENT                                                                                                                                                            
|                                  |  |                                                                                                                                                                     
|PART  III
Items 10, 11, 12 and 13 |  | Registrants PROXY STATEMENT for
its 2002 annual meeting of shareholders to
be filed no later than 120 days after the close
of the fiscal year ended March 30, 2002.

2



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TABLE OF CONTENTS



|                  |                                                                                                 |  |  |  |  |  |  | 
|----------------- | ----------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I           
|                  | ITEM 1.  BUSINESS                                                                              
|                  | ITEM 2.  PROPERTIES                                                                            
|                  | ITEM 3.  LEGAL PROCEEDINGS                                                                     
|                  | ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   
|PART  II         
|                  | ITEM 5.  MARKET FOR REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS                  
|                  | ITEM 6.  SELECTED FINANCIAL DATA                                                               
|                  | ITEM 7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 
|                  | ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                  | ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           
|                  | ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.
|PART  III        
|                  | ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                   
|                  | ITEM 11.  EXECUTIVE COMPENSATION                                                               
|                  | ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                       
|                  | ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                       
|PART  IV         
|                  | ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                     
|SIGNATURES       
|INDEX TO EXHIBITS



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PART  I

The forward-looking statements included in this report including, without
limitation, statements containing the words believes, anticipates,
estimates, expects, intends and words of similar import, which reflect
managements best judgment based on factors currently known, involve risks and
uncertainties. Actual results could differ materially from those anticipated
in these forward-looking statements as a result of a number of factors,
including but not limited to those discussed under Certain Factors Which May
Adversely Affect Future Operations Or An Investment In Giga-tronics in Item 1
below and in Item 7, Managements Discussion and Analysis.




ITEM 1.  BUSINESS

General

Giga-tronics Incorporated (Giga-tronics) includes operations of
Giga-tronics Instrument division, ASCOR, Inc. (ASCOR), DYMATIX, which is a
joint venture of Viking Semiconductor Equipment, Inc. (Viking) and Ultracision,
Inc. (Ultracision), and Microsource, Inc. (Microsource).

Giga-tronics designs, manufactures and markets through its Giga-tronics
Instrument division, a broad line of test and measurement equipment used in the
development, test and maintenance of wireless communications products and
systems, flight navigational equipment, electronic defense systems and
automatic testing systems. These products are used primarily in the design,
production, repair and maintenance of commercial telecommunications, radar, and
electronic warfare.

Giga-tronics was incorporated on March 5, 1980, and its principal
executive offices are located at 4650 Norris Canyon Road, San Ramon,
California, and its telephone number at that location is (925) 328-4650.

Effective July 23, 1996, Giga-tronics acquired ASCOR. ASCOR, located in
Fremont, California, designs, manufactures, and markets a line of switching and
connecting devices that link together many specific purpose instruments that
comprise a portion of automatic test systems. ASCOR offers a family of
switching and interface test adapters as standard VXI configured products, as
well as complete system integration services to the Automatic Test Equipment
market.

Effective June 27, 1997, Giga-tronics completed a merger with Viking by
issuing approximately 420,000 shares of the Companys common stock in exchange
for all of the common stock of Viking. Viking, which is now located in Santa
Clara, California, manufactures and markets a line of optical inspection
equipment used to manufacture and test semiconductor devices. Products include
die attachments, automatic die sorters, tape and reel equipment, and wafer
inspection equipment.

Effective December 2, 1997, Giga-tronics completed a merger with
Ultracision by issuing approximately 517,000 shares of the Companys common
stock in exchange for all of the common stock of Ultracision. Ultracision is a
manufacturer of automation equipment for the test and inspection of silicon
wafers. Ultracision also produces a line of probers for the testing and
inspection of silicon devices.

Effective May 18, 1998, Giga-tronics acquired Microsource. All the
outstanding shares of Microsource were exchanged for $1,500,000 plus contingent
payments based on earnings from Microsource from 1998 to 2000, which amounts
were nominal. Microsource located in Santa Rosa, California develops and
manufactures

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a broad line of YIG (Yttrium, Iron, Garnet) tuned oscillators, filters and
microwave synthesizers, which are used by its customers in manufacturing a wide
variety of microwave instruments or devices.

Giga-tronics intends to broaden its product lines and expand its market,
both by internal development of new products and through the acquisition of
other business entities. From time to time, the Company considers a variety of
acquisition opportunities.

Industry Segments

The Company manufactures products used in test, measurement and handling.
The Company operates primarily in four operating segments; Giga-tronics
Instruments, ASCOR Inc., Microsource Inc. and DYMATIX (formerly the
Semiconductor Equipment Group).

Products and Markets

Giga-tronics Instruments

The Giga-tronics Instrument segment produces signal sources, generators
and sweepers, and power measurement instruments for use in the microwave and RF
frequency range (10 kHz to 75 GHz). Within each product line are a number of
different models and options allowing customers to select frequency range and
specialized capabilities, features and functions. The end-user markets for
these products can be divided into three broad segments: commercial
telecommunications, radar and electronic warfare. This segments instruments
are used in the design, production, repair and maintenance and calibration of
other manufacturers products, from discrete components to complex systems.

ASCOR Inc.

The ASCOR Inc. segment produces switch modules, and interface adapters
that operate with a bandwidth from direct current (DC) to 18 GHz. This
segments switch modules may be incorporated within its customers automated
test equipment. The end-user markets for these products are primarily related
to electronic warfare, though the VXI architecture may become more accepted by
the telecommunications market.

DYMATIX (formerly the Semiconductor Equipment Group)

The DYMATIX segment manufactures and markets a line of optical inspection
equipment used in the testing of semiconductor devices. Products include die
attachments, automatic die sorters, tape and reel equipment, and wafer
inspection equipment. Further, DYMATIX manufacturers automation equipment for
the test inspection and robotic handling of silicon wafers in addition to a
line of probers for the testing and inspection of silicon devices.

Microsource Inc.

The Microsource segment develops and manufactures a broad line of YIG
(Yttrium, Iron, Garnet) tuned oscillators, filters and microwave synthesizers,
which are used by its customers in manufacturing a wide variety of microwave
instruments or devices.

Sources and Availability of Raw Materials and Components

Substantially all of the components required by Giga-tronics to make its
assemblies are available from more than one source. The Company occasionally
uses sole source arrangements to obtain leading-edge technology, favorable
pricing or supply terms. Although extended delays in delivering components
could result

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in longer product delivery schedules, the Company believes that its protection
against this possibility stems from its practice of dealing with
well-established suppliers and maintaining good relationships with such
suppliers.

Patents and Licenses

The Company attempts to obtain patents when appropriate. However, the
Company believes that its competitive position depends primarily on the
creative ability and technical competence of its personnel and the timely
introduction of new products rather than on the ownership or development of
patents.

The Company licenses certain instrument operating system software from
third parties. The Company believes, based on industry practice, that any
additional licenses necessary could be obtained on conditions which would not
have a materially adverse effect on the financial condition of the Company.

Seasonal Nature of Business

The business of the Company is not seasonal.

Working Capital Practices

Giga-tronics does not believe that it has any special practices or special
conditions affecting working capital items that are significant for an
understanding of its business.

Importance of Limited Number of Customers

Commercial business accounted for 83% of net sales in fiscal 2002, 89% in
fiscal 2001, and 84% in fiscal 2000. The Company had been a leading supplier
of microwave and radio frequency (RF) test instruments to various U.S.
Government defense agencies, as well as to their prime contractors. Management
anticipates sales to U.S. Government agencies will remain significant in fiscal
2003. Defense-related agencies accounted for 17% of net sales in fiscal 2002,
11% in fiscal 2001, and 16% in fiscal 2000. Prior to the current year, where
the defense business has improved, sales to the defense industry in general,
and direct sales to the United States and foreign government agencies in
particular, have declined. Any reversal of defense orders could have a
negative effect on the business, operating results, financial condition and
cash flows of Giga-tronics.

During 2002 and 2001, a Japanese distributor of the Company, Midoriya,
accounted for 16% and 10% of the Companys consolidated sales. At year end,
Midoriya had a negligible amount outstanding in accounts receivable while they
composed about 11% of receivables at the fiscal year end of 2001.

Backlog of Orders

On March 30, 2002, the Companys backlog of unfilled orders was
$21,387,000 compared to $39,964,000 at March 31, 2001. As of March 30, 2002,
there were approximately $13,912,000 unfilled orders that were scheduled for
shipment beyond a year, as compared to approximately $7,245,000 at March 31,
2001. Orders for the Companys products include program orders from both the
U.S. Government and defense contractors, with extended delivery dates.
Accordingly, the backlog of orders may vary substantially from quarter to
quarter and the backlog entering any single quarter may not be indicative of
sales for any period.

Backlog includes only those customer orders for which a delivery schedule
has been agreed upon between the Company and the customer and, in the case of
U.S. Government orders, for which funding has been appropriated.

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Competition

Giga-tronics is engaged in a highly competitive field. Competition from
numerous existing companies is intense and potential new entrants are expected
to increase. The Companys instrument, switch, oscillator and synthesizer
products compete with Agilent, Anritsu, Racal, IFR and Rohde & Schwarz while
the semiconductor equipment products compete with various other competitors.
Many of these companies have substantially greater research and development,
manufacturing, marketing, financial, technological, personnel and managerial
resources than Giga-tronics. There can be no assurance that any products
developed by these competitors will not gain greater market acceptance than any
developed by Giga-tronics. Accordingly, Giga-tronics will be required to
continue to devote substantial resources and efforts to marketing and research
and development activities.

Sales and Marketing

Giga-tronics Instruments, ASCOR Inc., DYMATIX and Microsource Inc. market
their products through various distributors and representatives to commercial
and government customers, although not necessarily through the same
distributors and representatives.

Product Development

Products of the type manufactured by Giga-tronics historically have had
relatively long product life cycles. However, the electronics industry is
subject to rapid technological changes at the component level. The future
success of the Company is dependent on its ability to steadily incorporate
advancements in component technologies into its new products.

Product development expense was approximately $7,001,000 in fiscal 2002,
$5,087,000 in fiscal 2001, and $4,180,000 in fiscal 2000. Activities included
the development of new products and the improvement of existing products. It
is managements intention to maintain or increase expenditures for product
development at levels required to sustain its competitive position. All of the
Companys product development activities are internally funded and expensed as
incurred.

Giga-tronics expects to continue to make significant investments in
research and development. There can be no assurance that future technologies,
processes or product developments will not render Giga-tronics current product
offerings obsolete or that Giga-tronics will be able to develop and introduce
new products or enhancements to existing products, which satisfy customer
needs, in a timely manner or achieve market acceptance. The failure to do so
could adversely affect Giga-tronics business.

Manufacturing

The assembly and testing of Giga-tronics Instruments microwave, RF and
power measurement products are done at its San Ramon facility. The assembly
and testing of ASCORs switching and connecting devices are done at its Fremont
facility. The assembly and testing of the DYMATIX products are done at its
Santa Clara facility. The assembly and testing of Microsources line of YIG
(Yttrium, Iron, Garnet) tuned oscillators, filters and microwave synthesizers
are done at its Santa Rosa facility.

Environment

To the best of its knowledge, the Company is in compliance with all
federal, state and local laws and regulations involving the protection of the
environment.

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Employees

As of March 30, 2002, Giga-tronics employed 219 individuals on a full time
basis. Management believes that the future success of the Company depends on
its ability to attract and retain skilled personnel. None of the Companys
employees are represented by a labor union, and the Company considers its
employee relations to be good.

Information about Foreign Operations

The Company sells to its international customers through a network of
foreign technical sales representative organizations. Sales to foreign
customers were approximately $17,105,000 in fiscal 2002, $22,072,000 in fiscal
2001, and $14,468,000 in fiscal 2000.

The Company closed its United Kingdom (UK) research & development facility
as of March 30, 2002 for the Instruments division. The Company has no other
foreign-based operations or material amounts of identifiable assets in foreign
countries. Its gross margins on foreign and domestic sales are similar.

Certain Factors Which May Adversely Affect Future Operations Or An Investment
In Giga-tronics

Business climate is volatile

Giga-tronics has a significant number of defense-related orders. If the
defense market should soften, shipments in the current year could decrease more
than current projected shipments with a concurrent decline in earnings. The
Companys commercial product backlog has a number of risks and uncertainties
such as the cancellation or deferral of orders, dispute over performance and
our ability to collect amounts due under these orders. If this occurs, then
shipments in the current year could decrease more than current projected
shipments resulting in a decline in earnings. During fiscal 2002 and 2001,
Midoriya, the Companys Japanese distributor accounted for a significant amount
of the Companys commercial sales, while at year-end Giga-tronics backlog from
this customer was negligible.

Giga-tronics sales are substantially dependent on the wireless
industry

Giga-tronics sells directly or indirectly to customers and equipment
manufacturers in the wireless industry. Currently, this industry is undergoing
dramatic and rapid change. As such, the business that Giga-tronics records
could decrease or existing recorded backlog could be stretched or deferred
resulting in less than projected shipments. These reduced shipments may have a
material adverse effect on operations.

Giga-tronics markets involve rapidly changing technology and standards

The market for electronics equipment is characterized by rapidly changing
technology and evolving industry standards. Giga-tronics believes that its
future success will depend in part upon its ability to develop and
commercialize its existing products, and to develop new products and
application and in part to develop, manufacture and successfully introduce new
products and product lines with improved capabilities and to continue to
enhance existing products. There can be no assurance that Giga-tronics will
successfully complete the development of current or future products or that
such products will achieve market acceptance.

Giga-tronics acquisitions may not be effectively integrated and their
integration may be costly

As part of its business strategy, Giga-tronics intends to broaden its
product lines and expand its markets, in part through the acquisition of other
business entities. Giga-tronics is subject to various risks in connection with
any future acquisitions. Such risks include, among other things, the
difficulty of assimilating the operations and personnel of the acquired
companies, the potential disruption of the Companys business, the inability of

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management to maximize the financial and strategic position of the Company
by the successful incorporation of acquired technology and rights into its
product offerings, the maintenance of uniform standards, controls, procedures
and policies, and the potential loss of key employees of acquired companies.
No assurance can be given that any acquisition by Giga-tronics will or will not
occur, that if an acquisition does occur, that it will not materially harm the
Company or that any such acquisition will be successful in enhancing the
Companys business. The Company currently contemplates that future
acquisitions may involve the issuance of additional shares of common stock.
Any such issuance may result in dilution to all Giga-tronics shareholders, and
sales of such shares in significant volume by the shareholders of acquired
companies may depress the price of its common stock.

Giga-tronics common stock price is volatile

The market price of the Companys common stock could be subject to
significant fluctuations in response to variations in quarterly operating
results, shortfalls in revenues or earning from levels expected by securities
analysts and other factors such as announcements of technological innovations
or new products by Giga-tronics or by competitors, government regulations or
developments in patent or other proprietary rights. In addition, the NASDAQ
National Market and other stock markets have experienced significant price
fluctuations in recent periods. These fluctuations often have seemingly been
unrelated to the operating performance of the specific companies whose stocks
are traded. Broad market fluctuations, as well as general foreign and domestic
economic conditions, may adversely affect the market price of the common stock.

Giga-tronics stock at any time has historically traded on thin volume on
NASDAQ. Sales of a significant volume of stock could result in a depression of
Giga-tronics share prices.




ITEM 2.  PROPERTIES

As of March 30, 2002, Giga-tronics principal executive office and the
Instrument divisions marketing, sales and engineering offices and
manufacturing facilities for its microwave and RF signal generator and power
measurement products are located in approximately 47,300 square feet in San
Ramon, California, which the Company occupies under a lease agreement expiring
December 31, 2006.

