##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-KSB
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 for the fiscal year ended March 25, 2006,
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 for the transition period from   to   .
 Commission File No. 0-12719
 GIGA-TRONICS INCORPORATED
 
  California
    
    94-2656341(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)4650 Norris Canyon Road, San Ramon, CA
    
    94583(Address of principal executive offices)
    
    (Zip Code)
   Title of each class
    
    Name of each exchange on which registeredNone
    
    None
  Common Stock, No par value
 o
  Yes þ
    
    No o
 þ
 o þ




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##### Table of Contents



PART OF FORM 10-KSB
    
    DOCUMENTPART III
    
    Registrants PROXY STATEMENT for
its 2006 Annual Meeting of Shareholders to
be filed no later than 120 days after the close
of the fiscal year ended March 25, 2006.
 o þ
 2




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




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




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




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Backlog of Orders
   Competition
    6




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Sales and Marketing
  Product Development
    Manufacturing
  Environment
  7




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Employees
  Information about Foreign Operations
  Geographic Distribution of Sales(Dollars in thousands)
    
    2006
    
    
    Percent

    
    2005
    
    
    PercentDomestic
    
    $
    11,549
    
    
    
    56.0
    %
    
    $
    15,356
    
    
    
    71.5
    %International
    
    
    9,071
    
    
    
    44.0
    %
    
    
    6,121
    
    
    
    28.5
    %
   Certain Factors Which May Adversely Affect Future Operations Or An Investment In
Giga-tronics
 Business climate is volatile
  Giga-tronics sales are substantially dependent on the wireless industry
  Giga-tronics markets involve rapidly changing technology and standards
  Liquidity
  8




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Giga-tronics acquisitions may not be effectively integrated and their integration may be costly
  Giga-tronics common stock price is volatile
   Performance problems in our products or problems arising from the use of our products together
with other vendors products may harm our business and reputation
  Competition
  9




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ITEM 2. DESCRIPTION OF PROPERTY
     
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   
 PART II
 
 ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
 Common Stock Market Prices
  10




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2006
    
    
    High
    
    
    Low
    
    
    2005
    
    
    High
    
    
    LowFirst quarter
    
    
    (3/27-6/25
    )
    
    $
    4.73
    
    
    $
    3.20
    
    
    
    (3/28-6/26
    )
    
    $
    3.60
    
    
    $
    1.46Second quarter
    
    
    (6/26-9/24
    )
    
    
    7.87
    
    
    
    3.59
    
    
    
    (6/27-9/25
    )
    
    
    1.86
    
    
    
    1.51Third quarter
    
    
    (9/25-12/24
    )
    
    
    5.34
    
    
    
    2.26
    
    
    
    (9/26-12/25
    )
    
    
    2.43
    
    
    
    1.61Fourth quarter
    
    
    (12/25-3/25
    )
    
    
    3.57
    
    
    
    2.49
    
    
    
    (12/26-3/26
    )
    
    
    6.16
    
    
    
    2.06
   Equity Compensation Plan Information
  Equity Compensation Plan InformationNo. of securities to be
    
    
    Weighted average
    
    
    No. of securities remaining availableissued upon exercise of
    
    
    exercise price of
    
    
    for future issuance under equityoutstanding option,
    
    
    outstanding option,
    
    
    compensation plans (excludingPlan category
    
    warrants and rights
    
    
    warrants and rights
    
    
    securities reflected in column (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation plans approved
by securities holders
    
    438,975
    
    

    $  2.5652
    
    
    876,900Equity compensation plans not
approved by securities holders
    

    n/a

    
    
    n/a
    
    

    n/aTotal
    

    438,975
    
    

    $  2.5652

    
    
    876,900
 Selected Financial Data
  11




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SELECTED CONSOLIDATED FINANCIAL DATA
 Summary of Operations:
    
    Years EndedMarch 25,
    
    
    March 26,
    
    
    March 27,
    
    
    March 29,
    
    
    March 30,(In thousands except per share data)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Net sales
    
    $
    20,620
    
    
    $
    21,477
    
    
    $
    17,491
    
    
    $
    20,822
    
    
    $
    35,363Gross profit
    
    
    8,300
    
    
    
    9,598
    
    
    
    4,736
    
    
    
    6,187
    
    
    
    10,432Operating expenses
    
    
    9,316
    
    
    
    8,760
    
    
    
    9,179
    
    
    
    10,412
    
    
    
    14,030Interest income, net
    
    
    32
    
    
    
    
    
    
    
    7
    
    
    
    60
    
    
    
    59Pre-tax (loss) income from continuing
operations before income taxes
    
    
    (984
    )
    
    
    849
    
    
    
    (4,440
    )
    
    
    (4,328
    )
    
    
    (3,514
    )Provision (benefit) for income taxes
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    4,098
    
    
    
    (1,983
    )(Loss) income from continuing operations
    
    
    (988
    )
    
    
    845
    
    
    
    (4,444
    )
    
    
    (8,426
    )
    
    
    (1,531
    )Income (loss) on discontinued operations,
net of income taxes
    
    
    27
    
    
    
    (233
    )
    
    
    (2,377
    )
    
    
    (2,336
    )
    
    
    (571
    )Net (loss) income
    
    $
    (961
    )
    
    $
    612
    
    
    $
    (6,821
    )
    
    $
    (10,762
    )
    
    $
    (2,102
    )Basic (loss) earnings per share:From continuing operations
    
    $
    (0.21
    )
    
    $
    0.18
    
    
    $
    (0.94
    )
    
    $
    (1.81
    )
    
    $
    (0.33
    )On discontinued operations
    
    
    0.01
    
    
    
    (0.05
    )
    
    
    (0.51
    )
    
    
    (0.50
    )
    
