10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[ X ]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	December 27, 2014

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	94-2656341
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4650 Norris Canyon Road, San Ramon, CA 94583	(925) 328-4650
(Address of principal executive offices)	Registrant’s telephone number, including area code

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ X ] No [     ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	[     ]	Accelerated filer	[     ]
Non-accelerated filer	[     ]	Smaller reporting company	[ X ]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).

Yes [     ] No [ X ]

There were a total of 5,444,747 shares of the Registrant’s Common Stock outstanding as of January 29, 2015.

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INDEX

PART I - FINANCIAL INFORMATION				Page No.
	Item 1.	Financial Statements
			Unaudited Condensed Consolidated Balance Sheets as of December 27, 2014 and March 29, 2014	4
			Unaudited Condensed Consolidated Statements of Operations, Three and Nine Months Ended December 27, 2014 and December 28, 2013	5
			Unaudited Condensed Consolidated Statements of Cash Flows, Nine Months Ended December 27, 2014 and December 28, 2013	6
			Notes to Unaudited Condensed Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		26
	Item 4.	Controls and Procedures		26
PART II - OTHER INFORMATION
	Item 1.	Legal Proceedings		26
	Item 1A.	Risk Factors		26
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		27
	Item 3.	Defaults Upon Senior Securities		27
	Item 4.	Mine Safety Disclosures		27
	Item 5.	Other information		27
	Item 6.	Exhibits		28
SIGNATURES				29
		Exhibit Index
			31.1 Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act.	30
			31.2 Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act.	31
			32.1 Certification of CEO pursuant to Section 906 of Sarbanes-Oxley Act.	32
			32.2 Certification of CFO pursuant to Section 906 of Sarbanes-Oxley Act.	33

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FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements about Giga-tronics Incorporated (the “Company”) for which it claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, capital structure and other financial items; (ii) statements of plans, objectives and expectations of the Company or its management or board of directors, including those relating to products, revenue or cost savings; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements.  Words such as "believes", "anticipates", "expects", "intends", "targeted", "projected", "continue", "remain", "will", "should", "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

These forward-looking statements are based on Management’s current knowledge and belief and include information concerning the Company’s possible or assumed future financial condition and results of operations. A number of factors, some of which are beyond the Company’s ability to predict or control, could cause future results to differ materially from those contemplated. These factors include but are not limited to risks related to (1) the Company’s potential inability to obtain necessary capital to finance its operations; (2) the Company’s ability to develop competitive products in a market with rapidly changing technology and standards; (3) risks related to customers’ credit worthiness/profiles; (4) changes in the Company’s credit profile and its ability to borrow; (5) a potential decline in demand for certain of the Company’s products; (6) potential product liability claims; (7) the potential loss of key personnel; and (8) U.S. and international economic conditions. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business operations. The reader is directed to the Company's annual report on Form 10-K for the year ended March 29, 2014 or further discussion of factors that could affect the Company's business and cause actual results to differ materially from those expressed in any forward-looking statement made in this report. The Company undertakes no obligation to update any forward-looking statements in this report.

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PART I - FINANCIAL SYSTEMS

ITEM 1 - FINANCIAL STATEMENTS

GIGA-TRONICS INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands except share data)	December 27, 2014			March 29, 2014
Assets
Current assets:
Cash and cash-equivalents	$	1,396		$	1,059
Trade accounts receivable, net of allowance of $45 and $44, respectively		2,532			1,846
Inventories, net		3,275			3,321
Prepaid expenses and other current assets		246			349
Total current assets		7,449			6,575
Property and equipment, net		780			949
Other long term assets		78			69
Total assets	$	8,307		$	7,593
Liabilities and shareholders' equity
Current liabilities:
Line of credit	$	1,622		$	1,165
Current portion of long term debt		801			200
Accounts payable		1,035			1,430
Accrued payroll and benefits		563			755
Deferred revenue		1,519			1,329
Deferred rent		121			104
Capital lease obligations		72			147
Other current liabilities		380			472
Total current liabilities		6,113			5,602
Long term loan and warrant debt, net of discounts		464			672
Derivative liability –at estimated fair value		235			128
Long term obligations - deferred rent		144			237
Long term obligations - capital lease		67			77
Total liabilities		7,023			6,716
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock of no par value; Authorized - 1,000,000 shares
Series A - designated 250,000 shares; no shares at December 27, 2014 and March 29, 2014 issued and outstanding		—			—
Series B, C, D- designated 19,500 shares; 18,533.51 shares at December 27, 2014 and March 29, 2014 issued and outstanding; (liquidation preference of $3,540)		2,911			2,911
Common stock of no par value; Authorized - 40,000,000 shares; 5,444,747 shares at December 27, 2014 and 5,181,247 at March 29, 2014 issued and outstanding		16,914			16,224
Accumulated deficit		(18,541	)		(18,258	)
Total shareholders' equity		1,284			877
Total liabilities and shareholders' equity	$	8,307		$	7,593

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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GIGA-TRONICS INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Month Periods Ended						Nine Month Periods Ended
	December 27,			December 28,			December 27,			December 28,
(In thousands except per share data)	2014			2013			2014			2013
Net sales	$	4,509		$	3,417		$	14,127		$	10,404
Cost of sales		2,637			2,130			8,101			6,672
Gross margin		1,872			1,287			6,026			3,732
Operating expenses:
Engineering		672			979			2,563			3,040
Selling, general and administrative		1,133			1,066			3,401			3,674
Restructuring		—			36			—			360
Total operating expenses		1,805			2,081			5,964			7,074
Operating income/(loss)		67			(794	)		62			(3,342	)
Gain on sale of product line		—			97			—			913
Gain on adjustment of derivative liability to fair value		107			—			16			—
Other income		—			—			—			7
Interest expense, net		(62	)		(21	)		(199	)		(52	)
Accretion of loan and warrant debt discounts		(45	)		—			(115	)		—
Income/(loss) before income taxes		67			(718	)		(236	)		(2,474	)
Provision for income taxes		—			—			47			2
Net income/(loss)	$	67		$	(718	)	$	(283	)	$	(2,476	)
Earnings/(loss) per common share – basic	$	0.01		$	(0.14	)	$	(0.05	)	$	(0.49	)
Earnings/(loss) per common share – diluted	$	0.01		$	(0.14	)	$	(0.05	)	$	(0.49	)
Weighted average shares used in per share calculation:
Basic		5,208			5,060			5,166			5,057
Diluted		5,463			5,060			5,166			5,057

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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GIGA-TRONICS INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Month Periods Ended
	December 27,			December 28,
(In thousands)	2014			2013
Cash flows from operating activities:
Net loss	$	(283	)	$	(2,476	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		237			166
Share based compensation		545			395
Loss on adjustment of derivative liability to fair value		(16	)		—
Accretion of discounts on loan and warrant debt		115			—
Change in deferred rent		(76	)		(59	)
Changes in operating assets and liabilities		(1,035	)		457
Net cash used in operating activities		(513	)		(1,517	)
Cash flows from investing activities:
Purchases of property and equipment		(30	)		(262	)
Net cash used in investing activities		(30	)		(262	)
Cash flows from financing activities:
Payments on capital leases		(123	)		(60	)
Proceeds from line of credit		8,125			136
Proceeds from issuance of debt		500			—
Proceeds from exercise of stock options		145			—
Proceeds from issuance of preferred stocks, net of issuance costs totaling $41		—			817
Repayments of line of credit		(7,668	)		(40	)
Repayments of debt		(99	)		—
Net cash provided by financing activities		880			853
Increase/(decrease) in cash and cash-equivalents		337			(926	)
Beginning cash and cash-equivalents		1,059			1,882
Ending cash and cash-equivalents	$	1,396		$	956
Supplementary disclosure of other cash flow information:
Cash paid for income taxes	$	2		$	2
Cash paid for interest	$	172		$	52
Supplementary disclosure of noncash financing activities:
Equipment acquired under capital lease	$	49		$	86

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)     Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Giga-tronics Incorporated (the “Company”), pursuant to the rules and regulations of the Securities and Exchange Commission. The consolidated results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. In the opinion of management, the information contained herein reflects all adjustments (consisting of normal recurring entries) necessary to make the consolidated results of operations for the interim periods a fair statement of such operations. For further information, refer to the consolidated financial statements and footnotes thereto, included in the Annual Report on Form 10-K, filed with the Securities and Exchange Commission for the year ended March 29, 2014.

Fiscal Year The 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 2015, ending on March 28, 2015 is a 52 week year, and fiscal year 2014, ended on March 29, 2014 was a 52 week year. Quarterly periods within each such fiscal year are in most cases 13 weeks as opposed to three calendar months. All references to three or nine month periods, and years in the consolidated financial statements relate to fiscal periods or years rather than three or nine month calendar quarters or calendar years.

DerivativesThe Company accounts for free standing derivatives and embedded derivatives required to be bifurcated and accounted for on a stand-alone basis at estimated fair value. Changes in fair value are reported in earnings as gain or loss on adjustment of derivative liability to fair value.

New Accounting StandardsIn April 2014, the Financial Accounting Standards Board (FASB) issued an accounting standard update that changes the criteria for reporting discontinued operations. Under the accounting standard update, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has, or will have, a major effect on an entity’s operations and financial results when either it qualifies as held for sale, disposed of by sale, or disposed of other than by sale. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2016. The Company is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements.

In May 2014, the FASB amended the accounting standards by creating a new Topic 606 which is in response to a joint initiative of the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. generally accepted accounting principles and international financial reporting standards that would:

1. Remove inconsistencies and weaknesses in revenue requirements.

2. Provide a more robust framework for addressing revenue issues.

3. Improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets.

4. Provide more useful information to users of financial statements through improved disclosure requirements.

5. Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer.

For a public entity, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is currently evaluating the impact this new accounting standard will have on its financial statements.

In June 2014, the FASB amended ASC 718, Share Based Compensation, to require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. For all entities, the amendments in this update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The Company is currently evaluating the impact this accounting standard update may have on its financial statements.

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In August 2014, the FASB issued ASU 2014-15 which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact this accounting standard update may have on its financial statements.

(2)       Going Concern and Management’s Plan

The Company incurred a net loss of $283,000 for the first nine months of fiscal 2015 and $3,742,000 for the fiscal year ended March 29, 2014. These losses contributed to an accumulated deficit of $18.5 million as of December 27, 2014.

In the first nine months of fiscal 2015 and all of fiscal 2014 the Company invested heavily in the development of a new Giga-tronics Division product platform, the Advanced Signal Generation System. The Company anticipates long-term revenue growth and improved gross margins from the new product platform, but the delay in completing it contributed significantly to the losses of the Company. The Advanced Signal Generation System's initial customer deliveries occurred in the second and third quarters of fiscal 2015, and are approaching final customer acceptance. Additional delays in shipping volume quantities, or longer than anticipated sales cycles, could significantly contribute to additional losses.

To help fund operations, the Company relies on advances under the line of credit with Silicon Valley Bank. However the Bank may terminate or suspend advances under the line of credit if the Bank determines there has been a material adverse change in the Company’s general affairs, financial forecasts or general ability to repay. (Note 13, Line of Credit). As of December 27, 2014, borrowings under the line of credit were $1.6 million.

These matters, along with recurring losses in prior years, raise substantial doubt as to the ability of the Company to continue as a going concern.

To address this matter, the Company’s management has taken several actions to provide additional liquidity and reduce costs and expenses going forward. These actions are described in the following paragraphs.

● On June 16, 2014, Giga-tronics amended its loan agreement with Partners For Growth IV, L.P. (“PFG”). Under the terms of the amendment, PFG made a revolving line of credit available to Giga-tronics in the amount of $500,000 and the Company borrowed the entire amount on June 17, 2014. The Company’s original agreement with PFG was entered into on March 13, 2014 under which the Company received $1.0 million from a three-year term loan. Pursuant to the amended loan agreement, the Company may borrow an additional $500,000. The loan agreement contains financial covenants associated with the Company achieving minimum quarterly net sales and maintaining a minimum monthly shareholders’ equity. In the event of default by the Company, all or any part of the Company’s obligation to PFG could become immediately due.

● In the first three months of fiscal 2015 the Microsource business unit received a $6.2 million order (“NRE Order”) for the non-recurring engineering and for the delivery of a limited number of flight-qualified prototype hardware from a major aerospace company to develop a variant of its high performance fast tuning YIG filters for an aircraft platform. The Company expects to recognize the majority of revenue from the NRE Order in fiscal 2015. The Company expects to finalize in the next few months a multi-year follow-on order for approximately $10.0 million associated with the production units, which are anticipated to start shipping in April of 2016. No assurances can be given that the parties will agree on the final multi-year production agreement, or what the actual terms will be.

● Also in the first three months of fiscal 2015 the Giga-tronics Division received a $2.4 million order from the United States Navy (“Navy”) for its Model 8003 Precision Scalar Analyzer product (“8003”). The Company recognized the associated revenue and invoiced the Navy in the first two quarters of fiscal 2015.

● To assist with the upfront purchases of inventory required for future product deliveries, the Company entered into advance payment arrangements with certain of its customers whereby the customers reimburse the Company for raw material purchases prior to the shipment of the finished products. In fiscal 2014 the Company entered into advance payment arrangements totaling $1.3 million, and during the first three quarters of fiscal 2015 the Company entered into $1.4 million of advance payment arrangements. The Company will continue to seek similar terms in future agreements with these and other customers.

8

Management will continue to review all aspects of the business in an effort to improve cash flow and reduce costs and expenses, while continuing to invest, to the extent possible, in new product development for future revenue streams.

Management will also continue to seek additional working capital through debt, equity financing or possible product line sales, but there are no assurances that such financings or sales will be available at all, or on terms acceptable to the Company.

The current year to date loss and the impacts of recurring losses in prior years have had a significant negative impact on the financial condition of the Company and raise substantial doubt about the Company’s ability to continue as a going concern. The Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might result if the Company were unable to do so.

(3)     Revenue Recognition

The Company records revenue when there is persuasive evidence of an arrangement, delivery has occurred, the price is fixed and determinable, and collectability is reasonably assured. This occurs when products are shipped or the customer accepts title transfer. If the arrangement involves acceptance terms, the Company defers revenue until product acceptance is received. The Company limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified return or refund privileges. The Company evaluates each deliverable in an arrangement to determine whether they represent separate units of accounting. On certain large development contracts, revenue is recognized upon achievement of substantive milestones. Determining whether a milestone is substantive is a matter of judgment and that assessment is performed only at the inception of the arrangement. The consideration earned from the achievement of a milestone must meet all of the following for the milestone to be considered substantive:

a. It is commensurate with either of the following:

1. The Company’s performance to achieve the milestone.

2. The enhancement of the value of the delivered item or items as a result of a specific outcome resulting from the Company's performance to achieve the milestone.

b. It relates solely to past performance.

c. It is reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within the arrangement.

Milestones are agreed upon with the customer prior to the start of the contract and some milestones will be tied to product shipping while others will be tied to design review. During the three and nine months ended December 27, 2014 revenue recognized on a milestone basis were $1.6 million and $4.5 million respectively. During the three and nine months ended December 28, 2013 revenue recognized on a milestone basis were $89,000 and $397,000, respectively.

On certain contracts with several of the Company’s significant customers the Company receives payments in advance of manufacturing. Advanced payments are recorded as deferred revenue until the revenue recognition criteria described above have been met.

Accounts receivable are stated at their net realizable value. The Company has estimated an allowance for uncollectable accounts based on analysis of specifically identified accounts, outstanding receivables, consideration of the age of those receivables, the Company’s historical collection experience, and adjustments for other factors management believes are necessary based on perceived credit risk.

9

The Company provides for estimated costs that may be incurred for product warranties at the time of shipment. The Company’s warranty policy generally provides twelve to eighteen months depending on the customer. The estimated cost of warranty coverage is based on the Company’s actual historical experience with its current products or similar products. For new products, the required reserve is based on historical experience of similar products until such time as sufficient historical data has been collected on the new product. Adjustments are made as new information becomes available.

(4) Inventories

(In thousands)	December 27, 2014		March 29, 2014
Raw materials	$	1,674	$	1,501
Work-in-progress		1,456		1,400
Finished goods		73		353
Demonstration inventory		72		67
Total	$	3,275	$	3,321

(5)         Gain on Sale of Product Line

On March 18, 2013, the Company entered into an Asset Purchase Agreement with Teradyne Inc. (“Teradyne”), whereby Teradyne agreed to purchase the Giga-tronics Division product line known as SCPM for $1.0 million, resulting in a net gain of $913,000, of which $816,000 was recorded during the first quarter of fiscal 2014. In April 2013 the Company received $800,000 in proceeds at the closing of the transaction upon delivery of electronic data associated with the purchase. The Company also earned an additional $50,000 associated with training of Teradyne employees, which was offset by $34,000 of associated costs. The balance of the consideration ($150,000) was subject to a hold back arrangement until December 31, 2013 to cover certain contingencies and the requirement to deliver certain inventory. During fiscal 2014, the Company delivered to Teradyne all of the associated inventory, totaling $53,000. On December 6, 2013, the Company received the remaining $150,000 along with confirmation from Teradyne that the holdback provisions were removed.

(6)         Earnings/Loss Per Share

Basic earnings (loss) per common share (EPS) is calculated by dividing net income or loss attributable to common shareholders by the weighted average common shares outstanding during the period. Net income attributable to common shareholders excludes distributed and undistributed earnings attributable to preferred stock, which constitute participating securities due to their dividend rights, and to which the Company applies the two-class method of calculating and presenting earnings per share. Diluted EPS reflects the net incremental shares that would be issued if unvested restricted shares became vested and dilutive outstanding stock options and warrants were exercised, using the treasury stock method. In the case of a net loss, it is assumed that no incremental shares would be issued because they would be antidilutive. In addition, certain options and restricted stock are considered antidilutive because assumed proceeds from exercise price, related tax benefits and average future compensation was greater than the weighted average number of options outstanding multiplied by the average market price during the period.