ASCORs marketing, sales and engineering offices and manufacturing
facilities for its switching and connecting devices are located in
approximately 18,756 square feet in Fremont, California, under a lease that
expires on June 30, 2006.

The DYMATIX marketing, sales and engineering offices and manufacturing
facilities for its automation equipment for the inspection of silicon wafers,
prober line and optical inspection equipment for the manufacture and test of
semiconductor devices are located in an approximately 20,400 square foot
facility in Santa Clara, California, under a lease expiring on June 30, 2002.

Microsources marketing, sales and engineering offices and manufacturing
facilities for its YIG tuned oscillators, filters and microwave synthesizers
are located in an approximately 49,090 square foot facility in Santa Rosa,
California, which the Company occupies under a lease expiring May 25, 2013.

The Company believes that its facilities are adequate for its business
activities.




ITEM 3.  LEGAL PROCEEDINGS

As of March 30, 2002, the Company has no material pending legal
proceedings. From time to time, Giga-tronics is involved in various disputes
and litigation matters that arise in the ordinary course of business.

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ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended March 30, 2002.

Executive Officers of the Company are listed on page 33 of this Form 10-K.




PART  II




ITEM 5.  MARKET FOR REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Common Stock Market Prices

Giga-tronics common stock is traded over the counter on NASDAQ National
Market System using the symbol GIGA. The number of record holders of the
Companys common stock as of March 30, 2002 was approximately 1,400. The table
below shows the high and low closing bid quotations for the common stock during
the indicated fiscal periods. These quotations reflect inter-dealer prices
without retail mark-ups, mark-downs, or commission and may not reflect actual
transactions.

|               |  |      |             |      |  |     |       |      |  |      |       |     |  |  |             |   |  |  |        |  |  |  |       | 
|-------------- |  | ---- | ----------- | ---- |  | --- | ----- | ---- |  | ---- | ----- | --- |  |  | ----------- | - |  |  | ------ |  |  |  | ----- | 
|               |  | 2002 |             | High |  | Low |       | 2001 |  | High |       | Low
|               |  |      |             |      |  |     |       |      |  |      |       |    
|First quarter  |  |      | (4/1-6/30   | )    |  |     | 5.810 |      |  |      | 3.200 |     |  |  | (3/26-6/24  | ) |  |  | 12.875 |  |  |  | 6.375 | 
|Second quarter |  |      | (7/1-9/29   | )    |  |     | 3.760 |      |  |      | 2.170 |     |  |  | (6/25-9/30  | ) |  |  | 10.000 |  |  |  | 6.781 | 
|Third quarter  |  |      | (9/30-12/29 | )    |  |     | 4.160 |      |  |      | 2.320 |     |  |  | (10/1-12/30 | ) |  |  | 7.313  |  |  |  | 4.813 | 
|Fourth quarter |  |      | (12/30-3/30 | )    |  |     | 4.630 |      |  |      | 3.450 |     |  |  | (12/31-3/31 | ) |  |  | 8.188  |  |  |  | 4.875 | 

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ITEM 6.  SELECTED FINANCIAL DATA

Effective March 26, 2000, the Company changed its method of accounting for
revenue recognition to conform with the guidance provided by SAB 101 (see Note 1
to the consolidated financial statements). The impact of adopting SAB 101
was to increase earnings (loss) before the cumulative effect of the accounting
 change in the year ended March 31, 2001 by $520,000, net of income taxes.

SELECTED FINANCIAL DATA

|                                                                               |  |            |        |           |  |           |        |           |  |           |        |  |  |   |        |   |  |   |        | 
|------------------------------------------------------------------------------ |  | ---------- | ------ | --------- |  | --------- | ------ | --------- |  | --------- | ------ |  |  | - | ------ | - |  | - | ------ | 
|                                                                               |  | Year Ended
|                                                                               |  |           
|                                                                               |  | March 30,  |        | March 31, |  | March 25, |        | March 27, |  | March 28,
|(In thousands except per share data)                                           |  | 2002       |        | 2001      |  | 2000      |        | 1999      |  | 1998     
|                                                                               |  |            |        |           |  |           |        |           |  |          
|Summary of Operations:                                                         |  |            |        |           |  |           |        |           |  |           |        |  |  |   |        |   |  |   |        | 
|Net sales                                                                      |  | $          | 39,036 |           |  | $         | 54,159 |           |  | $         | 47,577 |  |  | $ | 37,636 |   |  | $ | 36,813 | 
|Gross profit                                                                   |  |            | 11,535 |           |  |           | 19,056 |           |  |           | 15,810 |  |  |   | 11,534 |   |  |   | 15,789 | 
|Operating expenses                                                             |  |            | 16,085 |           |  |           | 16,032 |           |  |           | 14,315 |  |  |   | 15,293 |   |  |   | 15,172 | 
|Interest income, net                                                           |  |            | 63     |           |  |           | 205    |           |  |           | 59     |  |  |   | 121    |   |  |   | 457    | 
|Earnings (loss) before cumulative effect
of accounting change and income taxes |  |            | (4,462 | )         |  |           | 3,461  |           |  |           | 1,633  |  |  |   | (3,006 | ) |  |   | 1,096  | 
|Earnings (loss) before cumulative effect
of accounting change                  |  |            | (2,102 | )         |  |           | 2,421  |           |  |           | 1,139  |  |  |   | (1,858 | ) |  |   | 767    | 
|Net earnings (loss)                                                            |  |            | (2,102 | )         |  |           | 1,901  |           |  |           | 1,139  |  |  |   | (1,858 | ) |  |   | 767    | 
|Net earnings (loss) per share  basic                                          |  | $          | (0.46  | )         |  | $         | 0.42   |           |  | $         | 0.26   |  |  | $ | (0.43  | ) |  | $ | 0.18   | 
|Net earnings (loss) per share  diluted                                        |  | $          | (0.46  | )         |  | $         | 0.40   |           |  | $         | 0.24   |  |  | $ | (0.43  | ) |  | $ | 0.18   | 
|Shares of common stock  basic                                                 |  |            | 4,604  |           |  |           | 4,474  |           |  |           | 4,379  |  |  |   | 4,338  |   |  |   | 4,319  | 
|Shares of common stock  diluted                                               |  |            | 4,604  |           |  |           | 4,803  |           |  |           | 4,693  |  |  |   | 4,338  |   |  |   | 4,377  | 

|                            |  |           |        |           |  |           |        |           |  |           |        |  |  |   |        |  |  |   |        | 
|--------------------------- |  | --------- | ------ | --------- |  | --------- | ------ | --------- |  | --------- | ------ |  |  | - | ------ |  |  | - | ------ | 
|                            |  | March 30, |        | March 31, |  | March 25, |        | March 27, |  | March 28,
|(In thousands except ratio) |  | 2002      |        | 2001      |  | 2000      |        | 1999      |  | 1998     
|                            |  |           |        |           |  |           |        |           |  |          
|Financial Position:         |  |           |        |           |  |           |        |           |  |           |        |  |  |   |        |  |  |   |        | 
|Current ratio               |  |           | 5.46   |           |  |           | 4.06   |           |  |           | 3.17   |  |  |   | 3.32   |  |  |   | 5.06   | 
|Working capital             |  | $         | 23,012 |           |  | $         | 22,924 |           |  | $         | 21,066 |  |  | $ | 18,021 |  |  | $ | 23,484 | 
|Total assets                |  | $         | 32,880 |           |  | $         | 37,318 |           |  | $         | 37,526 |  |  | $ | 33,259 |  |  | $ | 32,672 | 
|Shareholders equity        |  | $         | 26,661 |           |  | $         | 28,475 |           |  | $         | 26,149 |  |  | $ | 24,710 |  |  | $ | 26,461 | 

|                                                                               |  |           |       |           |  |           |      |           |  |           |      |   |  |  |      |   |  |  |      |  
|------------------------------------------------------------------------------ |  | --------- | ----- | --------- |  | --------- | ---- | --------- |  | --------- | ---- | - |  |  | ---- | - |  |  | ---- | -
|                                                                               |  | March 30, |       | March 31, |  | March 25, |      | March 27, |  | March 28,
|                                                                               |  | 2002      |       | 2001      |  | 2000      |      | 1999      |  | 1998     
|                                                                               |  |           |       |           |  |           |      |           |  |          
|Percentage Data:                                                               |  |           |       |           |  |           |      |           |  |           |      |   |  |  |      |   |  |  |      |  
|Percent of net sales                                                           |  |           |       |           |  |           |      |           |  |           |      |   |  |  |      |   |  |  |      |  
|Gross profit                                                                   |  |           | 29.6  | %         |  |           | 35.2 | %         |  |           | 33.2 | % |  |  | 30.6 | % |  |  | 42.9 | %
|Operating expenses                                                             |  |           | 41.2  |           |  |           | 29.6 |           |  |           | 30.1 |   |  |  | 40.6 |   |  |  | 41.2 |  
|Interest income, net                                                           |  |           | 0.2   |           |  |           | 0.4  |           |  |           | 0.1  |   |  |  | 0.3  |   |  |  | 1.2  |  
|Earnings (loss) before cumulative effect
of accounting change and income taxes |  |           | (11.4 | )         |  |           | 6.4  |           |  |           | 3.4  |   |  |  | (8.0 | ) |  |  | 3.0  |  
|Net earnings (loss)                                                            |  |           | (5.4  | )         |  |           | 3.5  |           |  |           | 2.4  |   |  |  | (4.9 | ) |  |  | 2.1  |  

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SELECTED FINANCIAL DATA

Quarterly Financial Information (Unaudited)

|                                                                    |  |       |        |        |  |       |       |        |  |      |       |   |  |   |        |   |  |   |        |  
|------------------------------------------------------------------- |  | ----- | ------ | ------ |  | ----- | ----- | ------ |  | ---- | ----- | - |  | - | ------ | - |  | - | ------ | -
|                                                                    |  | 2002 
|                                                                    |  |      
|(In thousands except per share data)                                |  | First |        | Second |  | Third |       | Fourth |  | Year
|                                                                    |  |       |        |        |  |       |       |        |  |     
|Net sales                                                           |  | $     | 11,797 |        |  | $     | 9,892 |        |  | $    | 9,720 |   |  | $ | 7,627  |   |  | $ | 39,036 |  
|Gross profit                                                        |  |       | 3,326  |        |  |       | 3,612 |        |  |      | 3,405 |   |  |   | 1,192  |   |  |   | 11,535 |  
|Operating expenses                                                  |  |       | 4,332  |        |  |       | 4,060 |        |  |      | 3,824 |   |  |   | 3,869  |   |  |   | 16,085 |  
|Interest income, net                                                |  |       | 19     |        |  |       | 15    |        |  |      | 13    |   |  |   | 16     |   |  |   | 63     |  
|Loss before cumulative effect of
accounting change and
income taxes |  |       | (934   | )      |  |       | (435  | )      |  |      | (402  | ) |  |   | (2,682 | ) |  |   | (4,462 | )
|Loss before cumulative effect
of accounting change                  |  |       | (566   | )      |  |       | (275  | )      |  |      | (191  | ) |  |   | (1,070 | ) |  |   | (2,102 | )
|Net loss                                                            |  |       | (566   | )      |  |       | (275  | )      |  |      | (191  | ) |  |   | (1,070 | ) |  |   | (2,102 | )
|Net loss per share  basic                                          |  | $     | (0.12  | )      |  | $     | (0.06 | )      |  | $    | (0.04 | ) |  | $ | (0.23  | ) |  | $ | (0.46  | )
|Net loss per share  diluted                                        |  | $     | (0.12  | )      |  | $     | (0.06 | )      |  | $    | (0.04 | ) |  | $ | (0.23  | ) |  | $ | (0.46  | )
|Shares of common stock  basic                                      |  |       | 4,565  |        |  |       | 4,591 |        |  |      | 4,626 |   |  |   | 4,635  |   |  |   | 4,604  |  
|Shares of common stock  diluted                                    |  |       | 4,565  |        |  |       | 4,591 |        |  |      | 4,626 |   |  |   | 4,635  |   |  |   | 4,604  |  

|                                                                        |  |       |        |        |  |       |        |        |  |      |        |  |  |   |        |  |  |   |        | 
|----------------------------------------------------------------------- |  | ----- | ------ | ------ |  | ----- | ------ | ------ |  | ---- | ------ |  |  | - | ------ |  |  | - | ------ | 
|                                                                        |  | 2001 
|                                                                        |  |      
|                                                                        |  | First |        | Second |  | Third |        | Fourth |  | Year
|                                                                        |  |       |        |        |  |       |        |        |  |     
|Net sales                                                               |  | $     | 13,637 |        |  | $     | 13,642 |        |  | $    | 11,368 |  |  | $ | 15,512 |  |  | $ | 54,159 | 
|Gross profit                                                            |  |       | 4,963  |        |  |       | 4,814  |        |  |      | 4,068  |  |  |   | 5,211  |  |  |   | 19,056 | 
|Operating expenses                                                      |  |       | 3,775  |        |  |       | 4,298  |        |  |      | 3,883  |  |  |   | 4,076  |  |  |   | 16,032 | 
|Interest income, net                                                    |  |       | 33     |        |  |       | 36     |        |  |      | 96     |  |  |   | 40     |  |  |   | 205    | 
|Earnings before cumulative effect
of accounting change
and income taxes |  |       | 1,253  |        |  |       | 666    |        |  |      | 322    |  |  |   | 1,220  |  |  |   | 3,461  | 
|Earnings before cumulative effect of
accounting change                  |  |       | 877    |        |  |       | 465    |        |  |      | 225    |  |  |   | 854    |  |  |   | 2,421  | 
|Net earnings                                                            |  |       | 357    |        |  |       | 465    |        |  |      | 225    |  |  |   | 854    |  |  |   | 1,901  | 
|Net earnings per share  basic                                          |  | $     | 0.08   |        |  | $     | 0.10   |        |  | $    | 0.05   |  |  | $ | 0.19   |  |  | $ | 0.42   | 
|Net earnings per share  diluted                                        |  | $     | 0.07   |        |  | $     | 0.10   |        |  | $    | 0.05   |  |  | $ | 0.18   |  |  | $ | 0.40   | 
|Shares of common stock  basic                                          |  |       | 4,437  |        |  |       | 4,460  |        |  |      | 4,488  |  |  |   | 4,511  |  |  |   | 4,474  | 
|Shares of common stock  diluted                                        |  |       | 4,817  |        |  |       | 4,796  |        |  |      | 4,777  |  |  |   | 4,801  |  |  |   | 4,803  | 

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ITEM 7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

MANAGEMENTS DISCUSSION AND ANALYSIS

Results of Operations for Fiscal 2002 as compared to 2001

New orders received in fiscal 2002 were $20,461,000, a decrease of 65%
from the $57,830,000 received in 2001. New orders declined primarily due to the
weakness in the overall wireless market and major customer order cancellations
during fiscal 2002 partially offset by increases in new military orders. New
orders at Giga-tronics Instrument Division declined 65% to $10,357,000 for
fiscal year 2002 after a net order cancellation of $2,900,000. In fiscal 2002,
a significant customer of the Instrument Division stopped ordering from the
company, primarily due to slack demand. The company expects the lower levels
of business from this customer to continue. Orders at ASCOR declined 28% to
$3,296,000. DYMATIX experienced a decline of 55% on new orders to $2,969,000
for the fiscal year 2002. Orders at Microsource decreased 77% to $3,839,000
which includes $5,120,000 order reversal for a customer that commenced
liquidation proceedings. At year-end 2002, the Companys backlog of unfilled
orders was $21,387,000, compared to $39,964,000 at the end of 2001. The
decrease in backlog is primarily due to weak order levels at the Giga-tronics
Instrument Division and Microsource. As of year-end 2002, there were
approximately $13,912,000 unfilled orders that were scheduled for shipment
beyond a year and as of year end 2001 there were $7,245,000 unfilled orders
scheduled for shipment beyond a year. The increase in unfilled orders
scheduled for shipment beyond a year is attributable primarily to Microsources
customers delaying shipments of their orders.