    
    (0.13
    )Net (loss) earnings per share  basic
    
    $
    (0.20
    )
    
    $
    0.13
    
    
    $
    (1.45
    )
    
    $
    (2.31
    )
    
    $
    (0.46
    )Diluted (loss) earnings per share:From continuing operations
    
    $
    (0.21
    )
    
    $
    0.18
    
    
    $
    (0.94
    )
    
    $
    (1.81
    )
    
    $
    (0.33
    )On discontinued operations
    
    
    0.01
    
    
    
    (0.05
    )
    
    
    (0.51
    )
    
    
    (0.50
    )
    
    
    (0.13
    )Net (loss) earnings per share  diluted
    
    $
    (0.20
    )
    
    $
    0.13
    
    
    $
    (1.45
    )
    
    $
    (2.31
    )
    
    $
    (0.46
    )Shares of common stock  basic
    
    
    4,782
    
    
    
    4,725
    
    
    
    4,704
    
    
    
    4,663
    
    
    
    4,604Shares of common stock  diluted
    
    
    4,782
    
    
    
    4,741
    
    
    
    4,704
    
    
    
    4,663
    
    
    
    4,604
 Financial Position:(In thousands except ratio)
    
    March 25, 2006
    
    
    March 26, 2005
    
    
    March 27, 2004
    
    
    March 29, 2003
    
    
    March 30, 2002Current ratio
    
    
    3.93
    
    
    
    4.29
    
    
    
    2.92
    
    
    
    3.50
    
    
    
    5.49Working capital
    
    $
    8,856
    
    
    $
    9,337
    
    
    $
    7,997
    
    
    $
    13,697
    
    
    $
    23,135Total assets
    
    $
    12,346
    
    
    $
    12,961
    
    
    $
    13,733
    
    
    $
    21,875
    
    
    $
    32,880Shareholders equity
    
    $
    9,098
    
    
    $
    9,812
    
    
    $
    9,196
    
    
    $
    15,960
    
    
    $
    26,661
 Percentage Data:Percent of net sales
    
    March 25, 2006
    
    
    March 26, 2005
    
    
    March 27, 2004
    
    
    March 29, 2003
    
    
    March 30, 2002Gross profit
    
    
    40.3
    %
    
    
    44.7
    %
    
    
    27.1
    %
    
    
    29.7
    %
    
    
    29.5
    %Operating expenses
    
    
    45.2
    
    
    
    40.8
    
    
    
    52.5
    
    
    
    50.0
    
    
    
    39.7Interest income, net
    
    
    0.1
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.3
    
    
    
    0.2Pre-tax (loss) income
from continuing
operations
    
    
    (4.8
    )
    
    
    4.0
    
    
    
    (25.4
    )
    
    
    (20.8
    )
    
    
    (9.9
    )Income (loss) on
discontinued operations,
net of income taxes
    
    
    0.1
    
    
    
    (1.1
    )
    
    
    (13.6
    )
    
    
    (11.2
    )
    
    
    (1.6
    )Net (loss) income
    
    
    (4.7
    )
    
    
    2.8
    
    
    
    (39.0
    )
    
    
    (51.7
    )
    
    
    (5.9
    )
 12




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SELECTED CONSOLIDATED FINANCIAL DATA
  Quarterly Financial Information (Unaudited)
 2006(In thousands except per share data)
    
    First
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    YearNet sales
    
    $
    5,783
    
    
    $
    3,614
    
    
    $
    5,537
    
    
    $
    5,686
    
    
    $
    20,620Gross profit
    
    
    2,645
    
    
    
    1,223
    
    
    
    2,334
    
    
    
    2,098
    
    
    
    8,300Operating expenses
    
    
    2,419
    
    
    
    2,374
    
    
    
    2,317
    
    
    
    2,206
    
    
    
    9,316Interest income, net
    
    
    5
    
    
    
    9
    
    
    
    10
    
    
    
    8
    
    
    
    32Pre-tax income (loss) from continuing operations
    
    
    231
    
    
    
    (1,142
    )
    
    
    27
    
    
    
    (100
    )
    
    
    (984
    )Provision for income taxes
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Income (loss) from continuing operations
    
    
    227
    
    
    
    (1,142
    )
    
    
    27
    
    
    
    (100
    )
    
    
    (988
    )Income on discontinued operations, net of
income tax
    
    
    6
    
    
    
    5
    
    
    
    3
    
    
    
    13
    
    
    
    27Net income (loss)
    
    $
    233
    
    
    $
    (1,137
    )
    
    $
    30
    
    
    $
    (87
    )
    
    $
    (961
    )Basic earnings (loss) per share:From continuing operations
    
    $
    0.05
    
    
    $
    (0.24
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    (0.21
    )On discontinued operations
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.01Net earnings (loss) per share  basic
    
    $
    0.05
    
    
    $
    (0.24
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    (0.20
    )Diluted earnings (loss) per share:From continuing operations
    
    $
    0.05
    
    
    $
    (0.24
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    (0.21
    )On discontinued operations
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.01Net earnings (loss) per share  diluted
    
    $
    0.05
    
    
    $
    (0.24
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    (0.20
    )Shares of common stock  basic
    
    
    4,731
    
    
    
    4,778
    
    
    
    4,809
    
    
    
    4,809
    
    
    
    4,782Shares of common stock  diluted
    
    
    4,912
    
    
    
    4,778
    
    
    
    4,917
    
    
    
    4,809
    
    
    
    4,782
 13




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Quarterly Financial Information (Unaudited)
 2005(In thousands except per share data)
    
    First
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    YearNet sales
    
    $
    5,700
    
    
    $
    5,379
    
    
    $
    5,130
    
    
    $
    5,268
    
    
    $
    21,477Gross profit
    
    
    2,571
    
    
    
