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

~~Washington, D.C. 20549~~ Form 10-Q

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended March 31, 2011
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to

þ 000-31635 (Commission ~~QUARTERLY~~file ~~REPORT~~number) ENDWAVE ~~PURSUANT TO SECTION 13 OR 15~~CORPORATION (d)Exact OFname ~~THE~~of registrant ~~SECURITIES~~as ~~EXCHANGE~~specified ~~ACT~~in OFits ~~1934~~charter)

For the quarterly period ended September 30, 2010


Delaware		95-4333817
(State of incorporation)		(I.R.S. Employer Identification No.)
130 Baytech Drive San Jose, CA (Address of principal executive offices)		95134 (Zip code)

OR (408) 522-3100

~~o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15~~ (d)Registrant’s OFtelephone number, ~~THE~~including ~~SECURITIES~~area ~~EXCHANGE ACT OF 1934~~code)

~~For~~ Indicate by check mark whether the ~~transition~~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 ~~from~~ that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

~~000~~ 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-~~31635~~T (~~Commission~~§ 232.405 ~~file~~of ~~number~~this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

~~ENDWAVE~~ Indicate ~~CORPORATION~~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):

~~(Exact~~Large ~~name~~accelerated offiler ~~registrant~~o asAccelerated ~~specified~~filer ino ~~its~~Non-accelerated ~~charter)~~filer o Smaller reporting company þ

Delaware (State of incorporation)		95-4333817 (I.R.S. Employer Identification No.)
130 Baytech Drive
San Jose, CA		95134
(Address of principal executive offices)		(Zip code)

(Do not check if a smaller reporting company)

(408) 522-3100 (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 þ Noo.

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o Noo.

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 o Accelerated filer o Non-accelerated filer o Smaller reporting company þ (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ.

The number of shares of the registrant’s Common Stock outstanding as of ~~October~~April 29, ~~2010~~2011 was 9,~~802~~892,~~084~~ 120 shares.

ENDWAVE CORPORATION

INDEX

		~~Page~~			Page
PART I. FINANCIAL INFORMATION
	PART I.			FINANCIAL INFORMATION		3
Item 1. Financial Statements			3
	Item 1.			Financial Statements		3
Condensed Consolidated Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009			3
				Condensed Consolidated Balance Sheets as of March 31, 2011 (unaudited) and December 31, 2010		3
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2010 and 2009			4
				Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010		4
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009			5
				Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010		5
~~Notes to Condensed Consolidated Financial Statements (unaudited)~~			6	Notes to Condensed Consolidated Financial Statements (unaudited)		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
	Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3. Quantitative and Qualitative Disclosure about Market Risk			25
	Item 3.			Quantitative and Qualitative Disclosures about Market Risk		23
Item 4. Controls and Procedures			26
	Item 4.			Controls and Procedures		23
PART II. OTHER INFORMATION
	PART II.			OTHER INFORMATION
Item 1. Legal Proceedings			26
	Item 1.			Legal Proceedings		24
Item 1A. Risk Factors			27
	Item 1A.			Risk Factors		24
Item 6. Exhibits			37
	Item 6.			Exhibits		37
SIGNATURES			40			40
EXHIBITS			41			41
EX-31.1
EX-31.2
EX-32.1

PART I. FINANCIAL INFORMATION


Item 1.	*Financial Statements*

ENDWAVE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


	March 31,			December 31,
	2011			2010
	(In thousands, except share
	and per share amounts)
	(Unaudited)			(1)

ASSETS
Current assets:
Cash and cash equivalents	$	9,342		$	7,147
Short-term investments		11,880			16,380
Accounts receivable, net		1,254			2,600
Inventories		3,751			3,719
Other current assets		389			554

Total current assets		26,616			30,400
Property and equipment, net		1,932			2,048
Other assets		13			26

Total assets	$	28,561		$	32,474


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,561		$	1,837
Accrued warranty		480			614
Accrued compensation		549			626
Restructuring liabilities, short-term		926			431
Other current liabilities		271			320

Total current liabilities		3,787			3,828
Restructuring liabilities, long-term		115			234
Other long-term liabilities		124			124

Total liabilities		4,026			4,186

Commitments and contingencies (Note 6)
Stockholders’ equity:
Convertible preferred stock, $0.001 par value; 5,000,000 shares authorized; zero shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively		—			—
Common stock, $0.001 par value; 50,000,000 shares authorized; 9,890,382 and 9,832,684 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively		10			10
Additional paid-in capital		317,403			317,291
Accumulated other comprehensive income (loss)		5			(1	)
Accumulated deficit		(292,883	)		(289,012	)

Total stockholders’ equity		24,535			28,288

Total liabilities and stockholders’ equity	$	28,561		$	32,474

	September 30,			December 31,
	2010			2009
	(unaudited)			(1)
ASSETS
Current assets:
Cash and cash equivalents	$	9,834		$	55,158
Short-term investments		14,892			11,307
Accounts receivable, net		3,641			3,009
Inventories		4,499			4,879
Other current assets		532			788
Total current assets		33,398			75,141
Property and equipment, net		2,076			1,796
Other assets, net		78			179
Total assets	$	35,552		$	77,116
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,562		$	1,726
Accrued warranty		809			1,087
Accrued compensation		647			590
Restructuring liabilities, short-term		467			570
Other current liabilities		339			426
Total current liabilities		4,824			4,399
Restructuring liabilities, long-term		351			638
Other long-term liabilities		124			127
Total liabilities		5,299			5,164
Commitments and contingencies (Note 7)
Stockholders’ equity:
Convertible preferred stock, $0.001 par value; 5,000,000 shares authorized; zero and 300,000 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively		—			43,092
Common stock, $0.001 par value; 50,000,000 shares authorized; 9,802,084 and 9,684,756 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively		10			10
Additional paid-in capital, common stock		317,256			309,755
Accumulated other comprehensive income		3			15
Accumulated deficit		(287,016	)		(280,920	)
Total stockholders’ equity		30,253			71,952
Total liabilities and stockholders’ equity	$	35,552		$	77,116


(1)		Derived from the Company’s audited consolidated financial statements as of December 31, 2010.

(1) Derived from the Company’s audited consolidated financial statements as of December 31, 2009.

The accompanying notes are an integral part of these condensed consolidated financial statements.

ENDWAVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)


	Three Months Ended
	March 31,
	2011			2010
	(In thousands, except share and per share amounts)
	(Unaudited)

Revenues:
Product revenues	$	1,237		$	4,834

Costs and expenses:
Cost of product revenues*		1,036			3,391
Research and development*		1,327			1,006
Sales and marketing*		474			584
General and administrative*		1,453			1,131
Restructuring*		804			(14	)

Total costs and expenses		5,094			6,098

Loss from operations		(3,857	)		(1,264	)
Interest and other income (expense), net		(7	)		(19	)

Loss from operations before provision for income taxes		(3,864	)		(1,283	)
Provision for income taxes		7			—

Net loss	$	(3,871	)	$	(1,283	)

Basic and diluted net loss per share	$	(0.39	)	$	(0.13	)
Shares used in computing basic and diluted net loss per share		9,860,697			9,701,126


* Includes the following amounts related to stock-based compensation:
Cost of product revenues	$	(39	)	$	53
Research and development		9			95
Sales and marketing		78			68
General and administrative		87			115
Restructuring		18			—

(unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2010			2009			2010			2009
Revenues:
Product revenues	$	4,058		$	3,126		$	12,645		$	15,948
Costs and expenses:
Cost of product revenues*		3,169			2,369			10,596			11,425
Research and development*		1,221			1,452			3,302			4,463
Sales and marketing*		594			594			1,745			1,656
General and administrative*		996			1,374			3,009			4,605
Restructuring		63			(21	)		49			1,212
Total costs and expenses		6,043			5,768			18,701			23,361
Loss from continuing operations		(1,985	)		(2,642	)		(6,056	)		(7,413	)
Interest and other income (expense), net		(14	)		(3	)		(40	)		197
Loss from continuing operations before benefit from income taxes		(1,999	)		(2,645	)		(6,096	)		(7,216	)
Benefit from income taxes		—			(11	)		—			(32	)
Loss from continuing operations		(1,999	)		(2,634	)		(6,096	)		(7,184	)
Income from discontinued operations, net of tax* (Note 9)		—			41			—			17,571
Net income (loss)	$	(1,999	)	$	(2,593	)	$	(6,096	)	$	10,387
Basic and diluted net loss per share from continuing operations	$	(0.20	)	$	(0.27	)	$	(0.62	)	$	(0.76	)
Basic and diluted net income per share from discontinued operations	$	—		$	—		$	—		$	1.86
Basic and diluted net income (loss) per share	$	(0.20	)	$	(0.27	)	$	(0.62	)	$	1.10
Shares used in computing basic and diluted net loss per share		9,798,972			9,625,583			9,757,899			9,477,516

* Includes the following amounts related to stock-based compensation:

Cost of product revenues	$	(15	)	$	80	$	6	$	190
Research and development		13			186		65		374
Sales and marketing		35			215		69		390
General and administrative		107			458		270		999
Income from discontinued operations, net of tax		—			—		—		355

The accompanying notes are an integral part of these condensed consolidated financial statements.

ENDWAVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Three Months Ended
	March 31,
	2011			2010
	(In thousands)
	(Unaudited)

Operating activities:
Net loss	$	(3,871	)	$	(1,283	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		223			207
Stock compensation expense		153			331
Amortization of investments		52			82
Loss on disposal of fixed assets		56			—
Changes in operating assets and liabilities:
Accounts receivable		1,346			375
Inventories		(32	)		(658	)
Other assets		178			83
Accounts payable		(276	)		681
Accrued warranty		(134	)		37
Accrued compensation, restructuring, other current liabilities and other long-term liabilities		185			(291	)

Net cash used in operating activities		(2,120	)		(436	)

Investing activities:
Purchases of leasehold improvements and equipment		(163	)		(345	)
Proceeds on sales and maturities of investments		6,070			2,800
Purchases of investments		(1,616	)		(799	)

Net cash provided by investing activities		4,291			1,656

Financing activities:
Repurchase of preferred stock		—			(36,238	)
Proceeds from exercises of stock options, net		27			85
Payments on capital leases		(3	)		(3	)

Net cash (used in) provided by financing activities		24			(36,156	)

Net change in cash and cash equivalents		2,195			(34,936	)
Cash and cash equivalents at beginning of period		7,147			55,158

Cash and cash equivalents at end of period	$	9,342		$	20,222

(unaudited)

	Nine months ended
	September 30,
	2010			2009
Operating activities:
Net income (loss)	$	(6,096	)	$	10,387
Income from discontinued operations		—			17,571
Loss from continuing operations, net of tax		(6,096	)		(7,184	)
Adjustments to reconcile net loss to net cash used in continuing operating activities:
Depreciation		654			576
Stock compensation expense		410			1,953
Amortization of investments, net		249			198
Changes in operating assets and liabilities:
Accounts receivable, net		(632	)		478
Inventories		376			3,448
Other assets		357			(1,015	)
Accounts payable		836			528
Accrued warranty		(278	)		(631	)
Accrued compensation and other liabilities		(420	)		(831	)
Net cash used in operating activities		(4,544	)		(2,480	)
Investing activities:
Proceeds from sale of discontinued operations		—			28,000
Change in restricted cash		—			600
Purchases of property and equipment		(934	)		(289	)
Proceeds on sales and maturities of investments		15,530			19,715
Purchases of investments		(19,376	)		(30,331	)
Net cash (used in) provided by investing activities		(4,780	)		17,695
Financing activities:
Repurchase of preferred stock		(36,238	)		—
Payments on capital leases		(3	)		(13	)
Proceeds from common stock issuance		74			242
Proceeds from exercises of stock options		167			331
Net cash (used in) provided by financing activities		(36,000	)		560
Cash flows from discontinued operations:
Operating activities		—			(2,472	)
Investing activities		—			(794	)
Financing activities		—			—
Net cash used in discontinued operations		—			(3,266	)
Net change in cash and cash equivalents		(45,324	)		12,509
Cash and cash equivalents at beginning of period		55,158			33,998
Cash and cash equivalents at end of period	$	9,834		$	46,507

The accompanying notes are an integral part of these condensed consolidated financial statements.

ENDWAVE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


1.	Business and Basis of Presentation

Endwave Corporation (“Endwave” or the “Company”) designs, manufactures and markets radio frequency, or (“RF”), products that enable the transmission, reception and processing of high frequency RF RF signals. The Company’s ~~currently~~products ~~has~~consist of two key product lines, semiconductor devices and integrated transceiver modules:

• The Company’s transceiver modules, which serve as the core RF sub-system in digital microwave radios, are produced for telecommunication network original equipment manufacturers and system integrators located throughout the world, collectively referred to as telecom OEMs. • The Company’s semiconductor product line consists of a broad range of monolithic microwave integrated circuits, or MMICs, including amplifiers, voltage controlled oscillators, up and down converters, variable gain amplifiers, voltage variable attenuators, fixed attenuators and filters. These types of devices find wide application in numerous telecommunications, avionic, defense, homeland security, instrumentation and consumer systems.


	•	The Company’s semiconductor product line consists of a wide variety of monolithic microwave integrated circuits (“MMICs”), including amplifiers, voltage controlled oscillators, up and down converters, variable gain amplifiers, voltage variable attenuators, fixed attenuators and filters. These types of devices are widely used in telecommunications, satellite, defense, security, instrumentation, scientific and consumer systems. While the Company has developed, produced and sold such devices for several years as components of the Company’s module products, they were first offered for sale as stand-alone products in the latter part of 2009 and they have not yet become a significant source of revenue for the Company.

	•	The Company’s integrated transceiver modules combine several electronic functions into a single RF sub-system. Historically, the Company’s main customers for these products have been telecommunication network original equipment manufacturers and system integrators that utilize them in digital microwave radios. More recently the Company has identified and pursued uses for these products in additional product areas; however these alternate applications have not yet become a significant source of revenue for the Company.

The accompanying unaudited condensed consolidated financial statements of Endwave have been prepared in conformity with accounting principles generally accepted in the United States of America and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not contain all of the information and footnotes required by accounting principles generally ~~accepted~~ accepted in the United States of America for complete financial statements. The year-end condensed consolidated balance sheet data was derived from the Company’s audited consolidated ~~financial~~ financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, the information contained herein reflects all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the results of the interim periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2010~~2011 or any future periods. These condensed consolidated ~~financial~~ financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, ~~2009~~2010.

~~Certain prior year financial statement amounts have been reclassified to conform to the~~ ~~current year’s presentation. These reclassifications had no impact on previously reported total~~ ~~assets,~~ Proposed Merger ~~stockholders’~~with ~~equity or total net income (loss).~~GigOptix

On ~~April~~February 304, ~~2009~~2011, ~~the~~Endwave ~~Company~~entered ~~sold~~into ~~its~~an ~~Defense~~Agreement and Plan ~~Security~~of RFMerger ~~module~~with ~~business~~GigOptix, toInc. ~~Microsemi~~(“GigOptix”), and Aerie Acquisition Corporation, a wholly-owned subsidiary of GigOptix (“~~Microsemi~~Merger Subsidiary”)., ~~The~~pursuant ~~Company’s~~to ~~financial~~which Merger ~~statements~~Subsidiary ~~have~~will, ~~been~~subject ~~presented~~ to ~~reflect~~the satisfaction or waiver of the conditions therein, merge with and into Endwave, the ~~Defense~~ separate corporate existence of Merger Subsidiary shall cease and ~~Security~~Endwave RFwill ~~module~~be ~~business~~the assurviving acorporation ~~discontinued~~of ~~operation~~the ~~for~~merger ~~all~~and a ~~periods~~wholly-owned ~~presented~~subsidiary of GigOptix. ~~See~~This agreement is ~~additional~~ referred ~~discussion~~to atas ~~Note~~the 9,Merger ~~Discontinued~~Agreement ~~Operations~~and the proposed merger contemplated by the Merger Agreement as the Merger.

Upon the consummation of the Merger, (i) the outstanding shares of Endwave common stock will be converted into the right to receive an aggregate number of shares of GigOptix common stock equal to the product of (.425/.575) and the number of shares of GigOptix common stock outstanding immediately prior to consummation of the Merger, less 42.5% of the shares described in clause (ii) of this sentence and (ii) in-the-money options to acquire Endwave common stock outstanding immediately prior to the consummation of the Merger will be converted into that number of shares of GigOptix common stock determined by dividing the spread value of such options at closing by the closing price of GigOptix’s common stock on the trading day prior to closing, such that following the Merger, the pre-Merger holders of common stock and restricted stock units will own that number of

ENDWAVE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

shares equal to 42.5% of the outstanding stock of the combined company, less 42.5% of the shares issued in respect of Endwave stock options.

The Merger Agreement includes customary representations, warranties and covenants of Endwave and GigOptix. Endwave has agreed to conduct its operations and the operations of its subsidiaries according to its ordinary and usual course of business consistent with past practice until the effective time of the Merger. The Merger Agreement contains customary “no-solicitation” covenants pursuant to which neither Endwave nor GigOptix is permitted to solicit any alternative acquisition proposals, provide any information to any person in connection with any alternative acquisition proposal, participate in any discussions or negotiations relating to any alternative acquisition proposal, approve, endorse or recommend any alternative acquisition proposal, or enter into any agreement relating to any alternative acquisition proposal. The “no-solicitation” provision is subject to certain exceptions that permit the Board of Directors of each of Endwave and GigOptix, as the case may be, to comply with their respective fiduciary duties, which, under certain circumstances, would enable Endwave or GigOptix, as the case may be, to provide information to, and engage in discussions or negotiations with, third parties with respect to alternative acquisition proposals.

The Merger Agreement contains certain termination rights for both Endwave and GigOptix and further provides that, upon termination of the Merger Agreement under certain circumstances, Endwave may be obligated to pay GigOptix a termination fee of $1,000,000 plus certain reasonable documented expenses of GigOptix.