Net sales for 2002 were $39,036,000, a 28% decrease from the $54,159,000
in 2001. The reduction in sales was primarily due to fewer orders booked
because of the slowdown in the commercial wireless market and stretch outs on
existing orders in backlog. In fiscal 2002, Microsource revenues decreased 24%
or $3,172,000, on weak orders and customer stretch outs. Giga-tronics
Instrument Division sales decreased 14% or $3,442,000 and ASCOR sales decreased
50% or $3,735,000 primarily due to weak orders at both of these segments. Sales
at DYMATIX decreased 57% or $4,774,000 on weak orders primarily due to
customers delaying orders until their new product is released.

Cost of sales increased 22% in fiscal 2002 to $27,501,000 from the
$35,103,000 in 2001. The decrease is primarily attributable to the 28% decline
in sales offset with higher costs for labor and material on the products
shipped coupled with the write down of inventory and pre-production costs
associated with the liquidation of a Microsource customer. Subsequent to year
end, a telecommunications equipment customer of the Microsource Division
commenced liquidation proceedings. As a result, the orders under the long term
production contract with this customer were cancelled and Giga-tronics recorded
a write-off of $1,100,000 of inventory and pre-production costs.

Operating expenses increased less than 1% or $50,000 in fiscal 2002 over
2001 due to decreases of $1,984,000 in SG&A and $50,000 in total amortization
offset by an increase of $1,914,000 in product development expenses. Product
development costs increased 38% or $1,914,000 in fiscal 2002 primarily due to
increased product development at DYMATIX and increased YIG product development
costs at Microsource. Selling, general and administrative expenses decreased
19% or $1,984,000 for the fiscal year 2002 compared to the prior year. The
decrease is a result of lower commission expense of $959,000 on lower sales for
the year coupled with $752,000 less in administrative expenses and $322,000
less in marketing expenses primarily due to expense reduction measures taken
during the year. These expense reductions were primarily personnel related. For
fiscal year 2002 amortization of intangibles decreased 22% or $50,000 as
compared to last fiscal year. The decrease in the amortization of intangibles
is primarily a result of reduced amortization of patents and licenses. The
Company wrote off $173,000 of remaining goodwill related to the Microsource
acquisition as such goodwill was determined to be impaired. Interest income in
2002 decreased from 2001 due to lower interest rates.

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Giga-tronics recorded a net loss of $2,102,000, or $0.46 per diluted
share, in 2002 versus net earnings before cumulative effect of accounting
change of $2,421,000, or $0.51 per diluted share, in 2001. The Company recorded
$520,000 for the cumulative effect of accounting change in fiscal 2001 as a
result of the implementation of SAB 101. As a result, Giga-tronics recorded
net earnings of $1,901,000, or $0.40 per diluted share, in 2001.

Results of Operations for Fiscal 2001 as compared to 2000

During the fourth quarter of fiscal 2001, the Company adopted SAB 101,
Revenue Recognition in Financial Statements.The Company recorded a net
cumulative effect adjustment related to this change in accounting of $520,000,
effective March 26, 2000. The adoption of SAB 101 resulted in the deferral of
$2,165,000 in sales as of the beginning of the 2001 fiscal year and subsequent
recognition of the deferred sales during the year.

New orders received in 2001 were $57,830,000, a decrease of 10% from
$64,013,000 in 2000. This decrease was attributable primarily to the
non-recurrence of a three-year contract for about $14,100,000 recorded at the
end of fiscal 2000. At year-end 2001, the Companys backlog of unfilled orders
was $39,964,000, compared to $34,128,000 at the end of 2000. As of year end
2001, there were approximately $7,245,000 unfilled orders that were scheduled
for shipment beyond a year and as of year end 2000 there were $10,201,000
unfilled orders scheduled for shipment beyond a year. Primarily, the increase
in backlog is attributable to strong order levels at Microsource and at the
Giga-tronics Instruments division.

Net sales for 2001 were $54,159,000, a 14% increase from $47,577,000 in
2000. Sales for the fiscal year 2001, without the SAB 101 adjustment, would
have been $51,994,000, or over a 9% increase in revenue as compared to the
$47,577,000 of the prior year. In fiscal 2001, Microsource revenues decreased
12% or $1,861,000, while Giga-tronics Instruments revenues increased 35% or
$6,485,000, in sales and ASCOR improved 12% or $798,000, in sales. DYMATIX
(formerly the Semiconductor Equipment Group) improved 16% or $1,160,000.
DYMATIX sales for the fiscal year 2001, without the SAB 101 adjustment, would
have declined over 14% or $1,005,000.

Cost of sales increased 11% in 2001 to $35,103,000 from $31,767,000 in
2000. Cost of sales for the fiscal year 2001, without the SAB 101 adjustment,
would have been $33,681,000, or over a 6% increase in cost of sales as compared
to the prior year. The increase in fiscal 2001 is attributable to increased
shipments of products during the fiscal year coupled with higher costs for
labor and material for the products shipped.

Operating expenses increased 12% in 2001 over 2000. Product development
costs increased $907,000 in fiscal 2001 to $5,087,000. This was principally
due to increased development of new products at the Instruments division and at
Microsource. Selling, general and administrative expenses increased $1,058,000
to $10,713,000 in 2001 due to higher commissions on higher revenues coupled
with higher personnel and promotional expenses at the Instruments division.
Amortization of intangibles decreased $248,000 to $232,000 principally, as a
result of reduced amortization of patents and licenses.

Other income increased in fiscal 2001 primarily due to increased sublease
rent from the facilities leased in Santa Rosa. Net interest income in 2001
increased from 2000 due to higher average cash available for investment. The
average cash improvement resulted principally from higher cash levels in the
middle of the year. The provision for income taxes in 2001 was $1,040,000, or
30%, of the pre-tax earnings.

Giga-tronics recorded net earnings before cumulative effect of accounting
change of $2,421,000, or $0.51 per diluted share, in 2001 versus $1,139,000, or
$0.24 per diluted share, in 2000. The improvement in 2001 earnings was due to
the Companys higher sales levels in 2001 as compared to 2000. The Company
recorded $520,000 for the cumulative effect of accounting change in 2001 as a
result of the implementation of SAB 101. As a result, Giga-tronics recorded
net earnings of $1,901,000, or $0.40 per diluted share, in 2001 versus
$1,139,000, or $0.24 per diluted share, in 2000.

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Critical Accounting Policies

Management of Giga-tronics has identified the following as the Companys
critical accounting policies:

Revenue

Revenues are recognized when there is evidence of an arrangement, delivery has
occurred, the price is fixed and determinable, and collectability is reasonably
assured. This generally occurs when products are shipped and the risk of loss
has passed. Upon shipment, the Company also provides for the estimated cost
that may be incurred for product warranties. Revenue related to products
shipped subject to customers evaluation is recognized upon final acceptance.

Inventory

Inventories are stated at the lower of cost or market. Cost is determined on a
first-in, first-out basis.

Accounts Receivable

Accounts receivable are stated at the net realizable value. The Company has
estimated an allowance for uncollectible accounts based on analysis of
outstanding receivables, consideration of the age of those receivables, and the
Companys historical collection experience.

Deferred Tax Assets

The Company has recorded a valuation allowance to reflect the estimated amount
of deferred tax assets, which may not be realized. The ultimate realization of
deferred tax assets is dependent upon generation of future taxable income
during the periods in which those temporary differences become deductible.
Management considers projected future taxable income and tax planning
strategies in making this assessment. Based on the historical taxable income
and projections for future taxable income over the periods in which the
deferred tax assets become deductible, management believes it more likely than
not that the Company will realize benefits of these deductible differences, net
of valuation allowances, as of March 30, 2002.

Product Development Costs

The Company incurs pre-production costs on certain long-term supply
arrangements. The costs, which represent non-recurring engineering and tooling
costs, are capitalized as other assets and amortized over their useful life
when reimbursable by the customer. Otherwise, they are expensed as incurred.
Subsequent to fiscal 2002 year end, a telecommunications equipment customer of
the Microsource division commenced liquidation proceedings. As a result, the
orders under the long term production contract with this customer were
cancelled and Giga-tronics recorded a write-off of $1,100,000 of inventory and
pre-production costs. Included in other assets as of March 30, 2002 and March
31, 2001 were capitalized pre-production costs of $538,000, and $1,133,000,
respectively.

Financial Condition and Liquidity

As of March 30, 2002, Giga-tronics had $7,180,000 in cash and cash
equivalents, compared to $3,469,000 as of March 31, 2001. Cash provided by
operations amounted to $3,795,000 in 2002, $1,951,000 in 2001, and $2,644,000
in 2000. Cash provided by operations in 2002 is attributed to accounts
receivable collections and reduced inventory purchases offset by the operating
loss in the year and the net change in operating assets and liabilities. Cash
provided by operations in 2001 and 2000 is attributed to operating income in
the year.

Giga-tronics continues to maintain a strong financial position, with
working capital at year-end of $23,012,000 compared to $22,924,000 in 2001 and
$21,066,000 in 2000. The Companys current ratio of 5.5 increased from the
2001 and 2000 current ratio of 4.1 and 3.2, respectively. The increase in
working capital is primarily a result of the reduced inventory purchases of the
Company.

Additions to property and equipment were $811,000 in 2002, compared to
$1,800,000 in 2001 and $1,361,000 in 2000. Fiscal 2002 spending reflects
continuing investments to support new product development,

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increased productivity, and improved product quality. Other cash inflows
in 2002 consist of $239,000 of common stock in connection with the exercise of
stock options. Other cash inflows in 2001 were $367,000 of common stock in
connection with the exercise of stock options.

The Company leases various facilities under various operating leases that
expire through May 2013. Total future minimum lease payments under these
leases amount to approximately $10,908,000.

The Company is committed to purchase certain inventory under
non-cancelable purchase orders. As of March 30, 2002, non-cancelable purchase
orders were approximately $5,339,000 through fiscal 2003 and $256,000 beyond
fiscal 2003 and were scheduled to be delivered to the company at various dates
through October 2003.

Management believes that the Company has adequate resources to meet its
operating and capital expenditure needs for the foreseeable future. The Company
has a seven million dollar unsecured line of credit, none of which has been
used. This line of credit expires September 30, 2002. Giga-tronics intends to
increase research and development expenditures for the purpose of broadening
its product base. From time to time, Giga-tronics considers a variety of
acquisition opportunities to also broaden its product lines and expand its
market. Such acquisition activity could also increase the Companys operating
expenses and require the additional use of capital resources.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (FASB) issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the Balance Sheet and measure those instruments at fair value.
For a derivative not designated as a hedging instrument, changes in the fair
value of the derivative are recognized in earnings in the period of change.
The Company adopted SFAS No. 133 in the first quarter of fiscal 2002. The
adoption of SFAS No. 133 did not have a material effect on the financial
position or results of operations of the Company.

In July 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Other Intangible Assets. Statement No. 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 as well as all purchase method
business combinations completed after June 30, 2001. Statement No. 141 also
specifies criteria that intangible assets acquired in a purchase method
business combination must meet to be recognized and reported apart from
goodwill. Statement No. 142 requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead be tested for
impairment at least annually in accordance with the provisions of Statement No.
142. Statement No. 142 also requires that intangible assets with definite
useful lives be amortized over their respective estimated useful lives, and
reviewed for impairment in accordance with SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
The Company adopted the provisions of Statement No. 141 as of July 1, 2001. The
adoption of Statement No. 141 did not have a material impact on the Companys
financial position or results of operations. The Company will adopt the
provisions of Statement No. 142 effective March 31, 2002 and the Company does
not expect this to have a material impact on the consolidated financial
statements.

In August 2001, the FASB issued Statement No. 143, Accounting For Asset
Retirement Obligations. Statement No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated retirement costs. The Company will adopt Statement
No. 143 on January 1, 2003 and the adoption will not have a material effect on
our financial condition or results of operations.

In August 2001, the FASB issued Statement No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. Statement No. 144 addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. Statement No. 144 retains the fundamental provisions in Statement No. 121 for
recognizing and measuring impairment losses on long-lived assets held
for use and long-lived assets to be disposed of by sale, while also resolving
significant implementation issues associated with Statement No. 121. Statement
No. 144 also

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retains the basic provisions of APB Opinion No. 30 on how to present
discontinued operations in the statement of operations, but broadens that
presentation to include a component of an entity (rather than a segment of a
business). The Company will adopt the provisions of Statement No. 144 effective
March 31, 2002. The impact of such adoption will not have a material effect on
the Companys financial position or results of operations.




ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Financial instruments that expose the company to market risk are cash and
cash equivalents. The investments are held in recognized financial instruments
and have limited market risk due to the short-term maturities of the
instruments.