    2,329
    
    
    
    2,375
    
    
    
    2,323
    
    
    
    9,598Operating expenses
    
    
    2,257
    
    
    
    2,180
    
    
    
    2,210
    
    
    
    2,113
    
    
    
    8,760Interest income, net
    
    
    4
    
    
    
    (1
    )
    
    
    
    
    
    
    (3
    )
    
    
    Pre-tax income from continuing operations
    
    
    318
    
    
    
    148
    
    
    
    161
    
    
    
    222
    
    
    
    849Provision for income taxes
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Income from continuing operations
    
    
    314
    
    
    
    148
    
    
    
    161
    
    
    
    222
    
    
    
    845Income (loss) on discontinued
operations, net of income tax
    
    
    43
    
    
    
    (124
    )
    
    
    (133
    )
    
    
    (19
    )
    
    
    (233
    )Net income
    
    $
    357
    
    
    $
    24
    
    
    $
    28
    
    
    $
    203
    
    
    $
    612Basic earnings (loss) per share:From continuing operations
    
    $
    0.07
    
    
    $
    0.03
    
    
    $
    0.04
    
    
    $
    0.05
    
    
    $
    0.18On discontinued operations
    
    
    0.01
    
    
    
    (0.02
    )
    
    
    (0.03
    )
    
    
    (0.01
    )
    
    
    (0.05
    )Net earnings per share  basic
    
    $
    0.08
    
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    0.04
    
    
    $
    0.13Diluted earnings (loss) per share:From continuing operations
    
    $
    0.07
    
    
    $
    0.03
    
    
    $
    0.04
    
    
    $
    0.05
    
    
    $
    0.18On discontinued operations
    
    
    0.01
    
    
    
    (0.02
    )
    
    
    (0.03
    )
    
    
    (0.01
    )
    
    
    (0.05
    )Net earnings per share  diluted
    
    $
    0.08
    
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    0.04
    
    
    $
    0.13Shares of common stock  basic
    
    
    4,725
    
    
    
    4,725
    
    
    
    4,725
    
    
    
    4,727
    
    
    
    4,725Shares of common stock  diluted
    
    
    4,745
    
    
    
    4,732
    
    
    
    4,734
    
    
    
    4,802
    
    
    
    4,741
 14




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ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
  Overview
       Results of Operations
  New Orders(Dollars in thousands)
    
    2006
    
    
    % change

    
    2005
    
    
    % change

    
    2004Instrument Division
    
    $
    8,943
    
    
    
    (23
    %)
    
    $
    11,545
    
    
    
    7
    %
    
    $
    10,772ASCOR
    
    
    3,389
    
    
    
    (25
    %)
    
    
    4,536
    
    
    
    76
    %
    
    
    2,574Microsource
    
    
    2,825
    
    
    
    (42
    %)
    
    
    4,833
    
    
    
    28
    %
    
    
    3,763Total
    
    $
    15,157
    
    
    
    (28
    %)
    
    $
    20,914
    
    
    
    22
    %
    
    $
    17,109
 15




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(Dollars in thousands)
    
    2006
    
    
    % change

    
    2005
    
    
    % change
    
    
    2004Backlog of unfilled orders
    
    $
    10,329
    
    
    
    (35
    %)
    
    $
    15,792
    
    
    
    (3
    %)
    
    $
    16,355Backlog of unfilled
orders shippable within
one year
    
    
    5,863
    
    
    
    (28
    %)
    
    
    8,161
    
    
    
    9
    %
    
    
    7,473Previous fiscal year end
(FYE) one-year backlog
reclassified during year
as shippable later than
one year
    
    
    2,439
    
    
    
    79
    %
    
    
    1,364
    
    
    
    (24
    %)
    
    
    1,804Net cancellations during
year of previous FYE
one-year backlog
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    (49
    %)
    
    
    49
    Allocation of Net Sales(Dollars in thousands)
    
    2006
    
    
    % change

    
    2005
    
    
    % change
    
    2004Commercial
    
    $
    11,657
    
    
    
    (13
    %)
    
    $
    13,336
    
    
    
    23
    %
    
    $
    10,816Government/defense
    
    
    8,963
    
    
    
    10
    %
    
    
    8,141
    
    
    
    22
    %
    
    
    6,675
 16




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##### Table of Contents



Allocation of Net Sales by Segment(Dollars in thousands)
    
    2006
    
    
    % change

    
    2005
    
    
    % change

    
    2004Instrument DivisionCommercial
    
    $
    7,319
    
    
    
    (10
    %)
    
    $
    8,170
    
    
    
    26
    %
    
    $
    6,478Government/defense
    
    
    2,309
    
    
    
    (46
    %)
    
    
    4,279
    
    
    
    104
    %
    
    
    2,095ASCORCommercial
    
    
    659
    
    
    
    (73
    %)
    
    
    2,455
    
    
    
    64
    %
    
    
    1,500Government/defense
    
    
    3,900
    
    
    
    186
    %
    
    
    1,366
    
    
    
    (33
    %)
    
    
    2,024MicrosourceCommercial
    
    
    3,679
    
    
    
    36
    %
    
    
    2,711
    
    
    
    (3
    %)
    
    
    2,838Government/defense
    
    
    2,754
    
    
    
    10
    %
    
    
    2,496
    
    
    
    (4
    %)
    
    
    2,556
    Cost of Sales(Dollars in thousands)
    
    2006
    
    
    % change

    
    2005
    
    
    % change

    
    2004Cost of sales
    
    $
    12,320
    
    
    
    4
    %
    
    $
    11,879
    
    
    
    (7
    %)
    
    $
    12,755
    Operating Expenses(Dollars in thousands)
    