10

The shares used in per share computations are as follows:

	Three Month Periods Ended						Nine Month Periods Ended
	December 27,			December 28,			December 27,			December 28,
(In thousands except per share data)	2014			2013			2014			2013
Net income/(loss) as reported	$	67		$	(718	)	$	(283	)	$	(2,476	)
Net income/(loss) attributable to participating securities		(18	)		—			—			—
Net income/(loss) attributable to common shareholders	$	49		$	(718	)	$	(283	)	$	(2,476	)
Weighted average:
Common shares outstanding		5,208			5,060			5,166			5,057
Potential common shares		255			—			—			—
Common shares assuming dilution		5,463			5,060			5,166			5,057
Net earnings/(loss) per common share – basic	$	0.01		$	(0.14	)	$	(0.05	)	$	(0.49	)
Net earnings/(loss) per common share - diluted	$	0.01		$	(0.14	)	$	(0.05	)	$	(0.49	)
Stock options not included in computation that could potentially dilute EPS in the future		1,376			1,751			1,759			1,751
Restricted stock awards not included in computation that could potentially dilute EPS in the future		187			122			237			122
Convertible preferred stock not included in computation that could potentially dilute EPS in the future		—			1,853			1,853			1,853
Warrants not included in computation that could potentially dilute EPS in the future		—			1,017			1,277			1,017

The restricted stock awards and stock options not included in the computation of diluted earnings per share for the three month period ended December 27, 2014 are as a result of these instruments being anti-dilutive after application of the treasury method described above. The restricted stock awards, stock options, warrants and convertible preferred stock not included in the computation of diluted earnings per share (EPS) for the nine month periods ended December 27, 2014 and December 28, 2013 and for the three months ended December 28, 2013 are a result of the Company’s net loss and, therefore, these instruments are anti-dilutive.

(7)     Share Based Compensation

The Company has established the 2000 Stock Option Plan and the 2005 Equity Incentive Plan, which provide for the granting of options and restricted stock for up to 2,250,000 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. Option grants under the 2000 Stock Option Plan are no longer available. Options granted generally vest in one or more installments in a four or five year period 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 (SARs), which entitle them to surrender outstanding awards for a cash distribution under certain changes in ownership of the Company, as defined in the stock option plan. As of December 27, 2014, no SAR’s have been granted under the option plan. As of December 27, 2014, the total number of shares of common stock available for issuance is 475,650. All outstanding options have either a five year or a ten year life. The Company records compensation cost associated with share-based compensation equivalent to the estimated fair value of the awards over the requisite service period. There were 35,000 options granted in the third quarter of fiscal 2015 and options for 264,500 granted in the first nine months of fiscal 2015 with weighted average grant date fair values of $1.23 and $1.68 per share, respectively. There were options for 35,000 shares granted in the third quarter of fiscal 2014 and options for 430,750 shares granted in the first nine months of fiscal 2014 with weighted average grant date fair values of $1.05 and $1.09 per share, respectively.

11

Included in the options granted during fiscal 2014 are performance-based options for 100,000 shares granted as an inducement to an employee which were outside the 2005 plan. A portion of the options vest following the filing of the Company’s Form 10-K for fiscal 2015 provided certain bookings goals are achieved by the Company. No compensation cost had been recognized for these stock options through the first quarter of fiscal 2015 or during fiscal 2014 because management believed it was not probable that the performance criteria would be met. During the second quarter of fiscal 2015, management’s assessment changed as it now appears probable that the criteria will be met. The expense of $39,000 will be recognized ratably over the remaining vesting period. For the third quarter of fiscal 2015, $10,000 was recognized as compensation expense.

In calculating compensation related to stock option grants, the fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option-pricing model and the following weighted average assumptions:

	Three Month Periods Ended						Nine Month Periods Ended
	December 27,			December 28,			December 27,			December 28,
	2014			2013			2014			2013
Dividend yield		—			—			—			—
Expected volatility		93.03	%		88.38	%		91.68	%		86.33	%
Risk-free interest rate		1.62	%		1.37	%		1.65	%		1.02	%
Expected term (years)		8.36			8.36			8.36			7.91

The computation of expected volatility used in the Black-Scholes-Merton option-pricing model is based on the historical volatility of the Company’s share price. The expected term is estimated based on a review of historical employee exercise behavior with respect to option grants. The risk-free interest rate is based on the U.S. Treasury rates with maturity similar to the expected term of the option on the date of grant.

A summary of the changes in stock options outstanding for the nine month period ended December 27, 2014 and the fiscal year ended March 29, 2014 is as follows:

			Weighted		Weighted Average		Aggregate
			Average		Remaining Contractual		Intrinsic
	Shares		Exercise Price		Terms (Years)		Value
Outstanding at March 30, 2013		1,556,250	$	1.62		6.8	$	252
Granted		430,750		1.32
Exercised		—		—
Forfeited / Expired		248,250		1.72
Outstanding at March 29, 2014		1,738,750	$	1.53		6.8	$	113
Granted		264,500	$	2.04
Exercised		76,500	$	1.89
Forfeited / Expired		167,900	$	1.72
Outstanding at December 27, 2014		1,758,850	$	1.58		6.9	$	217
Exercisable at December 27, 2014		626,475	$	1.67		5.9	$	57
At December 27, 2014, expected to vest in the future		778,448	$	1.53		7.5	$	106

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As of December 27, 2014, there was $765,000 of total unrecognized compensation cost related to non-vested options. That cost is expected to be recognized over a weighted average period of 3.1 years. There were 71,750 options that vested during the quarter ended December 27, 2014. There were 74,050 options that vested during the quarter ended December 28, 2013. The total grant date fair value of options vested during the quarters ended December 27, 2014 and December 28, 2013 was $97,000 and $100,000, respectively. There were 231,150 options that vested during the nine month period ended December 27, 2014. There were 241,025 options that vested during the nine month period ended December 28, 2013. The total grant date fair value of options vested during the nine month periods ended December 27, 2014 and December 28, 2013 was $280,000 and $303,000, respectively. No shares were exercised in the three month periods ended December 27, 2014 and December 28, 2013. Options of 76,500 shares were exercised in the nine month period ended December 27, 2014 and no shares were exercised in the nine month period ended December 28, 2013. Share based compensation cost recognized in operating results for the three month periods ended December 27, 2014 and December 28, 2013 totaled $103,000 and $36,000, respectively. Share based compensation cost recognized in operating results for the nine month periods ended December 27, 2014 and December 28, 2013 totaled $280,000 and $316,000, respectively.

During the nine months ended December 28, 2013, the vesting for 40,000 options was accelerated in connection with a termination agreement with a former employee. This modification did not result in any incremental compensation expense, however $38,000 of stock-based compensation expense was accelerated and recognized during the nine months ended December 28, 2013.

During the nine months ended December 27, 2014, 25,000 options were exercised by certain members of the Company’s Board of Directors. No options were exercised by Board members in Fiscal 2014.

Restricted Stock

The Company granted 187,000 shares of restricted stock during the first nine months of fiscal 2015 to the members of the Board of Directors in lieu of cash compensation for services to be performed in fiscal 2015. The weighted average grant date fair value was $2.47. The Company granted 71,500 shares of restricted stock during the first nine months of fiscal 2014 to certain members of the Board of Directors in lieu of cash compensation for services to be performed in fiscal 2014. The weighted average grant date fair value was $1.53 per share. The Company also granted 30,000 shares of unrestricted stock during the first nine months of fiscal 2014 as part of a severance agreement with a former employee. The 30,000 shares did not have a restriction period because they vested immediately on the grant date, but are included in the roll forward schedule of restricted stock below because they were granted under the 2005 Plan. The restricted stock awards are considered fixed awards as the number of shares and fair value at the grant date is amortized over the requisite service period net of estimated forfeitures.

As of December 27, 2014, there was $262,000 of total unrecognized compensation cost related to non-vested restricted awards. That cost is expected to be recognized over a weighted average period of 0.5 years. Compensation cost was recognized for the restricted and unrestricted stock awards for the three and nine month periods ended December 27, 2014 totaling $131,000 and $265,000, respectively. These amounts include $16,000 and $32,000 for the three and nine months ended December 27, 2014 for performance awards based on bookings for which probability of attainment appears likely. Compensation cost was recognized for the restricted and unrestricted stock awards for the three and nine month periods ended December 28, 2013 totaling $31,000 and $79,000, respectively. No amounts were included for performance awards based on bookings as their probability of attainment did not appear likely at that time.

A summary of the changes in non-vested restricted stock awards outstanding at December 27, 2014 and at March 29, 2014 is as follows:

			Weighted
			Average Grant
	Shares		Date Fair Value
Non-vested at March 30, 2013		50,000	$	1.18
Granted		101,500		1.53
Vested		30,000		1.53
Forfeited or cancelled		—		—
Non-vested at March 29, 2014		121,500	$	1.39
Granted		187,000		2.47
Vested		71,500		1.53
Forfeited or cancelled		—		—
Non-vested at December 27, 2014		237,000	$	2.20

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8)     Significant Customer and Industry Segment Information

The Company has two reportable segments: Giga-tronics Division and Microsource.

Giga-tronics 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 and designs, manufactures, and markets a line of switching devices that link together many specific purpose instruments that comprise automatic test systems. These products are used primarily in the design, production, repair and maintenance of commercial telecommunications, radar, and electronic warfare equipment. Microsource develops and manufactures a broad line of YIG (Yttrium, Iron, Garnet) tuned oscillators, filters and microwave synthesizers, which are used by its customers in operational applications and in manufacturing a wide variety of microwave instruments and devices.

The tables below present information for the three and nine month periods ended December 27, 2014 and December 28, 2013.

			Three Month Periods Ended							Three Month Periods Ended
(In thousands)	At Dec. 27, 2014			December 27, 2014				At Dec. 28, 2013			December 28, 2013
					Net Income							Net Income
	Total Assets		Net Sales		(Loss)			Total Assets		Net Sales		(Loss)
Giga-tronics Division	$	5,431	$	2,021	$	(1,266	)	$	5,341	$	1,539	$	(1,209	)
Microsource		2,876		2488		1,333			1,821		1,878		491
Total	$	8,307	$	4,509	$	67		$	7,162	$	3,417	$	(718	)

			Nine Month Periods Ended							Nine Month Periods Ended
(In thousands)	At Dec. 27, 2014			December 27, 2014				At Dec. 28, 2013			December 28, 2013
					Net Income							Net Income
	Total Assets		Net Sales		(Loss)			Assets		Net Sales		(Loss)
Giga-tronics Division	$	5,431	$	6,638	$	(3,962	)	$	5,341	$	5,336	$	(2,961	)
Microsource		2,876		7,489		3,679			1,821		5,068		485
Total	$	8,307	$	14,127	$	(283	)	$	7,162	$	10,404	$	(2,476	)

During the third quarter of fiscal 2015, one customer accounted for 36% of the Company’s consolidated revenues and was included in the Microsource segment. A second customer accounted for 16% of the Company’s consolidated revenue for the three months ended December 27, 2014 and was primarily included in the Microsource segment. A third customer accounted for 15% of the Company’s consolidated revenue for the three months ended December 27, 2014 and was primarily included in the Giga-tronics Division. During the third quarter of fiscal 2014, one customer accounted for 41% of the Company’s consolidated revenue and was primarily included in the Microsource segment. A second customer accounted for 20% and was included in the Giga-tronics Division.

During the first nine months of fiscal 2015, one customer accounted for 32% of the Company’s consolidated revenues and was primarily included in the Microsource segment. A second customer accounted for 19% of the Company’s consolidated revenue for the nine months ended December 27, 2014 and was included in the Giga-tronics Division. A third customer accounted for 18% of the Company’s consolidated revenue for the nine months ended December 27, 2014 and was primarily included in the Microsource segment. One customer accounted for 43% of the Company’s consolidated revenues for the nine months ended December 28, 2013 and was primarily included in the Microsource segment. A second customer accounted for 14% of the Company’s consolidated revenues for the nine months ended December 28, 2013 and was included in the Giga-tronics Division.

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(9)     Income Taxes

The Company accounts for income taxes using the asset and liability method as codified in Topic 740. Under this 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 carry-forwards.

The Company did not incur tax expense for the three months ended December 27, 2014 and December 28, 2013. The Company’s tax expense for the nine months ending December 27, 2014 and December 28, 2013 was $47,000 and $2,000, respectively. The Company’s actual tax expense differed from the expected amount using statutory rates primarily as a result of the valuation allowance against deferred tax assets.

As of December 27, 2014, the Company had recorded $70,000 for unrecognized tax benefits related to uncertain tax positions. The unrecognized tax benefit is netted against the non-current deferred tax asset on the Consolidated Balance Sheet. The Company does not expect the liability for unrecognized tax benefits to change materially within the next 12 months. The Company does have a California Franchise Tax Board audit that is currently in process. The Company is working with the California Franchise Tax Board to resolve all audit issues and does not believe any material taxes, penalties and fees are due. However, as a result of the on-going examination, the Company recorded an estimated associated tax liability of $45,000 in the first quarter of fiscal 2015.

(10)        Warranty Obligations

The Company records a provision in cost of sales for estimated warranty obligations at the date products are sold. Adjustments are made as new information becomes available. The following provides a reconciliation of changes in the Company’s warranty reserve. The Company provides no other guarantees.

	Three Month Periods Ended						Nine Month Periods Ended
	December 27,			December 28,			December 27,			December 28,
(In thousands)	2014			2013			2014			2013
Balance at beginning of period	$	73		$	80		$	61		$	114
Provision, net		29			6			56			(3	)
Warranty costs incurred		(24	)		(17	)		(39	)		(42	)
Balance at end of period	$	78		$	69		$	78		$	69

(11)     Restructuring

The Company took steps to reduce expenses and personnel by combining its operations in Santa Rosa into its San Ramon facility. This physical move was completed on May 31, 2013. Certain employee retention agreements were extended through December 2013. Substantially all of the restructuring costs were for the Microsource reportable segment. As of March 29, 2014 the Company had expensed $780,000 related to these restructuring costs, of which $36,000 was recorded in the third quarter of fiscal 2014 and $360,000 for the nine months ended December 28, 2013. There were no restructuring costs during the first nine months of fiscal 2015 and the Company does not anticipate any additional restructuring costs.

(12)     Fair Value of Financial Instruments

Fair Value of Financial Instruments and Fair Value MeasurementsThe Company’s financial instruments consist principally of cash and cash-equivalents, line of credit, term loan, warrant debt and warrant derivative liability. The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The Company uses fair value measurements based on quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access as of the measurement date (Level 1), significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data (Level 2), or significant unobservable inputs reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability (Level 3), depending on the nature of the item being valued.

15

The carrying amounts of the Company’s cash and cash-equivalents and line of credit approximate their fair values at each balance sheet date due to the short-term maturity of these financial instruments. The fair values of term loan and warrant debt are based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company (Level 3), and at December 27, 2014 and March 29, 2014 resulted in the carrying amounts approximating fair values due to the fact that the agreements were entered into near the balance sheet dates and in management’s opinion there were no significant changes to the credit risk of the instruments since they were issued, nor were there significant changes in interest rates or other market factors. The estimated fair value of the bifurcated conversion feature represented by the warrant derivative liability which is measured at fair value on a recurring basis is based on a Black Scholes option pricing model with assumptions for stock price, exercise price, volatility, expected term, risk free interest rate and dividend yield similar to those described previously for share-based compensation which were generally observable (Level 2).  The Company had no assets or liabilities measured at fair value on a non-recurring basis, nor were there any transfers between Level 1 and Level 2 of the fair value hierarchy.

(13)     Line of Credit

On June 11, 2013 the Company entered into an amendment to the Second Amended Credit Facility (the “New Amended Credit Facility”) with Silicon Valley Bank. The New Amended Credit Facility amended the Second Amended Credit Facility by expanding the definition of eligible accounts, increasing the maximum limit, and extending the maturity date. The New Amended Credit Facility, which expires on April 15, 2015, is secured by all assets of the Company and provides for a borrowing capacity equal to 80% of eligible accounts receivable (70% of eligible foreign accounts receivable) on an aggregate basis, up to a maximum of $3.0 million, provided the Company maintains borrowing base eligibility, that is, a minimum of $750,000 of cash in excess of its line of credit liability.

The New Amended Credit Facility contains a collateral handling fee of one-tenth of one percent (0.10%) on outstanding financed receivables for each calendar month based upon a 360 day year. When the Company is borrowing base eligible, the collateral handling fee is not applicable. Interest accrues on the average outstanding borrowings at a floating per annum rate equal to the greater of the Prime Rate plus two percent (2.00%) or six percent (6.00%). When the Company is borrowing base eligible, any borrowings under the New Amended Credit Facility can be repaid and such repaid amounts re-borrowed until the maturity date. When the Company is not borrowing base eligible, advances are made on the New Amended Credit facility on individual accounts receivable and the Company is required to instruct its customers to remit payments to a lockbox at the Bank and when the Company is not borrowing base eligible, such payments are applied by the Bank to the line of credit to the extent monies were advanced to the Company based on such specific accounts receivable.  As of December 27, 2014, the Company was not borrowing base eligible and had outstanding borrowings of $1.6 million which have been classified as a current liability since the New Amended Credit Facility expires in less than twelve months.

As of March 29, 2014, the Company was not borrowing base eligible and, as a result, the Company’s outstanding borrowings under the New Amended Credit Facility of $1.2 million was classified as a current liability.

As of December 27, 2014 the borrowing of $1.6 million approached the maximum borrowing capacity under the Line of Credit. No material additional amounts were available to draw at December 27, 2014 or March 29, 2014. The Bank may terminate or suspend advances under the line of credit if the Bank determines there has been a material adverse change in the Company’s general affairs, financial forecasts or general ability to repay.

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(14)     Term Loan, Revolving Line of Credit and Warrants

On March 13, 2014 the Company entered into a three year, $2.0 million term loan agreement with PFG (the “PFG Loan”) under which the Company received $1.0 million on March 14, 2014 (the “First Draw”). Pursuant to the agreement, the Company had the ability to borrow an additional $1.0 million following the Company’s achievement of certain performance milestones which included achieving $7.5 million in net sales during the first half of fiscal 2015 and two consecutive quarters of net income greater than zero during fiscal 2015.

On June 16, 2014, the Company amended its loan agreement with PFG (the “Amendment”). Under the terms of the Amendment, PFG made a revolving credit line available to Giga-tronics in the amount of $500,000, and the Company borrowed the entire amount on June 17, 2014. The revolving line has a thirty-three month term. The Amendment reduced the future amount potentially available for the Company to borrow under the PFG Loan agreement from $1.0 million to $500,000. During the period ended December 27, 2014, the Company repaid $99,000 in principal to PFG. As of December 27, 2014, the Company had total debt outstanding of $1.4 million with PFG.