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                             |                                                                            |                |        |                |  |   |        |        | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------- | -------------- | ------ | -------------- |  | - | ------ | ------ | 
|(In thousands except share data)                                                                                                                             |                                                                            | March 30, 2002 |        | March 31, 2001
|                                                                                                                                                             |                                                                            |                |        |               
|Assets                                                                                                                                                       |                                                                            |                |        |                |  |   |        |       
|Current assets                                                                                                                                               |                                                                            |                |        |                |  |   |        |       
|                                                                                                                                                             | Cash and cash equivalents                                                  |                | $      | 7,180          |  |   | $      | 3,469  | 
|                                                                                                                                                             | Trade accounts receivable, net of allowance
of $358 and $262, respectively |                |        | 3,881          |  |   |        | 7,767  | 
|                                                                                                                                                             | Inventories                                                                |                |        | 11,246         |  |   |        | 15,185 | 
|                                                                                                                                                             | Income tax refund receivable                                               |                |        | 701            |  |   |        |       | 
|                                                                                                                                                             | Prepaid expenses                                                           |                |        | 320            |  |   |        | 424    | 
|                                                                                                                                                             | Deferred income taxes                                                      |                |        | 4,841          |  |   |        | 3,560  | 
|                                                                                                                                                             |                                                                            |                |        |                |  |   |        |       
|Total current assets                                                                                                                                         |                                                                            |                | 28,169 |                |  |   | 30,405 |       
|Property and equipment                                                                                                                                       |                                                                            |                |        |                |  |   |        |       
|                                                                                                                                                             | Leasehold improvements                                                     |                |        | 408            |  |   |        | 398    | 
|                                                                                                                                                             | Machinery and equipment                                                    |                |        | 16,590         |  |   |        | 16,123 | 
|                                                                                                                                                             | Office furniture and fixtures                                              |                |        | 1,162          |  |   |        | 1,142  | 
|                                                                                                                                                             |                                                                            |                |        |                |  |   |        |       
|Property and equipment, gross cost                                                                                                                           |                                                                            |                | 18,160 |                |  |   | 17,663 |       
|Less accumulated depreciation and amortization                                                                                                               |                                                                            |                | 14,098 |                |  |   | 12,357 |       
|                                                                                                                                                             |                                                                            |                |        |                |  |   |        |       
|Property and equipment, net                                                                                                                                  |                                                                            |                | 4,062  |                |  |   | 5,306  |       
|Patents and licenses                                                                                                                                         |                                                                            |                | 20     |                |  |   | 36     |       
|Goodwill, net                                                                                                                                                |                                                                            |                |       |                |  |   | 339    |       
|Other assets                                                                                                                                                 |                                                                            |                | 629    |                |  |   | 1,232  |       
|                                                                                                                                                             |                                                                            |                |        |                |  |   |        |       
|Total assets                                                                                                                                                 |                                                                            | $              | 32,880 |                |  | $ | 37,318 |       
|                                                                                                                                                             |                                                                            |                |        |                |  |   |        |       
|Liabilities and shareholders equity                                                                                                                         |                                                                            |                |        |                |  |   |        |       
|Current liabilities                                                                                                                                          |                                                                            |                |        |                |  |   |        |       
|                                                                                                                                                             | Accounts payable                                                           |                | $      | 1,426          |  |   | $      | 3,347  | 
|                                                                                                                                                             | Accrued commissions                                                        |                |        | 224            |  |   |        | 435    | 
|                                                                                                                                                             | Accrued payroll and benefits                                               |                |        | 1,249          |  |   |        | 1,687  | 
|                                                                                                                                                             | Accrued warranty                                                           |                |        | 779            |  |   |        | 732    | 
|                                                                                                                                                             | Customer advances                                                          |                |        | 780            |  |   |        | 690    | 
|                                                                                                                                                             | Obligation under capital lease                                             |                |        | 89             |  |   |        | 167    | 
|                                                                                                                                                             | Other current liabilities                                                  |                |        | 610            |  |   |        | 423    | 
|                                                                                                                                                             |                                                                            |                |        |                |  |   |        |       
|Total current liabilities                                                                                                                                    |                                                                            |                | 5,157  |                |  |   | 7,481  |       
|Obligations under capital lease, net of current portion                                                                                                      |                                                                            |                | 94     |                |  |   | 115    |       
|Deferred income taxes                                                                                                                                        |                                                                            |                | 546    |                |  |   | 796    |       
|Deferred rent                                                                                                                                                |                                                                            |                | 422    |                |  |   | 451    |       
|                                                                                                                                                             |                                                                            |                |        |                |  |   |        |       
|Total liabilities                                                                                                                                            |                                                                            |                | 6,219  |                |  |   | 8,843  |       
|                                                                                                                                                             |                                                                            |                |        |                |  |   |        |       
|Shareholders equity                                                                                                                                         |                                                                            |                |        |                |  |   |        |       
|Preferred stock of no par value
Authorized 1,000,000 shares; no shares outstanding
at March 30, 2002 and March 31, 2001                                      |                                                                            |                |       |                |  |   |       |       
|Common stock of no par value;
Authorized 40,000,000 shares; 4,648,944 shares at
March 30, 2002 and 4,542,694 shares at
March 31, 2001 issued and outstanding |                                                                            |                | 12,634 |                |  |   | 12,346 |       
|Retained earnings                                                                                                                                            |                                                                            |                | 14,027 |                |  |   | 16,129 |       
|                                                                                                                                                             |                                                                            |                |        |                |  |   |        |       
|Total shareholders equity                                                                                                                                   |                                                                            |                | 26,661 |                |  |   | 28,475 |       
|                                                                                                                                                             |                                                                            |                |        |                |  |   |        |       
|Total liabilities and shareholders equity                                                                                                                   |                                                                            | $              | 32,880 |                |  | $ | 37,318 |       
|                                                                                                                                                             |                                                                            |                |        |                |  |   |        |       

See Accompanying Notes to Consolidated Financial Statements

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##### Table of Contents



CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|------------------------------------------------------------------------------------------------------ |  | -------------- | ------ | -------------- |  | -------------- | ------ | - |  | - | ------ | 
|Years Ended
(In thousands except share data)                                                           |  | March 30, 2002 |        | March 31, 2001 |  | March 25, 2000
|                                                                                                       |  |                |        |                |  |               
|Net sales                                                                                              |  | $              | 39,036 |                |  | $              | 54,159 |   |  | $ | 47,577 | 
|Cost of sales                                                                                          |  |                | 27,501 |                |  |                | 35,103 |   |  |   | 31,767 | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Gross profit                                                                                           |  |                | 11,535 |                |  |                | 19,056 |   |  |   | 15,810 | 
|Product development                                                                                    |  |                | 7,001  |                |  |                | 5,087  |   |  |   | 4,180  | 
|Selling, general and administrative                                                                    |  |                | 8,729  |                |  |                | 10,713 |   |  |   | 9,655  | 
|Amortization of intangibles                                                                            |  |                | 182    |                |  |                | 232    |   |  |   | 480    | 
|Goodwill impairment                                                                                    |  |                | 173    |                |  |                |       |   |  |   |       | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Operating expenses                                                                                     |  |                | 16,085 |                |  |                | 16,032 |   |  |   | 14,315 | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Operating income (loss)                                                                                |  |                | (4,550 | )              |  |                | 3,024  |   |  |   | 1,495  | 
|Other income (expense)                                                                                 |  |                | 25     |                |  |                | 232    |   |  |   | 79     | 
|Interest income, net                                                                                   |  |                | 63     |                |  |                | 205    |   |  |   | 59     | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Earnings (loss) before provision (benefit) for
income taxes
and cumulative effect of accounting change |  |                | (4,462 | )              |  |                | 3,461  |   |  |   | 1,633  | 
|Provision (benefit) for income taxes                                                                   |  |                | (2,360 | )              |  |                | 1,040  |   |  |   | 494    | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Earnings (loss) before cumulative effect
of accounting change                                          |  |                | (2,102 | )              |  |                | 2,421  |   |  |   | 1,139  | 
|Cumulative effect of accounting change                                                                 |  |                |       |                |  |                | 520    |   |  |   |       | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Net earnings (loss)                                                                                    |  | $              | (2,102 | )              |  | $              | 1,901  |   |  | $ | 1,139  | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Basic earnings (loss) per share:                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Before cumulative effect of accounting change                                                          |  | $              | (0.46  | )              |  | $              | 0.54   |   |  | $ | 0.26   | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Cumulative effect of accounting change                                                                 |  |                |       |                |  |                | (0.12  | ) |  |   |       | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Basic earnings (loss) per share                                                                        |  | $              | (0.46  | )              |  | $              | 0.42   |   |  | $ | 0.26   | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Diluted earnings (loss) per share:                                                                     |  |                |        |                |  |                |        |   |  |   |        | 
|Before cumulative effect of accounting change                                                          |  | $              | (0.46  | )              |  | $              | 0.51   |   |  | $ | 0.24   | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Cumulative effect of accounting change                                                                 |  |                |       |                |  |                | (0.11  | ) |  |   |       | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Diluted earnings (loss) per share                                                                      |  | $              | (0.46  | )              |  | $              | 0.40   |   |  | $ | 0.24   | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Weighted average basic common shares outstanding                                                       |  |                | 4,604  |                |  |                | 4,474  |   |  |   | 4,379  | 
|Weighted average diluted common shares outstanding                                                     |  |                | 4,604  |                |  |                | 4,803  |   |  |   | 4,693  | 
|Pro forma amounts assuming accounting
change is applied
retroactively:                                 |  |                |        |                |  |                |        |   |  |   |        | 
|(Unaudited)                                                                                            |  |                |        |                |  |                |        |   |  |   |        | 
|Net income                                                                                             |  |                |        |                |  | $              | 2,421  |   |  | $ | 623    | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Basic earnings per share                                                                               |  |                |        |                |  | $              | 0.54   |   |  | $ | 0.14   | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 
|Diluted earnings per share                                                                             |  |                |        |                |  | $              | 0.51   |   |  | $ | 0.13   | 
|                                                                                                       |  |                |        |                |  |                |        |   |  |   |        | 

See Accompanying Notes to Consolidated Financial Statements

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##### Table of Contents



CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY AND COMPREHENSIVE INCOME (LOSS)

|                                                      |              |        |              |        |               |               |               |               |          |          |   |        |   |   |   |   |  |   |        |        |   |   |        |        |  
|----------------------------------------------------- | ------------ | ------ | ------------ | ------ | ------------- | ------------- | ------------- | ------------- | -------- | -------- | - | ------ | - | - | - | - |  | - | ------ | ------ | - | - | ------ | ------ | -
|                                                      |              |        | Common Stock |        |               |               |               |               | Other    |          |   |        |   |   |   |   | 
|                                                      |              |        |              |        | Comprehensive |               | Comprehensive |               | Retained |          |   |        |  
|(In thousands except share data)                      |              | Shares |              | Amount |               | Income (Loss) |               | Income (Loss) |          | Earnings |   | Total 
|                                                      |              |        |              |        |               |               |               |               |          |          |   |       
|Balance at March 27, 1999                             |              |        | 4,361,902    |        |               | $             | 11,621        |               |          | $        |  |        |   | $ |  |   |  | $ | 13,089 |        |   | $ | 24,710 |       
|Comprehensive Income  net                           
|                                                      | Net earnings |        |              |       |               |               |               |              |          |          |   | 1,139  |   |   |   |  |  |   |        | 1,139  |   |   |        | 1,139  |  
|                                                      |              |        |              |        |               |               |               |               |          |          |   |        |   |   |   |   |  |   |        |        |   |   |        |       
|Stock issuance under stock option plans               |              |        | 69,106       |        |               |               | 174           |               |          |          |  |        |   |   |  |   |  |   |       |        |   |   | 174    |       
|Tax benefit associated with exercise
of stock options |              |        |             |        |               |               | 126           |               |          |          |  |        |   |   |  |   |  |   |       |        |   |   | 126    |       
|                                                      |              |        |              |        |               |               |               |               |          |          |   |        |   |   |   |   |  |   |        |        |   |   |        |       
|Balance at March 25, 2000                             |              |        | 4,431,008    |        |               | $             | 11,921        |               |          | $        |  |        |   | $ |  |   |  | $ | 14,228 |        |   | $ | 26,149 |       
|Comprehensive Income  net                           
|                                                      | Net earnings |        |              |       |               |               |               |              |          |          |   | 1,901  |   |   |   |  |  |   |        | 1,901  |   |   |        | 1,901  |  
|                                                      |              |        |              |        |               |               |               |               |          |          |   |        |   |   |   |   |  |   |        |        |   |   |        |       
|Stock issuance under stock option plans               |              |        | 111,686      |        |               |               | 367           |               |          |          |  |        |   |   |  |   |  |   |       |        |   |   | 367    |       
|Tax benefit associated with exercise
of stock options |              |        |             |        |               |               | 58            |               |          |          |  |        |   |   |  |   |  |   |       |        |   |   | 58     |       
|                                                      |              |        |              |        |               |               |               |               |          |          |   |        |   |   |   |   |  |   |        |        |   |   |        |       
|Balance at March 31, 2001                             |              |        | 4,542,694    |        |               | $             | 12,346        |               |          | $        |  |        |   | $ |  |   |  | $ | 16,129 |        |   | $ | 28,475 |       
|Comprehensive Income  net                           
|                                                      | Net earnings |        |              |       |               |               |               |              |          |          |   | (2,102 | ) |   |   |  |  |   |        | (2,102 | ) |   |        | (2,102 | )
|                                                      |              |        |              |        |               |               |               |               |          |          |   |        |   |   |   |   |  |   |        |        |   |   |        |       
|Stock issuance under stock option plans               |              |        | 106,250      |        |               |               | 239           |               |          |          |  |        |   |   |  |   |  |   |       |        |   |   | 239    |       
|Tax benefit associated with exercise
of stock options |              |        |             |        |               |               | 49            |               |          |          |  |        |   |   |  |   |  |   |       |        |   |   | 49     |       
|                                                      |              |        |              |        |               |               |               |               |          |          |   |        |   |   |   |   |  |   |        |        |   |   |        |       
|Balance at March 30, 2002                             |              |        | 4,648,944    |        |               | $             | 12,634        |               |          | $        |  |        |   | $ |  |   |  | $ | 14,027 |        |   | $ | 26,661 |       
|                                                      |              |        |              |        |               |               |               |               |          |          |   |        |   |   |   |   |  |   |        |        |   |   |        |       

See Accompanying Notes to Consolidated Financial Statements

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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                 |                                           |                |        |                |   |                |        |        |   |   |        |        |  
|-------------------------------------------------------------------------------- | ----------------------------------------- | -------------- | ------ | -------------- | - | -------------- | ------ | ------ | - | - | ------ | ------ | -
|Years ended                                                                      |                                           |                |        |                |   |                |        |        |   |   |        |       
|(In thousands)                                                                   |                                           | March
30, 2002 |        | March 31, 2001 |   | March 25, 2000
|                                                                                 |                                           |                |        |                |   |               
|Cash flows provided from operations:                                             |                                           |                |        |                |   |                |        |        |   |   |        |       
|Net earnings (loss)                                                              |                                           | $              | (2,102 | )              |   | $              | 1,901  |        |   | $ | 1,139  |       
|Adjustments to reconcile net earnings (loss) to
net cash provided by operations: |                                           |                |        |                |   |                |        |        |   |   |        |       
|Provision for bad debt                                                           |                                           |                | 96     |                |   |                | 8      |        |   |   | (182   | )     
|Depreciation and amortization                                                    |                                           |                | 2,216  |                |   |                | 2,120  |        |   |   | 2,111  |       
|Impairment of Goodwill                                                           |                                           |                | 173    |                |   |                |       |        |   |   |       |       
|Tax benefit from employee stock options                                          |                                           |                | 49     |                |   |                | 58     |        |   |   | 126    |       
|Tax benefit of pre acquisition NOL utilization                                   |                                           |                |       |                |   |                |       |        |   |   | 394    |       
|Gain on sales of fixed assets                                                    |                                           |                | (1     | )              |   |                | (20    | )      |   |   | (20    | )     
|Deferred income taxes                                                            |                                           |                | (1,531 | )              |   |                | (205   | )      |   |   | (81    | )     
|Changes in operating assets and liabilities:                                     |                                           |                |        |                |   |                |        |        |   |   |        |       
|                                                                                 | Trade accounts receivable                 |                |        | 3,799          |   |                |        | 1,419  |   |   |        | (2,578 | )
|                                                                                 | Inventories                               |                |        | 3,939          |   |                |        | (1,072 | ) |   |        | (864   | )
|                                                                                 | Prepaid expenses                          |                |        | 229            |   |                |        | 20     |   |   |        | (61    | )
|                                                                                 | Accounts payable                          |                |        | (1,921         | ) |                |        | (718   | ) |   |        | 1,043  |  
|                                                                                 | Accrued commissions                       |                |        | (211           | ) |                |        | (190   | ) |   |        | 256    |  
|                                                                                 | Accrued payroll and benefits              |                |        | (438           | ) |                |        | 49     |   |   |        | 292    |  
|                                                                                 | Accrued warranty                          |                |        | 47             |   |                |        | 179    |   |   |        | 86     |  
|                                                                                 | Accrued other expenses                    |                |        | 62             |   |                |        | (613   | ) |   |        | 535    |  
|                                                                                 | Customer advances                         |                |        | 90             |   |                |        | (846   | ) |   |        | (112   | )
|                                                                                 | Income taxes receivable/payable           |                |        | (701           | ) |                |        | (139   | ) |   |        | 560    |  
|                                                                                 |                                           |                |        |                |   |                |        |        |   |   |        |       
|Net cash provided by operations                                                  |                                           |                | 3,795  |                |   |                | 1,951  |        |   |   | 2,644  |       
|Cash flows from investing activities:                                            |                                           |                |        |                |   |                |        |        |   |   |        |       
|Proceeds from sale of property and equipment                                     |                                           |                | 13     |                |   |                | 26     |        |   |   | 7      |       
|Additions to property and equipment                                              |                                           |                | (708   | )              |   |                | (1,645 | )      |   |   | (1,311 | )     
|Payment for purchase of Microsource,
including transaction costs                 |                                           |                |       |                |   |                |       |        |   |   | (8     | )     
|Other assets                                                                     |                                           |                | 603    |                |   |                | (489   | )      |   |   | (565   | )     
|                                                                                 |                                           |                |        |                |   |                |        |        |   |   |        |       
|Net cash used in investing activities                                            |                                           |                | (92    | )              |   |                | (2,108 | )      |   |   | (1,877 | )     
|Cash flows from financing activities:                                            |                                           |                |        |                |   |                |        |        |   |   |        |       
|Issuance of common stock                                                         |                                           |                | 239    |                |   |                | 367    |        |   |   | 174    |       
|Payment on notes payable and other long term liabilities                         |                                           |                | (29    | )              |   |                | (78    | )      |   |   | (45    | )     
|Payments on capital lease and other long term obligations                        |                                           |                | (202   | )              |   |                | (118   | )      |   |   | (127   | )     
|                                                                                 |                                           |                |        |                |   |                |        |        |   |   |        |       
|Net cash provided by financing activities                                        |                                           |                | 8      |                |   |                | 171    |        |   |   | 2      |       
|Increase in cash and cash equivalents                                            |                                           |                | 3,711  |                |   |                | 14     |        |   |   | 769    |       
|                                                                                 |                                           |                |        |                |   |                |        |        |   |   |        |       
|Beginning cash and cash equivalents                                              |                                           |                | 3,469  |                |   |                | 3,455  |        |   |   | 2,686  |       
|Ending cash and cash equivalents                                                 |                                           |                | 7,180  |                |   |                | 3,469  |        |   |   | 3,455  |       
|                                                                                 |                                           |                |        |                |   |                |        |        |   |   |        |       
|Supplementary disclosure of cash flow information:                               |                                           |                |        |                |   |                |        |        |   |   |        |       
|                                                                                 | Cash paid for income taxes                |                | $      | 56             |   |                | $      | 988    |   |   | $      | 86     |  
|                                                                                 |                                           |                |        |                |   |                |        |        |   |   |        |       
|                                                                                 | Cash paid for interest                    |                |        |               |   |                |        |       |   |   |        |       |  
|                                                                                 |                                           |                |        |                |   |                |        |        |   |   |        |       
|Non-cash investing and financing activities:                                     |                                           |                |        |                |   |                |        |        |   |   |        |       
|                                                                                 | Purchases under capital lease obligations |                |        | 103            |   |                |        | 155    |   |   |        | 50     |  
|                                                                                 |                                           |                |        |                |   |                |        |        |   |   |        |       