    2006
    
    
    % change

    
    2005
    
    
    % change

    
    2004Product development
    
    $
    3,760
    
    
    
    12
    %
    
    $
    3,370
    
    
    
    (11
    %)
    
    $
    3,766Selling, general and administrative
    
    
    5,556
    
    
    
    3
    %
    
    
    5,390
    
    
    
    
    
    
    
    5,413Total operating expenses
    
    $
    9,316
    
    
    
    6
    %
    
    $
    8,760
    
    
    
    (5
    %)
    
    $
    9,179
   17




---



##### Table of Contents



Critical Accounting Policies
  Revenues
  Product Warranties
  18




---



##### Table of Contents



Accounts Receivable
  Inventory
  Deferred Income Taxes
  Product Development Costs
  Financial Condition and Liquidity
    19




---



##### Table of Contents



Fiscal years (in thousands)2007
    
    $
    1,0902008
    
    
    1,2172009
    
    
    1,2272010
    
    
    1,0362011
    
    
    971Thereafter
    
    
    2,889$
    8,430
  Contractual Obligations
  (In thousands)
    
    Under one year
    
    
    One to three years
    
    
    Three to five years
    
    
    More than five yearsOperating leases
    
    $
    1,090
    
    
    $
    2,444
    
    
    $
    2,007
    
    
    $
    2,889Purchase obligations
    
    
    585
    
    
    
    38
    
    
    
    2
    
    
    
    Total contractual obligations
    
    $
    2,340
    
    
    $
    1,758
    
    
    $
    1,003
    
    
    $
    1,052
 Off-Balance-Sheet Arrangements
   20




---



##### Table of Contents



Recently Issued Accounting Standards
  Inventory Costs
 Recent Accounting Pronouncements Transition Election Related to Accounting
for Tax Effects of Share-Based Payment Awards Share Based Payment.
 21




---



##### Table of Contents



ITEM 7. FINANCIAL STATEMENTS
  Form 10-KSBFinancial Statements
    
    (Page No.)Consolidated Balance Sheets -
As of March 25, 2006 and
March 26, 2005
    
    23Consolidated Statements of Operations -
Years Ended March 25, 2006 and
March 26, 2005
    
    24Consolidated Statements of Shareholders Equity -
Years Ended March 25, 2006 and
March 26, 2005
    
    25Consolidated Statements of Cash Flows -
Years Ended March 25, 2006 and
March 26, 2005
    
    26Notes to Consolidated Financial Statements
    
    27 - 36Report of Independent Registered Public Accounting Firm
    
    37
 22




---



##### Table of Contents



CONSOLIDATED BALANCE SHEETS
 (In thousands except share data)
    
    March 25, 2006
    
    
    March 26, 2005AssetsCurrent assetsCash and cash equivalents
    
    $
    3,412
    
    
    $
    2,540Notes receivable, net of allowance of $250 and $250,
respectively
    
    
    3
    
    
    
    7Trade accounts receivable, net of allowance
of $63 and $77, respectively
    
    
    3,435
    
    
    
    3,145Inventories
    
    
    4,813
    
    
    
    6,257Prepaid expenses and other assets
    
    
    219
    
    
    
    227Total current assets
    
    
    11,882
    
    
    
    12,176Property and equipmentLeasehold improvements
    
    
    373
    
    
    
    373Machinery and equipment
    
    
    15,592
    
    
    
    15,786Office furniture and fixtures
    
    
    723
    
    
    
    721Property and equipment
    
    
    16,688
    
    
    
    16,880Less accumulated depreciation and amortization
    
    
    16,351
    
    
    
    16,206Property and equipment, net
    
    
    337
    
    
    
    674Other assets
    
    
    127
    
    
    
    111Total assets
    
    $
    12,346
    
    
    $
    12,961Liabilities and shareholders equityCurrent liabilitiesAccounts payable
    
    $
    870
    
    
    $
    1,075Accrued commissions
    
    
    171
    
    
    
    200Accrued payroll and benefits
    
    
    781
    
    
    
    720Accrued warranty
    
    
    250
    
    
    
    378Customer advances
    
    
    521
    
    
    
    2Other current liabilities
    
    
    433
    
    
    
    464Total current liabilities
    
    
    3,026
    
    
    
    2,839Deferred rent
    
    
    222
    
    
    
    310Total liabilities
    
    
    3,248
    
    
    
    3,149Shareholders equityPreferred stock of no par valueAuthorized 1,000,000 shares; no shares outstanding
at March 25, 2006 and March 26, 2005
    
    
    
    
    
    
    Common stock of no par value;Authorized 40,000,000 shares; 4,809,021 shares at
March 25, 2006 and 4,728,646 shares at
March 26, 2005 issued and outstanding
    
    
    13,003
    
    
    
    12,756Accumulated deficit
    
    
    (3,905
    )
    
    
    (2,944
    )Total shareholders equity
    
    
    9,098
    
    
    
    9,812Total liabilities and shareholders equity
    
    $
    12,346
    
    
    $
    12,961
 See Accompanying Notes to Consolidated Financial Statements
 23




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##### Table of Contents



CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended(In thousands except per share data)
    
    March 25, 2006
    
    
    March 26, 2005Net sales
    
    $
    20,620
    
    
    $
    21,477Cost of sales
    
    
    12,320
    
    
    
    11,879Gross profit
    
    
    8,300
    
    
    
    9,598Product development
    
    
    3,760
    
    
    
    3,370Selling, general and administrative
    
    
    5,556
    
    
    
    5,390Operating expenses
    
    
    9,316
    
    
    
    8,760Operating (loss) income from continuing operations
    
    
    (1,016
    )
    
    
    838Other income, net
    
    
    32
    
    
    