Interest on the initial $1.0 million term loan is fixed at 9.75% per annum and required monthly interest only payments during the first six months of the agreement followed by monthly principal and interest payments over the remaining thirty months. The Company may prepay the loan at any time prior to maturity by paying all future scheduled principal and unearned interest payments.

Interest on the $500,000 revolving line is fixed, calculated on a daily basis at a rate of 12.50% per annum. The Company may prepay the loan at any time prior to the March 13, 2017 maturity date without a penalty. Beginning in October 2014, PFG has the right to convert the $500,000 revolving loan into a term loan and require principal payments to be amortized over the remaining loan term. No payments were made in the period ended December 27, 2014.

The PFG Loan is secured by all of the assets of the Company under a lien that is junior to the SVB lien described in Note 13, and limits borrowing under the SVB credit line to $3.0 million. The Company paid a loan fee of $30,000 for the First Draw, $15,000 for the Amendment, and will pay $5,000 if the final $500,000 is drawn. The loan fees paid are recorded as prepaid expenses and amortized to interest expense over the remaining term of the PFG amended loan agreement. 

The amended loan agreement contains financial covenants associated with the Company achieving minimum quarterly net sales and maintaining a minimum monthly shareholders’ equity. In the event of default by the Company, all or any part of the Company’s obligation to PFG could become immediately due. The lender can accelerate the maturity of the loan in case of a default. As of December 27, 2014, the Company was in compliance with the financial covenants.

The loan agreement also provided for the issuance of warrants convertible into 300,000 shares of the Company’s common stock, of which 180,000 were exercisable upon receipt of the initial $1.0 million from the First Draw, 80,000 became exercisable with the Amendment, and 40,000 would become exercisable if the remaining $500,000 is funded. Each warrant issued under the loan agreement has a term of five years from the First Draw and an exercise price of $1.42 which is equal to the average NASDAQ closing price of the Company’s common stock for the ten trading days prior to the First Draw. The number of shares exercisable under each of the aforementioned warrant agreements is subject to downward adjustment from 180,000 to 155,000, 80,000 to 67,500 and 40,000 to 27,500, respectively, if the Company achieves net sales of at least $18.0 million and net income of at least $1.0 million in fiscal 2015.

If the warrants are not exercised before expiration on March 13, 2019, the Company would be required to pay PFG $150,000 and $67,000 as settlement for warrants associated with the First Draw and the Amendment, respectively together with $33,000 assuming the Company borrowed the remaining $500,000 and the associated warrants to be issued in connection therewith were not exercised by PFG. The warrants could be settled for cash at an earlier date in the event of any acquisition or other change in control of the Company, future public issuance of Company securities or liquidation (or substantially similar event) of the Company. The Company currently has no plans for any of the aforementioned events, and as a result, the cash payment date is estimated to be the expiration date unless warrants are exercised before then. Due to the fixed payment amount on the expiration date, the warrant structure is in substance a debt arrangement (the “Warrant Debt”) with a zero interest rate, a fixed maturity date and a feature that makes the debt convertible to common stock. The conversion feature is an embedded derivative and due to the downward adjustment feature based on performance criteria is not considered indexed solely to the Company’s stock. Thus, for accounting purposes, the conversion feature is bifurcated and accounted for separately from the host debt instrument as a derivative liability measured at fair value which resulted in an initial carrying value of $128,000 for the derivative liability associated with the warrants issued in connection with the First Draw and an initial carrying value of $123,000 for the derivative liability associated with the warrants issued in connection with the Amendment. As of December 27, 2014, the estimated fair values of the derivative liabilities associated with the warrants issued in connection with the First Draw and Amendment were $165,000 and $70,000, respectively, for a combined value of $235,000. As of September 27, 2014, the estimated fair values of the derivative liabilities associated with the warrants issued in connection with the First Draw and Amendment were $235,000 and $106,000, respectively, for a combined value of $341,000. The change in the fair value of the derivative liabilities since September 27, 2014 totaled $107,000 and is reported in earnings as gain on adjustment of derivative liability to fair value for the three months ended December 27, 2014. The change in the fair value of the derivative liabilities since their respective dates of issuance totaled $16,000 and is reported in earnings as gain on adjustment of derivative liability to fair value.

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The proceeds from the initial $1.0 million First Draw were allocated between the PFG Loan and the Warrant Debt (inclusive of its conversion feature) based on their relative fair values on the date of issuance which resulted in initial carrying values of $822,000 and $178,000, respectively. The conversion feature was bifurcated from the Warrant Debt and recorded at its $128,000 estimated fair value resulting in a remaining carrying value of $50,000 associated with the Warrant Debt. The resulting discounts of $178,000 on the PFG Loan and $100,000 on the Warrant Debt are being accreted to interest expense under the effective interest method over the three-year term of the PFG Debt and the five-year term of the Warrant Debt. Accretion expense for the three and nine months ended December 27, 2014 was $26,000 and $59,000, respectively.

The proceeds from the $500,000 credit line issued in connection with the Amendment were allocated between the PFG Loan and the Warrant Debt (inclusive of its conversion feature) based on their relative fair values on the date of issuance which resulted in initial carrying values of $365,000 and $135,000, respectively. The conversion feature was bifurcated from the Warrant Debt and recorded at its $123,000 estimated fair value resulting in a remaining carrying value of $12,000 associated with the Warrant Debt. The resulting discounts of $135,000 on the PFG Loan and $55,000 on the Warrant Debt will be accreted to interest expense under the effective interest method over the thirty-three month remaining term of the PFG Loan and the fifty-seven month remaining term of the Warrant Debt. Accretion expense for the three and nine months ended December 27, 2014 was $19,000 and $56,000 respectively.

(15)      Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants

On November 10, 2011, the Company received $2,199,000 in cash proceeds from Alara Capital AVI II, LLC, a Delaware limited liability company (the “Investor”), an investment vehicle sponsored by Active Value Investors, LLC, under a Securities Purchase Agreement entered into on October 31, 2011. Under the terms of the Securities Purchase Agreement, the Company issued 9,997 shares of its Series B Convertible Voting Perpetual Preferred Stock (“Series B Preferred Stock”) to the Investor at a price of $220 per share. The Company has recorded $2.0 million as Series B Preferred Stock on the consolidated balance sheet. This amount is net of stock offering costs of approximately $202,000 and represents the value attributable to both the convertible preferred stock and warrants issued to the Investor. After considering the value of the warrants, the effective conversion price of the preferred stock was greater than the common stock price on date of issue and therefore no beneficial conversion feature was present.

On February 19, 2013, the Company entered into a Securities Purchase Agreement (the “SPA”) pursuant to which it agreed to sell 3,424.65 shares of its Series C Convertible Voting Perpetual Preferred Stock (“Series C Preferred Stock”) to the Investor, for aggregate consideration of $500,000, which is approximately $146.00 per share. The Company has recorded $457,000 as Series C Preferred Stock on the consolidated balance sheet, which is net of stock offering costs of approximately $43,000. After considering the reduction in the value of the warrant, the effective conversion price of the preferred stock was greater than the common stock price on the date of issue and therefore no beneficial conversion feature was present.

On July 8, 2013 the Company received $817,000 in net cash proceeds from the Investor under a Securities Purchase Agreement. The Company sold to the Investor 5,111.86 shares of its Series D Convertible Voting Perpetual Preferred Stock (Series D Preferred Stock) and a warrant to purchase up to 511,186 additional shares of common stock at the price of $1.43 per share. The allocation of the $858,000 in gross proceeds from issuance of Series D Preferred Stock based on the relative fair values resulted in an allocation of $498,000 (which was recorded net of $41,000 of issuance costs) to Series D Preferred Stock and $360,000 to Common Stock.  In addition, because the effective conversion rate based on the $498,000 allocated to Series D Preferred Stock was $0.97 per common share which was less than the Company’s stock price on the date of issuance, a beneficial conversion feature was present at the issuance date.  The beneficial conversion feature totaled $238,000 and was recorded as a reduction of common stock and an increase to accumulated deficit.

18

Each share of Series B, Series C and Series D Preferred Stock is convertible into one share of the Company’s common stock. The investor also holds warrants to purchase 1,017,405 shares at an exercise price of $1.43 per share.

The table below presents information for the periods ended December 27, 2014 and March 29, 2014

Preferred Stock            

As of December 27, 2014 and March 29,2014        

							Liquidation
	Designated Shares		Shares Issued		Shares Outstanding		Preference (in thousands)
Series B		10,000.00		9,997.00		9,997.00	$	2,309
Series C		3,500.00		3,424.65		3,424.65		500
Series D		6,000.00		5,111.86		5,111.86		731
Total		19,500.00		18,533.51		18,533.51	$	3,540

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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 listed in Giga-tronics’ Annual Report on Form 10-K for the fiscal year ended March 29, 2014 Part I, under the heading “Risk Factors”, and Part II, under the heading “Management’s Discussion and Analysis of Financial Conditions and Results of Operations”.

Overview

Giga-tronics produces instruments, subsystems and sophisticated microwave components that have broad applications in both defense electronics and wireless telecommunications. The Company has two reporting segments: Giga-tronics Division and Microsource.

Giga-tronics 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 and designs, manufactures, and markets a line of switching devices that link together many specific purpose instruments that comprise automatic test systems. These products are used primarily in the design, production, repair and maintenance of commercial telecommunications, radar, and electronic warfare equipment. Microsource develops and manufactures a broad line of YIG (Yttrium, Iron, Garnet) tuned oscillators, filters and microwave synthesizers, which are used by its customers in operational applications and in manufacturing a wide variety of microwave instruments and devices.

In the first three months of fiscal 2015 the Giga-tronics Division received a $2.4 million order from the United States Navy (“Navy”) for its Model 8003 Precision Scalar Analyzers product (“8003”). The Navy was a significant customer for the Company in the first nine months of fiscal 2015. Also, in the first nine months of fiscal 2014 the Giga-tronics Division had a range of customers, both domestic and international, and one significant reseller.

In the first three months of fiscal 2015 the Microsource business unit received a $6.2 million order (“NRE Order”) for non-recurring engineering and for delivery of a limited number of flight-qualified prototype hardware from a major aerospace company to develop a variant of its high performance fast tuning YIG filters for an aircraft platform. The Company expects to recognize the majority of revenue in fiscal 2015 from the order. The Company expects to finalize in the next few months a multi-year follow-on order for approximately $10.0 million associated with the production units, which are anticipated to start shipping in April of 2016.

In the third quarter and first nine months of fiscal 2015, almost all of the orders and sales for the Microsource business unit were from two large aerospace customers. Almost all the orders and revenue for the Microsource business was associated with programs for retrofitting radar filter components on existing military aircraft and radar filter components for new military aircraft. The timing of orders and milestone achievements associated with these customers causes significant differences in orders, sales, deferred revenue, inventory and cash flow when comparing one fiscal period to another.

The Microsource NRE Order received early in fiscal 2015 resulted in significant improvements to sales and results of operations in the third quarter and first nine months of fiscal 2015, when compared to the same periods in fiscal 2014. We expect to see continued improvements in operating results for the remainder of fiscal 2015, when compared to fiscal 2014, as we continue to deliver on the Microsource NRE Order.

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Results of Operations

New orders received by segment are as follows:

NEW ORDERS            

	Three Month Periods Ended
(Dollars in thousands)	December 27, 2014		December 28, 2013		% change
Giga-tronics Division	$	2,484	$	2,165		15	%
Microsource		1,555		1,315		18	%
Total	$	4,039	$	3,480		16	%

	Nine Month Periods Ended
(Dollars in thousands)	December 27, 2014		December 28, 2013		% change
Giga-tronics Division	$	7,037	$	7,123		(1%	)
Microsource		8,130		2,232		264	%
Total	$	15,167	$	9,355		62	%

New orders received in the third quarter of fiscal 2015 increased by 16% to $4.0 million from the $3.5 million received in the third quarter of fiscal 2014. The increase is primarily due to a large order for legacy Giga-tronics Division Signal Generator products.

New orders received in the first nine months of fiscal 2015 increased 62% to $15.2 million from the $9.4 million received in the first nine months of fiscal 2014. The increase in orders is primarily due to the Microsource business unit in the first quarter of fiscal 2015 being awarded an approximately $6.2 million NRE contract from a large aerospace company.

The following table shows order backlog and related information at the end of the respective periods:

BACKLOG            

	December 27,		December 28,
(Dollars in thousands)	2014		2013		% change
Backlog of unfilled orders at end of period:
Giga-tronics Division	$	2,698	$	2,741		(2%	)
Microsource		5,012		2,607		92	%
Total	$	7,710	$	5,348		44	%
Backlog of unfilled orders shippable within one year:
Giga-tronics Division	$	2,698	$	2,741		(2%	)
Microsource		3,939		2,607		51	%
Total	$	6,637	$	5,348		24	%

Backlog at the end of the third quarter of fiscal 2015 increased 44% compared to the end of the same period last year. The increase in backlog is primarily due to the $6.2 million NRE Order the Microsource business unit received in the first quarter of fiscal 2015, and the receipt of a $1.3 million Microsource business unit order for radar filter components.

21

The allocation of net sales was as follows for the periods shown:

ALLOCATION OF NET SALES            

	Three Month Periods Ended
(Dollars in thousands)	December 27, 2014		December 28, 2013		% change
Giga-tronics Division	$	2,021	$	1,539		31	%
Microsource		2,488		1,878		32	%
Total	$	4,509	$	3,417		32	%

	Nine Month Periods Ended
(Dollars in thousands)	December 27, 2014		December 28, 2013		% change
Giga-tronics Division	$	6,638	$	5,336		24	%
Microsource		7,489		5,068		48	%
Total	$	14,127	$	10,404		36	%

Net sales in the third quarter of fiscal 2015 were $4.5 million, a 32% increase from the $3.4 million in fiscal 2014, primarily due to partial fulfillment of the Microsource NRE Order and the Giga-tronics Division shipment of a new switching product.    

Net sales in the first nine months of fiscal 2015 increased 36% to $14.1 million from the $10.4 million in the first nine months of fiscal 2014. Sales for the Giga-tronics Division increased 24% primarily due to the fulfillment of the Navy 8003 order. Sales for Microsource increased 48% primarily due to the partial fulfillment of the NRE Order with a large aerospace company.   

Cost of sales was as follows for the periods shown:

COST OF SALES

	Three Month Periods Ended
(Dollars in thousands)	December 27, 2014		December 28, 2013		% change
Cost of sales	$	2,637	$	2,130		24	%

	Nine Month Periods Ended
(Dollars in thousands)	December 27, 2014		December 28, 2013		% change
Cost of sales	$	8,101	$	6,672		21	%

Cost of sales as a percentage of sales decreased for the third quarter of fiscal 2015 to 58.5% compared to 62.3% for the third quarter of fiscal 2014. Cost of sales as a percentage of sales also decreased for the nine months ended December 27, 2014 to 57.3% compared to 64.1% from the first nine months of fiscal 2014. The percentage decreases were primarily due to the fulfilment of the Microsource NRE Order, which had a lower cost of sales compared to product sales.

22

Operating expenses were as follows for the periods shown:

OPERATING EXPENSES            

	Three Month Periods Ended
(Dollars in thousands)	December 27, 2014		December 28, 2013		% change
Engineering	$	672	$	979		(31	)%
Selling, general and administrative		1,133		1,066		6	%
Restructuring		—		36		(100	)%
Total	$	1,805	$	2,081		(13	)%

	Nine Month Periods Ended
(Dollars in thousands)	December 27, 2014		December 28, 2013		% change
Engineering	$	2,563	$	3,040		(16	)%
Selling, general and administrative		3,401		3,674		(7	)%
Restructuring		—		360		(100	)%
Total	$	5,964	$	7,074		(16	)%

Operating expenses decreased 13% or $276,000 in the third quarter of fiscal 2015 over fiscal 2014. Operating expenses decreased 16% or $1.1 million in the first nine months of fiscal 2015 over fiscal 2014. Engineering expenses decreased $307,000 in the third quarter of fiscal 2015 and $477,000 in the first nine months of fiscal 2015, primarily due to a portion of our engineers being assigned to the Microsource NRE Order which is recorded as cost of sales. Selling, general and administrative decreased by $273,000 in the first nine months of fiscal 2015 primarily due to personnel and other cost reductions over the prior 21 months. The restructuring activities were completed in fiscal year 2014. (Note 11, Restructuring).

Gain on the Sale of Product Line

On March 18, 2013, the Company entered into an Asset Purchase Agreement with Teradyne Inc. (“Teradyne”), whereby Teradyne agreed to purchase the Giga-tronics Division product line known as SCPM for $1.0 million, resulting in a net gain of $97,000 during the third quarter of fiscal 2014 and $913,000 for all of fiscal 2014. (Note 5, Gain on Sale of Product Line).

Derivative Liability and Accretion of Discounts on Term Loan and Warrant Debt Notes

The Company recorded a gain of $107,000 and $16,000 for the three and nine months ended December 27, 2014, in association with the revaluation of the PFG debt derivative liability. The Company also recorded accretion of discount expense associated with the warrants issued with the PFG Loan of $45,000 for the three months ended December 27, 2014, and $115,000 for the nine months ended December 27, 2014. (Note 14, Term Loan, Revolving Line of Credit and Warrants).

23

Net Interest Expense

Net interest expense for the third quarter of fiscal 2015 was $62,000, an increase of $41,000 over the third quarter of fiscal 2014. Net interest expense for the first nine months of fiscal 2015 was $199,000, an increase of $147,000 over the first nine months of fiscal 2014. The fiscal 2015 increases were primarily the result of increased borrowings under the SVB line of credit and the loans with PFG.

Net Income and Net Loss

Giga-tronics recorded net income of $67,000 for the third quarter of fiscal 2015 versus a net loss of $718,000 in the third quarter of fiscal 2014. The profit in the third quarter of fiscal 2015 compared to the loss in the third quarter of fiscal 2014 was primarily due to increased revenues associated with the Microsource NRE Order.

Giga-tronics recorded a net loss of $283,000 for the first nine months of fiscal 2015 versus a net loss of $2.5 million for the first nine months of fiscal 2014. The lower net loss in the first nine months of fiscal 2015 compared to the first nine months of fiscal 2014 was primarily due to increased revenues associated with the Microsource NRE Order and the Navy 8003 order, and the decrease in operating expenses discussed above.