See Accompanying Notes to Consolidated Financial Statements

20



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1  Summary of Significant Accounting Policies

The CompanyThe accompanying consolidated financial statements include the
accounts of Giga-tronics and its wholly owned subsidiaries. Giga-tronics and
its subsidiary companies design, manufacture and market a broad line of test
and measurement equipment used in the development, test, and maintenance of
wireless communications products and systems, flight navigational equipment,
electronic defense systems, and automatic testing systems. The Company also
manufactures and markets a line of test, measurement, and handling equipment
used in the manufacturing of semiconductor devices. The Companys products are
sold worldwide to customers in the test and measurement and semiconductor
industries. During March 2002 the Company closed its United Kingdom (UK)
research & development facility. The Company currently has no other
foreign-based operations or material amounts of identifiable assets in foreign
countries. Its gross margins on foreign and domestic sales are similar, and
all non-U.S. sales are made in U.S. dollars.

Principles of ConsolidationThe consolidated financial statements include
the accounts of Giga-tronics and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.

Use of EstimatesThe preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that effect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Fiscal YearThe Companys financial reporting year consists of either a 52
week or 53 week period ending on the last Saturday of the month of March.
Fiscal year 2002 contained 52 weeks while fiscal year 2001 contained 53 weeks
and fiscal year 2000 contained 52 weeks.

Revenue RecognitionRevenues are recognized when there is evidence of an
arrangement, delivery has occurred, the price is fixed and determinable, and
collectability is reasonably assured. This generally occurs when products are
shipped and the risk of loss has passed. Upon shipment, the Company also
provides for the estimated cost that may be incurred for product warranties.
Revenue related to products shipped subject to customers evaluation is
recognized upon final acceptance.

During the fourth quarter of fiscal 2001, the Company adopted Staff Accounting
Bulletin (SAB) 101, Revenue Recognition in Financial Statements,effective
March 26, 2000. Prior to the adoption of SAB 101, the Company recognized
revenue on sales with final customer acceptance upon delivery and provided for
the estimated costs of installation obligations at the time the revenue was
recognized. The Company recorded a cumulative effect adjustment related to this
change in accounting of $520,000, net of income taxes at the beginning of
fiscal year 2001. The adoption of SAB 101 resulted in the deferral of
$2,165,000 in revenue as of the beginning of the 2001 fiscal year, and
subsequent recognition of the deferred sales during the year.

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Pro forma effect of SAB 101 assuming accounting change is applied retroactively
is as follows:

|                                      |  |                |        |                |  |                |        |  |  |   |        | 
|------------------------------------- |  | -------------- | ------ | -------------- |  | -------------- | ------ |  |  | - | ------ | 
|Years ended                           |  |                |        |                |  |                |        |  |  |   |        | 
|(In thousands except per share data)  |  | March 30, 2002 |        | March 31, 2001 |  | March 25, 2000
|                                      |  |                |        |                |  |               
|(Unaudited)                           |  |                |        |                |  |                |        |  |  |   |        | 
|Net Sales                             |  | $              | 39,036 |                |  | $              | 54,159 |  |  | $ | 45,412 | 
|Cost of Sales                         |  |                | 27,501 |                |  |                | 35,103 |  |  |   | 30,345 | 
|                                      |  |                |        |                |  |                |        |  |  |   |        | 
|Gross Profit                          |  |                | 11,535 |                |  |                | 19,056 |  |  |   | 15,067 | 
|Operating Expense                     |  |                | 16,085 |                |  |                | 16,032 |  |  |   | 14,315 | 
|                                      |  |                |        |                |  |                |        |  |  |   |        | 
|Operating Income (loss)               |  |                | (4,550 | )              |  |                | 3,024  |  |  |   | 752    | 
|Interest and other income             |  |                | 88     |                |  |                | 437    |  |  |   | 138    | 
|                                      |  |                |        |                |  |                |        |  |  |   |        | 
|Earnings (loss) before taxes          |  |                | (4,462 | )              |  |                | 3,461  |  |  |   | 890    | 
|Provision (benefit) for income taxes  |  |                | (2,360 | )              |  |                | 1,040  |  |  |   | 267    | 
|                                      |  |                |        |                |  |                |        |  |  |   |        | 
|Net income (loss)                     |  | $              | (2,102 | )              |  | $              | 2,421  |  |  | $ | 623    | 
|                                      |  |                |        |                |  |                |        |  |  |   |        | 
|Net income (loss) per share  Basic   |  | $              | (0.46  | )              |  | $              | 0.54   |  |  | $ | 0.14   | 
|                                      |  |                |        |                |  |                |        |  |  |   |        | 
|Net income (loss) per share  Diluted |  | $              | (0.46  | )              |  | $              | 0.51   |  |  | $ | 0.13   | 
|                                      |  |                |        |                |  |                |        |  |  |   |        | 

Cash EquivalentsThe Company considers all highly liquid debt instruments
with remaining maturity dates of 90 days or less from date of purchase to be
cash equivalents.

InventoriesInventories are stated at the lower of cost or market. Cost is
determined on a first-in, first-out basis.

Property and EquipmentProperty and equipment are stated at cost.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the respective assets, which range from three to ten years for
machinery and equipment and office fixtures. Leasehold improvements and assets
acquired under capital leases are amortized using the straight-line method over
the shorter of the estimated useful lives of the respective assets or the lease
term. Recoverability of property and equipment is measured by comparison of
its carrying amount, including the unamortized portion of goodwill allocated to
property and equipment, to future cash flows the property and equipment are
expected to generate. The Company assesses the recoverability of enterprise
level goodwill by determining whether the unamortized goodwill balance can be
recovered through undiscounted future cash flows of the acquired operation.

Deferred RentRent expense is recognized in an amount equal to the minimum
guaranteed base rent plus future rental increases amortized on the
straight-line basis over the terms of the leases, including free rent periods.
Included in other long-term liabilities is the excess of rent expense over
required rental payments.

Income TaxesIncome taxes are accounted for using the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

Patents and LicensesPatents and licenses are being amortized using the
straight-line method over periods of five to seven years. As of March 30, 2002
and March 31, 2001 accumulated amortization on patents and licenses was
$2,176,000 and $2,160,000, respectively.

GoodwillGoodwill is being amortized using the straight-line method over a
period of five years. In March 2002, the Company determined that the remaining
goodwill balance was impaired and recorded an impairment charge of $173,000. As of March
30, 2002 and March 31, 2001 accumulated amortization on goodwill was $2,220,000
and $1,881,000 respectively.

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Pre-production costsThe Company incurs pre-production costs on certain
long-term supply arrangements. The costs, which represent non-recurring
engineering and tooling costs, are capitalized as other assets and amortized
over their useful life when reimbursable by the customer. Otherwise, they are
expensed as incurred. Subsequent to fiscal 2002 year end, a telecommunications
equipment customer of the Microsource division commenced liquidation
proceedings. As a result, the orders under the long term production contract
with this customer were cancelled and Giga-tronics recorded a write-off of
$1,100,000 of inventory and pre-production costs in the fourth quarter of
fiscal 2002. Included in other assets as of March 30, 2002 and March 31, 2001
were capitalized pre-production costs of $538,000, and $1,133,000,
respectively.

Product Development CostsProduct development costs are charged to
operations in the year incurred.

Software Development CostsDevelopment costs included in the research and
development of new products and enhancements to existing products are expensed
as incurred until technological feasibility in the form of a working model has
been established. To date, completion of software development has been
concurrent with the establishment of technological feasibility, and
accordingly, no costs have been capitalized.

Stock-based CompensationThe Company uses the intrinsic value method to
account for employee stock-based compensation.

Earnings (Loss) Per ShareBasic earnings (loss) per share are computed
using the weighted average number of common shares outstanding during the
period. Diluted earnings per share incorporate the incremental shares issuable
upon the assumed exercise of stock options using the treasury method.
Antidilutive options are not included in the computation of diluted earnings
per share.

Financial Instruments and Concentration of Credit RiskFinancial
instruments, which potentially subject the Company to credit risk as of March 30,
2002, consist principally of cash, cash equivalents and trade accounts
receivable. The Companys cash equivalents consist principally of money
market funds and certificates of deposits. Cash and cash equivalents are held
in recognized depository institutions. Concentration of credit risk in trade
accounts receivable results primarily from sales to major customers. The
Company individually evaluates the creditworthiness of its customers and
generally does not require collateral or other security.

Fair Market Value of Financial InstrumentsThe carrying amount for the
Companys cash equivalents, trade accounts receivable and accounts payable
approximates fair market value because of the short maturity of these financial
instruments.

Recent Accounting PronouncementsThe Financial Accounting Standards Board
(FASB) issued SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the Balance Sheet and measure those instruments at
fair value. For a derivative not designated as a hedging instrument, changes
in the fair value of the derivative are recognized in earnings in the period of
change. The Company adopted SFAS No. 133 in the first quarter of fiscal 2002.
The adoption of SFAS No. 133 did not have a material effect on the financial
position or results of operations of the Company.

In July 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Other Intangible Assets. Statement No. 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 as well as all purchase method
business combinations completed after June 30, 2001. Statement No. 141 also
specifies criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill.
Statement No. 142 requires that goodwill and intangible assets with indefinite
useful lives no longer be amortized, but instead be tested for impairment at
least annually in accordance with the provisions of Statement No. 142.
Statement No. 142 also requires that intangible assets with definite useful
lives be amortized over their respective estimated

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useful lives, and reviewed for impairment in accordance with SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of. The Company adopted the provisions of Statement No. 141 as of
July 1, 2001. The adoption of Statement No. 141 did not have a material impact
on the Companys financial position or results of operations. The Company will
adopt the provisions of Statement No. 142 effective March 31, 2002. The
Company does not expect this to have a material effect on the consolidated
financial statements.

In August 2001, the FASB issued Statement No. 143, Accounting For Asset
Retirement Obligations. Statement No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated retirement costs. The Company will adopt Statement
No. 143 on January 1, 2003 and the adoption will not have a material effect on
our financial condition or results of operations.

In August 2001, the FASB issued Statement No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. Statement No. 144 addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. Statement No. 144 retains the fundamental provisions in Statement No. 121
for recognizing and measuring impairment losses on long-lived assets held
for use and long-lived assets to be disposed of by sale, while also resolving
significant implementation issues associated with Statement No. 121. Statement
No. 144 also retains the basic provisions of APB Opinion No. 30 on how to
present discontinued operations in the statement of operations, but broadens
that presentation to include a component of an entity (rather than a segment of
a business). The Company adopted the provisions of Statement No. 144 effective
March 31, 2002. The impact of such adoption did not have a material effect on
the Companys financial position or results of operations.

2  Cash and Cash Equivalents

Cash and cash equivalents consisted of the following at March 30, 2002 and March 31, 2001:

|               |       |           |                           |       |  |   |       |       | 
|-------------- | ----- | --------- | ------------------------- | ----- |  | - | ----- | ----- | 
|               |       |           | Cash and Cash Equivalents
|               |       |           |                          
|March 30, 2002 |       | Amortized |                           | Fair 
|(In thousands) |       | Cost      |                           | Value
|               |       |           |                           |      
|Cash           |       | $         | 7,180                     |       |  | $ | 7,180 |      
|               |       |           |                           |       |  |   |       |      
|               | Total |           | $                         | 7,180 |  |   | $     | 7,180 | 
|               |       |           |                           |       |  |   |       |      

|               |       |           |                           |       |  |   |       |       | 
|-------------- | ----- | --------- | ------------------------- | ----- |  | - | ----- | ----- | 
|               |       |           | Cash and Cash Equivalents
|               |       |           |                          
|March 31,
2001 |       | Amortized |                           | Fair 
|(In thousands) |       | Cost      |                           | Value
|               |       |           |                           |      
|Cash           |       | $         | 3,469                     |       |  | $ | 3,469 |      
|               |       |           |                           |       |  |   |       |      
|               | Total |           | $                         | 3,469 |  |   | $     | 3,469 | 
|               |       |           |                           |       |  |   |       |      

3  Inventories

|                        |  |                |        |                |  |   |        | 
|----------------------- |  | -------------- | ------ | -------------- |  | - | ------ | 
|Years ended             |  |                |        |                |  |   |        | 
|(In thousands)          |  | March 30, 2002 |        | March 31, 2001
|                        |  |                |        |               
|Raw materials           |  | $              | 6,034  |                |  | $ | 8,432  | 
|Work-in-progress        |  |                | 3,852  |                |  |   | 4,833  | 
|Finished goods          |  |                | 683    |                |  |   | 1,020  | 
|Demonstration inventory |  |                | 677    |                |  |   | 900    | 
|                        |  |                |        |                |  |   |        | 
|                        |  | $              | 11,246 |                |  | $ | 15,185 | 
|                        |  |                |        |                |  |   |        | 

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4  Selling Expenses

Selling expenses consist primarily of commissions paid to various marketing
agencies. Commission expense totaled $1,620,000, $2,579,000, and $2,360,000 in
fiscal 2002, 2001, and 2000, respectively. Advertising costs which are
expensed as incurred totaled $362,000, $579,000, and $511,000 for fiscal 2002,
2001, and 2000, respectively.