    11(Loss) income from continuing operations before
income taxes
    
    
    (984
    )
    
    
    849Provision for income taxes
    
    
    4
    
    
    
    4(Loss) income from continuing operations
    
    
    (988
    )
    
    
    845Income (loss) on discontinued operations, net of
income taxes of nil for 2006 and 2005
    
    
    27
    
    
    
    (233
    )Net (loss) income
    
    $
    (961
    )
    
    $
    612Basic net (loss) earnings per share:From continuing operations
    
    $
    (0.21
    )
    
    $
    0.18On discontinued operations
    
    
    0.01
    
    
    
    (0.05
    )Basic net (loss) income per share
    
    $
    (0.20
    )
    
    $
    0.13Diluted net (loss) earnings per share:From continuing operations
    
    $
    (0.21
    )
    
    $
    0.18On discontinued operations
    
    
    0.01
    
    
    
    (0.05
    )Diluted net (loss) income per share
    
    $
    (0.20
    )
    
    $
    0.13Shares used in per share calculation:Basic
    
    
    4,782
    
    
    
    4,725Diluted
    
    
    4,782
    
    
    
    4,741
 See Accompanying Notes to Consolidated Financial Statements
 24




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##### Table of Contents



CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Retained EarningsCommon Stock
    
    
    (Accumulated(In thousands except share data)
    
    Shares
    
    
    Amount
    
    
    Deficit)
    
    
    TotalBalance at March 27, 2004
    
    
    4,724,896
    
    
    $
    12,752
    
    
    $
    (3,556
    )
    
    $
    9,196Comprehensive income  netNet income
    
    
    
    
    
    
    
    
    
    
    612
    
    
    
    612Stock issuance under stock option
and employee stock purchase plans
    
    
    3,750
    
    
    
    4
    
    
    
    
    
    
    
    4Balance at March 26, 2005
    
    
    4,728,646
    
    
    
    12,756
    
    
    
    (2,944
    )
    
    
    9,812Comprehensive loss  netNet loss
    
    
    
    
    
    
    
    
    
    
    (961
    )
    
    
    (961
    )Stock issuance under stock option
and employee stock purchase plans
    
    
    80,375
    
    
    
    247
    
    
    
    
    
    
    
    247Balance at March 25, 2006
    
    
    4,809,021
    
    
    $
    13,003
    
    
    $
    (3,905
    )
    
    $
    9,098
 See Accompanying Notes to Consolidated Financial Statements
 25




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended(In thousands)
    
    March 25, 2006
    
    
    March 26, 2005Cash flows from operations:Net (loss) income
    
    $
    (961
    )
    
    $
    612Adjustments to reconcile net (loss) income to
net cash provided by (used in) operations:Net provision for doubtful accounts and note
receivable
    
    
    (14
    )
    
    
    (12
    )Depreciation and amortization
    
    
    452
    
    
    
    758Loss on sales of fixed assets
    
    
    
    
    
    
    4Deferred rent
    
    
    (88
    )
    
    
    (69
    )Changes in operating assets and liabilities:Notes receivable
    
    
    4
    
    
    
    (4
    )Trade accounts receivable
    
    
    (276
    )
    
    
    (924
    )Inventories
    
    
    1,444
    
    
    
    663Prepaid expenses and other current assets
    
    
    8
    
    
    
    44Accounts payable
    
    
    (205
    )
    
    
    (611
    )Accrued commissions
    
    
    (29
    )
    
    
    (93
    )Accrued payroll and benefits
    
    
    61
    
    
    
    (169
    )Accrued warranty
    
    
    (128
    )
    
    
    (170
    )Other current liabilities
    
    
    (31
    )
    
    
    (210
    )Customer advances
    
    
    519
    
    
    
    (56
    )Net cash provided by (used in) operations
    
    
    756
    
    
    
    (237
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (115
    )
    
    
    (185
    )Other assets
    
    
    (16
    )
    
    
    216Net cash (used in) provided by investing activities
    
    
    (131
    )
    
    
    31Cash flows from financing activities:Issuance of common stock
    
    
    247
    
    
    
    4Payments on capital leases
    
    
    
    
    
    
    (10
    )Net cash provided by (used in) financing activities
    
    
    247
    
    
    
    (6
    )Increase (decrease) in cash and cash equivalents
    
    
    872
    
    
    
    (212
    )Beginning cash and cash equivalents
    
    
    2,540
    
    
    
    2,752Ending cash and cash equivalents
    
    $
    3,412
    
    
    $
    2,540Supplementary disclosure of cash flow information:Cash paid for income taxes
    
    $
    4
    
    
    $
    4Cash paid for interest
    
    
    
    
    
    
    
 See Accompanying Notes to Consolidated Financial Statements
 26




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##### Table of Contents



1 Summary of Significant Accounting Policies
 The Company
 Principles of Consolidation
 Use of Estimates
 Fiscal Year
 Reclassifications
 Revenue Recognition
  (In thousands)
    
    March 25, 2006
    
    
    March 26, 2005Beginning balance
    
    $
    77
    
    
    $
    339Provision for doubtful accounts
    
    
    20
    
    
    
    (5
    )Recoveries of doubtful accounts
    
    
    
    
    
    
    Write-off of doubtful accounts
    
    
    (34
    )
    
    
    (257
    )Ending balance
    
    $
    63
    
    
    $
    77
 27




---



##### Table of Contents



Accrued Warranty
 Inventories
 Property and Equipment
  Deferred Rent
 Income Taxes
 Product Development Costs
 Software Development Costs
 Stock-based Compensation Accounting for Stock-Based Compensation  Transition and Disclosure
 an Amendment of FAS 123. Accounting for Stock Issued to Employees, Accounting for Stock-Based Compensation.
 28