Financial Condition and Liquidity

As of December 27, 2014, Giga-tronics had $1.4 million in cash and cash equivalents, compared to $1.1 million as of March 29, 2014.

Working capital at December 27, 2014 and March 29, 2014 was $1.3 million and $973,000, respectively. The current ratio (current assets divided by current liabilities) at December 27, 2014 was 1.22 compared to 1.17 on March 29, 2014.

Cash used in operating activities was $513,000 for the nine month period ended December 27, 2014. Cash used in operating activities in the first nine months of fiscal 2015 primarily resulted from an increase in accounts receivable of $686,000 due to the increase in customer sales. Cash used in operating activities amounted to $1.5 million for the nine month period ended December 28, 2013. Cash used in operating activities for the first nine months of fiscal year 2014 was primarily attributed to the net loss of $2.5 million, which was partially offset by the $449,000 increase in accounts payable and the $395,000 in noncash expense for share based compensation.

Additions to property and equipment were $30,000 in the first nine months of fiscal 2015 compared to $262,000 for the same period last year. The additions in the first nine months of fiscal 2015 were associated with equipment needed to manufacture the new product platform. The additions in the prior year were primarily due to leasehold improvements associated with the move of the Microsource manufacturing to the San Ramon facility.

Cash provided by financing activities for the first nine months ended December 27, 2014 was $880,000, primarily due to $500,000 of debt proceeds received from PFG and $457,000 of net proceeds from the line of credit from Silicon Valley Bank. On June 16, 2014, the Company amended its loan agreement with PFG. Under the terms of the amendment, PFG made a revolving line available to Giga-tronics in the amount of $500,000 for which the Company borrowed the entire amount on June 17, 2014. The Company had total debt of $1.4 million with PFG as of December 27, 2014. The amended loan agreement also provides for the Company’s ability to request an additional term loan of up to $500,000 in Fiscal 2015. (Note 14, Term Loan, Revolving Line of Credit, and Warrants).

As of December 27, 2014, the Company’s outstanding borrowings under the New Amended Credit Facility with SVB, which expires on April 15, 2015, were $1.6 million. Management intends to draw upon the New Amended Credit Facility throughout fiscal 2015 to meet projected cash requirements. As of December 27, 2014, the line of credit was at its maximum borrowing capacity. SVB may terminate or suspend advances under the line of credit if SVB determines there has been a material adverse change in the Company’s general affairs, financial forecasts or general ability to repay. 

24

The Company incurred a net loss of $283,000 for the first nine months of fiscal 2015 and $3,742,000 for the fiscal year ended March 29, 2014. These losses have contributed to an accumulated deficit of $18.5 million as of December 27, 2014.

In the first nine months of fiscal 2015 and all of fiscal 2014 the Company invested heavily in the development of a new Giga-tronics Division product platform, the Advanced Signal Generation System. The Company anticipates long-term revenue growth and improved gross margins from the new product platform, but the delay in completing it contributed significantly to the losses of the Company. The Advanced Signal Generation System's initial customer deliveries occurred in the second and third quarters of fiscal 2015, and are approaching final customer acceptance. Additional delays in shipping volume quantities, or longer than anticipated sales cycles, could significantly contribute to additional losses.

To help fund operations, the Company relies on advances under the line of credit with Silicon Valley Bank. However the Bank may terminate or suspend advances under the line of credit if the Bank determines there has been a material adverse change in the Company’s general affairs, financial forecasts or general ability to repay. (Note 13, Line of Credit). As of December 27, 2014, borrowings under the line of credit were $1.6 million.

These matters, along with recurring losses in prior years, raise substantial doubt as to the ability of the Company to continue as a going concern.

To address this matter, the Company’s management has taken several actions to provide additional liquidity and reduce costs and expenses going forward. These actions are described in the following paragraphs.

● On June 16, 2014, Giga-tronics amended its loan agreement with Partners For Growth IV, L.P. (“PFG”). Under the terms of the amendment, PFG made a revolving line of credit available to Giga-tronics in the amount of $500,000 and the Company borrowed the entire amount on June 17, 2014. The Company’s original agreement with PFG was entered into on March 13, 2014 under which the Company received $1.0 million from a three-year term loan. Pursuant to the amended loan agreement, the Company may borrow an additional $500,000. The loan agreement contains financial covenants associated with the Company achieving minimum quarterly net sales and maintaining a minimum monthly shareholders’ equity. In the event of default by the Company, all or any part of the Company’s obligation to PFG could become immediately due.

● In the first three months of fiscal 2015 the Microsource business unit received a $6.2 million order (“NRE Order”) for the non-recurring engineering and for the delivery of a limited number of flight-qualified prototype hardware from a major aerospace company to develop a variant of its high performance fast tuning YIG filters for an aircraft platform. The Company expects to recognize the majority of revenue from the NRE Order in fiscal 2015. The Company expects to finalize in the next few months a multi-year follow-on order for approximately $10.0 million associated with the production units, which are anticipated to start shipping in April of 2016. No assurances can be given that the parties will agree on the final multi-year production agreement, or what the actual terms will be.

● Also in the first three months of fiscal 2015 the Giga-tronics Division received a $2.4 million order from the United States Navy (“Navy”) for its Model 8003 Precision Scalar Analyzer product (“8003”). The Company recognized the associated revenue and invoiced the Navy in the first two quarters of fiscal 2015.

● To assist with the upfront purchases of inventory required for future product deliveries, the Company entered into advance payment arrangements with certain of its customers, whereby the customers reimburse the Company for raw material purchases prior to the shipment of the finished products. In fiscal 2014 the Company entered into advance payment arrangements totaling $1.3 million, and during the first three quarters of fiscal 2015 the Company entered into $1.4 million of advance payment arrangements. The Company will continue to seek similar terms in future agreements with these and other customers.

Management will continue to review all aspects of the business in an effort to improve cash flow and reduce costs and expenses, while continuing to invest, to the extent possible, in new product development for future revenue streams.

Management will also continue to seek additional working capital through debt, equity financing or possible product line sales, but there are no assurances that such financings or sales will be available at all, or on terms acceptable to the Company.

The current year to date loss and the impacts of recurring losses in prior years have had a significant negative impact on the financial condition of the Company and raise substantial doubt about the Company’s ability to continue as a going concern. Management believes that through the actions to date and possible future actions described above, the Company should have the necessary liquidity to continue its operations at least for the next twelve months, though no assurances can be made in this regard based on uncertainties with respect to the continued manufacturing and marketing efforts of the Company’s new product platform and the material adverse change clause in the Company’s line of credit agreement discussed above. The Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might result if the Company were unable to do so.

25

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4 - CONTROLS AND PROCEDURES

The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to provide reasonable assurances that (i) the information the Company is required to disclose in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time period required by the Commission’s rules and forms, and (ii) such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

There were no significant changes in the Company's internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

Based on the above described procedures and actions taken, the Company’s management, including its Chief Executive Officer and its Chief Financial Officer have concluded that as of December 27, 2014, the Company’s internal control over financial reporting was effective based on the criteria described in the 1992 “COSO Internal Control – Integrated Framework.”

II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

As of December 27, 2014, Giga-tronics had 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.

ITEM 1A - RISK FACTORS

Other than discussed below there has been no material change in the risk factors disclosed in the registrant’s Annual Report on Form 10-K for the fiscal year ended March 29, 2014.

26

Ability to stay listed for trading on The NASDAQ Capital Market

In February 2014, The NASDAQ Stock Market (“NASDAQ”) initiated proceedings to delist the Company from the NASDAQ Capital Market for failure to maintain the minimum required shareholders’ equity. The Company appealed that determination and certain subsequent determinations, and on November 17, 2014, the Company received a notification letter from NASDAQ advising the Company that the hearing panel granted an extension of the Company’s listing through February 16, 2015.

The Company previously reported that it received a notification letter from NASDAQ dated February 12, 2014, advising the Company of its failure to comply with the required minimum of $2,500,000 in shareholders’ equity for continued listing on The Nasdaq Capital Market, pursuant to NASDAQ listing rule 5550(b)(1). The Company fell below the minimum requirement with reported shareholders’ equity of $2,044,000 in its Form 10-Q for the quarterly period ended December 28, 2013.

NASDAQ stated in the February 12, 2014 letter that under the NASDAQ listing rules the Company had 45 calendar days to submit a plan to regain compliance. The Company submitted a plan on March 31, 2014, and NASDAQ notified the Company on April 10, 2014 of NASDAQ’s acceptance of the plan and the granting of an extension to comply with the required minimum of $2,500,000 in shareholders’ equity by August 11, 2014. The terms of the extension required the Company to complete certain contemplated sales or other transactions by August 11, 2014, but the Company was unable to do so.

On August 14, 2014, the Company received a notification letter from NASDAQ advising the Company of its failure to comply with the terms of the extension granted to meet the required minimum in shareholders’ equity. The Company requested, and was granted, a hearing that took place on November 6, 2014.

During the extension period the Company is required to provide NASDAQ a written monthly update regarding its progress towards compliance. The Company must also provide NASDAQ prompt notice of significant events that occur during the extension, including any event that might call into question the Company’s ability to regain compliance. NASDAQ reserves the right to reconsider the extension or its terms if it believes that any new development or information makes the Company’s continued listing inadvisable or unwarranted. Unless the Company regains compliance, continuation of the Company’s listing on NASDAQ will cease on, or shortly after February 16, 2015.

Regaining compliance will most likely depend on the Company’s ability to sell one or more of its legacy product lines or raise equity capital through the exercise of certain existing warrants. No assurance can be given that the Company will regain compliance by February 16, 2015, or that NADAQ will not reconsider the extension or its terms before that date. If the Company’s Common Stock ceases to be listed for trading on the Nasdaq Capital Market, the Company expects that its Common Stock would be traded over the counter on the OTCQB marketplace on or about the same day or shortly thereafter.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.           

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.          

ITEM 4 - MINE SAFETY DISCLOSURES

Not applicable.          

ITEM 5 - OTHER INFORMATION

None.

27

ITEM 6 - EXHIBITS

31.1 Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act.

31.2 Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act.

32.1 Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act.

32.2 Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act.

101.INS** XBRL Instance

101.SCH** XBRL Taxonomy Extension Schema

101.CAL** XBRL Taxonomy Extension Calculation

101.DEF** XBRL Taxonomy Extension Definition

101.LAB** XBRL Taxonomy Extension Labels

101.PRE** XBRL Taxonomy Extension Presentation

28

SIGNATURES

Pursuant to the requirements 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
		(Registrant)
		By:
Date:	January 29, 2015	/s/ John R. Regazzi
		John R. Regazzi
		President and Chief Executive Officer
		(Principal Executive Officer)
Date:	January 29, 2015	/s/ Steven D. Lance
		Steven D. Lance
		Vice President of Finance
		Chief Financial Officer & Secretary

29

EX-31

EXHIBIT 31.1 

CERTIFICATIONS UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John R. Regazzi, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Giga-tronics Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	January 29, 2015
		/s/ John R. Regazzi
		John R. Regazzi
		Chief Executive Officer

EX-31

EXHIBIT 31.2

CERTIFICATIONS UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven D. Lance, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Giga-tronics Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	January 29, 2015
		/s/ Steven D. Lance
		Steven D. Lance
		Vice President of Finance
		Chief Financial Officer & Secretary

EX-32

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Giga-tronics Incorporated (the "Company") on Form 10-Q for the period ending December 27, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John R. Regazzi, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	January 29, 2015
		/s/ John R. Regazzi
		John R. Regazzi
		Chief Executive Officer

EX-32

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Giga-tronics Incorporated (the "Company") on Form 10-Q for the period ending December 27, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Steven D. Lance, Vice President of Finance, Chief Financial Officer & Secretary, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	January 29, 2015
		/s/ Steven D. Lance
		Steven D. Lance
		Vice President of Finance
		Chief Financial Officer & Secretary

XML

Note 8 - Significant Customer and Industry Segment Information (Details) - Segment Reporting Information (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Dec. 27, 2014	Dec. 28, 2013	Dec. 27, 2014	Dec. 28, 2013	Mar. 29, 2014
Segment Reporting Information [Line Items]
Assets	$ 8,307,000	$ 7,162,000	$ 8,307,000	$ 7,162,000	$ 7,593,000
Net sales	4,509,000	3,417,000	14,127,000	10,404,000
Net income (loss)	67,000	(718,000)	(283,000)	(2,476,000)	(3,742,000)
Gigatronics [Member]
Segment Reporting Information [Line Items]
Assets	5,431,000	5,341,000	5,431,000	5,341,000
Net sales	2,021,000	1,539,000	6,638,000	5,336,000
Net income (loss)	(1,266,000)	(1,209,000)	(3,962,000)	(2,961,000)
Microsource [Member]
Segment Reporting Information [Line Items]
Assets	2,876,000	1,821,000	2,876,000	1,821,000
Net sales	2,488,000	1,878,000	7,489,000	5,068,000
Net income (loss)	$ 1,333,000	$ 491,000	$ 3,679,000	$ 485,000

XML

Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants (Details) - Preferred Stock Information (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 27, 2014	Nov. 10, 2011	Feb. 19, 2013	Jul. 08, 2013
Class of Stock [Line Items]
Designated Shares	19,500
Shares Issued	18,534
Shares Outstanding	18,534
Liquidation Preference (in Dollars)	$ 3,540
Series B Preferred Stock [Member]
Class of Stock [Line Items]
Designated Shares	10,000
Shares Issued	9,997	9,997
Shares Outstanding	9,997
Liquidation Preference (in Dollars)	2,309
Series C Preferred Stock [Member]
Class of Stock [Line Items]
Designated Shares	3,500
Shares Issued	3,425		3,425
Shares Outstanding	3,425
Liquidation Preference (in Dollars)	500
Series D Preferred Stock [Member]
Class of Stock [Line Items]
Designated Shares	6,000
Shares Issued	5,112			5,112
Shares Outstanding	5,112
Liquidation Preference (in Dollars)	$ 731

XML

Note 6 - Earnings/Loss Per Share (Details) - Net Income/Loss and Common Shares Used in Per-share Computations (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Dec. 27, 2014	Dec. 28, 2013	Dec. 27, 2014	Dec. 28, 2013	Mar. 29, 2014
Note 6 - Earnings/Loss Per Share (Details) - Net Income/Loss and Common Shares Used in Per-share Computations [Line Items]
Net income/(loss) as reported (in Dollars)	$ 67,000	$ (718,000)	$ (283,000)	$ (2,476,000)	$ (3,742,000)
Net income/(loss) attributable to participating securities (in Dollars)	(18,000)
Net income/(loss) attributable to common shareholders (in Dollars)	$ 49,000	$ (718,000)	$ (283,000)	$ (2,476,000)
Common shares outstanding	5,208	5,060	5,166	5,057
Potential common shares	255
Common shares assuming dilution	5,463	5,060	5,166	5,057
Net earnings/(loss) per common share – basic (in Dollars per share)	$ 0.01	$ (0.14)	$ (0.05)	$ (0.49)
Net earnings/(loss) per common share - diluted (in Dollars per share)	$ 0.01	$ (0.14)	$ (0.05)	$ (0.49)
Equity Option [Member]
Note 6 - Earnings/Loss Per Share (Details) - Net Income/Loss and Common Shares Used in Per-share Computations [Line Items]
Anti-diluted securities excluded from computation of earning per share	1,376	1,751	1,759	1,751
Restricted Stock [Member]
Note 6 - Earnings/Loss Per Share (Details) - Net Income/Loss and Common Shares Used in Per-share Computations [Line Items]
Anti-diluted securities excluded from computation of earning per share	187	122	237	122
Convertible Debt Securities [Member]
Note 6 - Earnings/Loss Per Share (Details) - Net Income/Loss and Common Shares Used in Per-share Computations [Line Items]
Anti-diluted securities excluded from computation of earning per share		1,853	1,853	1,853
Warrant [Member]
Note 6 - Earnings/Loss Per Share (Details) - Net Income/Loss and Common Shares Used in Per-share Computations [Line Items]
Anti-diluted securities excluded from computation of earning per share		1,017	1,277	1,017

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Note 7 - Share-based Compensation (Tables)

9 Months Ended

Dec. 27, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Three Month Periods Ended						Nine Month Periods Ended
	December 27,			December 28,			December 27,			December 28,
	2014			2013			2014			2013
Dividend yield		—			—			—			—
Expected volatility		93.03	%		88.38	%		91.68	%		86.33	%
Risk-free interest rate		1.62	%		1.37	%		1.65	%		1.02	%
Expected term (years)		8.36			8.36			8.36			7.91

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

			Weighted		Weighted Average		Aggregate
			Average		Remaining Contractual		Intrinsic
	Shares		Exercise Price		Terms (Years)		Value
Outstanding at March 30, 2013		1,556,250	$	1.62		6.8	$	252
Granted		430,750		1.32
Exercised		—		—
Forfeited / Expired		248,250		1.72
Outstanding at March 29, 2014		1,738,750	$	1.53		6.8	$	113
Granted		264,500	$	2.04
Exercised		76,500	$	1.89
Forfeited / Expired		167,900	$	1.72
Outstanding at December 27, 2014		1,758,850	$	1.58		6.9	$	217
Exercisable at December 27, 2014		626,475	$	1.67		5.9	$	57
At December 27, 2014, expected to vest in the future		778,448	$	1.53		7.5	$	106

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

			Weighted
			Average Grant
	Shares		Date Fair Value
Non-vested at March 30, 2013		50,000	$	1.18
Granted		101,500		1.53
Vested		30,000		1.53
Forfeited or cancelled		—		—
Non-vested at March 29, 2014		121,500	$	1.39
Granted		187,000		2.47
Vested		71,500		1.53
Forfeited or cancelled		—		—
Non-vested at December 27, 2014		237,000	$	2.20

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Note 11 - Restructuring (Details) (USD $)	3 Months Ended	9 Months Ended		12 Months Ended
	Dec. 28, 2013	Dec. 27, 2014	Dec. 28, 2013	Mar. 29, 2014
Restructuring and Related Activities [Abstract]
Restructuring Charges	$ 36,000	$ 0	$ 360,000	$ 780,000

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Note 7 - Share-based Compensation (Details) - Changes in Nonvested Restricted Stock Awards Outstanding (USD $)	9 Months Ended	12 Months Ended
	Dec. 27, 2014	Mar. 29, 2014
Changes in Nonvested Restricted Stock Awards Outstanding [Abstract]
Outstanding, shares	121,500	50,000
Outstanding, weighted average fair value	$ 1.39	$ 1.18
Granted, shares	187,000	101,500
Granted, weighted average fair value	$ 2.47	$ 1.53
Vested, shares	71,500	30,000
Vested, weighted average fair value	$ 1.53	$ 1.53
Outstanding, shares	237,000	121,500
Outstanding, weighted average fair value	$ 2.20	$ 1.39

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Note 3 - Revenue Recognition

9 Months Ended

Dec. 27, 2014

Revenue Recognition Disclosure [Abstract]

Revenue Recognition Disclosure [Text Block]

(3)     Revenue Recognition

The Company records revenue when there is persuasive evidence of an arrangement, delivery has occurred, the price is fixed and determinable, and collectability is reasonably assured. This occurs when products are shipped or the customer accepts title transfer. If the arrangement involves acceptance terms, the Company defers revenue until product acceptance is received. The Company limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified return or refund privileges. The Company evaluates each deliverable in an arrangement to determine whether they represent separate units of accounting. On certain large development contracts, revenue is recognized upon achievement of substantive milestones. Determining whether a milestone is substantive is a matter of judgment and that assessment is performed only at the inception of the arrangement. The consideration earned from the achievement of a milestone must meet all of the following for the milestone to be considered substantive:

a. It is commensurate with either of the following:

1. The Company’s performance to achieve the milestone.

2. The enhancement of the value of the delivered item or items as a result of a specific outcome resulting from the Company's performance to achieve the milestone.

b. It relates solely to past performance.

c. It is reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within the arrangement.