5  Significant Customers and Industry Segment Information

The Company has five reportable segments: Giga-tronics Instruments division,
ASCOR, Microsource, DYMATIX, and Corporate. Giga-tronics Instrument division
produces a broad line of test and measurement equipment used in the
development, test and maintenance of wireless communications products and
systems, flight navigational equipment, electronic defense systems and
automatic testing systems. ASCOR designs, manufactures, and markets a line of
switching devices that link together many specific purpose instruments that
comprise automatic test systems. Microsource develops and manufactures a broad
line of YIG (Yttrium, Iron, Garnet) tuned oscillators, filters and microwave
synthesizers, which are used in a wide variety of microwave instruments or
devices. DYMATIX, which includes Viking Semiconductor Equipment, Inc. and
Ultracision, Inc., manufactures and markets optical inspection equipment used
to test semiconductor devices and automation equipment for the test and
inspection of silicon wafers. Corporate handles the financing needs of each
segment and lends funds to each segment as required.

The accounting policies for the segments are the same as those described in the
Summary of Significant Accounting Policies. The Company evaluates the
performance of its segments and allocates resources to them based on earnings
before income taxes (pre-tax income (loss)). Segment net sales includes sales
to external customers. Segment pre-tax loss includes an allocation for
corporate expenses, amortization of goodwill, and interest expense from
borrowings from Corporate. Corporate expenses are allocated to the reportable
segments based principally on full time equivalent headcount. Interest expense
is charged at approximately prime which is currently 5% for cash required by
each segment. Goodwill associated with acquisitions are recorded as assets of
the individual segments. Assets include accounts receivable, inventories,
equipment, cash, deferred income taxes, prepaid expenses, goodwill and other
long-term assets. The Company accounts for inter-segment sales and transfers
at terms that allow a reasonable profit to the seller. During the periods
reported there were no significant inter-segment sales or transfers.

The Companys reportable operating segments are strategic business units that
offer different products and services. They are managed separately because each
business utilizes different technology and requires different marketing
strategies. All of the businesses except for Giga-tronics Instruments were
acquired. The Companys chief operating decision maker is considered to be the
Companys Chief Executive Officer (CEO). The CEO reviews financial
information presented on a consolidated basis accompanied by disaggregated
information about revenues and pre-tax income by operating segment. The tables
below present information for the fiscal years ended in 2002, 2001 and 2000:

March 30, 2002 (In thousands):

|                              |  |              |        |       |  |             |       |         |  |           |        |       |  |   |        |   |  |   |       |  |  |   |        |  
|----------------------------- |  | ------------ | ------ | ----- |  | ----------- | ----- | ------- |  | --------- | ------ | ----- |  | - | ------ | - |  | - | ----- |  |  | - | ------ | -
|                              |  | Giga-tronics |        |       |  |             |       |         |  |           |        |       |  |   |        |   |  |   |       |  |  |  
|                              |  | Instruments  |        | ASCOR |  | Microsource |       | DYMATIX |  | Corporate |        | Total
|                              |  |              |        |       |  |             |       |         |  |           |        |      
|Revenue                       |  | $            | 21,559 |       |  | $           | 3,768 |         |  | $         | 10,036 |       |  | $ | 3,673  |   |  | $ |      |  |  | $ | 39,036 |  
|Interest income               |  |              | 28     |       |  |             | 74    |         |  |           | 0      |       |  |   | 4      |   |  |   | 69    |  |  |   | 175    |  
|Interest expense              |  |              | (130   | )     |  |             | 0     |         |  |           | (561   | )     |  |   | (234   | ) |  |   | 813   |  |  |   | (112   | )
|Depreciation and
amortization |  |              | 593    |       |  |             | 138   |         |  |           | 1,408  |       |  |   | 77     |   |  |   |      |  |  |   | 2,216  |  
|Pre-tax income (loss)         |  |              | (548   | )     |  |             | (655  | )       |  |           | (3,011 | )     |  |   | (1,182 | ) |  |   | 934   |  |  |   | (4,462 | )
|Assets                        |  |              | 12,122 |       |  |             | 3,479 |         |  |           | 9,661  |       |  |   | 4,037  |   |  |   | 3,581 |  |  |   | 32,880 |  

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March 31, 2001 (In thousands):

|                                          |  |              |        |       |  |             |       |         |  |           |        |       |  |   |       |   |  |   |       |  |  |   |        |  
|----------------------------------------- |  | ------------ | ------ | ----- |  | ----------- | ----- | ------- |  | --------- | ------ | ----- |  | - | ----- | - |  | - | ----- |  |  | - | ------ | -
|                                          |  | Giga-tronics |        |       |  |             |       |         |  |           |        |       |  |   |       |   |  |   |       |  |  |  
|                                          |  | Instruments  |        | ASCOR |  | Microsource |       | DYMATIX |  | Corporate |        | Total
|                                          |  |              |        |       |  |             |       |         |  |           |        |      
|Revenue                                   |  | $            | 25,001 |       |  | $           | 7,503 |         |  | $         | 13,208 |       |  | $ | 8,447 |   |  | $ |      |  |  | $ | 54,159 |  
|Interest income                           |  |              | 25     |       |  |             | 93    |         |  |           | 6      |       |  |   | 3     |   |  |   | 109   |  |  |   | 236    |  
|Interest expense                          |  |              | (196   | )     |  |             | (4    | )       |  |           | (744   | )     |  |   | (354  | ) |  |   | 1,267 |  |  |   | (31    | )
|Depreciation and amortization             |  |              | 604    |       |  |             | 148   |         |  |           | 1,270  |       |  |   | 98    |   |  |   |      |  |  |   | 2,120  |  
|Income
before taxes and accounting change |  |              | 1,193  |       |  |             | 1,436 |         |  |           | (985   | )     |  |   | 434   |   |  |   | 1,383 |  |  |   | 3,461  |  
|Assets                                    |  |              | 15,518 |       |  |             | 4,172 |         |  |           | 11,937 |       |  |   | 5,236 |   |  |   | 455   |  |  |   | 37,318 |  

March 25, 2000 (In thousands):

|                              |  |              |        |       |  |             |       |         |  |           |        |       |  |   |       |   |  |   |       |  |  |   |        |  
|----------------------------- |  | ------------ | ------ | ----- |  | ----------- | ----- | ------- |  | --------- | ------ | ----- |  | - | ----- | - |  | - | ----- |  |  | - | ------ | -
|                              |  | Giga-tronics |        |       |  |             |       |         |  |           |        |       |  |   |       |   |  |   |       |  |  |  
|                              |  | Instruments  |        | ASCOR |  | Microsource |       | DYMATIX |  | Corporate |        | Total
|                              |  |              |        |       |  |             |       |         |  |           |        |      
|Revenue                       |  | $            | 18,516 |       |  | $           | 6,705 |         |  | $         | 15,069 |       |  | $ | 7,287 |   |  | $ |      |  |  | $ | 47,577 |  
|Interest income               |  |              |       |       |  |             | 34    |         |  |           | 1      |       |  |   |      |   |  |   | 70    |  |  |   | 105    |  
|Interest expense              |  |              | (25    | )     |  |             | (15   | )       |  |           | (634   | )     |  |   | (329  | ) |  |   | 957   |  |  |   | (46    | )
|Depreciation and
amortization |  |              | 699    |       |  |             | 153   |         |  |           | 1,164  |       |  |   | 95    |   |  |   |      |  |  |   | 2,111  |  
|Pre-tax income (loss)         |  |              | 361    |       |  |             | 53    |         |  |           | 132    |       |  |   | 168   |   |  |   | 919   |  |  |   | 1,633  |  
|Assets                        |  |              | 13,546 |       |  |             | 5,299 |         |  |           | 11,874 |       |  |   | 5,396 |   |  |   | 1,411 |  |  |   | 37,526 |  

The Companys Giga-tronics Instruments, ASCOR, and Microsource segments sell to
agencies of the U.S. Government and U.S. defense-related customers. In fiscal
2002, 2001, and 2000 U.S. Government and U.S. defense-related customers
accounted for 17%, 11%, and 16%, of sales, respectively. During 2002 and 2001,
a Japanese distributor of the Company, Midoriya, accounted for 16% and 10% of
the Companys consolidated sales. At year end, Midoriya had a negligible
amount outstanding in accounts receivable compared to about 11% of the
Companys receivables at the fiscal year end of 2001.

Export sales accounted for 44%, 41%, and 30% of the Companys sales in fiscal
2002, 2001, and 2000, respectively. Export sales by geographical area are
shown below:

|               |  |                |        |                |  |                |        |  |  |   |        | 
|-------------- |  | -------------- | ------ | -------------- |  | -------------- | ------ |  |  | - | ------ | 
|Years ended    |  |                |        |                |  |                |        |  |  |   |        | 
|(In thousands) |  | March 30, 2002 |        | March 31, 2001 |  | March 25, 2000
|               |  |                |        |                |  |               
|Americas       |  | $              | 1,112  |                |  | $              | 4,256  |  |  | $ | 1,989  | 
|Europe         |  |                | 4,860  |                |  |                | 6,831  |  |  |   | 6,448  | 
|Asia           |  |                | 9,412  |                |  |                | 9,512  |  |  |   | 4,981  | 
|Rest of world  |  |                | 1,721  |                |  |                | 1,473  |  |  |   | 1,050  | 
|               |  |                |        |                |  |                |        |  |  |   |        | 
|               |  | $              | 17,105 |                |  | $              | 22,072 |  |  | $ | 14,468 | 
|               |  |                |        |                |  |                |        |  |  |   |        | 

6  Earnings (loss) per Share

Shares used in per share computations for the years
ended March 30, 2002, March 31, 2001 and March 25, 2000 are as follows:

|                                                                |  |                |        |                |  |                |       |  |  |   |       | 
|--------------------------------------------------------------- |  | -------------- | ------ | -------------- |  | -------------- | ----- |  |  | - | ----- | 
|Years ended                                                     |  |                |        |                |  |                |       |  |  |   |       | 
|(In thousands except per share data)                            |  | March 30, 2002 |        | March 31, 2001 |  | March 25, 2000
|                                                                |  |                |        |                |  |               
|Net earnings (loss)                                             |  | $              | (2,102 | )              |  | $              | 1,901 |  |  | $ | 1,139 | 
|                                                                |  |                |        |                |  |                |       |  |  |   |       | 
|Weighted average:                                               |  |                |        |                |  |                |       |  |  |   |       | 
|Common shares outstanding                                       |  |                | 4,604  |                |  |                | 4,474 |  |  |   | 4,379 | 
|Potential common shares                                         |  |                |       |                |  |                | 329   |  |  |   | 314   | 
|                                                                |  |                |        |                |  |                |       |  |  |   |       | 
|Common shares assuming dilution                                 |  |                | 4,604  |                |  |                | 4,803 |  |  |   | 4,693 | 
|                                                                |  |                |        |                |  |                |       |  |  |   |       | 
|Net earnings (loss) per share of common stock                   |  | $              | (0.46  | )              |  | $              | 0.42  |  |  | $ | 0.26  | 
|                                                                |  |                |        |                |  |                |       |  |  |   |       | 
|Net earnings (loss) per share of common stock
assuming dilution |  | $              | (0.46  | )              |  | $              | 0.40  |  |  | $ | 0.24  | 
|                                                                |  |                |        |                |  |                |       |  |  |   |       | 
|Stock options not included in computation                       |  |                | 550    |                |  |                | 57    |  |  |   | 24    | 
|                                                                |  |                |        |                |  |                |       |  |  |   |       | 

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The number of stock options not included in the computation of diluted earnings
per share (EPS) for the period ended March 30, 2002 is a result of the
Companys loss from continuing operations and therefore the options are
antidilutive. The number of stock options not included in the computation of
diluted EPS for the periods ending March 31, 2001 and March 25, 2000 reflects
stock options where the exercise prices were greater than the average market
price of the common shares and are therefore antidilutive.

7  Income Taxes

Following are the components of the provision (benefit) for income taxes:

|                                                                                                                  |         |                |        |                |   |                |       |       |   |   |     |      |  
|----------------------------------------------------------------------------------------------------------------- | ------- | -------------- | ------ | -------------- | - | -------------- | ----- | ----- | - | - | --- | ---- | -
|Years ended                                                                                                       |         |                |        |                |   |                |       |       |   |   |     |     
|(In thousands)                                                                                                    |         | March 30, 2002 |        | March 31, 2001 |   | March 25, 2000
|                                                                                                                  |         |                |        |                |   |               
|Current:                                                                                                          |         |                |        |                |   |                |       |       |   |   |     |     
|                                                                                                                  | Federal |                | $      | (817           | ) |                | $     | 1,063 |   |   | $   | 46   |  
|                                                                                                                  | State   |                |        | (61            | ) |                |       | 66    |   |   |     | 7    |  
|                                                                                                                  |         |                |        |                |   |                |       |       |   |   |     |     
|                                                                                                                  |         |                | (878   | )              |   |                | 1,129 |       |   |   | 53  |     
|Deferred:                                                                                                         |         |                |        |                |   |                |       |       |   |   |     |     
|                                                                                                                  | Federal |                |        | (1,078         | ) |                |       | 58    |   |   |     | (180 | )
|                                                                                                                  | State   |                |        | (453           | ) |                |       | (263  | ) |   |     | 100  |  
|                                                                                                                  |         |                |        |                |   |                |       |       |   |   |     |     
|                                                                                                                  |         |                | (1,531 | )              |   |                | (205  | )     |   |   | (80 | )   
|Charge in lieu of taxes attributable to employer
stock option plans                                               |         |                | 49     |                |   |                | 58    |       |   |   | 127 |     
|Goodwill, for initial recognition of acquired tax
benefits that previously were included in the
valuation reserve |         |                |       |                |   |                | 58    |       |   |   | 394 |     
|                                                                                                                  |         |                |        |                |   |                |       |       |   |   |     |     
|Provision (benefit) for income taxes                                                                              |         | $              | (2,360 | )              |   | $              | 1,040 |       |   | $ | 494 |     
|                                                                                                                  |         |                |        |                |   |                |       |       |   |   |     |     

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and liabilities are as follows:

|                                                 |  |                |        |                |  |   |        |  
|------------------------------------------------ |  | -------------- | ------ | -------------- |  | - | ------ | -
|Years ended                                      |  |                |        |                |  |   |        |  
|(In thousands)                                   |  | March 30, 2002 |        | March 31, 2001
|                                                 |  |                |        |               
|Current deferred tax assets, net                 |  | $              | 4,841  |                |  | $ | 3,560  |  
|Noncurrent deferred tax asset (liabilities), net |  |                | (546   | )              |  |   | (796   | )
|                                                 |  |                |        |                |  |   |        |  
|Net deferred taxes                               |  | $              | 4,295  |                |  | $ | 2,764  |  
|                                                 |  |                |        |                |  |   |        |  
|Future state tax effect                          |  |                | (274   | )              |  |   | (182   | )
|Allowance for doubtful accounts                  |  |                | 154    |                |  |   | 112    |  
|Fixed asset depreciation                         |  |                | (586   | )              |  |   | (855   | )
|Inventory basis and additional costs capitalized |  |                | 3,309  |                |  |   | 2,529  |  
|Accrued vacation                                 |  |                | 191    |                |  |   | 284    |  
|Accrued warranty                                 |  |                | 334    |                |  |   | 314    |  
|Other accrued liabilities                        |  |                | 217    |                |  |   | 212    |  
|Net operating loss carryforward                  |  |                | 5,964  |                |  |   | 6,056  |  
|Income tax credits                               |  |                | 1,317  |                |  |   | 786    |  
|Valuation allowances                             |  |                | (6,331 | )              |  |   | (6,492 | )
|                                                 |  |                |        |                |  |   |        |  
|                                                 |  | $              | 4,295  |                |  | $ | 2,764  |  
|                                                 |  |                |        |                |  |   |        |  