---



##### Table of Contents



Years Ended(In thousands except per share data)
    
    March 25, 2006
    
    
    March 26, 2005Net (loss) income, as reported
    
    $
    (961
    )
    
    $
    612Deduct:Stock-based compensation expense
included in reported net (loss) income
    
    
    
    
    
    
    Add:Total stock-based employee compensation
determined under fair value based
method for all awards, net of income
tax expense
    
    
    (123
    )
    
    
    (233
    )Pro forma net (loss) income
    
    $
    (1,084
    )
    
    $
    379Net (loss) earnings per share  Basic:As reported
    
    $
    (0.20
    )
    
    $
    0.13Pro forma
    
    
    (0.23
    )
    
    
    0.08Net (loss) earnings per share  Diluted:As reported
    
    
    (0.20
    )
    
    
    0.13Pro forma
    
    
    (0.23
    )
    
    
    0.08
  Years Ended
    
    March 25, 2006
    
    March 26, 2005Expected life of options
    
    4 years
    
    4 yearsExpected life of purchase rights
    
    6 mos
    
    6 mosAnnualized volatility
    
    79%
    
    119%Risk-free interest rate
    
    3.77% to 4.72%
    
    3.71% to 4.17%Dividend yield
    
    Zero
    
    Zero
 Discontinued Operations
 Income (Loss) Per Share
 Comprehensive Income (Loss)
 Financial Instruments and Concentration of Credit Risk
 29




---



##### Table of Contents



Fair Value of Financial Instruments
 Recently Issued Accounting Standards Share-Based Payments
 Inventory Costs
 Recent Accounting Pronouncements Transition Election Related to Accounting for
Tax Effects of Share-Based Payment Awards Share Based Payment.
 2 Cash Equivalents
  30




---



##### Table of Contents



3 Inventories
  (In thousands)
    
    March 25, 2006
    
    
    March 26, 2005Raw materials
    
    $
    3,025
    
    
    $
    3,702Work-in-progress
    
    
    1,309
    
    
    
    1,925Finished goods
    
    
    246
    
    
    
    393Demonstration inventory
    
    
    233
    
    
    
    237$
    4,813
    
    
    $
    6,257
 4 Selling Expenses
  5 Significant Customers and Industry Segment Information
   
 March
25, 2006(In thousands):
    
    Instrument Division
    
    ASCOR
    
    Microsource
    
    Corporate
    
    TotalRevenue
    
    $
    9,628
    
    
    $
    4,559
    
    
    $
    6,433
    
    
    $
    
    
    
    $
    20,620Interest income
    
    
    8
    
    
    
    3
    
    
    
    11
    
    
    
    1,116
    
    
    
    1,138Interest expense
    
    
    (258
    )
    
    
    (40
    )
    
    
    (806
    )
    
    
    (2
    )
    
    
    (1,106
    )Depreciation and amortization
    
    
    280
    
    
    
    38
    
    
    
    134
    
    
    
    
    
    
    
    452(Loss) income from continuing operations
before income taxes
    
    
    (1,092
    )
    
    
    (350
    )
    
    
    (639
    )
    
    
    1,097
    
    
    
    (984
    )Assets
    
    
    4,417
    
    
    
    2,262
    
    
    
    4,950
    
    
    
    717
    
    
    
    12,346
 31




---



##### Table of Contents



March
26, 2005(In thousands):
    
    Instrument Division
    
    ASCOR
    
    Microsource
    
    Corporate
    
    TotalRevenue
    
    $
    12,449
    
    
    $
    3,821
    
    
    $
    5,207
    
    
    $
    
    
    
    $
    21,477Interest income
    
    
    3
    
    
    
    2
    
    
    
    
    
    
    
    903
    
    
    
    908Interest expense
    
    
    (226
    )
    
    
    (27
    )
    
    
    (645
    )
    
    
    (10
    )
    
    
    (908
    )Depreciation and amortization
    
    
    432
    
    
    
    58
    
    
    
    268
    
    
    
    
    
    
    
    758Income (loss) from continuing operations
before income taxes
    
    
    791
    
    
    
    (105
    )
    
    
    (1,003
    )
    
    
    1,166
    
    
    
    849Assets
    
    
    5,328
    
    
    
    2,427
    
    
    
    4,449
    
    
    
    757
    
    
    
    12,961
   (In thousands)
    
    March 25, 2006
    
    
    March 26, 2005Americas
    
    $
    104
    
    
    $
    225Europe
    
    
    4,191
    
    
    
    2,473Asia
    
    
    1,950
    
    
    
    1,935Rest of world
    
    
    2,826
    
    
    
    1,488$
    9,071
    
    
    $
    6,121
 6 Earnings (loss) per Share
  (In thousands except per share data)
    
    March 25, 2006
    
    March 26, 2005Net (loss) income
    
    $
    (961
    )
    
    $
    612Weighted average:Common shares outstanding
    
    
    4,782
    
    
    
    4,725Potential common shares
    
    
    
    
    
    
    16Common shares assuming dilution
    
    
    4,782
    
    
    
    4,741Net (loss) earnings per share of common stock
    
    $
    (0.20
    )
    
    $
    0.13Net (loss) earnings per share of common stock
assuming dilution
    
    $
    (0.20
    )
    
    $
    0.13Stock options not included in computation
    
    
    439
    
    
    
    575
  32




---



##### Table of Contents



7 Income Taxes
  Years ended (in thousands)
    
    March 25, 2006
    
    
    March 26, 2005CurrentFederal
    
    $
    
    
    
    $
    State
    
    
    4
    
    
    
    44
    
    
    
    4DeferredFederal
    
    
    
    
    
    
    State
    
    
    
    
    
    
    
    
    
