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Giga-tronics Reports Results for the First Quarter FY 2019

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DUBLIN, Calif., Aug. 14, 2018 (GLOBE NEWSWIRE) -- Giga-tronics Incorporated (OTCQB:GIGA) (the "Company") reported today revenues for the first fiscal quarter ended June 30, 2018 of $3.1 million, a $1.1 million or 53% increase as compared to $2.0 million for the first quarter of fiscal 2018. Effective April 1, 2018, the Company adopted the required Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, as amended (commonly referred to as ASC 606), which changed the way the Company recognizes revenue for certain contracts. The financial results for the three months ended June 30, 2018 presented in this news release have been adjusted to reflect the new methods of accounting.  Of the $1.1 million increase in first quarter fiscal 2019 revenues over the comparable prior year period, 56% was due to the Company's required adoption of ASC 606 with the remaining amount primarily attributable to increased Microsource RADAR filter sales in the first quarter of fiscal 2019 over 2018.  Net sales for the Company's Giga-tronics business unit were $129,000, a 57% decrease from $297,000 in the first quarter of fiscal 2018. The decrease was due to lower ASG product shipments.

Net loss for the first quarter of fiscal 2019 was $287,000, or $0.03 per fully diluted common share, compared to $1.3 million, or $0.13 for the first quarter of fiscal 2018.  The decrease in net loss was due to significantly improved gross margins of 43% in the first quarter of fiscal 2019 compared to 23% in the first quarter of fiscal 2018 due to the increased revenues described above (including the impact of the adoption of ASC 606) as well as a decrease in operating expenses of 15% or $247,000 in the first quarter of fiscal 2019 over fiscal 2018. Engineering expenses decreased $77,000, primarily due to a decrease in personnel related expenses due to lower headcount.  Selling, general and administrative expenses decreased by $170,000 primarily due a decrease in headcount and personnel related expenses, a decrease in bonuses and commissions, and lower lease and facilities cost as a result of the Company's relocation to a smaller facility in Dublin, California during May 2017.

John Regazzi, CEO of Giga-tronics, said, "The Company is now focused solely on the EW segment of the defense market where we believe we have greater chances for improved future revenue growth and higher gross margins than with our prior 'commodity' product lines. The major elements are in place now to achieve profitability in FY19 ending March 31, 2019."

Lutz Henckels, Executive Vice President and Interim Chief Financial Officer, stated, "Our operating expenses have been significantly reduced over the past two fiscal years and we've strengthened our sales team along with changing our sales strategy for our Advanced Signal Generation and Analysis ('ASGA') system from component sales to total solution sales."

Mr. Henckels continued, "With the sole source Microsource RADAR filter business, which achieved $2.9M in revenue during the first quarter of fiscal 2019, the Company has a solid revenue foundation for fiscal 2019. Orders and sales of the Company's ASGA product platform are anticipated to show growth in fiscal 2019 because our new sales approach."

Giga-tronics will host a conference call today at 4:30 p.m. ET to discuss the first quarter results. To participate in the call, dial (888) 517-2470 or (630) 827-6818, and enter PIN Code 5758887#. The call will also be broadcast over the internet at www.gigatronics.com under "Investor Relations." The conference call discussion reflects management's views as of August 14, 2018.

Giga-tronics is a publicly held company, traded on the OTCQB Capital Market under the symbol "GIGA".  Giga-tronics produces YIG (Yttrium, Iron, Garnet) tuned oscillators, RADAR filters, and microwave synthesizers for use in military defense applications as well as sophisticated test and measurement equipment primarily used in electronic warfare test & emulation applications.

This press release contains forward-looking statements concerning operating results, future orders, and sales of new products, shippable backlog within a year, long term growth and margin, expected shipments, product line sales, and customer acceptance of new products. Actual results may differ significantly due to risks and uncertainties, such as: uncertainty as to the company's ability to continue as a going concern; delays in customer orders for the new ASG and our ability to manufacture it; receipt or timing of future orders, cancellations or deferrals of existing or future orders; our need for additional financing; results of pending or threatened litigation; the volatility in the market price of our common stock; and general market conditions.  For further discussion, see Giga-tronics' most recent annual report on Form 10-K for the fiscal year ended March 31, 2018 Part I, under the heading "Risk Factors" and Part II, under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations."

 
GIGA-TRONICS INCORPORATED 
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)   June 30, 2018   March 31, 2018
Assets        
Current assets:        
Cash and cash-equivalents   $ 748     $ 1,485  
Trade accounts receivable, net of allowance of $8 and $8, respectively     458       364  
Inventories, net     3,438       5,487  
Prepaid expenses and other current assets     792       87  
Total current assets     5,436       7,423  
Property and equipment, net     760       833  
Other long term assets     175       175  
Total assets   $ 6,371     $ 8,431  
Liabilities and shareholders' equity        
Current liabilities:        
Line of credit   $ 552     $ 552  
Current portion of long term debt, net of discount and issuance costs     1,523       1,447  
Accounts payable     756       996  
Accrued payroll and benefits     413       343  
Deferred revenue     257       3,374  
Deferred rent     62       58  
Capital lease obligations     40       40  
Deferred liability related to asset sale     51       52  
Other current liabilities     959       947  
Total current liabilities     4,613       7,809  
Long term deferred rent     411       429  
Long term obligations - capital lease     50       62  
Total liabilities     5,074       8,300  
         
Shareholders' equity:        
Convertible preferred stock of no par value;        
Authorized - 1,000,000 shares        
Series A - designated 250,000 shares; no shares at June 30, 2018 and March 31, 2018 issued and outstanding            
Series B, C, D - designated 19,500 shares; 18,533.31 shares at June 30, 2018 and March 31, 2018 issued and outstanding; (liquidation preference of $3,540 at June 30, 2018 and March 31, 2018)   2,911       2,911  
Series E- designated 60,000 shares; 53,400 shares at June 30, 2018 and 43,800 shares at March 31, 2018 issued and outstanding; (liquidation preference of $2,003 at June 30, 2018 and $1,643 at March 31, 2018)   907       702  
Common stock of no par value;        
Authorized - 40,000,000 shares; 10,418,953 shares at June 30, 2018 and 10,312,653 at March 31, 2018 issued and outstanding   25,272       25,200  
Accumulated deficit     (27,793 )     (28,682 )
Total shareholders' equity     1,297       131  
Total liabilities and shareholders' equity   $ 6,371     $ 8,431  
                 


   
GIGA-TRONICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
   
      Three Month Periods Ended  
      June 30,        June 24,  
(In thousands, except per share data)      2018        2017  
Revenue   $ 3,050     $ 1,991  
Cost of goods and services     1,744       1,525  
Gross margin     1,306       466  
         
Operating expenses:        
Engineering     375       452  
Selling, general and administrative     1,001       1,171  
Total operating expenses     1,376       1,623  
         
Operating loss     (70 )     (1,157 )
         
Interest expense:        
Interest expense, net     (127 )     (79 )
Interest expense from accretion of loan discount     (50 )     (22 )
Total interest expense, net     (177 )     (101 )
Loss before income taxes     (247 )     (1,258 )
Provision for income taxes     40        
Net loss   $ (287 )   $ (1,258 )
         
Loss per common share – basic   $ (0.03 )   $ (0.13 )
Loss per common share – diluted   $ (0.03 )   $ (0.13 )
         
Weighted average common shares used in per share calculation:      
Basic     10,419       9,715  
Diluted     10,419       9,715  


Contact:  Lutz Henckels
CFO
lhenckels@gigatronics.com
(925) 328-4650 ext. 4698

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