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|                                                                   |  |                |        |                |  |                |       |    |  |   |       |   |  |  |      |   |  |   |     |   |  |  |      |  
|------------------------------------------------------------------ |  | -------------- | ------ | -------------- |  | -------------- | ----- | -- |  | - | ----- | - |  |  | ---- | - |  | - | --- | - |  |  | ---- | -
|Years ended                                                        |  |                |        |                |  |                |       |    |  |   |       |   |  |  |      |   |  |   |     |   |  |  |      |  
|(In thousands except percentages)                                  |  | March 30, 2002 |        | March 31, 2001 |  | March 25, 2000
|                                                                   |  |                |        |                |  |               
|Statutory federal income tax (benefit)                             |  | $              | (1,517 | )              |  |                | (34.0 | )% |  | $ | 1,176 |   |  |  | 34.0 | % |  | $ | 555 |   |  |  | 34.0 | %
|Beginning of year change in deferred
Tax asset valuation allowance |  |                | 117    |                |  |                | 2.6   |    |  |   |      |   |  |  |     |   |  |   | (55 | ) |  |  | (3.4 | )
|State income tax, net of federal benefit                           |  |                | (143   | )              |  |                | (3.2  | )  |  |   | 200   |   |  |  | 5.8  |   |  |   | 57  |   |  |  | 3.5  |  
|Nontax deductible expenses                                         |  |                | 9      |                |  |                | 0.2   |    |  |   | 6     |   |  |  | 0.2  |   |  |   | 6   |   |  |  | 0.4  |  
|Tax credits                                                        |  |                | (894   | )              |  |                | (20.0 | )  |  |   | (297  | ) |  |  | (8.6 | ) |  |   | (98 | ) |  |  | (6.0 | )
|Goodwill and patent amortization                                   |  |                | 142    |                |  |                | 3.2   |    |  |   | 60    |   |  |  | 1.7  |   |  |   | 88  |   |  |  | 5.4  |  
|Interest income exempt from federal tax                            |  |                | (82    | )              |  |                | (1.8  | )  |  |   | (58   | ) |  |  | (1.7 | ) |  |   | (51 | ) |  |  | (3.1 | )
|Other                                                              |  |                | 8      |                |  |                | .3    |    |  |   | (47   | ) |  |  | (1.4 | ) |  |   | (8  | ) |  |  | (.5  | )
|                                                                   |  |                |        |                |  |                |       |    |  |   |       |   |  |  |      |   |  |   |     |   |  |  |      |  
|Effective income tax (benefit)                                     |  | $              | (2,360 | )              |  |                | (52.7 | )% |  | $ | 1,040 |   |  |  | 30.0 | % |  | $ | 494 |   |  |  | 30.3 | %
|                                                                   |  |                |        |                |  |                |       |    |  |   |       |   |  |  |      |   |  |   |     |   |  |  |      |  

The change in valuation allowance from March 31, 2001 to March 30, 2002 was
$161,000. The change in valuation allowance from March 25, 2000 to March 31,
2001 was $395,000. The change in valuation allowance from March 27, 1999 to
March 25, 2000 was $860,000.

The Company has recorded a valuation allowance to reflect the estimated amount
of deferred tax assets, which may not be realized. The ultimate realization of
deferred tax assets is dependent upon generation of future taxable income
during the periods in which those temporary differences become deductible.
Management considers projected future taxable income and tax planning
strategies in making this assessment. Based on the historical taxable income
and projections for future taxable income over the periods in which the
deferred tax assets become deductible, management believes it more likely than
not that the Company will realize benefits of these deductible differences, net
of valuation allowances as of March 30, 2002.

During the year ended March 27, 1999, the Company acquired approximately
$7,600,000 of deferred tax assets in the acquisition of Microsource, which was
fully offset by a valuation allowance. Subsequent recognition of tax benefits
relating to the valuation allowance for deferred tax assets of Microsource will
be allocated to goodwill and the remainder to income tax benefit. As of March
30, 2002, goodwill related to the acquisition of Microsource has been reduced
by a cumulative adjustment of $452,000 for the tax benefits realized from the
acquired Microsource deferred tax assets.

During the years ended March 30, 2002, March 31, 2001 and March 25, 2000,
disqualifying employee stock option dispositions resulted in an income tax
deduction to the Company of approximately $122,000, $145,000 and $269,000,
respectively, and a tax benefit of approximately $49,000, $58,000 and $127,000,
respectively. The tax benefit has been reflected as an increase to the
Companys paid-in capital in the accompanying Statement of Shareholders
Equity.

8  Stock Options and Employee Benefit Plans

Stock Option PlanThe Company established a 1990 Stock Option Plan which
provided for the granting of options for up to 700,000 shares of common stock.
The 1990 Plan expired during the 2001 fiscal year. The Company subsequently
established the 2000 Stock Option Plan which provides for the granting of
options for up to 700,000 shares of common stock at 100% of fair market value
at the date of grant, with each grant requiring approval by the Board of
Directors of the Company. Options granted vest in one or more installments as
set forth in the relevant option agreements and must be exercised while the
grantee is employed by the Company or within a certain period after termination
of employment. Options granted to employees shall not have terms in excess of
10 years from the grant date. Holders of options may be granted stock
appreciation rights (SARs), which entitle them to surrender outstanding
options for a cash distribution under certain changes in ownership of the
Company, as defined in the stock option plan. As of March 30, 2002, no SARs
have been granted under the option plan. As of March 30, 2002, the total number
of shares of common stock available for issuance is 428,100 under the 2000
stock option plan. All outstanding options have a term of five years.

28



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Following is a summary of stock option activity:

|                                 |           |  |                    |       |             |  |         |  |                |  |                  |          |   |   |       |       | 
|-------------------------------- | --------- |  | ------------------ | ----- | ----------- |  | ------- |  | -------------- |  | ---------------- | -------- | - | - | ----- | ----- | 
|                                 |           |  | Per Share Weighted |       |             |  |         |  |                |  |                  |          |   |   |      
|                                 |           |  | Average Fair Value |       | Options     |  |         |  |                |  | Weighted Average
|                                 |           |  | of Options Granted |       | Exercisable |  | Shares  |  | Exercise Price
|                                 |           |  |                    |       |             |  |         |  |               
|Outstanding as of March 27, 1999 |           |  |                    |       |             |  | 48,814  |  |                |  | 635,564          |          |   |   | 2.391 |      
|                                 |           |  |                    |       |             |  |         |  |                |  |                  |          |   |   |       |      
|                                 | Exercised |  |                    |       |             |  |         |  |                |  |                  | (28,204  | ) |   |       | 2.515 | 
|                                 | Forfeited |  |                    |       |             |  |         |  |                |  |                  | (168,875 | ) |   |       | 2.118 | 
|                                 | Granted   |  | $                  | 2.613 |             |  |         |  |                |  |                  | 115,500  |   |   |       | 2.613 | 
|                                 |           |  |                    |       |             |  |         |  |                |  |                  |          |   |   |       |      
|Outstanding as of March 25, 2000 |           |  |                    |       |             |  | 131,424 |  |                |  | 553,985          |          |   |   | 2.514 |      
|                                 | Exercised |  |                    |       |             |  |         |  |                |  |                  | (84,212  | ) |   |       | 2.247 | 
|                                 | Forfeited |  |                    |       |             |  |         |  |                |  |                  | (89,737  | ) |   |       | 4.786 | 
|                                 | Granted   |  | $                  | 6.407 |             |  |         |  |                |  |                  | 214,700  |   |   |       | 6.407 | 
|                                 |           |  |                    |       |             |  |         |  |                |  |                  |          |   |   |       |      
|Outstanding as of March 31, 2001 |           |  |                    |       |             |  | 143,988 |  |                |  | 594,736          |          |   | $ | 3.610 |      
|                                 |           |  |                    |       |             |  |         |  |                |  |                  |          |   |   |       |      
|                                 | Exercised |  |                    |       |             |  |         |  |                |  |                  | (67,275  | ) |   |       | 2.163 | 
|                                 | Forfeited |  |                    |       |             |  |         |  |                |  |                  | (145,437 | ) |   |       | 3.783 | 
|                                 | Granted   |  | $                  | 4.290 |             |  |         |  |                |  |                  | 168,150  |   |   |       | 4.290 | 
|                                 |           |  |                    |       |             |  |         |  |                |  |                  |          |   |   |       |      
|Outstanding as of March 30, 2002 |           |  |                    |       |             |  | 194,437 |  |                |  | 550,174          |          |   | $ | 3.838 |      
|                                 |           |  |                    |       |             |  |         |  |                |  |                  |          |   |   |       |      

In accordance with SFAS No. 123, Accounting for Stock-Based Compensation, the
Company is required to disclose the effects on net earnings and earnings per
share as if it had elected to use the fair value method to account for employee
stock-based compensation plans. Had the Company recorded a charge for the fair
value of options granted consistent with SFAS No. 123, net earnings (loss) and
net earnings (loss) per share would have been changed to the pro-forma
(unaudited) amounts shown below:

|                                        |             |                |   |                |   |                |   |       |  |  |   |       | 
|--------------------------------------- | ----------- | -------------- | - | -------------- | - | -------------- | - | ----- |  |  | - | ----- | 
|Years ended                             |             |                |   |                |   |                |   |       |  |  |   |      
|(In thousands except per share data)    |             | March 30, 2002 |   | March 31, 2001 |   | March 25, 2000
|                                        |             |                |   |                |   |               
|Net earnings (loss)                     |             |                |   |                |   |                |   |       |  |  |   |      
|                                        | As reported |                | $ | (2,102         | ) |                | $ | 1,901 |  |  | $ | 1,139 | 
|                                        | Pro-forma   |                |   | (2,373         | ) |                |   | 1,537 |  |  |   | 872   | 
|Net earnings (loss) per share  basic   |             |                |   |                |   |                |   |       |  |  |   |      
|                                        | As reported |                |   | (0.46          | ) |                |   | 0.42  |  |  |   | 0.26  | 
|                                        | Pro-forma   |                |   | (0.52          | ) |                |   | 0.34  |  |  |   | 0.20  | 
|Net earnings (loss) per share  diluted |             |                |   |                |   |                |   |       |  |  |   |      
|                                        | As reported |                |   | (0.46          | ) |                |   | 0.40  |  |  |   | 0.24  | 
|                                        | Pro-forma   |                |   | (0.52          | ) |                |   | 0.32  |  |  |   | 0.19  | 



| |  |  | For purposes of computing pro-forma (unaudited) consolidated net earnings
(loss), the fair value of each option grant and Employee Stock Purchase
Plan purchase right is estimated on the date of grant using the Black
Scholes option pricing model. The assumptions used to value the option
grants and purchase rights are stated below:
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                 |  |                |    |                |  |                |    |   |  |  |    |  
|-------------------------------- |  | -------------- | -- | -------------- |  | -------------- | -- | - |  |  | -- | -
|Years ended                      |  | March 30, 2002 |    | March 31, 2001 |  | March 25, 2000
|                                 |  |                |    |                |  |               
|Expected life of options         |  | 4 years        |    | 4 years        |  | 4 years       
|Expected life of purchase rights |  | 6 mos          |    | 6 mos          |  | 6 mos         
|Volatility                       |  |                | 60 | %              |  |                | 60 | % |  |  | 60 | %
|Risk-free interest rate          |  | 4.39 to 4.93   |    | 4.64 to 6.30   |  | 5.08 to 5.97  
|Dividend yield                   |  | Zero           |    | Zero           |  | Zero          

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Options Outstanding and Exercisable as of March 30, 2002, by Price Range

|                    |  |             |         |                  |  |                |      |             |  |                |       |  |  |  |         |  |  |   |       | 
|------------------- |  | ----------- | ------- | ---------------- |  | -------------- | ---- | ----------- |  | -------------- | ----- |  |  |  | ------- |  |  | - | ----- | 
|                    |  | Number      |         | Weighted Average |  | Weighted       |      | Number      |  | Weighted      
|Range of            |  | of Options  |         | Remaining        |  | Average        |      | of Options  |  | Average       
|Exercise Prices     |  | Outstanding |         | Contractual Life |  | Exercise Price |      | Exercisable |  | Exercise Price
|                    |  |             |         |                  |  |                |      |             |  |               
|$2.09               |  |             | 170,724 |                  |  |                | 1.70 |             |  | $              | 2.094 |  |  |  | 119,637 |  |  | $ | 2.094 | 
|From $2.12 to $5.75 |  |             | 311,825 |                  |  |                | 3.63 |             |  |                | 4.063 |  |  |  | 55,175  |  |  |   | 3.553 | 
|From $6.13 to $8.88 |  |             | 67,625  |                  |  |                | 3.38 |             |  |                | 7.209 |  |  |  | 19,625  |  |  |   | 7.112 | 
|                    |  |             |         |                  |  |                |      |             |  |                |       |  |  |  |         |  |  |   |       | 
|From $2.09 to $8.88 |  |             | 550,174 |                  |  |                | 3.00 |             |  | $              | 3.838 |  |  |  | 194,437 |  |  | $ | 3.014 | 
|                    |  |             |         |                  |  |                |      |             |  |                |       |  |  |  |         |  |  |   |       | 

Employee Stock Purchase PlanUnder the Companys Employee Stock Purchase
Plan (the Purchase Plan), employees meeting specific employment qualifications
are eligible to participate and can purchase shares semi-annually through
payroll deductions at the lower of 85% of the fair market value of the stock at
the commencement or end of the offering period. The Purchase Plan permits
eligible employees to purchase common stock through payroll deductions for up
to 10% of qualified compensation. As of March 30, 2002, 99,285 shares remain
available for issuance under the Purchase Plan. The weighted average fair
value of the purchase rights granted in fiscal 2002 was $2.392.

401(k) PlanThe Company has established 401(k) plans which cover
substantially all employees. Participants may make voluntary contributions to
the plan up to 20% of their defined compensation. The Company is required to
match a percentage of the participants contributions in accordance with the
plan. Participants vest ratably in Company contributions over a four-year
period. Company contributions to the plans for fiscal 2002, 2001, and 2000
were approximately $163,000, $208,000, and $151,000, respectively.

9  Commitments

The Company leases a 47,300 square foot facility located in San Ramon,
California, under a twelve-year lease (as amended) that commenced in April
1994. The Company leases a 18,756 square foot facility located in Fremont,
California, under a seven-year lease that commenced in July 1999. The Company
leases a 20,400 square foot
facility located in Santa Clara, California, under a seven-year lease that
commenced in July 1995. The Company leases a 49,090 square foot facility
located in Santa Rosa, California, under a twenty-year lease that commenced in
July 1993. These facilities accommodate all of the Companys present
operations. The Company also has acquired equipment under capital and
operating leases. The future minimum lease payments for operating equipment
and facility leases are shown below:

|               |  |   |        | 
|-------------- |  | - | ------ | 
|Fiscal years   |  |   |        | 
|(In thousands) |  |   |        | 
|2003           |  | $ | 1,843  | 
|2004           |  |   | 1,678  | 
|2005           |  |   | 1,511  | 
|2006           |  |   | 1,522  | 
|2007           |  |   | 667    | 
|Thereafter     |  |   | 3,687  | 
|               |  |   |        | 
|               |  | $ | 10,908 | 
|               |  |   |        | 

The aggregate rental expense was $1,951,000, $1,816,000, and $1,812,000 in
fiscal 2002, 2001, and 2000, respectively.