The Merger which is subject to regulatory approvals as well as approvals by the stockholders of Endwave is expected to close during the second quarter of 2011.


2.	Investments

The following fair value amounts have been determined using available market information.

	September 30, 2010
	March 31, 2011
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
Investments:
Commercial paper	$	21,~~649~~749	$	—	$	—	$	21,~~649~~749
United States government agencies		129,~~240~~511		35		—		129,~~243~~516
Total	$	14,889	$	3	$	—	$	14,892
Corporate securities		615		—		—		615
Total	$	11,875	$	5	$	—	$	11,880


	December 31, 2010
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)

Investments:
Commercial paper	$	4,248	$	—	$	—		$	4,248
United States government agencies		11,822		2		(3	)		11,821
Corporate securities		311		—		—			311

Total	$	16,381	$	2	$	(3	)	$	16,380

At March 31, 2011, the Company had $11.9 million of short-term investments with maturities of less than one year and no long-term investments.

	December 31, 2009
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
Investments:
Commercial paper	$	799	$	—	$	—		$	799
United States government agency		8,759		5		(2	)		8,762
Corporate securities		1,734		12		—			1,746
Total	$	11,292	$	17	$	(2	)	$	11,307

ENDWAVE CORPORATION

~~At September~~ NOTES ~~30, 2010, the Company had $14.9 million of short-term investments with maturities~~TO of CONDENSED ~~less~~CONSOLIDATED ~~than one year and no long term investments.~~FINANCIAL STATEMENTS — (Continued)

At ~~September~~March 3031, ~~2010~~2011, the Company had unrealized gains of $35,000 related to $9.05 million of investments in United States government agency bonds and no unrealized losses. Unrealized gains and losses on commercial paper and corporate security investments were immaterial as of March 31, 2011. The investments mature ~~through~~during 2011 and the Company believes that it has the ability to hold these investments until ~~their~~the maturity ~~dates~~ date. Realized gains and losses were insignificant for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010.

The Company reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been less than the cost basis, credit quality and the Company’s ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value. If the Company believes the carrying value of an investment is in excess of its fair value, and this difference is other-than-temporary, it is the Company’s policy to write down the investment to reduce its carrying value to fair value.

Fair Value Measurements

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of ~~September~~March 3031, ~~2010~~2011 and December 31, ~~2009~~2010 (in thousands):

	Quoted Prices in
	Active Markets of				Significant Other
	Identical Assets				Observable Inputs
	(Level 1)				(Level 2)
	Sept 30,		Dec 31,		Sept 30,		Dec 31,
	Mar 31,		Dec 31,		Mar 31,		Dec 31,
	2010		2009		2010		2009
	2011		2010		2011		2010
Assets:
Cash equivalents:
Money market funds	$	74,~~491~~517	$	542,~~097~~911	$	—	$	—
Commercial paper		—		—		~~650~~3,660		—2,454
Corporate bond		—		—		—		250
Short-term investments:
Commercial paper		—		—		21,~~649~~749		~~799~~4,248
United States government agencies		—		—		129,~~243~~516		811,~~762~~821
Corporate securities		—		—		—615		~~1,746~~311
Total	$	74,~~491~~517	$	542,~~097~~911	$	15,~~542~~540	$	1119,~~307~~084
Liabilities:	$	—	$	—	$	—	$	—

The Company’s financial assets and liabilities are valued using market prices on both active ~~markets~~ markets (Level 1) and less active markets (Level 2). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. ~~Level~~ Level 2 instrument valuations are obtained from readily-available pricing sources for comparable instruments. As of March 31, 2011, the Company did not have any assets or liabilities without observable market values that would require a high level of judgment to determine fair value (Level 3).

7 As of March 31, 2011 and December 31, 2010, the Company did not have any significant transfers of investments between Level 1 and Level 2.

The amounts reported as cash and cash equivalents, accounts receivable, note receivable, accounts payable and accrued warranty, compensation and other liabilities approximate fair value due to their short-term maturities. The fair value for the Company’s investments in marketable debt securities is estimated based on quoted market prices and are the only financial instruments required to be adjusted to fair market value on a recurring basis. Based upon

~~readily-available pricing sources for comparable instruments. As of September 30, 2010, the Company~~ ~~did not have any assets or liabilities without observable market values that would require a high~~ ~~level of judgment to determine fair value (Level 3).~~ ENDWAVE CORPORATION

~~As of September~~ NOTES ~~30, 2010 and December 31, 2009, the Company did not have any significant~~TO ~~transfers~~ CONDENSED ofCONSOLIDATED ~~investments between Level 1 and Level 2.~~FINANCIAL STATEMENTS — (Continued)

~~The amounts reported as cash and cash equivalents, accounts receivable, accounts payable and~~ accrued warranty, compensation and other liabilities approximate fair value due to their short-term maturities. The fair value for the Company’s investments in marketable debt securities is estimated based on quoted market prices. Based upon borrowing rates currently available to the Company for ~~capital~~ capital leases with similar terms, the carrying value of its capital lease obligations approximates fair value.


3.	Inventories

Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market and consisted of the following (in thousands):

	September 30,		December 31,
	March 31,		December 31,
	2010		2009
	2011		2010
Raw materials	$	32,~~597~~937	$	43,~~046~~221
Work in process		~~398~~112		~~292~~149
Finished goods		~~504~~702		~~541~~349
	$	4,499	$	4,879
Total	$	3,751	$	3,719

4. ~~Note~~ ~~Receivable~~ Warranty

~~During~~ The ~~the~~warranty ~~third~~periods ~~quarter~~for ~~of 2008,~~ the Company’s ~~was~~products ~~issued~~are abetween 12 ~~note~~and ~~receivable~~30 months byfrom ~~one~~the date of ~~its~~shipment. The Company ~~customers,~~ provides ~~Allgon~~for ~~Microwave~~estimated ~~Corporation~~warranty ABexpense ~~(“Allgon”)~~at ~~which~~the ~~failed~~time toof ~~meet~~shipment. While the ~~terms~~Company ofengages ~~its accounts~~in ~~receivable~~extensive ~~owed~~product toquality ~~the~~programs and ~~Company.~~processes, ~~The~~including ~~note~~actively ~~was~~monitoring inand evaluating the quality ~~amount~~ of ~~$545~~component suppliers,~~000,~~ ~~with~~its ~~payments~~warranty ofobligation is ~~$25~~ affected by product failure rates,~~000~~ ~~due~~material onusage and service delivery costs incurred in correcting a ~~weekly~~product ~~basis~~failure. ~~The~~Should actual ~~note~~product ~~was~~failure torates, bematerial ~~paid~~usage inor ~~full~~service bydelivery costs differ from the ~~end~~estimates, ofrevisions to the ~~first~~estimated warranty ~~quarter~~accrual ~~of 2009~~and related costs may be required.

~~During the third and fourth quarters of 2008, Allgon made the first five payments under the~~ ~~note.~~ Changes ~~However, during the fourth quarter of 2008, Allgon went~~ in ~~default on~~ the ~~note~~Company’s ~~and~~product ~~filed~~warranty ~~for bankruptcy~~liability ~~protection. At~~ during the ~~time~~three ofmonths ~~default,~~ended ~~the note receivable balance was $420~~March 31,~~000.~~ ~~Based~~2011 ~~on Allgon’s bankruptcy liquidation~~ and ~~the~~2010 ~~related~~are ~~estimates of payments to Allgon’s creditors, the~~as ~~Company~~ follows ~~reserved~~(in ~~100%, or $420,000, of the remaining balance of the note receivable.~~thousands):

Subsequent to Allgon’s default on the note receivable, the Company filed a complaint alleging that Allgon’s parent company, Advantech Advanced Microwave Technologies Inc. of Montreal, Canada (“Advantech”), had breached its contractual obligations with the Company and owes the Company $994,500 which includes amounts owed under the note receivable and for purchased inventory and authorized and accepted purchase orders resulting in shippable finished goods. See additional discussion at Note 7, Commitments and Contingencies.