Milestones are agreed upon with the customer prior to the start of the contract and some milestones will be tied to product shipping while others will be tied to design review. During the three and nine months ended December 27, 2014 revenue recognized on a milestone basis were $1.6 million and $4.5 million respectively. During the three and nine months ended December 28, 2013 revenue recognized on a milestone basis were $89,000 and $397,000, respectively.

On certain contracts with several of the Company’s significant customers the Company receives payments in advance of manufacturing. Advanced payments are recorded as deferred revenue until the revenue recognition criteria described above have been met.

Accounts receivable are stated at their net realizable value. The Company has estimated an allowance for uncollectable accounts based on analysis of specifically identified accounts, outstanding receivables, consideration of the age of those receivables, the Company’s historical collection experience, and adjustments for other factors management believes are necessary based on perceived credit risk.

The Company provides for estimated costs that may be incurred for product warranties at the time of shipment. The Company’s warranty policy generally provides twelve to eighteen months depending on the customer. The estimated cost of warranty coverage is based on the Company’s actual historical experience with its current products or similar products. For new products, the required reserve is based on historical experience of similar products until such time as sufficient historical data has been collected on the new product. Adjustments are made as new information becomes available.

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Note 13 - Line of Credit (Details) (USD $)	0 Months Ended
	Jun. 11, 2013	Dec. 27, 2014	Mar. 29, 2014
Note 13 - Line of Credit (Details) [Line Items]
Line of Credit Facility, Collateral Fees, Percent of Outstanding Financed Receivables	0.10%
Line of Credit, Current		$ 1,622,000	$ 1,165,000
Line of Credit Facility, Remaining Borrowing Capacity		0	0
New Amended Credit Facility [Member] | Foreign Accounts Receivable [Member]
Note 13 - Line of Credit (Details) [Line Items]
Advance Rate	70.00%
New Amended Credit Facility [Member]
Note 13 - Line of Credit (Details) [Line Items]
Line of Credit Facility, Initiation Date	Jun. 11, 2013
Advance Rate	80.00%
Line of Credit Facility, Maximum Borrowing Capacity	3,000,000
Line of Credit Facility, Covenant Terms, Minimum Cash Balance	750,000
Line of Credit, Current		$ 1,600,000	$ 1,200,000
Minimum [Member]
Note 13 - Line of Credit (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	2.00%
Maximum [Member]
Note 13 - Line of Credit (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	6.00%

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Note 2 - Going Concern and Management's Plan (Details) (USD $)	0 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended	0 Months Ended
	Mar. 13, 2014	Dec. 27, 2014	Dec. 28, 2013	Dec. 27, 2014	Dec. 28, 2013	Mar. 29, 2014	Mar. 14, 2014	Jun. 17, 2014	Jun. 28, 2014	Jun. 16, 2014
Note 2 - Going Concern and Management's Plan (Details) [Line Items]
Net Income (Loss) Attributable to Parent		$ 67,000	$ (718,000)	$ (283,000)	$ (2,476,000)	$ (3,742,000)
Retained Earnings (Accumulated Deficit)		(18,541,000)		(18,541,000)		(18,258,000)
Proceeds from Lines of Credit				8,125,000	136,000
Debt Instrument, Term	3 years
Proceeds from Issuance of Debt				500,000
Unbilled Receivables, Not Billable, Amount Expected to be Collected in Remainder of Fiscal Year									6,200,000
Unbilled Receivables, Not Billable, Amount Expected to be Collected in Next Twelve Months									2,400,000
Advance Payment Arrangements				1,400,000		1,300,000
Scenario, Forecast [Member] | Microsource [Member] | New Order [Member]
Note 2 - Going Concern and Management's Plan (Details) [Line Items]
Unbilled Receivables, Not Billable, Amount Expected to be Collected after Next Twelve Months		10,000,000		10,000,000
Microsource [Member]
Note 2 - Going Concern and Management's Plan (Details) [Line Items]
Net Income (Loss) Attributable to Parent		1,333,000	491,000	3,679,000	485,000
PFG Loan [Member]
Note 2 - Going Concern and Management's Plan (Details) [Line Items]
Debt Instrument, Term	3 years
Proceeds from Issuance of Debt	1,000,000						1,000,000
Revolving Credit Facility [Member] | Partners For Growth IV, L.P. [Member]
Note 2 - Going Concern and Management's Plan (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity										500,000
Proceeds from Lines of Credit							500,000	500,000
Line of Credit Facility, Maximum Borrowing Capacity, Additional				500,000
Silicon Valley Bank [Member]
Note 2 - Going Concern and Management's Plan (Details) [Line Items]
Long-term Line of Credit		1,600,000		1,600,000
Line of Credit Facility, Maximum Borrowing Capacity		$ 3,000,000		$ 3,000,000

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Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants (Tables)

9 Months Ended

Dec. 27, 2014

Disclosure Text Block Supplement [Abstract]

Schedule of Stock by Class [Table Text Block]

							Liquidation
	Designated Shares		Shares Issued		Shares Outstanding		Preference (in thousands)
Series B		10,000.00		9,997.00		9,997.00	$	2,309
Series C		3,500.00		3,424.65		3,424.65		500
Series D		6,000.00		5,111.86		5,111.86		731
Total		19,500.00		18,533.51		18,533.51	$	3,540

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Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) (USD $)	0 Months Ended	3 Months Ended	9 Months Ended		0 Months Ended	9 Months Ended	0 Months Ended
	Mar. 13, 2014	Dec. 27, 2014	Dec. 27, 2014	Dec. 28, 2013	Mar. 14, 2014	Dec. 27, 2014	Jun. 17, 2014	Mar. 29, 2014	Sep. 27, 2014	Jun. 16, 2014	Jun. 15, 2014
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Debt Instrument, Term	3 years
Proceeds from Issuance of Debt			$ 500,000
Line of Credit Facility, Remaining Borrowing Capacity		0	0			0		0
Repayments of Debt			99,000
Repayments of Lines of Credit			7,668,000	40,000
Accretion Expense		19,000
Proceeds from Lines of Credit			8,125,000	136,000
Common Stock [Member] | Under First Draw [Member] | PFG Loan [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Class of Warrant or Right, Outstanding (in Shares)					180,000
undefined					155,000
Class of Warrant or Right, Exchanged for Cash, Amount					150,000
Common Stock [Member] | Amendment [Member] | PFG Loan [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Class of Warrant or Right, Outstanding (in Shares)					80,000
Class of Warrant or Right, Exchanged for Cash, Amount					67,000
Common Stock [Member] | If Final Draw Occurs [Member] | PFG Loan [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Class of Warrant or Right, Outstanding (in Shares)					40,000
undefined					27,500
Class of Warrant or Right, Exchanged for Cash, Amount					33,000
Common Stock [Member] | PFG Loan [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)					300,000
Class of Warrant or Right, Term					5 years
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)					$ 1.42
Class of Warrant or Right, Exercisable, Adjustment, Net Sales					18,000,000
Class of Warrant or Right, Exercisable, Adjustment, Net Income					1,000,000
Amendment [Member] | Under Second Draw [Member] | PFG Loan [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
undefined					67,500
Achievement of Performance Milestones First Half of Fiscal 2015 [Member] | PFG Loan [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Line of Credit Facility, Remaining Borrowing Capacity					1,000,000
Debt Instrument Performance Milestone Net Sales	7,500,000
Under First Draw [Member] | PFG Loan [Member] | Prepaid Expenses and Other Current Assets [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Debt Issuance Cost					30,000
Under First Draw [Member] | PFG Loan [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Long-term Debt, Gross					822,000
Debt Instrument, Convertible, Beneficial Conversion Feature					128,000
Debt Instrument, Unamortized Discount					178,000
Under First Draw [Member] | Warrant Debt [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Long-term Debt, Gross					178,000
Debt Instrument, Convertible, Beneficial Conversion Feature					50,000
Derivative Liability, Fair Value, Gross Liability		165,000	165,000			165,000			235,000
Debt Instrument, Unamortized Discount					100,000
Under First Draw [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Accretion Expense		26,000	59,000
Amendment [Member] | PFG Loan [Member] | Prepaid Expenses and Other Current Assets [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Debt Issuance Cost					15,000
Amendment [Member] | PFG Loan [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Long-term Debt, Gross					365,000
Debt Instrument, Convertible, Beneficial Conversion Feature					123,000
Debt Instrument, Unamortized Discount					135,000
Amendment [Member] | Warrant Debt [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Long-term Debt, Gross					135,000
Debt Instrument, Convertible, Beneficial Conversion Feature					12,000
Derivative Liability, Fair Value, Gross Liability		70,000	70,000			70,000			106,000
Debt Instrument, Unamortized Discount					55,000
Accretion Expense			56,000
If Final Draw Occurs [Member] | PFG Loan [Member] | Prepaid Expenses and Other Current Assets [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Debt Issuance Cost					5,000
PFG Loan [Member] | Revolving Credit Facility [Member] | Partners For Growth IV, L.P. [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Line of Credit Facility, Remaining Borrowing Capacity										500,000	1,000,000
PFG Loan [Member] | Secured Debt [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Long-term Debt, Gross		1,000,000	1,000,000			1,000,000
PFG Loan [Member] | Minimum [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Debt Instrument Performance Milestones Net Income		0
PFG Loan [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Debt Instrument, Term	3 years
Debt Instrument, Face Amount	2,000,000
Proceeds from Issuance of Debt	1,000,000				1,000,000
Debt Instrument, Interest Rate, Stated Percentage		9.75%	9.75%			9.75%
Fair Value Adjustment of Warrants		(107,000)				16,000
Warrant Debt [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Derivative Liability, Fair Value, Gross Liability		235,000	235,000			235,000			341,000
Revolving Credit Facility [Member] | Partners For Growth IV, L.P. [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity										500,000
Debt Instrument, Interest Rate, Stated Percentage		12.50%	12.50%			12.50%
Repayments of Lines of Credit		0
Proceeds from Lines of Credit					500,000		500,000
Partners For Growth IV, L.P. [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Repayments of Debt		99,000
Long-term Debt		1,400,000	1,400,000			1,400,000
Silicon Valley Bank [Member]
Note 14 - Term Loan, Revolving Line of Credit and Warrants (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 3,000,000	$ 3,000,000			$ 3,000,000

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Note 3 - Revenue Recognition (Details) (USD $)	3 Months Ended		9 Months Ended
	Dec. 27, 2014	Dec. 28, 2013	Dec. 27, 2014	Dec. 28, 2013
Note 3 - Revenue Recognition (Details) [Line Items]
Revenue Recognition, Milestone Method, Revenue Recognized	$ 1,600,000	$ 89,000	$ 4,500,000	$ 397,000
Minimum [Member]
Note 3 - Revenue Recognition (Details) [Line Items]
Warranty Term			12 months
Maximum [Member]
Note 3 - Revenue Recognition (Details) [Line Items]
Warranty Term			18 months

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Note 4 - Inventories (Details) - Inventories (USD $) In Thousands, unless otherwise specified	Dec. 27, 2014	Mar. 29, 2014
Inventories [Abstract]
Raw materials	$ 1,674	$ 1,501
Work-in-progress	1,456	1,400
Finished goods	73	353
Demonstration inventory	72	67
Total	$ 3,275	$ 3,321

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Note 2 - Going Concern and Management's Plan

9 Months Ended

Dec. 27, 2014

Going Concern Disclosure [Abstract]

Going Concern Disclosure [Text Block]

(2)       Going Concern and Management’s Plan

The Company incurred a net loss of $283,000 for the first nine months of fiscal 2015 and $3,742,000 for the fiscal year ended March 29, 2014. These losses contributed to an accumulated deficit of $18.5 million as of December 27, 2014.

In the first nine months of fiscal 2015 and all of fiscal 2014 the Company invested heavily in the development of a new Giga-tronics Division product platform, the Advanced Signal Generation System. The Company anticipates long-term revenue growth and improved gross margins from the new product platform, but the delay in completing it contributed significantly to the losses of the Company. The Advanced Signal Generation System's initial customer deliveries occurred in the second and third quarters of fiscal 2015, and are approaching final customer acceptance. Additional delays in shipping volume quantities, or longer than anticipated sales cycles, could significantly contribute to additional losses.

To help fund operations, the Company relies on advances under the line of credit with Silicon Valley Bank. However the Bank may terminate or suspend advances under the line of credit if the Bank determines there has been a material adverse change in the Company’s general affairs, financial forecasts or general ability to repay. (Note 13, Line of Credit). As of December 27, 2014, borrowings under the line of credit were $1.6 million.

These matters, along with recurring losses in prior years, raise substantial doubt as to the ability of the Company to continue as a going concern.

To address this matter, the Company’s management has taken several actions to provide additional liquidity and reduce costs and expenses going forward. These actions are described in the following paragraphs.

● On June 16, 2014, Giga-tronics amended its loan agreement with Partners For Growth IV, L.P. (“PFG”). Under the terms of the amendment, PFG made a revolving line of credit available to Giga-tronics in the amount of $500,000 and the Company borrowed the entire amount on June 17, 2014. The Company’s original agreement with PFG was entered into on March 13, 2014 under which the Company received $1.0 million from a three-year term loan. Pursuant to the amended loan agreement, the Company may borrow an additional $500,000. The loan agreement contains financial covenants associated with the Company achieving minimum quarterly net sales and maintaining a minimum monthly shareholders’ equity. In the event of default by the Company, all or any part of the Company’s obligation to PFG could become immediately due.

● In the first three months of fiscal 2015 the Microsource business unit received a $6.2 million order (“NRE Order”) for the non-recurring engineering and for the delivery of a limited number of flight-qualified prototype hardware from a major aerospace company to develop a variant of its high performance fast tuning YIG filters for an aircraft platform. The Company expects to recognize the majority of revenue from the NRE Order in fiscal 2015. The Company expects to finalize in the next few months a multi-year follow-on order for approximately $10.0 million associated with the production units, which are anticipated to start shipping in April of 2016. No assurances can be given that the parties will agree on the final multi-year production agreement, or what the actual terms will be.

● Also in the first three months of fiscal 2015 the Giga-tronics Division received a $2.4 million order from the United States Navy (“Navy”) for its Model 8003 Precision Scalar Analyzer product (“8003”). The Company recognized the associated revenue and invoiced the Navy in the first two quarters of fiscal 2015.

● To assist with the upfront purchases of inventory required for future product deliveries, the Company entered into advance payment arrangements with certain of its customers whereby the customers reimburse the Company for raw material purchases prior to the shipment of the finished products. In fiscal 2014 the Company entered into advance payment arrangements totaling $1.3 million, and during the first three quarters of fiscal 2015 the Company entered into $1.4 million of advance payment arrangements. The Company will continue to seek similar terms in future agreements with these and other customers.

Management will continue to review all aspects of the business in an effort to improve cash flow and reduce costs and expenses, while continuing to invest, to the extent possible, in new product development for future revenue streams.

Management will also continue to seek additional working capital through debt, equity financing or possible product line sales, but there are no assurances that such financings or sales will be available at all, or on terms acceptable to the Company.

The current year to date loss and the impacts of recurring losses in prior years have had a significant negative impact on the financial condition of the Company and raise substantial doubt about the Company’s ability to continue as a going concern. The Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might result if the Company were unable to do so.