As of March 30, 2002, Property and Equipment includes equipment under capital
lease of $491,000 and related accumulated amortization of $223,000. As of
March 31, 2001, Property and Equipment includes equipment

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under capital lease of $283,000 and related accumulated amortization of
$162,000. The future minimum lease payments for capital leases are shown
below:

|                                               |  |   |     | 
|---------------------------------------------- |  | - | --- | 
|Fiscal years                                   |  |   |     | 
|(In thousands)                                 |  |   |     | 
|2003                                           |  | $ | 90  | 
|2004                                           |  |   | 88  | 
|2005                                           |  |   | 10  | 
|                                               |  |   |     | 
|Total                                          |  |   | 188 | 
|Less interest costs                            |  |   | 5   | 
|                                               |  |   |     | 
|Present value of minimum lease payments        |  |   | 183 | 
|Less current portion                           |  |   | 89  | 
|                                               |  |   |     | 
|Long term portion of capital lease obligations |  | $ | 94  | 
|                                               |  |   |     | 

The Company is committed to purchase certain inventory under non-cancelable
purchase orders. As of March 30, 2002, non-cancelable purchase orders were
approximately $5,339,000 through fiscal 2003 and $256,000 beyond fiscal 2003
and were scheduled to be delivered to the Company at various dates through
October 2003.

10  Line of Credit

The Company has an agreement with a bank for an unsecured revolving line of
credit loan for $7,000,000 with interest payable at prime rate or at LIBOR plus
1-1/2 percent. As of March 30, 2002, this credit line has not been utilized
by the Company and expires September 30, 2002.

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INDEPENDENT AUDITORS REPORT

The Board of Directors and Shareholders
Giga-tronics Incorporated:

We have audited the accompanying consolidated balance sheets of
Giga-tronics Incorporated and subsidiaries as of March 30, 2002 and March 31,
2001, and the related consolidated statements of operations, shareholders
equity and cash flows for each of the years in the three year period ended
March 30, 2002. These consolidated financial statements are the responsibility
of the Companys management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Giga-tronics Incorporated and subsidiaries as of March 30, 2002 and March 31,
2001, and the results of their operations and their cash flows for each of the
years in the three year period ended March 30, 2002, in conformity with
accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, effective
March 26, 2000, the Company changed its method of accounting for certain
equipment sales.

/s/
KPMG LLP

Mountain View, California
May 6, 2002

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ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.

Not applicable.




PART  III




ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding directors of the Company is set forth under the
heading Election of Directors of the Companys Proxy Statement for its 2002
Annual Meeting of Shareholders, incorporated herein by reference. This Proxy
Statement is to be filed no later than 120 days after the close of the fiscal
year ended March 30, 2002.

GIGA-TRONICS INCORPORATED
EXECUTIVE OFFICERS

|                     |  |     |    |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------------------- |  | --- | -- | -------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name                 |  | Age |    | Position
|                     |  |     |    |         
|George H. Bruns, Jr. |  |     | 83 |          |  | Chief Executive Officer since January, 1995,
Chairman of the Board and a Director of the
Company. 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 Director
of Testronics, Inc. of McKinney, Texas.                                                                                                                                                                                                                         
|                     |  |     |    |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Mark H. Cosmez II    |  |     | 50 |          |  | Vice President, Finance/Chief Financial Officer,
Giga-tronics since October 1997. Before joining
Giga-tronics, Mr. Cosmez was the Chief Financial
Officer for Pacific Bell Public Communications.
Prior to 1997, he was the Vice President of
Finance and Chief Financial Officer for
International Microcomputer Software Inc., a
NASDAQ-traded software company.                                                                                                                                                                                                                                  
|                     |  |     |    |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Claudio S. Mariotta  |  |     | 58 |          |  | President, Giga-tronics Instrument Division since
April 2001. From December 2000 to April 2001, Mr.
Mariotta served as Vice President of Operations
for the Giga-tronics Instrument Division. Mr.
Mariotta came to Giga-tronics in August 1999 as
Vice President of Product Development of the
Giga-tronics Instrument Division. Prior to
joining Giga-tronics Mr. Mariotta was the Chief
Operating Officer and Chief Technical Officer of
SSE Telecom a provider of Satellite transceivers
worldwide.                                                                                              
|                     |  |     |    |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Jeffrey T. Lum       |  |     | 56 |          |  | President, ASCOR, Inc. since November 1987. Mr.
Lum founded ASCOR in 1987 and has been President
since inception. Before founding ASCOR, Mr. Lum
was Vice President and founder of Autek Systems
Corporation.                                                                                                                                                                                                                                                                                                                                                                                       
|                     |  |     |    |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Daniel S. Markowitz  |  |     | 51 |          |  | President, Dymatix, a joint venture between
Ultracision, Inc. and Viking Semiconductor
Equipment, Inc. since January 2000. Also,
President of Ultracision, Inc. and Viking
Semiconductor Equipment, Inc. since April 1999.
Assistant to the Chairman of Giga-tronics, Inc.
from September 1998 to March 1999. Vice
President, Automation Products, Ultracision, Inc.
from February 1996 to August 1998. Mr. Markowitz
was the General Manager of Mar Engineering from
September 1993 to January 1996. Mar Engineering
is a manufacturer of precision machined components
for the aerospace industry.
|                     |  |     |    |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|William E. Wilson    |  |     | 62 |          |  | President of Microsource, Inc. since April 2001.
Mr. Wilson has been a director of the Company
since December 1998. Before joining the Company
as the President of Microsource, Inc., Mr. Wilson
was the Chairman and CEO of Microwave Technology
Incorporated of Fremont, CA, a producer of
Microwave Devices and Amplifiers with broad
application to defense electronics,
telecommunications and the test and measurement
industries.                                                                                                                                                            

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ITEM 11.  EXECUTIVE COMPENSATION

Information regarding the Companys compensation of its executive officers
is set forth under the heading Executive Compensation of the Companys Proxy
Statement for its 2002 Annual Meeting of Shareholders, incorporated herein by
reference. This Proxy Statement is to be filed no later than 120 days after
the close of the fiscal year ended March 30, 2002.




ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding security ownership of certain beneficial owners and
management is set forth under the heading Stock Ownership of Certain
Beneficial Owners and Management of its Proxy Statement for the 2002 Annual
Meeting of Shareholders, incorporated herein by reference. This Proxy
Statement is to be filed no later than 120 days after the close of the fiscal
year ended March 30, 2002.




ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Not applicable.

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PART  IV




ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K



|(a)(1) |  | Financial Statements
|------ |  | --------------------

The following financial statements and schedules are filed or incorporated
by reference as a part of this report.

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

|                                                                                                                                                |  |            |         | 
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- | ------- | 
|                                                                                                                                                |  | Form 10K  
|Financial Statements                                                                                                                            |  | (Page No.)
|                                                                                                                                                |  |           
|Consolidated Balance Sheets -
As of March 30, 2002 and
March 31, 2001                                                                           |  |            | 17      | 
|Consolidated Statements of Operations -
Years Ended March 30, 2002,
March 31, 2001 and March 25, 2000                                           |  |            | 18      | 
|Consolidated Statements of Shareholders Equity and
Comprehensive Income (Loss) -
Years Ended March 30, 2002,
March 31, 2001 and March 25, 2000 |  |            | 19      | 
|Consolidated Statements of Cash Flows -
Years Ended March 30, 2002,
March 31, 2001 and March 25, 2000                                           |  |            | 20      | 
|Notes to Consolidated Financial Statements                                                                                                      |  |            | 21 - 31 | 
|Independent Auditors Report                                                                                                                    |  |            | 32      | 

|                                                                           |  |            |           |  | 
|-------------------------------------------------------------------------- |  | ---------- | --------- |  | 
|                                                                           |  |            | Form 10-K
|(a)(2) Schedules                                                           |  | (Page No.)
|                                                                           |  |           
|Report on Financial Statement Schedule and Consent of Independent Auditors |  |            | 37        | 
|Schedule II  Valuation and Qualifying Accounts                            |  |            | 38        | 

All other schedules are not submitted because they are not applicable or
not required or because the required information is included in the financial
statements or notes thereto.

Except for those portions thereof incorporated by reference in this Form
10-K, the 2002 Annual Report and the Proxy Statement are not to be deemed filed
as part of this report.



|(a)(3) |  | Exhibits
|------ |  | --------

Reference is made to the Exhibit Index which is found on page 39 of this Annual Report on Form 10-K.



|(b) |  | Reports on Form 8-K
|--- |  | -------------------

No reports on Form 8-K were filed during the quarter ended March 30, 2002.

35



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

| |  |                           |  |                                                                                                   
| |  | ------------------------- |  | --------------------------------------------------------------------------------------------------
| |  | GIGA-TRONICS INCORPORATED
| |  |                           |  |                                                                                                   
| |  | By                        |  | /s/   GEORGE H. BRUNS, JR.

George H. Bruns, Jr.
Chairman of the Board and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

|                                                 |  |                                                                                               |  |                
|------------------------------------------------ |  | --------------------------------------------------------------------------------------------- |  | ---------------
|/s/   GEORGE H. BRUNS, JR.

George H. Bruns, Jr. |  | Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)               |  | 5/21/02

(Date)
|                                                
|/s/   MARK H. COSMEZ II

Mark H. Cosmez II       |  | Vice President, Finance, Chief
Financial Officer and Secretary
(Principal Accounting Officer) |  | 5/21/02

(Date)
|                                                
|                                                 |  |                                                                                               |  |                
|                                                
|/s/   JAMES A. COLE

James A. Cole               |  | Director                                                                                      |  | 5/20/02

(Date)
|                                                
|                                                 |  |                                                                                               |  |                
|                                                
|/s/   ROBERT C. WILSON

Robert C. Wilson         |  | Director                                                                                      |  | 5/20/02

(Date)
|                                                
|                                                 |  |                                                                                               |  |                
|                                                
|/s/   WILLIAM E. WILSON
William E. Wilson        |  | Director                                                                                      |  | 5/21/02

(Date)

36



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##### Table of Contents



Exhibit 23.0

REPORT ON FINANCIAL STATEMENT SCHEDULE AND CONSENT OF
INDEPENDENT AUDITORS

The Board of Directors
Giga-tronics Incorporated

The audits referred to in our report dated May 6, 2002, included the
related financial statement schedule for the years ended March 30, 2002, March
31, 2001, and March 25, 2000, included herein. This financial statement
schedule is the responsibility of the Companys management. Our responsibility
is to express an opinion on this financial statement schedule based on our
audits. In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

We consent to incorporation by reference in the registration statements
(Nos. 333-45476, 333-34719, 333-39403, and 333-69688) on Form S-8 of
Giga-tronics Incorporated of our reports included herein.



| | /s/   KPMG LLP

KPMG LLP
| | ------------------------

Mountain View, California
May 21, 2002

37



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##### Table of Contents



Schedule II

|                                     |  |              |         |            |  |              |         |           |  |         |         |  |  |   |         | 
|------------------------------------ |  | ------------ | ------- | ---------- |  | ------------ | ------- | --------- |  | ------- | ------- |  |  | - | ------- | 
|Column A                             |  | Column B     |         | Column C   |  | Column D     |         | Column E 
|                                     |  |              |         |            |  |              |         |          
|                                     |  | Balance at   |         | Charged to |  |              |         |           |  | Balance
|                                     |  | Beginning of |         | Cost and   |  | Deductions   |         | at End   
|Description                          |  | Period       |         | Expenses   |  | (Recoveries) |         | of Period
|                                     |  |              |         |            |  |              |         |          
|                                     |  | $            |         |            |  | $            |         |           |  | $       |         |  |  | $ |         | 
|Year ended March 30, 2002            |  |              |         |            |  |              |         |           |  |         |         |  |  |   |         | 
|Allowances deducted from
assets:     |  |              |         |            |  |              |         |           |  |         |         |  |  |   |         | 
|Accounts receivable:                 |  |              |         |            |  |              |         |           |  |         |         |  |  |   |         | 
|For allowance for doubtful
accounts1 |  |              | 261,776 |            |  |              | 110,430 |           |  |         | 14,071  |  |  |   | 358,135 | 
|Total                                |  |              | 261,776 |            |  |              | 110,430 |           |  |         | 14,071  |  |  |   | 358,135 | 
|                                     |  |              |         |            |  |              |         |           |  |         |         |  |  |   |         | 
|Year ended March 31, 2001            |  |              |         |            |  |              |         |           |  |         |         |  |  |   |         | 
|Allowances deducted from
assets:     |  |              |         |            |  |              |         |           |  |         |         |  |  |   |         | 
|Accounts receivable:                 |  |              |         |            |  |              |         |           |  |         |         |  |  |   |         | 
|For allowance for doubtful
accounts1 |  |              | 253,890 |            |  |              | 13,589  |           |  |         | 5,703   |  |  |   | 261,776 | 
|Total                                |  |              | 253,890 |            |  |              | 13,589  |           |  |         | 5,703   |  |  |   | 261,776 | 
|                                     |  |              |         |            |  |              |         |           |  |         |         |  |  |   |         | 
|Year ended March 25, 2000            |  |              |         |            |  |              |         |           |  |         |         |  |  |   |         | 
|Accounts receivable:                 |  |              |         |            |  |              |         |           |  |         |         |  |  |   |         | 
|For allowance for doubtful
accounts1 |  |              | 434,613 |            |  |              | 36,624  |           |  |         | 217,347 |  |  |   | 253,890 | 
|Total                                |  |              | 434,613 |            |  |              | 36,624  |           |  |         | 217,347 |  |  |   | 253,890 | 
|                                     |  |              |         |            |  |              |         |           |  |         |         |  |  |   |         | 



---

|1 |  | Allowance for accounts receivable collection exposure.
|- |  | ------------------------------------------------------

38



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##### Table of Contents



GIGA-TRONICS INCORPORATED




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.                                                                                                  
|
|
|
|
| |  |  | 4.1  |   |  | Rights Agreement dated as of November 6, 1998 between Giga-tronics
Incorporated and ChaseMellon Shareholder Services LLC, as previously filed
on November 9, 1998 as Exhibit 4.1 to Form 8-K 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 |   |  | Ultracision, Inc. 1986 Stock Option Plan, filed on March 30, 1998 as
Exhibit 99.1 to Form S-8 (33-48889), incorporated herein by reference.**                                                                                                                    
|
|
|
|
| |  |  | 10.6 |   |  | Ultracision, Inc. 1987 Stock Option Plan, filed on March 30, 1998 as
Exhibit 99.2 to Form S-8 (33-48889), incorporated herein by reference.**                                                                                                                    
|
|
|
|
| |  |  | 10.7 |   |  | Form of Incentive Stock Option Agreements for Ultracision Inc., as
Amended by the Assumed Option Agreement, as previously filed on March 30,
1998 as Exhibit 99.3 to Form S-8 (33-48889) and incorporated herein by
reference.**                                 
|
|
|
|
| |  |  | 10.8 |   |  | 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.**                                                                        
|
|
|
|
| |  |  | 23.0 | * |  | Report on Financial Statement Schedule and Consent of Independent
Auditors. (See page 37 of this Annual Report on Form 10-K.)                                                                                                                                    



---

|*  |  | Attached as exhibits to this Form 10-K.                 
|-- |  | --------------------------------------------------------
|  
|  
|  
|  
|** |  | Management contract or compensatory plan or arrangement.

39