	Three Months
	Ended
	March 31,
	2011			2010

Balance at January 1	$	614		$	1,087
Warranties accrued		18			54
Warranties settled or reversed		(152	)		(17	)

Balance at March 31	$	480		$	1,124

5. ~~Warranty~~ Restructuring

~~The~~ During ~~warranty~~the ~~periods~~first ~~for~~quarter of 2011, the Company’s ~~products~~undertook ~~are~~certain restructuring ~~between~~activities 12to ~~and~~reduce ~~30 months from date of shipment~~expenses. The Company ~~provides~~vacated its ~~for~~facilities ~~estimated~~in ~~warranty~~Salem, ~~expense~~New atHampshire ~~the~~and ~~time~~terminated 12 employees ofin ~~shipment.~~order ~~While~~to reduce the Company’s ~~engages~~cost structure. inThe ~~extensive~~employee ~~product~~terminations ~~quality~~affected ~~programs~~all ~~and~~areas ~~processes,~~of ~~including actively monitoring~~the ~~and~~ Company’s ~~evaluating~~operations. ~~the~~The ~~quality~~components of ~~component~~the ~~suppliers~~$804,000 restructuring ~~its~~charges ~~warranty~~included ~~obligation~~the isfollowing: ~~affected~~$527,000 ~~by product~~for ~~failure rates~~ severance, ~~material~~benefits ~~usage~~ and ~~service~~payroll ~~delivery~~taxes, ~~costs~~$18,000 ~~incurred~~for inthe incremental ~~correcting~~fair value as a ~~product~~result ~~failure.~~of the acceleration of ~~Should~~ certain ~~actual~~stock ~~product~~awards ~~failure~~for ~~rates,~~the ~~material~~affected ~~usage~~personnel, or$203,000 ~~service~~for facilities ~~delivery~~charges ~~costs~~related ~~differ~~to ~~from~~exiting the lease in Salem, New ~~estimates~~ Hampshire and a $56,000 ~~revisions~~loss toon ~~the~~disposal ~~estimated~~of ~~warranty~~fixed ~~accrual~~assets for impaired leasehold improvements and equipment related ~~costs~~to ~~may~~the closure beof ~~required~~the Salem facility.

~~Changes~~ The Company reviews long-lived assets for impairment, whenever certain events or changes in circumstances indicate that the carrying ~~Company’s~~amount ~~product~~of ~~warranty~~these ~~liability~~assets ~~during~~may not be recoverable. During the ~~nine~~first ~~months~~quarter ~~ended~~of ~~September 30~~2011, the Company recognized a non-cash ~~2010~~ $56,000 ~~and~~loss ~~2009~~on ~~are~~disposal asof ~~follows~~fixed ~~(in~~assets ~~thousands):~~for impaired leasehold improvements and

	Nine months ended Sept 30,
	2010			2009
Balance at January 1	$	1,087		$	2,439
Warranties accrued		345			641
Warranties settled or reversed		(623	)		(1,190	)
Warranties transferred due to sale of business		—			(728	)
Balance at September 30	$	809		$	1,162

6. Restructuring

During the first quarter of 2009, the Company undertook certain restructuring activities to reduce expenses. The components of the restructuring charge included severance, benefits, payroll taxes and other costs associated with employee terminations. The net charge for these restructuring activities was $1.2 million and all cash payments have been made. Of this amount, approximately $182,000 has been included in the discontinued operations line item on the consolidated statements of operations.

During the second quarter of 2009, the Company undertook certain additional restructuring activities to reduce expenses. The components of the restructuring charge included severance, benefits, payroll taxes and other costs associated with employee terminations. The net charge for these restructuring activities was $243,000 and all cash payments have been made. Of this amount, approximately $39,000 has been included in the discontinued operations line item on the consolidated statements of operations.

During the fourth quarter of 2009, the Company undertook certain additional restructuring activities, including the departure of a senior executive, to reduce expenses. The components of the restructuring charge included severance, benefits, payroll taxes and other costs associated with employee terminations. The net charge for these restructuring activities was $1.2 million. The remaining restructuring liability of $755,000 at September 30, 2010 is expected to be substantially paid by the end of the third quarter of 2012.

During the third quarter of 2010, the Company undertook certain additional restructuring activities to reduce expenses. The components of the restructuring charge included severance, benefits, payroll taxes and other costs associated with an employee termination. The net charge for these restructuring activities was $63,000 and is expected to be substantially paid by the end of the fourth quarter of 2010.

Changes in all of the Company’s restructuring liabilities discussed are summarized as follows (in thousands):

	Nine months ended September 30,
	2010			2009
Accrual at January 1	$	1,208		$	—
Restructuring charge		63			1,507
Cash payments		(475	)		(1,351	)
Imputed interest		36			—
Restructuring charge adjustment		(14	)		(76	)
Accrual at September 30	$	818		$	80

At September 30, 2010, $467,000 and $351,000 of accrued restructuring charges were included in current liabilities and long-term liabilities, respectively, on the condensed consolidated balance sheet. At December 31, 2009, $570,000 and $638,000 of accrued restructuring charges were included in current liabilities and long-term liabilities, respectively, on the audited consolidated balance sheet. The restructuring liability related to a senior executive was recorded at its fair value based on an assumed interest rate of 5.0%, which represents the current market rate of interest at which the Company could borrow, due to the long-term nature of the liability. The

~~Company will recognize interest expense associated with amortizing the $77,000 discount on~~ ~~this liability over the 30 month term of the restructuring payout. During the three and nine~~ ~~months ended September 30, 2010, the Company recognized interest expense of $12,000 and $36,000,~~ ENDWAVE ~~respectively.~~ CORPORATION

~~The Company’s restructuring estimates will be reviewed and revised quarterly, if necessary,~~ ~~and may result in an increase or decrease to restructuring charges. During the first quarter of~~ ~~2010, the Company recorded a $14,000 positive adjustment as a result of lower benefit charges in~~ NOTES TO ~~connection~~ CONDENSED ~~with~~CONSOLIDATED ~~the first quarter 2009 restructuring plan than were originally anticipated.~~FINANCIAL STATEMENTS — (Continued)

7 equipment related to the closure of the Salem facility. ~~Commitments~~ ~~and~~This impairment ~~Contingencies~~charge was included in the restructuring expenses in the Company’s condensed consolidated statement of operations.

On The ~~October 31, 2008, the~~ Company ~~filed~~incurred acash ~~complaint~~charges ~~with the Canadian Superior Court in Montreal, Quebec alleging that Advantech, the parent company~~ of ~~Allgon~~approximately ~~Microwave Corporation AB~~$730,000 ~~had~~ related ~~breached~~to its ~~contractual~~first ~~obligations~~quarter ~~with~~2011 ~~Endwave~~restructuring ~~and~~activities ~~owes~~for severance, ~~the Company $994~~benefits,~~500,~~ ~~which~~payroll ~~includes amounts~~taxes ~~owed~~and ~~under~~facilities charges and the ~~note~~payments ~~receivable~~are ~~discussed~~expected into ~~Note~~be 4substantially ~~and~~completed ~~for~~by ~~purchased inventory and~~the ~~authorized~~ end ~~and~~of ~~accepted~~the ~~purchase~~fourth ~~orders~~quarter ~~resulting~~of ~~in shippable finished goods~~2011. The ~~Company~~charges ~~cannot predict~~related to the acceleration ~~outcome~~ of ~~these~~stock ~~proceedings.~~awards ~~Other~~and ~~than~~ the ~~complaint~~loss ~~against~~on ~~Advantech,~~disposal ~~the~~of ~~Company~~fixed is assets ~~not~~are ~~currently~~non-cash ~~a party to any material litigation~~charges.

~~8. Stockholders~~ Changes in the Company’s ~~Equity~~restructuring liabilities discussed above during the three months ended March 31, 2011 and 2010 are summarized as follows (in thousands):


	Three Months
	Ended
	March 31,
	2011			2010

Accrual at December 31	$	665		$	1,208
Cash restructuring charge		730			—
Cash payments		(363	)		(251	)
Imputed interest		9			13
Restructuring charge adjustment		—			(14	)

Accrual at March 31	$	1,041		$	956

At December 31, 2010, $431,000 and $234,000 of accrued restructuring charges are included in current liabilities and long-term liabilities, respectively, on the consolidated balance sheet.

At March 31, 2011, $926,000 and $115,000 of accrued restructuring charges were included in current liabilities and long-term liabilities, respectively, on the condensed consolidated balance sheet. Of the $1.0 million in total accrued restructuring, approximately $530,000 is related to the first quarter 2011 restructuring plan and $511,000 is related to the restructuring liability for a senior executive which was recognized in the fourth quarter of fiscal year 2009.

The restructuring liability related to a senior executive was recorded at its fair value based on an assumed interest rate of 5.0%, which represents the current market rate of interest at which the Company could borrow, due to the long-term nature of the liability. The Company will recognize interest expense associated with amortizing the $77,000 discount on this liability over the 30 month term of the restructuring payout. During the first three months of 2011 and 2010, the Company recognized interest expense of $9,000 and $13,000, respectively. The payments for the restructuring liability related to a senior executive are expected to be completed by end of the second quarter of 2012, but if the proposed Merger is completed, the payments will be accelerated to coincide with the closing of the Merger.

The Company’s restructuring estimates will be reviewed and revised quarterly and may result in an increase or decrease to restructuring charges. During the first quarter of 2010, the Company recorded a $14,000 positive adjustment as a result of lower benefit charges in connection with our first quarter 2009 restructuring plan than were originally anticipated. No adjustments were recorded during the first quarter of 2011.


6.	Commitments and Contingencies

On October 31, 2008, the Company filed a complaint with the Canadian Superior Court in Montreal, Quebec alleging that Advantech, the parent company of Allgon Microwave Corporation AB, had breached its contractual obligations with Endwave and owes the Company $994,500 for amounts outstanding under a note receivable and for purchased inventory and authorized finished goods purchase orders. The Company cannot predict the outcome of these proceedings. At the time of default, the note receivable balance was $420,000. Based on Allgon’s bankruptcy

ENDWAVE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

liquidation and the related estimates of payments to Allgon’s creditors, the Company still continues to reserve 100%, or $420,000, of the remaining balance of the note receivable.