    
    Provision for income taxes
    
    $
    4
    
    
    $
    4
  Years ended (in thousands)
    
    March 25, 2006
    
    
    March 26, 2005Current tax assets, net
    
    $
    
    
    
    $
    Noncurrent tax assets, net
    
    
    
    
    
    
    $
    
    
    
    $
    Future state tax effect
    
    $
    (597
    )
    
    $
    (730
    )Allowance for doubtful accounts
    
    
    27
    
    
    
    33Fixed assets depreciation
    
    
    151
    
    
    
    84Inventory reserves and additional costs capitalized
    
    
    2,515
    
    
    
    2,635Accrued vacation
    
    
    133
    
    
    
    115Accrued warranty
    
    
    107
    
    
    
    162Other accrued liabilities
    
    
    155
    
    
    
    161Deferred rent
    
    
    159
    
    
    
    132Net operating loss carryforwards
    
    
    14,083
    
    
    
    13,919Income tax credits
    
    
    2,293
    
    
    
    2,366Valuation allowances
    
    
    (19,026
    )
    
    
    (18,877
    )$
    
    
    
    $
    
  Years ended(In thousands except percentages)
    
    March 25, 2006
    
    
    March 26, 2005Statutory federal income tax expense (benefit)
    
    $
    (335
    )
    
    
    (34.0
    )%
    
    $
    209
    
    
    
    34.0
    %Valuation allowance
    
    
    149
    
    
    
    15.2
    
    
    
    2,437
    
    
    
    395.6Net operating loss generated from dissolution of
subsidiaries
    
    
    
    
    
    
    
    
    
    
    (2,947
    )
    
    
    (478.4
    )Expiration of net operating losses
    
    
    437
    
    
    
    44.5
    
    
    
    406
    
    
    
    65.9State income tax, net of federal benefit
    
    
    (57
    )
    
    
    (5.8
    )
    
    
    36
    
    
    
    5.8Non-tax deductible expenses
    
    
    3
    
    
    
    .3
    
    
    
    
    
    
    
    Income tax credits
    
    
    (142
    )
    
    
    (14.4
    )
    
    
    (218
    )
    
    
    (35.4
    )Other
    
    
    (51
    )
    
    
    (5.2
    )
    
    
    81
    
    
    
    13.2Effective income tax expense
    
    $
    4
    
    
    
    .4
    %
    
    $
    4
    
    
    
    .7
    %
 33




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##### Table of Contents



8 Stock Options and Employee Benefit Plans
 Stock Option Plans
  Options
    
    
    Total Options
    
    
    Weighted AverageExercisable
    
    
    Outstanding
    
    
    Fair ValueOutstanding as of March 27, 2004
    
    
    168,926
    
    
    
    556,100
    
    
    $
    3.382Exercised
    
    
    
    
    
    
    (3,750
    )
    
    
    1.220Forfeited
    
    
    
    
    
    
    (84,250
    )
    
    
    4.028Granted
    
    
    
    
    
    
    180,000
    
    
    
    2.584Outstanding as of March 26, 2005
    
    
    239,013
    
    
    
    648,100
    
    
    $
    3.089Exercised
    
    
    
    
    
    
    (80,375
    )
    
    
    3.074Forfeited
    
    
    
    
    
    
    (128,750
    )
    
    
    4.884Granted
    
    
    
    
    
    
    
    
    
    
    Outstanding as of March 25, 2006
    
    
    203,475
    
    
    
    438,975
    
    
    $
    2.565
 34




---



##### Table of Contents



Options Outstanding and Exercisable as of March 25, 2006, by Price RangeWeighted Average
    
    
    Weighted
    
    
    Number
    
    
    WeightedTotal Options
    
    
    Remaining
    
    
    Average
    
    
    of Options
    
    
    AverageRange of Exercise Prices
    
    Outstanding
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    Exercisable
    
    
    Exercise PriceFrom $1.22 to $1.96
    
    
    55,250
    
    
    
    2.24
    
    
    $
    1.83
    
    
    
    21,750
    
    
    $
    1.71From $2.29 to $3.11
    
    
    358,725
    
    
    
    2.91
    
    
    
    2.51
    
    
    
    156,725
    
    
    
    2.56From $4.87 to $5.18
    
    
    25,000
    
    
    
    .18
    
    
    
    4.93
    
    
    
    25,000
    
    
    
    4.93From $1.22 to $5.18
    
    
    438,975
    
    
    
    2.67
    
    
    $
    2.57
    
    
    
    203,475
    
    
    $
    2.76
 Employee Stock Purchase Plan
 401(k) Plans
 9 Commitments
 
   Fiscal years (in thousands)2007
    
    $
    1,0902008
    
    
    1,2172009
    
    
    1,2272010
    
    
    1,0362011
    
    
    971Thereafter
    
    
    2,889$
    8,430
   35




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##### Table of Contents



10 Warranty Obligations
  (In thousands)
    
    March 25, 2006
    
    March 26, 2005Balance at beginning of year
    
    $
    378
    
    
    $
    548Provision for current year sales
    
    
    159
    
    
    
    122Warranty costs incurred
    
    
    (287
    )
    
    
    (292
    )Balance at end of year
    
    $
    250
    
    
    $
    378
 11 Line of Credit
  36




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##### Table of Contents



37




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##### Table of Contents



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
        
 ITEM 8A. CONTROLS AND PROCEDURES
  
 ITEM 8B. OTHER INFORMATION
  38




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##### Table of Contents



PART III
 
 ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
  39




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##### Table of Contents



EXECUTIVE OFFICERS
 Name
    
    Age
    
    PositionGeorge H. Bruns, Jr.
    
