17	Preferred Stock and Warrants

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

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 which 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

beneficial conversion feature was present.

February 19, 2013,

the Company entered into a Securities Purchase Agreement 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.

As part of this transaction, the Company and the Investor agreed to reduce the number of shares exercisable under the previously issued warrant, and 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

beneficial conversion feature was present.

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 hundred

shares of the Company’s common stock. In connection with the preferred stock issuance described above, the Company issued to the investor warrants to purchase a total of

1,017,405

common shares at an exercise price of

$1.43

per share. These warrants were exercised in

February 2015,

and

May 2015.

The Company received funds from Alara in separate closings dated

February 16, 2015

and

February 23, 2015.

Alara exercised a total of

1,002,818

of its existing Series C and Series D warrants to purchase common shares, all of which had an exercise price of

$1.43

per share for total cash proceeds of

$1,434,000,

which was recorded net of

$42,000

of stock issuance costs. As part of the consideration for this exercise, the Company sold to Alara

two

new warrants to purchase an additional

898,634

and

194,437

common shares at an exercise price of

$1.78

and

$1.76

per share, respectively, for a total purchase price of

$137,000

$0.125

per share. The new warrants have a term of

five

years and

may

be paid in cash or through a cashless net share settlement. The Company and Alara amended the remaining

14,587

warrants as part of the

February

closings. On

May 14, 2015,

Alara exercised the remaining

14,587

warrants by acquiring

7,216

of shares of the Company’s common stock through a cashless net share settlement.

December 31, 2018,

Alara Capital AVI II, LLC effected an in-kind distribution, without consideration, of all of its shares of common stock, convertible preferred stock and warrants of Giga-tronics Incorporated (“Issuer”) to its limited partners of their respective interests of the Company’s securities held by Alara Capital AVI II, LLC in connection with the wind-up and dissolution of Alara Capital AVI II, LLC. As a result, Alara Capital AVI II, LLC

longer beneficially owns more than

of the common stock.

Series E Senior Convertible Voting Perpetual Preferred Stock

March 26, 2018,

the Company entered into a Securities Purchase Agreement for the sale of

42,800

shares of a newly designated series of

6.0%

Series E Senior Convertible Voting Perpetual Preferred Stock (“Series E Shares”) to approximately

private investors. The sale was completed and the Series E Shares were issued on

March 28, 2018.

Holders of Series E Shares are entitled to receive, when, as and if declared by the Company’s Board of Directors, cumulative preferential dividends, payable semiannual in cash at a rate per annum equal to

6.0%

of the initial purchase price of

$25.00

per share or in-kind (at the Company’s election) through the issuance of shares of the Company’s common stock, based on the

day volume weighted average price of the common stock. The deemed dividend is reflected on the face of the statement of operation as an increase in net loss or a decrease in net income to arrive at net income (loss) attributable to common shareholders.

The purchase price for each Series E Share was

$25.00.

Gross proceeds received by the Company were approximately

$1.095

million (the “Placement”). Net proceeds to the Company after fees and expenses of the Placement were approximately

$1.0

million. Placement agent fees incurred in connection with the transaction were

of gross proceeds or approximately

$57,000

in cash, plus warrants to purchase

of the number of common shares into which the Series E shares can be converted (

14,867

shares) at an exercise price of

$3.75

per share.

During the

2019

fiscal year, the Company issued and sold an additional

56,200

Series E Shares for the price of

$25.00

per share, resulting in gross proceeds of

$1,405,000.

Net proceeds from sales of Series E Shares during the

2019

fiscal year were approximately

$1.2

million after fees and expenses of approximately

$212,000.

Placement agent fees incurred in connection with the transaction were

of gross proceeds or approximately

$56,875

in cash, plus warrants to purchase

of the number of common shares into which the Series E shares can be converted (

6.67

shares) at an exercise price of

$3.75

per share.

For the

twelve

months ended

March 28, 2020,

additional Series E shares were issued.

Series E Exchange

The Company completed a private exchange offer on

November 7, 2019,

issuing an aggregate of

896,636

shares of common stock in exchange for

88,600

shares of Series E Preferred Stock and the dividends accrued thereon. The shares of common stock to be issued in the exchange were issued in reliance on the exemption from registration set forth in Section

(a)(

) of the Securities Act of

1933

(the “Securities Act”), though other exemptions

may

be available.

The table below presents information for the fiscal years ended

March 28, 2020

and

March 30, 2019:

Preferred Stock

As of

March

and

March

201

	Designated Shares		Shares Issued		Shares Outstanding		Liquidation Preference (in thousands)
Series B		10,000.00		9,997.00		9,245.13	$	2,136
Series C		3,500.00		3,424.65		3,424.65		500
Series D		6,000.00		5,111.86		5,111.86		731
Series E		100,000.00		100,000.00		9,200.00		345
Total at March 28, 2020		119,500.00		118,533.51		26,981.64	$	3,712

	Designated Shares		Shares Issued		Shares Outstanding		Liquidation 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
Series E		100,000.00		100,000.00		98,400.00		3,690
Total at March 30, 2019		119,500.00		118,533.51		116,933.51	$	7,230