Other than the complaint against Advantech, the Company is not currently a party to any material litigation.

As discussed in the restructuring footnote, the Company vacated its facilities in Salem, New Hampshire during the first quarter of 2011 and as a result will incur an early termination charge for exiting the lease. The following table summarizes the Company’s updated operating lease obligations including the early termination charge as of March 31, 2011:


	Payments Due by Period
			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
	(In thousands)

Contractual Obligations:
Operating lease obligations	$	490	$	418	$	72	$	—	$	—


7.	Stockholders’ Equity

Preferred Stock and Warrant Purchase Agreement

The Company had 5,000,000 shares of convertible preferred stock authorized as of ~~September~~March 3031, ~~2010~~ 2011 and December 31, ~~2009~~ 2010.

In April 2006, the Company entered into a purchase agreement with Oak Investment Partners XI, Limited Partnership (“Oak”). Pursuant to the purchase agreement, Oak purchased 300,000 shares of the Company’s Series B preferred stock, par value $0.001 per share, for $150 per preferred share, or a total of $45.0 million. The preferred shares were convertible ~~initially~~ into 3,000,000 shares of of common stock, for an effective purchase price of $15 per common share equivalent. The Company also issued Oak a warrant granting Oak the right to purchase an additional 90,000 shares of Series B preferred stock at an exercise price of $150 per share. The warrant expired on April 24, 2009. The Company received net proceeds of $43.1 million from the sale of the Series B preferred stock and the warrant after the payment of legal fees and other expenses, including commissions.

On January 21, 2010, the Company repurchased all 300,000 outstanding shares of its preferred stock held by Oak for $120 per share, or a total of $36.0 million in cash. The total cost of the repurchase was $36.2 million, which included fees and expenses. The 300,000 outstanding shares represented 3,000,000 shares of Endwave common stock on an as-converted basis. Such shares had entitled Oak to a liquidation preference equal to its original investment of $45.0 million before any proceeds from a liquidation or sale of the Company would have been paid to the holders of Endwave’s common stock. In connection with the share repurchase, Eric Stonestrom, Oak’s designee to Endwave’s board of directors, resigned from the board of directors.

Since the Company repurchased the preferred stock for official retirement, the excess of the stated value, $43.1 million, over the effective repurchase price of $36.2 million was credited to additional paid-in capital.

Stock Based ~~Option Exchange~~Compensation

On August 11, 2009, the Company filed a Tender Offer Statement on Schedule TO with the Securities and Exchange Commission. The tender offer related to an offer by the Company to certain optionholders to exchange some or all of their outstanding stock option grants to purchase shares of the Company’s common stock granted under the Company’s 2007 Equity Incentive Plan with an exercise price per share greater than or equal to $5.00 for new option grants at an exchange ratio of three old options for one new option. The exchange offer was made to employees and directors of the Company who, as of the date the exchange offer commenced, were actively employed by or acting as a member of the Board of Directors of the Company and held eligible options. The exchange offer expired on September 9, 2009. A total of 1,570,938 options were eligible to participate in the

exchange offer and a total 1,559,113 options were exchanged for 519,624 new options. The new options have a two-year vesting period, except for 67,143 director’s shares which primarily have a one-year vesting period. All new options have an exercise price of $2.53 per share which was the closing price of the Company’s common stock on September 10, 2009.

The exchange of original options for new options was treated as a modification of the original options. As such, the Company will continue to incur compensation cost for the incremental difference between the fair value of the new options and the fair value of the original options immediately before modification, reflecting the current facts and circumstances on the modification date, over the expected term of the new options. Since the incremental difference between the fair value of the new options and the fair value of the original options immediately before modification was immaterial, the value of the options of $661,000 is primarily due to the carry-forward value of the old options into the new options.

Stock-based Compensation

Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service period. All of the Company’s stock compensation is accounted for as an equity instrument.

The effect of recording stock-based compensation for the three months ended September 30, 2010 and 2009 was as follows (in thousands, except per share data):

	Three months ended September 30,
	2010			2009
Stock-based compensation expense by type of award:
Employee stock options and restricted stock units	$	81		$	847
Employee stock purchase plan		58			109
Amounts capitalized into inventory during the three month period		—			(17	)
Amounts previously capitalized into inventory and expensed		1			—
Total stock-based compensation		140			939
Tax effect on stock-based compensation		—			—
Total stock-based compensation expense	$	140		$	939
Impact on net loss per share — basic and diluted	$	(0.01	)	$	(0.10	)

The effect of recording stock-based compensation for the nine months ended September 30, 2010 and 2009 was as follows (in thousands, except per share data):

	Nine months ended September 30,
	2010			2009
Stock-based compensation expense by type of award:
Employee stock options and restricted stock units	$	443		$	1,998
Employee stock purchase plan		(38	)		314
Amounts capitalized into inventory during the nine month period		(6	)		(29	)
Amounts previously capitalized into inventory and expensed		11			25
Total stock-based compensation		410			2,308
Tax effect on stock-based compensation		—			—
Total stock-based compensation expense	$	410		$	2,308
Impact on net income (loss) per share — basic and diluted	$	(0.04	)	$	(0.24	)

During the three months ended September 30, 2010, the Company granted options to purchase 6,400 shares of common stock, with an estimated total grant-date fair value of $10,000 or $1.57 per share. Of these amounts, the Company estimated that the stock-based compensation expense of the awards not expected to vest was $2,000.

~~During the three months ended September 30, 2009, the Company granted options to purchase~~ ~~562,624 shares of common stock, including 519,624 options granted as part of an option exchange~~ ~~program. The 519,624 options granted as part of the exchange program had an estimated total~~ ENDWAVE ~~grant-date fair value of $661,000 or $1.27 per share. The remaining 43,000 options had an~~ CORPORATION ~~estimated total grant-date fair value of $58,000 or $1.35 per share. The total estimated~~ ~~grant-date fair value of all 562,624 options granted was $719,000. Of this amount, the Company estimated that the stock-based compensation expense of the awards not expected to vest was $128,000.~~

~~During the three months ended September 30, 2010, the Company granted 50,000 restricted stock~~ ~~units with an estimated grant-date fair value of $133,000 or $2.65 per share. Of this amount, the~~ ~~Company estimated that the stock-based compensation expense of the awards not expected to vest was~~ NOTES TO ~~$15,000.~~ CONDENSED ~~The~~CONSOLIDATED ~~Company did not grant any restricted stock units during the three months ended~~FINANCIAL ~~September~~ STATEMENTS ~~30, 2009.~~— (Continued)

~~During the nine months ended September 30, 2010, the Company granted options to purchase~~ ~~301,500~~ The ~~shares~~effect of ~~common~~recording stock~~, with an estimated total grant~~-~~date~~based ~~fair~~compensation ~~value~~for ofthe ~~$457,000 or $1.52~~three ~~per~~ months ~~share.~~ended ~~Of these amounts~~March 31, ~~the~~2011 ~~Company~~and ~~estimated~~2010 ~~that~~was ~~the~~as ~~stock-based~~follows ~~compensation expense of~~(in ~~the~~ thousands, ~~awards~~except ~~not~~per ~~expected~~share ~~to vest was $77,000.~~data):

During the nine months ended September 30, 2009, the Company granted options to purchase 1,082,624 shares of common stock, including 519,624 options granted as part of an option exchange program. The remaining 563,000 options had an estimated total grant-date fair value of $596,000 or $1.06 per share. The total estimated grant-date fair value of all 1,082,624 options granted was $1.3 million. Of this amount, the Company estimated that the stock-based compensation expense of the awards not expected to vest was a total of $274,000.


	Three Months
	Ended
	March 31,
	2011			2010

Stock-based compensation expense by type of award:
Employee stock options and restricted stock units	$	123		$	262
Employee stock purchase plan		30			75
Amounts capitalized into inventory during the three-month period		—			(6	)
Amounts previously capitalized into inventory and expensed		—			—

Total stock-based compensation		153			331
Tax effect on stock-based compensation		—			—

Total stock-based compensation expense	$	153		$	331

Impact on net loss per share — basic and diluted	$	(0.02	)	$	(0.03	)

During the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011, the Company granted ~~218~~options to purchase 19,~~000~~200 shares ~~restricted~~of common stock ~~units~~ with an estimated grant-date fair value of $~~583~~27,000 or $21.6741 per share. Of this amount, the Company estimated that the stock-based compensation expense of the awards not expected to vest was $654,000. ~~The~~During the three months ended March 31, 2011, the Company did not grant ~~any~~ restricted stock units ~~during the nine months ended September 30, 2009~~.