    
    87
    
    
    Chairman of the Board and a Director of the
Company. Chief Executive Officer from
January 1995 to April 2006. He provided
seed financing for the Company in 1980 and
has been a Director since inception. Mr.
Bruns is General Partner of The Bruns
Company, a private venture investment and
management consulting firm. Mr. Bruns is a
Director of Testronics, Inc. of McKinney,
Texas.John R. Regazzi
    
    
    51
    
    
    Chief Executive Officer and a Director of
the Company since April 2006. Mr. Regazzi
had been President and General Manager of
Instrument Division since September 2005,
and prior to that, was Vice President of
Operations for Instrument Division from
October 2004 through September 2005. Prior
to that, he was Vice President of
Engineering for Instrument Division from
June 2001 through October 2004. Previous
experience includes 22 years at Hewlett
Packard and Agilent Technologies in various
design and management positions associated
with their microwave sweeper and synthesizer
product lines. His final position at Agilent
Technologies was as a senior engineering
manager.Mark H. Cosmez II
    
    
    54
    
    
    Vice President, Finance/Chief Financial
Officer and Secretary of Giga-tronics, Inc.
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.Jeffrey T. Lum
    
    
    60
    
    
    President of ASCOR, Inc. since November
1987. Mr. Lum founded ASCOR in 1987 and has
been President since inception. Mr. Lum was
a founder and Vice President of Autek
Systems Corporation, a manufacturer of
precision waveform analyzers. Mr. Lum is on
the Board of Directors for the Santa Clara
Aquamaids, a non-profit organization
dedicated to advancing athletes in
synchronized swimming to the Olympics games.Daniel S. Markowitz
    
    
    55
    
    
    President of Microsource, Inc. since 2003.
Prior to that, President of Dymatix, a
subsidiary of Giga-tronics, Inc., and its
Ultracision and Viking predecessors from
1996 through 2003. General Manager of Mar
Engineering from 1993 to 1996. Prior to
that, some 20 years of varied positions in
the aerospace industry.
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##### Table of Contents



ITEM 10. EXECUTIVE COMPENSATION
  
 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
  
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 13. EXHIBITS
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Audit Fees
  Audit-Related Fees
  Tax Fees
  All Other Fees
  Audit Committee Pre-Approval Policy
  41




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##### Table of Contents



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

George H. Bruns, Jr.
    
    Chairman of the Board
    
    5/30/06
(Date)/s/ JOHN R. REGAZZI

John R. Regazzi
    
    Chief Executive Officer
Principal Executive Officer
    
    5/30/06
(Date)/s/ MARK H. COSMEZ II

Mark H. Cosmez II
    
    Vice President, Finance, Chief
Financial Officer and Secretary
(Principal Accounting Officer)
    
    5/30/06
(Date)/s/ JAMES A. COLE

James A. Cole
    
    Director
    
    5/30/06
(Date)/s/ KENNETH A. HARVEY

Kenneth A. Harvey
    
    Director
    
    5/30/06
(Date)/s/ ROBERT C. WILSON

Robert C. Wilson
    
    Director
    
    5/30/06
(Date)/s/ GARRETT A. GARRETTSON

Garrett A. Garretson
    
    Director
    
    6/01/06
(Date)
 42




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##### Table of Contents



INDEX TO EXHIBITS
 3.1
    
    Articles of Incorporation of the Registrant, as amended, previously filed as Exhibit 3.1 to
Form 10-K for the fiscal year ended March 27, 1999 and incorporated herein by reference.3.2
    
    By-laws of Registrant, as amended, previously filed as Exhibit 3.2 to Form 10-K for the
fiscal year ended March 28, 1998, and incorporated herein by reference.10.1
    
    1990 Restated Stock Option Plan and form of Incentive Stock Option Agreement, previously
filed on November 3, 1997 as Exhibit 99.1 to Form S-8 (33-39403) and incorporated herein by
reference.*10.2
    
    Standard form Indemnification Agreement for Directors and Officers, previously filed on June
21, 1999, as Exhibit 10.2 to Form 10-K for the fiscal year ended March 27, 1999 and
incorporated herein by reference.*10.3
    
    Lease between Giga-tronics Incorporated and Calfront Associates for 4650 Norris Canyon Road,
San Ramon, CA, dated December 6, 1993, previously filed as Exhibit 10.12 to Form 10-K for the
fiscal year ended March 26, 1994 and incorporated herein by reference.10.4
    
    Employee Stock Purchase Plan, previously filed on August 29, 1997, as Exhibit 99.1 to Form
S-8 (33-34719), and incorporated herein by reference.*10.5
    
    2000 Stock Option Plan and form of Incentive Stock Option Agreement, previously filed on
September 8, 2000 as Exhibit 99.1 to Form S-8 (33-45476) and incorporated herein by
reference.*10.6
    
    Amendment No. 1 to Employee Stock Purchase Plan, previously filed on September 24, 2001, as
Exhibit 99.1 to Form S-8 (33-69688), and incorporated herein by reference.*16
    
    Letter from KPMG LLP dated June 24, 2004, previously filed as Exhibit 16 to Current Report on
Form 8-K filed June 24, 2004 and incorporated herein by reference.21
    
    Significant Subsidiaries. (See page
44 of this Annual Report on Form 10-KSB.)23.1
    
    Consent of Independent Registered
Public Accounting Firm Perry-Smith LLP. (See page 45 of
this Annual Report on Form 10-KSB.)31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act.
(See page 46 of this Annual Report on Form 10-KSB.)31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act.
(See page 47 of this Annual Report on Form 10-KSB.)32.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act.
(See page 48 of this Annual Report on Form 10-KSB.)32.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act.
(See page 49 of this Annual Report on Form 10-KSB.)
 
 *
    
    Management contract or compensatory plan or arrangement. 43