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Note 5 - Gain on Sale of Product Line (Details) (USD $)	3 Months Ended		9 Months Ended	12 Months Ended	1 Months Ended	0 Months Ended
	Dec. 28, 2013	Jun. 29, 2013	Dec. 28, 2013	Mar. 29, 2014	Apr. 30, 2013	Dec. 06, 2013	Dec. 31, 2013	Mar. 18, 2013
Note 5 - Gain on Sale of Product Line (Details) [Line Items]
Nontrade Receivables, Current								$ 1,000,000
Discontinued Operation, Gain (Loss) on Disposal of Discontinued Operation, Net of Tax	97,000	816,000	913,000	913,000
Contingent Consideration, Hold Back for Contingent Liabilities							(150,000)
Proceeds at Closing [Member]
Note 5 - Gain on Sale of Product Line (Details) [Line Items]
Proceeds from Divestiture of Businesses					800,000
Training Employees [Member]
Note 5 - Gain on Sale of Product Line (Details) [Line Items]
Proceeds from Divestiture of Businesses					50,000
Other Nonrecurring Expense					34,000
Inventory [Member]
Note 5 - Gain on Sale of Product Line (Details) [Line Items]
Proceeds from Divestiture of Businesses						150,000
Revenues				$ 53,000

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Note 9 - Income Taxes (Details) (USD $)	3 Months Ended		9 Months Ended
	Dec. 27, 2014	Dec. 28, 2013	Dec. 27, 2014	Dec. 28, 2013	Jun. 28, 2014
Note 9 - Income Taxes (Details) [Line Items]
Income Tax Expense (Benefit)	$ 0	$ 0	$ 47,000	$ 2,000
Unrecognized Tax Benefits	70,000		70,000
California Franchise Tax Board [Member]
Note 9 - Income Taxes (Details) [Line Items]
Unrecognized Tax Benefits					$ 45,000

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Condensed Consolidated Balance Sheets (Unaudited) (USD $)	Dec. 27, 2014	Mar. 29, 2014
Current assets:
Cash and cash-equivalents	$ 1,396,000	$ 1,059,000
Trade accounts receivable, net of allowance of $45 and $44, respectively	2,532,000	1,846,000
Inventories, net	3,275,000	3,321,000
Prepaid expenses and other current assets	246,000	349,000
Total current assets	7,449,000	6,575,000
Property and equipment, net	780,000	949,000
Other long term assets	78,000	69,000
Total assets	8,307,000	7,593,000
Liabilities and shareholders' equity
Line of credit	1,622,000	1,165,000
Current portion of long term debt	801,000	200,000
Accounts payable	1,035,000	1,430,000
Accrued payroll and benefits	563,000	755,000
Deferred revenue	1,519,000	1,329,000
Deferred rent	121,000	104,000
Capital lease obligations	72,000	147,000
Other current liabilities	380,000	472,000
Total current liabilities	6,113,000	5,602,000
Long term loan and warrant debt, net of discounts	464,000	672,000
Derivative liability –at estimated fair value	235,000	128,000
Long term obligations - deferred rent	144,000	237,000
Long term obligations - capital lease	67,000	77,000
Total liabilities	7,023,000	6,716,000
Commitments and contingencies
Convertible preferred stock of no par value; Authorized - 1,000,000 shares
Common stock of no par value; Authorized - 40,000,000 shares; 5,444,747 shares at December 27, 2014 and 5,181,247 at March 29, 2014 issued and outstanding	16,914,000	16,224,000
Accumulated deficit	(18,541,000)	(18,258,000)
Total shareholders' equity	1,284,000	877,000
Total liabilities and shareholders' equity	8,307,000	7,593,000
Series B, C, and D Preferred Stock [Member]
Convertible preferred stock of no par value; Authorized - 1,000,000 shares
Preferred Stock, Value Issued	$ 2,911,000	$ 2,911,000

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Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants (Details) (USD $)	9 Months Ended	0 Months Ended	9 Months Ended	0 Months Ended
	Dec. 28, 2013	Nov. 10, 2011	Dec. 27, 2014	Feb. 19, 2013	Jul. 08, 2013
Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants (Details) [Line Items]
Preferred Stock, Shares Issued (in Shares)			18,533.51
Proceeds from Issuance of Preferred Stock and Preference Stock	$ 817,000
Series B Preferred Stock [Member]
Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants (Details) [Line Items]
Proceeds from Issuance of Preferred Stock, Preference Stock, and Warrants		2,199,000
Preferred Stock, Shares Issued (in Shares)		9,997	9,997.00
Sale of Stock, Price Per Share (in Dollars per share)		$ 220
Preferred Stock, Value, Issued			2,000,000
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs			202,000
Series C Preferred Stock [Member]
Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants (Details) [Line Items]
Preferred Stock, Shares Issued (in Shares)			3,424.65	3,424.65
Sale of Stock, Price Per Share (in Dollars per share)				$ 146.00
Preferred Stock, Value, Issued			457,000
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs			43,000
Proceeds from Issuance of Preferred Stock and Preference Stock				500,000
Series D Preferred Stock [Member] | SPA [Member] | Unallocated [Member]
Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants (Details) [Line Items]
Proceeds from Issuance of Convertible Preferred Stock					817,000
Series D Preferred Stock [Member] | SPA [Member] | Allocated [Member]
Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants (Details) [Line Items]
Proceeds from Issuance of Convertible Preferred Stock					498,000
Proceeds from Issuance of Common Stock					360,000
Debt Instrument, Convertible, Conversion Price (in Dollars per share)					$ 0.97
Series D Preferred Stock [Member] | SPA [Member]
Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants (Details) [Line Items]
Debt Issuance Cost					41,000
Series D Preferred Stock [Member]
Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants (Details) [Line Items]
Preferred Stock, Shares Issued (in Shares)			5,111.86		5,111.86
Proceeds from Issuance of Convertible Preferred Stock					858,000
Debt Instrument, Convertible, Beneficial Conversion Feature					$ 238,000
New Warrant [Member]
Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants (Details) [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)					511,186
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)					$ 1.43
Alara Capital AVI II, LLC [Member]
Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants (Details) [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)			1,017,405
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)			$ 1.43

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Condensed Consolidated Statements of Cash Flows (Unaudited) (Parentheticals) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Dec. 28, 2013
Preferred stocks, issuance costs	$ 41

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Note 7 - Share-based Compensation (Details) - Weighted Average Assumptions	3 Months Ended		9 Months Ended
	Dec. 27, 2014	Dec. 28, 2013	Dec. 27, 2014	Dec. 28, 2013
Weighted Average Assumptions [Abstract]
Dividend yield
Expected volatility	93.03%	88.38%	91.68%	86.33%
Risk-free interest rate	1.62%	1.37%	1.65%	1.02%
Expected term (years)	8 years 131 days	8 years 131 days	8 years 131 days	7 years 332 days

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Accounting Policies, by Policy (Policies)

9 Months Ended

Dec. 27, 2014

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

The condensed consolidated financial statements included herein have been prepared by Giga-tronics Incorporated (the “Company”), pursuant to the rules and regulations of the Securities and Exchange Commission. The consolidated results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. In the opinion of management, the information contained herein reflects all adjustments (consisting of normal recurring entries) necessary to make the consolidated results of operations for the interim periods a fair statement of such operations. For further information, refer to the consolidated financial statements and footnotes thereto, included in the Annual Report on Form 10-K, filed with the Securities and Exchange Commission for the year ended March 29, 2014.

Fiscal Period, Policy [Policy Text Block]

Fiscal Year The 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 2015, ending on March 28, 2015 is a 52 week year, and fiscal year 2014, ended on March 29, 2014 was a 52 week year. Quarterly periods within each such fiscal year are in most cases 13 weeks as opposed to three calendar months. All references to three or nine month periods, and years in the consolidated financial statements relate to fiscal periods or years rather than three or nine month calendar quarters or calendar years.

Derivatives, Policy [Policy Text Block]

Derivatives The Company accounts for free standing derivatives and embedded derivatives required to be bifurcated and accounted for on a stand-alone basis at estimated fair value. Changes in fair value are reported in earnings as gain or loss on adjustment of derivative liability to fair value.

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Standards In April 2014, the Financial Accounting Standards Board (FASB) issued an accounting standard update that changes the criteria for reporting discontinued operations. Under the accounting standard update, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has, or will have, a major effect on an entity’s operations and financial results when either it qualifies as held for sale, disposed of by sale, or disposed of other than by sale. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2016. The Company is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements.

In May 2014, the FASB amended the accounting standards by creating a new Topic 606 which is in response to a joint initiative of the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. generally accepted accounting principles and international financial reporting standards that would:

1. Remove inconsistencies and weaknesses in revenue requirements.

2. Provide a more robust framework for addressing revenue issues.

3. Improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets.

4. Provide more useful information to users of financial statements through improved disclosure requirements.

5. Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer.

For a public entity, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is currently evaluating the impact this new accounting standard will have on its financial statements.

In June 2014, the FASB amended ASC 718, Share Based Compensation, to require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. For all entities, the amendments in this update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The Company is currently evaluating the impact this accounting standard update may have on its financial statements.

In August 2014, the FASB issued ASU 2014-15 which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact this accounting standard update may have on its financial statements.

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Note 7 - Share-based Compensation (Details) - Changes in Stock Options Outstanding (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended			9 Months Ended		12 Months Ended
	Dec. 27, 2014	Jun. 28, 2014	Dec. 28, 2013	Dec. 27, 2014	Dec. 28, 2013	Mar. 29, 2014	Mar. 30, 2013
Changes in Stock Options Outstanding [Abstract]
Outstanding, Shares		1,738,750		1,738,750			1,556,250
Outstanding, Weighted Average Exercise Price		$ 1.53		$ 1.53			$ 1.62
Outstanding, Weighted Average Remaining Contractual Terms				6 years 328 days		6 years 292 days	6 years 292 days
Outstanding, Aggregate Intrinsic Value		$ 113		$ 113			$ 252
Exercisable at December 27, 2014	626,475			626,475
Exercisable at December 27, 2014	$ 1.67			$ 1.67
Exercisable at December 27, 2014				5 years 328 days
Exercisable at December 27, 2014	57			57
At December 27, 2014, expected to vest in the future	778,448			778,448
At December 27, 2014, expected to vest in the future	$ 1.53			$ 1.53
At December 27, 2014, expected to vest in the future				7 years 6 months
At December 27, 2014, expected to vest in the future	106			106
Granted, Shares	35,000		35,000	264,500	430,750	430,750
Granted, Weighted Average Exercise Price				$ 2.04		$ 1.32
Exercised, Shares	0	0		76,500	0
Exercised, Weighted Average Exercise Price				$ 1.89
Forfeited/expired, Shares				167,900		248,250
Forfeited/expired, Weighted Average Exercise Price				$ 1.72		$ 1.72
Outstanding, Shares	1,758,850			1,758,850		1,738,750
Outstanding, Weighted Average Exercise Price	$ 1.58			$ 1.58		$ 1.53
Outstanding, Weighted Average Remaining Contractual Terms				6 years 328 days		6 years 292 days	6 years 292 days
Outstanding, Aggregate Intrinsic Value	$ 217			$ 217		$ 113

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Note 6 - Earnings/Loss Per Share (Tables)

9 Months Ended

Dec. 27, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Month Periods Ended						Nine Month Periods Ended
	December 27,			December 28,			December 27,			December 28,
(In thousands except per share data)	2014			2013			2014			2013
Net income/(loss) as reported	$	67		$	(718	)	$	(283	)	$	(2,476	)
Net income/(loss) attributable to participating securities		(18	)		—			—			—
Net income/(loss) attributable to common shareholders	$	49		$	(718	)	$	(283	)	$	(2,476	)
Weighted average:
Common shares outstanding		5,208			5,060			5,166			5,057
Potential common shares		255			—			—			—
Common shares assuming dilution		5,463			5,060			5,166			5,057
Net earnings/(loss) per common share – basic	$	0.01		$	(0.14	)	$	(0.05	)	$	(0.49	)
Net earnings/(loss) per common share - diluted	$	0.01		$	(0.14	)	$	(0.05	)	$	(0.49	)
Stock options not included in computation that could potentially dilute EPS in the future		1,376			1,751			1,759			1,751
Restricted stock awards not included in computation that could potentially dilute EPS in the future		187			122			237			122
Convertible preferred stock not included in computation that could potentially dilute EPS in the future		—			1,853			1,853			1,853
Warrants not included in computation that could potentially dilute EPS in the future		—			1,017			1,277			1,017

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Note 1 - Basis of Presentation

9 Months Ended

Dec. 27, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

(1)     Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Giga-tronics Incorporated (the “Company”), pursuant to the rules and regulations of the Securities and Exchange Commission. The consolidated results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. In the opinion of management, the information contained herein reflects all adjustments (consisting of normal recurring entries) necessary to make the consolidated results of operations for the interim periods a fair statement of such operations. For further information, refer to the consolidated financial statements and footnotes thereto, included in the Annual Report on Form 10-K, filed with the Securities and Exchange Commission for the year ended March 29, 2014.

Fiscal Year The 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 2015, ending on March 28, 2015 is a 52 week year, and fiscal year 2014, ended on March 29, 2014 was a 52 week year. Quarterly periods within each such fiscal year are in most cases 13 weeks as opposed to three calendar months. All references to three or nine month periods, and years in the consolidated financial statements relate to fiscal periods or years rather than three or nine month calendar quarters or calendar years.

Derivatives The Company accounts for free standing derivatives and embedded derivatives required to be bifurcated and accounted for on a stand-alone basis at estimated fair value. Changes in fair value are reported in earnings as gain or loss on adjustment of derivative liability to fair value.

New Accounting Standards In April 2014, the Financial Accounting Standards Board (FASB) issued an accounting standard update that changes the criteria for reporting discontinued operations. Under the accounting standard update, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has, or will have, a major effect on an entity’s operations and financial results when either it qualifies as held for sale, disposed of by sale, or disposed of other than by sale. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2016. The Company is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements.

In May 2014, the FASB amended the accounting standards by creating a new Topic 606 which is in response to a joint initiative of the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. generally accepted accounting principles and international financial reporting standards that would:

1. Remove inconsistencies and weaknesses in revenue requirements.

2. Provide a more robust framework for addressing revenue issues.

3. Improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets.

4. Provide more useful information to users of financial statements through improved disclosure requirements.

5. Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer.

For a public entity, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is currently evaluating the impact this new accounting standard will have on its financial statements.

In June 2014, the FASB amended ASC 718, Share Based Compensation, to require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. For all entities, the amendments in this update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The Company is currently evaluating the impact this accounting standard update may have on its financial statements.

In August 2014, the FASB issued ASU 2014-15 which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact this accounting standard update may have on its financial statements.

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 27, 2014	Mar. 29, 2014
Trade accounts receivable, allowance (in Dollars)	$ 45	$ 44
Preferred Stock, Shares Authorized	19,500
Prеfеrrеd Stock, Sharеs Issuеd	18,534
Preferred Stock, Shares Outstanding	18,534
Preferred Stock, Liquidation Preference (in Dollars)	3,540
Common stock, par value (in Dollars per share)	$ 0	$ 0
Common stock, authorized	40,000,000	40,000,000
Common stock, issued	5,444,747	5,181,247
Common stock, outstanding	5,444,747	5,181,247
Series A Preferred Stock [Member]
Preferred Stock, Shares Authorized	250,000	250,000
Prеfеrrеd Stock, Sharеs Issuеd	0	0
Preferred Stock, Shares Outstanding	0	0
Series B, C, and D Preferred Stock [Member]
Preferred Stock, Shares Authorized	19,500	19,500
Prеfеrrеd Stock, Sharеs Issuеd	18,534	18,534
Preferred Stock, Shares Outstanding	18,534	18,534
Preferred Stock, Liquidation Preference (in Dollars)	$ 3,540	$ 3,540

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Note 11 - Restructuring

9 Months Ended

Dec. 27, 2014

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

(11)     Restructuring

The Company took steps to reduce expenses and personnel by combining its operations in Santa Rosa into its San Ramon facility. This physical move was completed on May 31, 2013. Certain employee retention agreements were extended through December 2013. Substantially all of the restructuring costs were for the Microsource reportable segment. As of March 29, 2014 the Company had expensed $780,000 related to these restructuring costs, of which $36,000 was recorded in the third quarter of fiscal 2014 and $360,000 for the nine months ended December 28, 2013. There were no restructuring costs during the first nine months of fiscal 2015 and the Company does not anticipate any additional restructuring costs.

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Document And Entity Information	9 Months Ended
	Dec. 27, 2014	Jan. 29, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	GIGA TRONICS INC
Document Type	10-Q
Current Fiscal Year End Date	--03-28
Entity Common Stock, Shares Outstanding		5,444,747
Amendment Flag	false
Entity Central Index Key	0000719274
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Dec. 27, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3

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Note 12 - Fair Value of Financial Instruments

9 Months Ended

Dec. 27, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

(12)     Fair Value of Financial Instruments

Fair Value of Financial Instruments and Fair Value MeasurementsThe Company’s financial instruments consist principally of cash and cash-equivalents, line of credit, term loan, warrant debt and warrant derivative liability. The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The Company uses fair value measurements based on quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access as of the measurement date (Level 1), significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data (Level 2), or significant unobservable inputs reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability (Level 3), depending on the nature of the item being valued.

The carrying amounts of the Company’s cash and cash-equivalents and line of credit approximate their fair values at each balance sheet date due to the short-term maturity of these financial instruments. The fair values of term loan and warrant debt are based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company (Level 3), and at December 27, 2014 and March 29, 2014 resulted in the carrying amounts approximating fair values due to the fact that the agreements were entered into near the balance sheet dates and in management’s opinion there were no significant changes to the credit risk of the instruments since they were issued, nor were there significant changes in interest rates or other market factors. The estimated fair value of the bifurcated conversion feature represented by the warrant derivative liability which is measured at fair value on a recurring basis is based on a Black Scholes option pricing model with assumptions for stock price, exercise price, volatility, expected term, risk free interest rate and dividend yield similar to those described previously for share-based compensation which were generally observable (Level 2).  The Company had no assets or liabilities measured at fair value on a non-recurring basis, nor were there any transfers between Level 1 and Level 2 of the fair value hierarchy.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Dec. 27, 2014	Dec. 28, 2013	Dec. 27, 2014	Dec. 28, 2013
Net sales	$ 4,509,000	$ 3,417,000	$ 14,127,000	$ 10,404,000
Cost of sales	2,637,000	2,130,000	8,101,000	6,672,000
Gross margin	1,872,000	1,287,000	6,026,000	3,732,000
Operating expenses:
Engineering	672,000	979,000	2,563,000	3,040,000
Selling, general and administrative	1,133,000	1,066,000	3,401,000	3,674,000
Restructuring		36,000	0	360,000
Total operating expenses	1,805,000	2,081,000	5,964,000	7,074,000
Operating income/(loss)	67,000	(794,000)	62,000	(3,342,000)
Gain on sale of product line		97,000		913,000
Gain on adjustment of derivative liability to fair value	107,000		16,000
Other income				7,000
Interest expense, net	(62,000)	(21,000)	(199,000)	(52,000)
Accretion of loan and warrant debt discounts	(45,000)		(115,000)
Income/(loss) before income taxes	67,000	(718,000)	(236,000)	(2,474,000)
Provision for income taxes	0	0	47,000	2,000
Net income/(loss)	$ 67,000	$ (718,000)	$ (283,000)	$ (2,476,000)
Earnings/(loss) per common share – basic (in Dollars per share)	$ 0.01	$ (0.14)	$ (0.05)	$ (0.49)
Earnings/(loss) per common share – diluted (in Dollars per share)	$ 0.01	$ (0.14)	$ (0.05)	$ (0.49)
Weighted average shares used in per share calculation:
Basic (in Shares)	5,208	5,060	5,166	5,057
Diluted (in Shares)	5,463	5,060	5,166	5,057

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Note 6 - Earnings/Loss Per Share

9 Months Ended

Dec. 27, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

(6)         Earnings/Loss Per Share

Basic earnings (loss) per common share (EPS) is calculated by dividing net income or loss attributable to common shareholders by the weighted average common shares outstanding during the period. Net income attributable to common shareholders excludes distributed and undistributed earnings attributable to preferred stock, which constitute participating securities due to their dividend rights, and to which the Company applies the two-class method of calculating and presenting earnings per share. Diluted EPS reflects the net incremental shares that would be issued if unvested restricted shares became vested and dilutive outstanding stock options and warrants were exercised, using the treasury stock method. In the case of a net loss, it is assumed that no incremental shares would be issued because they would be antidilutive. In addition, certain options and restricted stock are considered antidilutive because assumed proceeds from exercise price, related tax benefits and average future compensation was greater than the weighted average number of options outstanding multiplied by the average market price during the period.