During the three months ended ~~June~~March 3031, ~~2009~~2011, the Company fully accelerated the vesting of ~~165,600~~ options into ~~connection~~purchase 47,053 shares ~~with~~of ~~the~~common ~~closing~~stock ofand ~~the~~9,430 ~~Microsemi~~restricted ~~transaction~~stock units ~~described~~ in ~~Note~~connection 9with ~~and~~ certain restructuring activities. The Company recorded additional stock-based compensation expense of of $6618,000 relating to the incremental value of ~~the~~these fully vested modified awards in restructuring expense on the Company’s condensed consolidated statement of operations.

As During ofthe ~~September~~three months ended March 3031, 2010, the ~~unrecorded~~Company granted ~~stock-based~~options ~~compensation balance related~~ to ~~all~~purchase ~~stock options was $426~~269,~~000,~~600 shares ~~net~~ of ~~estimated~~common ~~forfeitures,~~stock with ~~and will be recognized over~~ an estimated ~~weighted~~ grant-~~average~~date ~~service~~fair ~~period~~value of ~~1.3 years. As of September 30, 2010, the unrecorded stock-based compensation balance related to all restricted stock units was~~ $~~367~~403,000, ~~net~~or of$1.49 ~~estimated~~per ~~forfeitures,~~ share. ~~and~~Of ~~will~~this beamount, ~~recognized~~the ~~over~~Company an estimated ~~weighted-average~~that ~~service period of 1.4 years. As of September 30, 2010~~ the ~~unrecorded~~ stock-based compensation ~~balance~~expense ~~related~~of to the ~~employee stock~~awards ~~purchase~~not ~~plan~~expected to vest was $~~108~~68,000~~, net of estimated forfeitures, and will be recognized over an estimate weighted-average service period of 0~~.~~3 years.~~

~~Valuation~~ During ~~Assumptions~~the three months ended March 31, 2010, the Company granted 138,000 restricted stock units with an estimated grant-date fair value of $356,000 or $2.58 per share. Of this amount, the Company estimated that the stock-based compensation expense of the awards not expected to vest was $42,000.

~~The~~ As ~~fair~~of ~~value~~March 31, 2011, the unrecorded stock-based compensation balance related to all stock options was $292,000, net of ~~each~~estimated ~~option~~forfeitures, ~~grant~~and iswill be recognized over an estimated onweighted-average ~~the~~service ~~date~~period of ~~grant~~1.3 years. ~~using~~As of March 31, 2011, the ~~Black~~unrecorded stock-~~Scholes~~based compensation ~~option~~ balance ~~valuation~~related ~~model~~to all restricted stock was $197,000, net of estimated forfeitures, and will be recognized over an estimated weighted-average service period of 0.9 years. As of March 31, 2011, the ~~graded~~unrecorded stock-~~vesting~~based ~~method~~compensation balance ~~with~~related to the ~~following~~employee stock purchase plan was $66,000, net of estimated forfeitures, and will be recognized over an estimate weighted-average service period of 0.5 years. ~~assumptions:~~

	Three months ended						Nine months ended
	September 30,						September 30,
	2010			2009			2010			2009
Risk-free interest rate		0.84% - 1.60	%		1.62% - 2.53	%		0.84% - 2.43	%		1.44% - 2.53	%
Expected life of options	4.6 years			3.7 years			4.6 years			4.1 years
Expected dividends		0.0	%		0.0	%		0.0	%		0.0	%
Volatility		70	%		70	%		70	%		70	%

~~The fair value of purchase rights under the employee stock purchase plan is determined using~~ ~~the Black-Scholes option valuation model with the following weighted-average assumptions:~~ ENDWAVE CORPORATION

	Nine months ended
	September 30,
	2010			2009
Risk-free interest rate		0.24% - 1.06	%		0.35% - 0.93	%
Expected life of options	1.2 years			1.2 years
Expected dividends		0.0	%		0.0	%
Volatility		51	%		51	%

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~There were no enrollments or shares issued under the employee stock purchase plan for the~~ ~~three months ended September 30, 2010 or 2009.~~ Valuation Assumptions

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model and the graded-vesting method with the following weighted-average assumptions:


	Three Months Ended
	March 31,
	2011			2010

Risk-free interest rate		1.15% - 2.11	%		1.28% - 2.23	%
Expected life of options		4.4 years			4.6 years
Expected dividends		0.0	%		0.0	%
Volatility		67	%		70	%

There were no enrollments or shares issued under the employee stock purchase plan for the three months ended March 31, 2011 or 2010.

The dividend yield of zero is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. Expected volatility is based on the combination of historical volatility of the Company’s common stock and the expected future volatility over the period commensurate with the expected life of the options and other factors. The risk-free interest rates are taken from the Daily Federal Yield Curve Rates as of the grant dates as published by the Federal Reserve and represent the yields on actively traded Treasury securities for terms equal to the expected term of the options. The expected term calculation is based on the Company’s observed historical option exercise behavior and post-vesting cancellations of options by employees.

The total intrinsic value of options exercised during the three months ended ~~September~~March 3031, ~~2010~~ ~~and~~2011 ~~2009 was $2,000~~ and ~~$36,000, respectively. The total intrinsic value of options exercised during the nine months ended September 30,~~ 2010 ~~and 2009~~ was $5310,000 and $~~145~~39,000, respectively.

Equity Incentive Program

The Company’s equity incentive program is a broad-based, long-term retention program designed to align stockholder and employee interests. Under the Company’s equity incentive program, stock options generally have a vesting period of four years, are exercisable for a period not to exceed ten years from the date of issuance and are generally granted at prices not less than the fair market value of the Company’s common stock at the grant date. Under the Company’s equity ~~incentive~~ incentive program, restricted stock units generally have a vesting period of two years.

The following table summarizes ~~the~~ stock option activity for the indicated periods:

						Weighted-
				Weighted-		Average		~~Aggregate~~
				Average		Remaining		~~Intrinsic~~Aggregate
	Number of			Exercise		Contractual		~~Value~~Intrinsic
	Shares			Price		Term (Years)		~~(In thousands)~~Value
Outstanding at December 31, 2009		1,010,561		$	2.31
								(In thousands)
Options granted		301,500			2.69
Outstanding at December 31, 2010		1,228,187		$	2.39
Options exercised		(80,725	)		2.07
Options granted		19,200			2.66
Options cancelled		(57,957	)		2.97
Options exercised		(13,717	)		1.99
Outstanding at September 30, 2010		1,173,379		$	2.39		6.69	$	122
Options cancelled		(14,133	)		2.60
Options vested and exercisable and expected to be exercisable at September 30, 2010		1,118,107		$	2.39		6.59	$	119
Outstanding at March 31, 2011		1,219,537		$	2.40		6.02	$	183
Options vested and exercisable at September 30, 2010		615,930		$	2.33		4.82	$	82
Options vested and exercisable and expected to be exercisable at March 31, 2011		1,176,192		$	2.39		5.92	$	179
Options vested and exercisable at March 31, 2011		779,506		$	2.37		4.47	$	138

~~The options outstanding and options vested and exercisable at September 30, 2010 were in the~~ ~~following exercise price ranges:~~ ENDWAVE CORPORATION

							Options Vested and Exercisable
Options Outstanding at September 30, 2010							At September 30, 2010
					Weighted-Average
			Weighted-Average		Remaining				Weighted-Average
Range of Exercise Price	Shares		Exercise Price		Contractual Life		Shares		Exercise Price
$0.76 - $ 1.21		11,183	$	1.13		2.25		11,183	$	1.13
$1.81 - $ 1.81		278,926	$	1.81		5.36		166,539	$	1.81
$1.93 - $ 2.40		86,372	$	2.17		5.76		56,396	$	2.04
$2.53 - $ 2.53		460,617	$	2.53		6.15		306,035	$	2.53
$2.55 - $ 2.55		30,300	$	2.55		8.59		30,093	$	2.55
$2.65 - $ 2.65		261,825	$	2.65		9.05		32,740	$	2.65
$2.82 - $ 6.59		41,781	$	3.45		8.58		10,682	$	4.27
$9.90 - $13.23		2,375	$	10.43		5.54		2,262	$	10.40
		1,173,379	$	2.39		6.69		615,930	$	2.33

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The ~~following~~options ~~table~~outstanding ~~summarizes~~and ~~the~~options ~~restricted~~vested ~~stock~~and ~~unit~~exercisable ~~activity~~at March 31, ~~for~~2011 were in the ~~indicated~~following ~~periods~~exercise price ranges:

						Weighted-
								Options Vested and
				Weighted-		Average		Aggregate
								Exercisable
				Average		Remaining		Intrinsic
								At March 31,
	Number of			Grant Date		Contractual		Value
	Options Outstanding at March 31, 2011							2011
	Shares			Fair Value		Term (Years)		(In thousands)
				Weighted-Average		Weighted-Average
Outstanding at December 31, 2009		—		$	0.00
				Exercise		Remaining				Weighted-Average
Awarded		218,000			2.67
Range of Exercise Price	Shares			Price		Contractual Life		Shares		Exercise Price
Released		—			0.00
$0.76 - $1.21		11,183		$	1.13		1.39		11,183	$	1.13
Forfeited		(6,200	)		2.58
$1.81 - $1.81		263,478		$	1.81		4.43		191,015	$	1.81
Outstanding at September 30, 2010		211,800		$	2.68		0.94	$	460
$1.93 - $2.40		168,502		$	2.25		7.35		62,727	$	2.10
$2.53 - $2.53		444,859		$	2.53		5.21		381,653	$	2.53
$2.55 - $2.55		30,300		$	2.55		8.09		30,130	$	2.55
$2.65 - $2.65		250,659		$	2.65		7.84		84,639	$	2.65
$2.66 - $9.90		49,381		$	3.49		7.90		16,984	$	4.48
$10.20 - $13.23		1,175		$	10.97		3.99		1,175	$	10.97
		1,219,537		$	2.40		6.02		779,506	$	2.37

At The ~~September 30,~~following ~~2010,~~table ~~the~~summarizes ~~Company had 196,090~~ restricted stock ~~units~~unit ~~vested and expected to~~activity ~~vest~~ for ~~with~~the aindicated ~~weighted average remaining contractual term of 0.93 years and an aggregate intrinsic~~periods: ~~value of $426,000.~~

At September 30, 2010, the Company had 4,718,185 shares available for grant under its equity incentive plans.