The shares used in per share computations are as follows:

	Three Month Periods Ended						Nine Month Periods Ended
	December 27,			December 28,			December 27,			December 28,
(In thousands except per share data)	2014			2013			2014			2013
Net income/(loss) as reported	$	67		$	(718	)	$	(283	)	$	(2,476	)
Net income/(loss) attributable to participating securities		(18	)		—			—			—
Net income/(loss) attributable to common shareholders	$	49		$	(718	)	$	(283	)	$	(2,476	)
Weighted average:
Common shares outstanding		5,208			5,060			5,166			5,057
Potential common shares		255			—			—			—
Common shares assuming dilution		5,463			5,060			5,166			5,057
Net earnings/(loss) per common share – basic	$	0.01		$	(0.14	)	$	(0.05	)	$	(0.49	)
Net earnings/(loss) per common share - diluted	$	0.01		$	(0.14	)	$	(0.05	)	$	(0.49	)
Stock options not included in computation that could potentially dilute EPS in the future		1,376			1,751			1,759			1,751
Restricted stock awards not included in computation that could potentially dilute EPS in the future		187			122			237			122
Convertible preferred stock not included in computation that could potentially dilute EPS in the future		—			1,853			1,853			1,853
Warrants not included in computation that could potentially dilute EPS in the future		—			1,017			1,277			1,017

The restricted stock awards and stock options not included in the computation of diluted earnings per share for the three month period ended December 27, 2014 are as a result of these instruments being anti-dilutive after application of the treasury method described above. The restricted stock awards, stock options, warrants and convertible preferred stock not included in the computation of diluted earnings per share (EPS) for the nine month periods ended December 27, 2014 and December 28, 2013 and for the three months ended December 28, 2013 are a result of the Company’s net loss and, therefore, these instruments are anti-dilutive.

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Note 5 - Gain on Sale of Product Line

9 Months Ended

Dec. 27, 2014

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

(5)         Gain on Sale of Product Line

On March 18, 2013, the Company entered into an Asset Purchase Agreement with Teradyne Inc. (“Teradyne”), whereby Teradyne agreed to purchase the Giga-tronics Division product line known as SCPM for $1.0 million, resulting in a net gain of $913,000, of which $816,000 was recorded during the first quarter of fiscal 2014. In April 2013 the Company received $800,000 in proceeds at the closing of the transaction upon delivery of electronic data associated with the purchase. The Company also earned an additional $50,000 associated with training of Teradyne employees, which was offset by $34,000 of associated costs. The balance of the consideration ($150,000) was subject to a hold back arrangement until December 31, 2013 to cover certain contingencies and the requirement to deliver certain inventory. During fiscal 2014, the Company delivered to Teradyne all of the associated inventory, totaling $53,000. On December 6, 2013, the Company received the remaining $150,000 along with confirmation from Teradyne that the holdback provisions were removed.

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Note 4 - Inventories (Tables)

9 Months Ended

Dec. 27, 2014

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

(In thousands)	December 27, 2014		March 29, 2014
Raw materials	$	1,674	$	1,501
Work-in-progress		1,456		1,400
Finished goods		73		353
Demonstration inventory		72		67
Total	$	3,275	$	3,321

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Note 13 - Line of Credit

9 Months Ended

Dec. 27, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

(13)     Line of Credit

On June 11, 2013 the Company entered into an amendment to the Second Amended Credit Facility (the “New Amended Credit Facility”) with Silicon Valley Bank. The New Amended Credit Facility amended the Second Amended Credit Facility by expanding the definition of eligible accounts, increasing the maximum limit, and extending the maturity date. The New Amended Credit Facility, which expires on April 15, 2015, is secured by all assets of the Company and provides for a borrowing capacity equal to 80% of eligible accounts receivable (70% of eligible foreign accounts receivable) on an aggregate basis, up to a maximum of $3.0 million, provided the Company maintains borrowing base eligibility, that is, a minimum of $750,000 of cash in excess of its line of credit liability.

The New Amended Credit Facility contains a collateral handling fee of one-tenth of one percent (0.10%) on outstanding financed receivables for each calendar month based upon a 360 day year. When the Company is borrowing base eligible, the collateral handling fee is not applicable. Interest accrues on the average outstanding borrowings at a floating per annum rate equal to the greater of the Prime Rate plus two percent (2.00%) or six percent (6.00%). When the Company is borrowing base eligible, any borrowings under the New Amended Credit Facility can be repaid and such repaid amounts re-borrowed until the maturity date. When the Company is not borrowing base eligible, advances are made on the New Amended Credit facility on individual accounts receivable and the Company is required to instruct its customers to remit payments to a lockbox at the Bank and when the Company is not borrowing base eligible, such payments are applied by the Bank to the line of credit to the extent monies were advanced to the Company based on such specific accounts receivable.  As of December 27, 2014, the Company was not borrowing base eligible and had outstanding borrowings of $1.6 million which have been classified as a current liability since the New Amended Credit Facility expires in less than twelve months.

As of March 29, 2014, the Company was not borrowing base eligible and, as a result, the Company’s outstanding borrowings under the New Amended Credit Facility of $1.2 million was classified as a current liability.

As of December 27, 2014 the borrowing of $1.6 million approached the maximum borrowing capacity under the Line of Credit. No material additional amounts were available to draw at December 27, 2014 or March 29, 2014. The Bank may terminate or suspend advances under the line of credit if the Bank determines there has been a material adverse change in the Company’s general affairs, financial forecasts or general ability to repay.

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Note 9 - Income Taxes

9 Months Ended

Dec. 27, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

(9)     Income Taxes

The Company accounts for income taxes using the asset and liability method as codified in Topic 740. Under this 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 carry-forwards.

The Company did not incur tax expense for the three months ended December 27, 2014 and December 28, 2013. The Company’s tax expense for the nine months ending December 27, 2014 and December 28, 2013 was $47,000 and $2,000, respectively. The Company’s actual tax expense differed from the expected amount using statutory rates primarily as a result of the valuation allowance against deferred tax assets.

As of December 27, 2014, the Company had recorded $70,000 for unrecognized tax benefits related to uncertain tax positions. The unrecognized tax benefit is netted against the non-current deferred tax asset on the Consolidated Balance Sheet. The Company does not expect the liability for unrecognized tax benefits to change materially within the next 12 months. The Company does have a California Franchise Tax Board audit that is currently in process. The Company is working with the California Franchise Tax Board to resolve all audit issues and does not believe any material taxes, penalties and fees are due. However, as a result of the on-going examination, the Company recorded an estimated associated tax liability of $45,000 in the first quarter of fiscal 2015.

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Note 7 - Share-based Compensation

9 Months Ended

Dec. 27, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

(7)     Share Based Compensation

The Company has established the 2000 Stock Option Plan and the 2005 Equity Incentive Plan, which provide for the granting of options and restricted stock for up to 2,250,000 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. Option grants under the 2000 Stock Option Plan are no longer available. Options granted generally vest in one or more installments in a four or five year period 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 (SARs), which entitle them to surrender outstanding awards for a cash distribution under certain changes in ownership of the Company, as defined in the stock option plan. As of December 27, 2014, no SAR’s have been granted under the option plan. As of December 27, 2014, the total number of shares of common stock available for issuance is 475,650. All outstanding options have either a five year or a ten year life. The Company records compensation cost associated with share-based compensation equivalent to the estimated fair value of the awards over the requisite service period. There were 35,000 options granted in the third quarter of fiscal 2015 and options for 264,500 granted in the first nine months of fiscal 2015 with weighted average grant date fair values of $1.23 and $1.68 per share, respectively. There were options for 35,000 shares granted in the third quarter of fiscal 2014 and options for 430,750 shares granted in the first nine months of fiscal 2014 with weighted average grant date fair values of $1.05 and $1.09 per share, respectively.

Included in the options granted during fiscal 2014 are performance-based options for 100,000 shares granted as an inducement to an employee which were outside the 2005 plan. A portion of the options vest following the filing of the Company’s Form 10-K for fiscal 2015 provided certain bookings goals are achieved by the Company. No compensation cost had been recognized for these stock options through the first quarter of fiscal 2015 or during fiscal 2014 because management believed it was not probable that the performance criteria would be met. During the second quarter of fiscal 2015, management’s assessment changed as it now appears probable that the criteria will be met. The expense of $39,000 will be recognized ratably over the remaining vesting period. For the third quarter of fiscal 2015, $10,000 was recognized as compensation expense.

In calculating compensation related to stock option grants, the fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option-pricing model and the following weighted average assumptions:

	Three Month Periods Ended						Nine Month Periods Ended
	December 27,			December 28,			December 27,			December 28,
	2014			2013			2014			2013
Dividend yield		—			—			—			—
Expected volatility		93.03	%		88.38	%		91.68	%		86.33	%
Risk-free interest rate		1.62	%		1.37	%		1.65	%		1.02	%
Expected term (years)		8.36			8.36			8.36			7.91

The computation of expected volatility used in the Black-Scholes-Merton option-pricing model is based on the historical volatility of the Company’s share price. The expected term is estimated based on a review of historical employee exercise behavior with respect to option grants. The risk-free interest rate is based on the U.S. Treasury rates with maturity similar to the expected term of the option on the date of grant.

A summary of the changes in stock options outstanding for the nine month period ended December 27, 2014 and the fiscal year ended March 29, 2014 is as follows:

			Weighted		Weighted Average		Aggregate
			Average		Remaining Contractual		Intrinsic
	Shares		Exercise Price		Terms (Years)		Value
Outstanding at March 30, 2013		1,556,250	$	1.62		6.8	$	252
Granted		430,750		1.32
Exercised		—		—
Forfeited / Expired		248,250		1.72
Outstanding at March 29, 2014		1,738,750	$	1.53		6.8	$	113
Granted		264,500	$	2.04
Exercised		76,500	$	1.89
Forfeited / Expired		167,900	$	1.72
Outstanding at December 27, 2014		1,758,850	$	1.58		6.9	$	217
Exercisable at December 27, 2014		626,475	$	1.67		5.9	$	57
At December 27, 2014, expected to vest in the future		778,448	$	1.53		7.5	$	106

As of December 27, 2014, there was $765,000 of total unrecognized compensation cost related to non-vested options. That cost is expected to be recognized over a weighted average period of 3.1 years. There were 71,750 options that vested during the quarter ended December 27, 2014. There were 74,050 options that vested during the quarter ended December 28, 2013. The total grant date fair value of options vested during the quarters ended December 27, 2014 and December 28, 2013 was $97,000 and $100,000, respectively. There were 231,150 options that vested during the nine month period ended December 27, 2014. There were 241,025 options that vested during the nine month period ended December 28, 2013. The total grant date fair value of options vested during the nine month periods ended December 27, 2014 and December 28, 2013 was $280,000 and $303,000, respectively. No shares were exercised in the three month periods ended December 27, 2014 and December 28, 2013. Options of 76,500 shares were exercised in the nine month period ended December 27, 2014 and no shares were exercised in the nine month period ended December 28, 2013. Share based compensation cost recognized in operating results for the three month periods ended December 27, 2014 and December 28, 2013 totaled $103,000 and $36,000, respectively. Share based compensation cost recognized in operating results for the nine month periods ended December 27, 2014 and December 28, 2013 totaled $280,000 and $316,000, respectively.

During the nine months ended December 28, 2013, the vesting for 40,000 options was accelerated in connection with a termination agreement with a former employee. This modification did not result in any incremental compensation expense, however $38,000 of stock-based compensation expense was accelerated and recognized during the nine months ended December 28, 2013.

During the nine months ended December 27, 2014, 25,000 options were exercised by certain members of the Company’s Board of Directors. No options were exercised by Board members in Fiscal 2014.

Restricted Stock

The Company granted 187,000 shares of restricted stock during the first nine months of fiscal 2015 to the members of the Board of Directors in lieu of cash compensation for services to be performed in fiscal 2015. The weighted average grant date fair value was $2.47. The Company granted 71,500 shares of restricted stock during the first nine months of fiscal 2014 to certain members of the Board of Directors in lieu of cash compensation for services to be performed in fiscal 2014. The weighted average grant date fair value was $1.53 per share. The Company also granted 30,000 shares of unrestricted stock during the first nine months of fiscal 2014 as part of a severance agreement with a former employee. The 30,000 shares did not have a restriction period because they vested immediately on the grant date, but are included in the roll forward schedule of restricted stock below because they were granted under the 2005 Plan. The restricted stock awards are considered fixed awards as the number of shares and fair value at the grant date is amortized over the requisite service period net of estimated forfeitures.

As of December 27, 2014, there was $262,000 of total unrecognized compensation cost related to non-vested restricted awards. That cost is expected to be recognized over a weighted average period of 0.5 years. Compensation cost was recognized for the restricted and unrestricted stock awards for the three and nine month periods ended December 27, 2014 totaling $131,000 and $265,000, respectively. These amounts include $16,000 and $32,000 for the three and nine months ended December 27, 2014 for performance awards based on bookings for which probability of attainment appears likely. Compensation cost was recognized for the restricted and unrestricted stock awards for the three and nine month periods ended December 28, 2013 totaling $31,000 and $79,000, respectively. No amounts were included for performance awards based on bookings as their probability of attainment did not appear likely at that time.

A summary of the changes in non-vested restricted stock awards outstanding at December 27, 2014 and at March 29, 2014 is as follows:

			Weighted
			Average Grant
	Shares		Date Fair Value
Non-vested at March 30, 2013		50,000	$	1.18
Granted		101,500		1.53
Vested		30,000		1.53
Forfeited or cancelled		—		—
Non-vested at March 29, 2014		121,500	$	1.39
Granted		187,000		2.47
Vested		71,500		1.53
Forfeited or cancelled		—		—
Non-vested at December 27, 2014		237,000	$	2.20

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Note 8 - Significant Customer and Industry Segment Information

9 Months Ended

Dec. 27, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

8)     Significant Customer and Industry Segment Information

The Company has two reportable segments: Giga-tronics Division and Microsource.

Giga-tronics 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 and designs, manufactures, and markets a line of switching devices that link together many specific purpose instruments that comprise automatic test systems. These products are used primarily in the design, production, repair and maintenance of commercial telecommunications, radar, and electronic warfare equipment. Microsource develops and manufactures a broad line of YIG (Yttrium, Iron, Garnet) tuned oscillators, filters and microwave synthesizers, which are used by its customers in operational applications and in manufacturing a wide variety of microwave instruments and devices.

The tables below present information for the three and nine month periods ended December 27, 2014 and December 28, 2013.

			Three Month Periods Ended							Three Month Periods Ended
(In thousands)	At Dec. 27, 2014			December 27, 2014				At Dec. 28, 2013			December 28, 2013
					Net Income							Net Income
	Total Assets		Net Sales		(Loss)			Total Assets		Net Sales		(Loss)
Giga-tronics Division	$	5,431	$	2,021	$	(1,266	)	$	5,341	$	1,539	$	(1,209	)
Microsource		2,876		2488		1,333			1,821		1,878		491
Total	$	8,307	$	4,509	$	67		$	7,162	$	3,417	$	(718	)

			Nine Month Periods Ended							Nine Month Periods Ended
(In thousands)	At Dec. 27, 2014			December 27, 2014				At Dec. 28, 2013			December 28, 2013
					Net Income							Net Income
	Total Assets		Net Sales		(Loss)			Assets		Net Sales		(Loss)
Giga-tronics Division	$	5,431	$	6,638	$	(3,962	)	$	5,341	$	5,336	$	(2,961	)
Microsource		2,876		7,489		3,679			1,821		5,068		485
Total	$	8,307	$	14,127	$	(283	)	$	7,162	$	10,404	$	(2,476	)

During the third quarter of fiscal 2015, one customer accounted for 36% of the Company’s consolidated revenues and was included in the Microsource segment. A second customer accounted for 16% of the Company’s consolidated revenue for the three months ended December 27, 2014 and was primarily included in the Microsource segment. A third customer accounted for 15% of the Company’s consolidated revenue for the three months ended December 27, 2014 and was primarily included in the Giga-tronics Division. During the third quarter of fiscal 2014, one customer accounted for 41% of the Company’s consolidated revenue and was primarily included in the Microsource segment. A second customer accounted for 20% and was included in the Giga-tronics Division.

During the first nine months of fiscal 2015, one customer accounted for 32% of the Company’s consolidated revenues and was primarily included in the Microsource segment. A second customer accounted for 19% of the Company’s consolidated revenue for the nine months ended December 27, 2014 and was included in the Giga-tronics Division. A third customer accounted for 18% of the Company’s consolidated revenue for the nine months ended December 27, 2014 and was primarily included in the Microsource segment. One customer accounted for 43% of the Company’s consolidated revenues for the nine months ended December 28, 2013 and was primarily included in the Microsource segment. A second customer accounted for 14% of the Company’s consolidated revenues for the nine months ended December 28, 2013 and was included in the Giga-tronics Division.

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Note 10 - Warranty Obligations

9 Months Ended

Dec. 27, 2014

Product Warranties Disclosures [Abstract]

Product Warranty Disclosure [Text Block]

(10)        Warranty Obligations

The Company records a provision in cost of sales for estimated warranty obligations at the date products are sold. Adjustments are made as new information becomes available. The following provides a reconciliation of changes in the Company’s warranty reserve. The Company provides no other guarantees.

	Three Month Periods Ended						Nine Month Periods Ended
	December 27,			December 28,			December 27,			December 28,
(In thousands)	2014			2013			2014			2013
Balance at beginning of period	$	73		$	80		$	61		$	114
Provision, net		29			6			56			(3	)
Warranty costs incurred		(24	)		(17	)		(39	)		(42	)
Balance at end of period	$	78		$	69		$	78		$	69

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Note 7 - Share-based Compensation (Details) (USD $)	3 Months Ended			9 Months Ended		12 Months Ended
	Dec. 27, 2014	Jun. 28, 2014	Dec. 28, 2013	Dec. 27, 2014	Dec. 28, 2013	Mar. 29, 2014
Note 7 - Share-based Compensation (Details) [Line Items]
Percent of Fair Market Value of Common Stock at Date of Grant				100.00%
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				187,000		101,500
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	475,650			475,650
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	35,000		35,000	264,500	430,750	430,750
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share)	$ 1.23		$ 1.05	$ 1.68	$ 1.09
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized (in Dollars)	$ 765,000			$ 765,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition				3 years 36 days
Share-based Compensation Arrangement by Share-based Payment Award Options Vested Number	71,750		74,050	231,150	241,025
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value (in Dollars)	97,000		100,000	280,000	303,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	0	0		76,500	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share)				$ 2.47		$ 1.53
Options Granted to Employees [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award Expiration				10 years
Stock Appreciation Rights (SARs) [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				0
Outstanding Options [Member] | Minimum [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award Expiration				5 years
Outstanding Options [Member] | Maximum [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award Expiration				10 years
Performance-based Options [Member] | New Employee [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross						100,000
Allocated Share-based Compensation Expense (in Dollars)	10,000	0				0
Aggregate Share-based Compensation (in Dollars)				39,000
Employee Stock Option [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Allocated Share-based Compensation Expense (in Dollars)	103,000		36,000	280,000	316,000
Accelerated in Connection with Termination Agreement [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Allocated Share-based Compensation Expense (in Dollars)					38,000
Share-based Compensation Arrangement by Share-based Payment Award Options Vested Number					40,000
Restricted Stock [Member] | Director [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period					71,500
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share)					$ 1.53
Restricted Stock [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				187,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share)				$ 2.47
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition				6 months
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options (in Dollars)	262,000			262,000
Restricted Stock, Employee Severance [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period					30,000
Restricted and Unrestricted Stock [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Allocated Share-based Compensation Expense (in Dollars)	131,000		31,000	265,000	79,000
Performance Shares [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Allocated Share-based Compensation Expense (in Dollars)	$ 16,000			$ 32,000
Minimum [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				4 years
Maximum [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				5 years
Director [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period				25,000		0
2000 Stock Option Plan and 2005 Equity Incentive Plan [Member]
Note 7 - Share-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	2,250,000			2,250,000

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Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants

9 Months Ended

Dec. 27, 2014

Disclosure Text Block Supplement [Abstract]

Preferred Stock [Text Block]

(15)      Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants

On November 10, 2011, the Company received $2,199,000 in cash proceeds from Alara Capital AVI II, LLC, a Delaware limited liability company (the “Investor”), an investment vehicle sponsored by Active Value Investors, LLC, under a Securities Purchase Agreement entered into on October 31, 2011. Under the terms of the Securities Purchase Agreement, the Company issued 9,997 shares of its Series B Convertible Voting Perpetual Preferred Stock (“Series B Preferred Stock”) to the Investor at a price of $220 per share. The Company has recorded $2.0 million as Series B Preferred Stock on the consolidated balance sheet. This amount is net of stock offering costs of approximately $202,000 and represents the value attributable to both the convertible preferred stock and warrants issued to the Investor. After considering the value of the warrants, the effective conversion price of the preferred stock was greater than the common stock price on date of issue and therefore no beneficial conversion feature was present.

On February 19, 2013, the Company entered into a Securities Purchase Agreement (the “SPA”) pursuant to which it agreed to sell 3,424.65 shares of its Series C Convertible Voting Perpetual Preferred Stock (“Series C Preferred Stock”) to the Investor, for aggregate consideration of $500,000, which is approximately $146.00 per share. The Company has recorded $457,000 as Series C Preferred Stock on the consolidated balance sheet, which is net of stock offering costs of approximately $43,000. After considering the reduction in the value of the warrant, the effective conversion price of the preferred stock was greater than the common stock price on the date of issue and therefore no beneficial conversion feature was present.

On July 8, 2013 the Company received $817,000 in net cash proceeds from the Investor under a Securities Purchase Agreement. The Company sold to the Investor 5,111.86 shares of its Series D Convertible Voting Perpetual Preferred Stock (Series D Preferred Stock) and a warrant to purchase up to 511,186 additional shares of common stock at the price of $1.43 per share. The allocation of the $858,000 in gross proceeds from issuance of Series D Preferred Stock based on the relative fair values resulted in an allocation of $498,000 (which was recorded net of $41,000 of issuance costs) to Series D Preferred Stock and $360,000 to Common Stock.  In addition, because the effective conversion rate based on the $498,000 allocated to Series D Preferred Stock was $0.97 per common share which was less than the Company’s stock price on the date of issuance, a beneficial conversion feature was present at the issuance date.  The beneficial conversion feature totaled $238,000 and was recorded as a reduction of common stock and an increase to accumulated deficit.

Each share of Series B, Series C and Series D Preferred Stock is convertible into one share of the Company’s common stock. The investor also holds warrants to purchase 1,017,405 shares at an exercise price of $1.43 per share.

The table below presents information for the periods ended December 27, 2014 and March 29, 2014

Preferred Stock            

As of December 27, 2014 and March 29,2014        

							Liquidation
	Designated Shares		Shares Issued		Shares Outstanding		Preference (in thousands)
Series B		10,000.00		9,997.00		9,997.00	$	2,309
Series C		3,500.00		3,424.65		3,424.65		500
Series D		6,000.00		5,111.86		5,111.86		731
Total		19,500.00		18,533.51		18,533.51	$	3,540

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Note 8 - Significant Customer and Industry Segment Information (Tables)

9 Months Ended

Dec. 27, 2014

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

			Three Month Periods Ended							Three Month Periods Ended
(In thousands)	At Dec. 27, 2014			December 27, 2014				At Dec. 28, 2013			December 28, 2013
					Net Income							Net Income
	Total Assets		Net Sales		(Loss)			Total Assets		Net Sales		(Loss)
Giga-tronics Division	$	5,431	$	2,021	$	(1,266	)	$	5,341	$	1,539	$	(1,209	)
Microsource		2,876		2488		1,333			1,821		1,878		491
Total	$	8,307	$	4,509	$	67		$	7,162	$	3,417	$	(718	)

			Nine Month Periods Ended							Nine Month Periods Ended
(In thousands)	At Dec. 27, 2014			December 27, 2014				At Dec. 28, 2013			December 28, 2013
					Net Income							Net Income
	Total Assets		Net Sales		(Loss)			Assets		Net Sales		(Loss)
Giga-tronics Division	$	5,431	$	6,638	$	(3,962	)	$	5,341	$	5,336	$	(2,961	)
Microsource		2,876		7,489		3,679			1,821		5,068		485
Total	$	8,307	$	14,127	$	(283	)	$	7,162	$	10,404	$	(2,476	)

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Note 10 - Warranty Obligations (Details) - Reconciliation of Company's Estimated Warranty Obligations (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Dec. 27, 2014	Dec. 28, 2013	Dec. 27, 2014	Dec. 28, 2013
Reconciliation of Company's Estimated Warranty Obligations [Abstract]
Balance at beginning of period	$ 73	$ 80	$ 61	$ 114
Provision, net	29	6	56	(3)
Warranty costs incurred	(24)	(17)	(39)	(42)
Balance at end of period	$ 78	$ 69	$ 78	$ 69

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Dec. 27, 2014	Dec. 28, 2013
Net loss	$ (283,000)	$ (2,476,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	237,000	166,000
Share based compensation	545,000	395,000
Loss on adjustment of derivative liability to fair value	(16,000)
Accretion of discounts on loan and warrant debt	115,000
Change in deferred rent	(76,000)	(59,000)
Changes in operating assets and liabilities	(1,035,000)	457,000
Net cash used in operating activities	(513,000)	(1,517,000)
Purchases of property and equipment	(30,000)	(262,000)
Net cash used in investing activities	(30,000)	(262,000)
Payments on capital leases	(123,000)	(60,000)
Proceeds from line of credit	8,125,000	136,000
Proceeds from issuance of debt	500,000
Proceeds from exercise of stock options	145,000
Proceeds from issuance of preferred stocks, net of issuance costs totaling $41		817,000
Repayments of line of credit	(7,668,000)	(40,000)
Repayments of debt	(99,000)
Net cash provided by financing activities	880,000	853,000
Increase/(decrease) in cash and cash-equivalents	337,000	(926,000)
Beginning cash and cash-equivalents	1,059,000	1,882,000
Ending cash and cash-equivalents	1,396,000	956,000
Supplementary disclosure of other cash flow information:
Cash paid for income taxes	2,000	2,000
Cash paid for interest	172,000	52,000
Equipment acquired under capital lease	$ 49,000	$ 86,000

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Note 4 - Inventories

9 Months Ended

Dec. 27, 2014

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

(4) Inventories

(In thousands)	December 27, 2014		March 29, 2014
Raw materials	$	1,674	$	1,501
Work-in-progress		1,456		1,400
Finished goods		73		353
Demonstration inventory		72		67
Total	$	3,275	$	3,321

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Note 10 - Warranty Obligations (Tables)

9 Months Ended

Dec. 27, 2014

Product Warranties Disclosures [Abstract]

Schedule of Product Warranty Liability [Table Text Block]

	Three Month Periods Ended						Nine Month Periods Ended
	December 27,			December 28,			December 27,			December 28,
(In thousands)	2014			2013			2014			2013
Balance at beginning of period	$	73		$	80		$	61		$	114
Provision, net		29			6			56			(3	)
Warranty costs incurred		(24	)		(17	)		(39	)		(42	)
Balance at end of period	$	78		$	69		$	78		$	69

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Note 8 - Significant Customer and Industry Segment Information (Details)	9 Months Ended	3 Months Ended		9 Months Ended
	Dec. 27, 2014	Dec. 27, 2014	Dec. 28, 2013	Dec. 28, 2013
Note 8 - Significant Customer and Industry Segment Information (Details) [Line Items]
Number of Reportable Segments	2
Second Customer [Member] | Gigatronics [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Note 8 - Significant Customer and Industry Segment Information (Details) [Line Items]
Concentration Risk, Percentage	19.00%
Second Customer [Member] | Microsource [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Note 8 - Significant Customer and Industry Segment Information (Details) [Line Items]
Concentration Risk, Percentage		16.00%	20.00%	14.00%
Third Customer [Member] | Microsource [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Note 8 - Significant Customer and Industry Segment Information (Details) [Line Items]
Concentration Risk, Percentage	18.00%	15.00%
Gigatronics [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Note 8 - Significant Customer and Industry Segment Information (Details) [Line Items]
Concentration Risk, Percentage		36.00%
Microsource [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Note 8 - Significant Customer and Industry Segment Information (Details) [Line Items]
Concentration Risk, Percentage	32.00%		41.00%	43.00%

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Note 14 - Term Loan, Revolving Line of Credit and Warrants

9 Months Ended

Dec. 27, 2014

Disclosure Text Block [Abstract]

Long-term Debt [Text Block]

(14)     Term Loan, Revolving Line of Credit and Warrants

On March 13, 2014 the Company entered into a three year, $2.0 million term loan agreement with PFG (the “PFG Loan”) under which the Company received $1.0 million on March 14, 2014 (the “First Draw”). Pursuant to the agreement, the Company had the ability to borrow an additional $1.0 million following the Company’s achievement of certain performance milestones which included achieving $7.5 million in net sales during the first half of fiscal 2015 and two consecutive quarters of net income greater than zero during fiscal 2015.

On June 16, 2014, the Company amended its loan agreement with PFG (the “Amendment”). Under the terms of the Amendment, PFG made a revolving credit line available to Giga-tronics in the amount of $500,000, and the Company borrowed the entire amount on June 17, 2014. The revolving line has a thirty-three month term. The Amendment reduced the future amount potentially available for the Company to borrow under the PFG Loan agreement from $1.0 million to $500,000. During the period ended December 27, 2014, the Company repaid $99,000 in principal to PFG. As of December 27, 2014, the Company had total debt outstanding of $1.4 million with PFG.

Interest on the initial $1.0 million term loan is fixed at 9.75% per annum and required monthly interest only payments during the first six months of the agreement followed by monthly principal and interest payments over the remaining thirty months. The Company may prepay the loan at any time prior to maturity by paying all future scheduled principal and unearned interest payments.

Interest on the $500,000 revolving line is fixed, calculated on a daily basis at a rate of 12.50% per annum. The Company may prepay the loan at any time prior to the March 13, 2017 maturity date without a penalty. Beginning in October 2014, PFG has the right to convert the $500,000 revolving loan into a term loan and require principal payments to be amortized over the remaining loan term. No payments were made in the period ended December 27, 2014.

The PFG Loan is secured by all of the assets of the Company under a lien that is junior to the SVB lien described in Note 13, and limits borrowing under the SVB credit line to $3.0 million. The Company paid a loan fee of $30,000 for the First Draw, $15,000 for the Amendment, and will pay $5,000 if the final $500,000 is drawn. The loan fees paid are recorded as prepaid expenses and amortized to interest expense over the remaining term of the PFG amended loan agreement. 

The amended loan agreement contains financial covenants associated with the Company achieving minimum quarterly net sales and maintaining a minimum monthly shareholders’ equity. In the event of default by the Company, all or any part of the Company’s obligation to PFG could become immediately due. The lender can accelerate the maturity of the loan in case of a default. As of December 27, 2014, the Company was in compliance with the financial covenants.

The loan agreement also provided for the issuance of warrants convertible into 300,000 shares of the Company’s common stock, of which 180,000 were exercisable upon receipt of the initial $1.0 million from the First Draw, 80,000 became exercisable with the Amendment, and 40,000 would become exercisable if the remaining $500,000 is funded. Each warrant issued under the loan agreement has a term of five years from the First Draw and an exercise price of $1.42 which is equal to the average NASDAQ closing price of the Company’s common stock for the ten trading days prior to the First Draw. The number of shares exercisable under each of the aforementioned warrant agreements is subject to downward adjustment from 180,000 to 155,000, 80,000 to 67,500 and 40,000 to 27,500, respectively, if the Company achieves net sales of at least $18.0 million and net income of at least $1.0 million in fiscal 2015.

If the warrants are not exercised before expiration on March 13, 2019, the Company would be required to pay PFG $150,000 and $67,000 as settlement for warrants associated with the First Draw and the Amendment, respectively together with $33,000 assuming the Company borrowed the remaining $500,000 and the associated warrants to be issued in connection therewith were not exercised by PFG. The warrants could be settled for cash at an earlier date in the event of any acquisition or other change in control of the Company, future public issuance of Company securities or liquidation (or substantially similar event) of the Company. The Company currently has no plans for any of the aforementioned events, and as a result, the cash payment date is estimated to be the expiration date unless warrants are exercised before then. Due to the fixed payment amount on the expiration date, the warrant structure is in substance a debt arrangement (the “Warrant Debt”) with a zero interest rate, a fixed maturity date and a feature that makes the debt convertible to common stock. The conversion feature is an embedded derivative and due to the downward adjustment feature based on performance criteria is not considered indexed solely to the Company’s stock. Thus, for accounting purposes, the conversion feature is bifurcated and accounted for separately from the host debt instrument as a derivative liability measured at fair value which resulted in an initial carrying value of $128,000 for the derivative liability associated with the warrants issued in connection with the First Draw and an initial carrying value of $123,000 for the derivative liability associated with the warrants issued in connection with the Amendment. As of December 27, 2014, the estimated fair values of the derivative liabilities associated with the warrants issued in connection with the First Draw and Amendment were $165,000 and $70,000, respectively, for a combined value of $235,000. As of September 27, 2014, the estimated fair values of the derivative liabilities associated with the warrants issued in connection with the First Draw and Amendment were $235,000 and $106,000, respectively, for a combined value of $341,000. The change in the fair value of the derivative liabilities since September 27, 2014 totaled $107,000 and is reported in earnings as gain on adjustment of derivative liability to fair value for the three months ended December 27, 2014. The change in the fair value of the derivative liabilities since their respective dates of issuance totaled $16,000 and is reported in earnings as gain on adjustment of derivative liability to fair value.

The proceeds from the initial $1.0 million First Draw were allocated between the PFG Loan and the Warrant Debt (inclusive of its conversion feature) based on their relative fair values on the date of issuance which resulted in initial carrying values of $822,000 and $178,000, respectively. The conversion feature was bifurcated from the Warrant Debt and recorded at its $128,000 estimated fair value resulting in a remaining carrying value of $50,000 associated with the Warrant Debt. The resulting discounts of $178,000 on the PFG Loan and $100,000 on the Warrant Debt are being accreted to interest expense under the effective interest method over the three-year term of the PFG Debt and the five-year term of the Warrant Debt. Accretion expense for the three and nine months ended December 27, 2014 was $26,000 and $59,000, respectively.

The proceeds from the $500,000 credit line issued in connection with the Amendment were allocated between the PFG Loan and the Warrant Debt (inclusive of its conversion feature) based on their relative fair values on the date of issuance which resulted in initial carrying values of $365,000 and $135,000, respectively. The conversion feature was bifurcated from the Warrant Debt and recorded at its $123,000 estimated fair value resulting in a remaining carrying value of $12,000 associated with the Warrant Debt. The resulting discounts of $135,000 on the PFG Loan and $55,000 on the Warrant Debt will be accreted to interest expense under the effective interest method over the thirty-three month remaining term of the PFG Loan and the fifty-seven month remaining term of the Warrant Debt. Accretion expense for the three and nine months ended December 27, 2014 was $19,000 and $56,000 respectively.