						Weighted-
				Weighted-		Average
				Average		Remaining		Aggregate
	Number of			Grant Date		Contractual		Intrinsic
	Shares			Fair Value		Term (Years)		Value
								(In thousands)

Outstanding at December 31, 2010		204,800		$	2.68
Awarded		—			0.00
Released		(74,330	)		2.58
Forfeited		—			0.00

Outstanding at March 31, 2011		130,470		$	2.74		0.68	$	309

At March 31, 2011, the Company had 125,238 restricted stock units vested and expected to vest with a weighted average remaining contractual term of 0.7 years and an aggregate intrinsic value of $297,000.

At March 31, 2011, the Company had 5,158,966 shares available for grant under its equity incentive plans.

Employee Stock Purchase Plan

In October 2000, the Company established the Endwave Corporation Employee Stock Purchase Plan. All employees who work a minimum of 20 hours per week and are customarily employed by the ~~Company~~ Company (or an affiliate thereof) for at least five months per calendar year are eligible to participate. Under this plan, employees may purchase shares of common stock through payroll deductions of up to 15% of their earnings with a limit of 3,000 shares per offering period under the plan. The price paid for the Company’s common stock purchased under the plan is equal to 85% of the lower of the fair market value of the Company’s common stock on the date of commencement of participation by an employee in an offering under the plan or the date of purchase. The compensation cost in connection with the purchase plan for the three months ended March 31, 2011 and 2010 was $30,000 and $75,000, respectively. There were no shares issued under the purchase plan during the three months

For the compensation cost in connection with the purchase plan for the three months ended September 30, 2010, the Company recognized an expense of $58,000. For the compensation cost in connection with the purchase plan for the three months ended September 30, 2009, the Company recognized an expense of $109,000.

For the compensation cost in connection with the purchase plan for the nine months ended September 30, 2010, the Company recognized a benefit of $38,000 due to actual contributions being less than expected contributions for the offering period, resulting in the recognition of compensation cost only for those awards that actually vested. For the compensation cost in connection with the purchase plan for the nine months ended September 30, 2009, the Company recognized an expense of $314,000.

~~There were no shares issued under the purchase plan during the three months ended September~~ ~~30, 2010 or the three months ended September 30, 2009. During the nine months ended September 30,~~ ~~2010 and 2009, there were 36,603 and 103,075 shares issued under the purchase plan at weighted~~ ENDWAVE ~~average prices of $2.03 and $2.35 per share, respectively. At September 30, 2010, there were~~ CORPORATION ~~327,229 shares available for purchase under the purchase plan.~~

9. NOTES ~~Discontinued~~TO CONDENSED ~~Operations~~CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On ended ~~April~~March 3031, ~~2009,~~2011 ~~the~~or Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Microsemi, pursuant to which Microsemi purchased the Company’s Defense and Security RF module business (the “Business”), including all of the outstanding capital stock of Endwave Defense Systems, Incorporated (“EDSI”)2010. AsAt ~~consideration~~March 31, ~~Microsemi assumed certain liabilities associated exclusively with the Business~~2011, ~~including the Company’s building lease in~~there ~~Folsom,~~ were ~~California~~446, ~~and paid $28.0~~473 ~~million~~shares inavailable ~~cash. The Purchase Agreement contains standard representations and warranties as to the Business that survives~~ for ~~two~~purchase ~~years~~under ~~following~~ the ~~closing.~~ purchase In connection with the transaction, the Company entered into an indemnification agreement pursuant to which the Company agreed to indemnify Microsemi for environmental, product liability and intellectual property infringement claims related to the Company’s operation of the Business prior to the closing date, as well as for any other excluded liability, and Microsemi agreed to indemnify the Company for any claims related to the operation of the Business following the closing date and for any other assumed liability, subject in some cases to a customary deductible and limitation on maximum damagesplan.

~~Concurrently~~8. ~~with~~Net ~~the~~Loss ~~closing~~Per of the acquisition, the Company entered into a transition services agreement and an employee transition services agreement with Microsemi pursuant to which the Company agreed to provide to Microsemi for a limited period of time certain transitional services, including human resources, information technology and product supply services. Share

~~During~~ Basic ~~the~~net ~~fiscal~~income ~~year~~(loss) ~~ended~~per ~~December 31,~~share ~~2009,~~is computed by dividing net income (loss) by the ~~Company~~weighted ~~recognized~~average anumber ~~$19~~of common shares outstanding for the period.~~6 million~~ ~~gain~~Diluted onnet income (loss) per share ~~sale~~ is ofcomputed ~~discontinued~~by ~~operations,~~dividing the net ofincome ~~tax,~~(loss) ~~which~~for ~~included~~the period by the ~~following:~~weighted ~~$28.0 million~~average number of ~~cash received~~shares ~~from~~of ~~Microsemi~~common stock and potential $1common stock equivalents outstanding during the period, if dilutive.~~3 million~~ ofPotential ~~liabilities~~common ~~assumed~~stock byequivalents ~~Microsemi~~include options ~~reduced~~to bypurchase ~~$647~~common stock,~~000~~ ~~of deal~~unvested ~~fees~~restricted stock units and ~~$9.1 million~~shares ofto ~~assets~~be ~~transferred~~purchased toin ~~Microsemi~~connection with the Company’s employee stock purchase plan.

~~The~~ Potential ~~results~~dilutive common shares of ~~operations~~1,374,196 ~~for~~as ~~the~~of March 31, ~~Business~~2011 ~~classified~~and 1,357,965 as ~~discontinued~~of ~~operations~~March 31, ~~are~~2010 asfrom ~~follows~~ the (assumed exercise of stock options, unvested restricted stock units and shares issuable under the Company’s employee stock purchase plan were not included in ~~thousands):~~the net loss per share calculations, as the Company incurred net losses for all periods presented and the inclusion of such shares would have been anti-dilutive. As a result, diluted net loss per share is the same as basic net loss per share for all periods presented.

	Three months ended		Nine months ended
	September 30,		September 30,
	2009		2009
Revenue of discontinued operations	$	—	$	5,313
Loss from discontinued operations	$	—	$	(2,028	)
Gain on sale of discontinued operation, net of tax		41		19,599
Income from discontinued operations, net of tax	$	41	$	17,571


9.	Comprehensive Loss

10 Comprehensive loss generally represents all changes in stockholders’ equity except those resulting from investments or contributions by stockholders. ~~Net~~ ~~Income~~The ~~(Loss)~~Company’s unrealized ~~Per~~gains ~~Share~~and losses on its available-for-sale securities represent the only components of comprehensive loss excluded from the reported net loss and are displayed in the statements of stockholders’ equity.

~~Basic net income (loss) per share is computed by dividing net loss by the weighted-average~~ ~~number~~ The components of ~~common~~comprehensive ~~shares outstanding for the period. Diluted net income (~~loss~~) per~~ ~~share~~were isas ~~computed by~~follows dividing the net loss for the period by the weighted-average number of shares of common stock and potential common stock equivalents outstanding during the period, if dilutive. Potential common stock equivalents include the convertible preferred stock which was repurchased (in ~~January 2010,~~ ~~options to purchase common stock, restricted stock units and shares to be purchased in connection~~ thousands): ~~with the Company’s employee stock purchase plan.~~

As of September 30, 2009, 300,000 shares of preferred stock were outstanding, which were convertible into 3,000,000 shares of common stock. On January 21, 2010, the Company repurchased all 300,000 shares of its preferred stock.


	Three Months Ended
	March 31,
	2011			2010

Net loss	$	(3,871	)	$	(1,283	)
Change in unrealized gain (loss) on investments		6			(5	)

Total comprehensive loss	$	(3,865	)	$	(1,288	)


10.	Segment Disclosures

The Company operates in a single business segment. Although the Company sells to customers in various geographic regions throughout the world, the end customers may be located elsewhere. The Company’s total revenues by billing location for the periods ended March 31 were as follows (in thousands):


	Three Months Ended March 31,
	2011				2010

United States	$	20	1.6	%	$	1,766	36.5	%
Finland		70	5.7	%		—	0.0	%
Germany		909	73.4	%		2,128	44.0	%
Hungary		164	13.3	%		179	3.7	%
Slovakia		56	4.5	%		706	14.6	%
Rest of the world		18	1.5	%		55	1.2	%

Total	$	1,237	100.0	%	$	4,834	100.0	%

~~As the Company incurred net losses from continuing operations for all periods presented,~~ ~~shares associated with common stock issuable upon the conversion of the preferred shares were not~~ ~~included in the calculation of diluted net loss per share, as the effect would be anti-dilutive.~~ ENDWAVE ~~Potential dilutive common shares of 1,385,179 as of September 30, 2010 and 1,034,167 as of~~ CORPORATION ~~September 30, 2009 from the assumed exercise of stock options and unvested restricted stock units~~ were not included in the net income (loss) per share calculations as their inclusion would have been anti-dilutive. As a result, diluted net loss per share is the same as basic net loss per share for all periods presented.

~~11.~~ NOTES ~~Comprehensive~~TO CONDENSED ~~Income~~CONSOLIDATED FINANCIAL STATEMENTS — (~~Loss~~Continued)

~~Comprehensive~~ For ~~income~~the ~~(loss)~~three months ended March ~~generally~~31, ~~represents~~2011, ~~all~~two ~~changes~~customers each inaccounted ~~stockholders’~~for ~~equity~~greater ~~except those~~than ~~resulting~~10% ~~from~~of ~~investments~~total orrevenues ~~contributions~~and combined bythey ~~stockholders.~~accounted ~~The~~for 92% of the Company’s ~~unrealized gains~~total ~~and~~ revenues, ~~losses~~the onlarger ~~its~~of ~~available-~~which was Nokia Siemens Networks which accounted for~~-sale~~ ~~securities~~79% ~~and~~of ~~gains~~the ~~and~~Company’s ~~losses~~total ~~resulting~~revenues. ~~from~~For ~~foreign~~the ~~exchange~~ three ~~translations~~months ~~represent~~ended ~~the~~March 31, ~~only~~2010, ~~components~~three customers each accounted for greater than 10% of ~~comprehensive~~total ~~loss~~revenues ~~excluded~~and ~~from~~combined they accounted for 94% of the Company’s total revenues, the ~~reported~~ largest ~~net~~of ~~loss~~which ~~and~~was ~~are~~Nokia ~~displayed~~Siemens inNetworks, ~~the~~which ~~statements~~accounted for 45% of ~~stockholders~~the Company’s ~~equity~~total revenues.

~~The~~ At ~~components~~March 31, 2011, 40% and 60% of ~~comprehensive~~the ~~income~~Company’s ~~(loss)~~ net book value of its long-lived assets were aslocated ~~follows~~in (the United States of America and Thailand, respectively. At December 31, 2010, 45% and 55% of the Company’s net book value of its long-lived assets were located in ~~thousands):~~the United States of America and Thailand, respectively.

	Three months ended						Nine months ended
	September 30,						September 30,
	2010			2009			2010			2009
Net income (loss)	$	(1,999	)	$	(2,593	)	$	(6,096	)	$	10,387
Change in unrealized gain (loss) on investments		2			4			(12	)		(37	)
Total comprehensive income (loss)	$	(1,997	)	$	(2,589	)	$	(6,108	)	$	10,350


11.	Recent Accounting Pronouncements

12 In July 2010 the Financial Accounting Standards Board (“FASB”) issued new standards which amend the receivable disclosure requirements, including the credit quality of financing receivables and the allowance for credit losses. These standards require additional disclosures that will facilitate financial statement user’s evaluation of the nature of credit risk inherent in financing receivables, how that risk is analyzed in arriving at the allowance for credit losses, and the reason for any changes in the allowance for credit losses. These new standards are required to be adopted for interim and annual reporting periods beginning on or after December ~~Segment~~15, ~~Disclosures~~2010. The Company adopted these standards which did not have a material impact on its consolidated financial statements.

~~The Company operates in a single business segment. Although the Company sells to customers in~~ ~~various geographic regions throughout the world, the end customers may be located elsewhere~~ . ~~The~~ ~~Company’s total revenues by billing location for the periods ended September 30 were as follows (in thousands):~~

	Three months ended September 30,
	2010				2009
United States	$	470	11.6	%	$	168	5.4	%
Finland		—	—			106	3.4	%
Germany		2,343	57.7	%		1,205	38.5	%
Slovakia		947	23.3	%		1,081	34.6	%
Hungary		230	5.7	%		448	14.3	%
Rest of the world		68	1.7	%		118	3.8	%
Total	$	4,058	100.0	%	$	3,126	100.0	%

	Nine months ended September 30,
	2010				2009
United States	$	3,793	30.0	%	$	213	1.3	%
Finland		—	—			9,997	62.7	%
Germany		5,520	43.7	%		2,181	13.7	%
Slovakia		2,280	18.0	%		2,178	13.7	%
Hungary		600	4.7	%		1,157	7.3	%
Rest of the world		452	3.6	%		222	1.3	%
Total	$	12,645	100.0	%	$	15,948	100	%

For the three months ended September 30, 2010, three customers each accounted for greater than 10% of total revenues and combined they accounted for 92% of the Company’s total revenues. For the three months ended September 30, 2009, three customers each accounted for greater than 10% of total revenues and combined they accounted for 91% of the Company’s total revenues.

In the first nine months of 2010, three customers each accounted for greater than 10% of total revenues and combined they accounted for 93% of the Company’s total revenues. In the first nine months of 2009, two customers accounted for 90% of our total revenues and no other customer accounted for more than 10% of our total revenues.

13. Recent Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board (“FASB”) issued new standards for revenue agreements with multiple deliverables. These new standards impact the determination of when the individual deliverables included in a multiple-element arrangement may be treated as separate units of accounting. Additionally, these new standards modify the manner in which the transaction consideration is allocated across the separately identified deliverables by no longer permitting the residual method of allocating arrangement consideration. These new standards are required to be adopted in the first quarter of 2011; however, early adoption is permitted. The Company does not expect these new standards to significantly impact its consolidated financial statements.

In October 2009, the FASB issued new standards for the accounting for certain revenue arrangements that include software elements. These new standards amend the scope of pre-existing software revenue guidance by removing from the guidance non-software components of tangible products and certain software components of tangible products. These new standards are required to be adopted in the first quarter of 2011; however, early adoption is permitted. The Company does not expect these new standards to significantly impact its consolidated financial statements.

In January 2010, the FASB issued new standards for fair value measurement and disclosures. These new standards require disclosures for significant transfers in and out of Level 1 and Level 2 fair value measurements and the reasons for the transfers and activity. For Level 3 fair value measurements, purchases, sales, issuances and settlements must be reported on a gross basis. Further, additional disclosures are required by class of assets or liabilities, as well as inputs used to measure fair value and valuation techniques. These standards were required to be adopted in the first quarter of 2010. The Company adopted these standards which did not have a material impact on the Company’s consolidated financial statements.

In February 2010, the FASB issued new standards which amend the subsequent event disclosure requirements for public company filers. An entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated. These standards were effective upon issuance and did not a material impact on the Company’s consolidated financial statements.

In July 2010, the FASB issued new standards which amend the receivable disclosure requirements, including the credit quality of financing receivables and the allowance for credit losses. These standards require additional disclosures that will facilitate financial statement user’s evaluation of the nature of credit risk inherent in financing receivables, how that risk is analyzed in arriving at the allowance for credit losses, and the reason for any changes in the allowance for credit losses. These new standards are required to be adopted for interim and annual reporting periods beginning on or after December 15, 2010. The Company does not expect these new standards to significantly impact its consolidated financials.


Item 2.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements, related notes and “Risk Factors” section included elsewhere in this report on Form 10-Q, as well as the information contained under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our ~~consolidated~~ consolidated financial statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, ~~2009~~2010. In addition to historical consolidated financial information, this discussion contains forward-looking statements that involve known and unknown risks and uncertainties, including statements regarding our expectations, beliefs, intentions or strategies regarding ~~the~~ the future. All forward-looking statements included in this report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from those discussed in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements. In the past, our operating results have fluctuated and are likely to continue to fluctuate in the future.

The terms “we,” “us,” “our” and words of similar import below refer to Endwave Corporation.

Overview

We design, manufacture and market radio frequency, or RF, products that enable the transmission, reception and processing of high frequency RF signals.

~~As a result of the divestiture of our Defense and Security RF module business in April 2009,~~ ~~our~~ Our products ~~now~~ consist of two key product lines, semiconductor devices and integrated transceiver modules:

• Our transceiver modules, which serve as the core RF sub-system in digital microwave radios, are produced for telecommunication network original equipment manufacturers and system integrators located throughout the world, collectively referred to as telecom OEMs.


	•	Our semiconductor product line consists of a wide variety of monolithic microwave integrated circuits, or MMICs, including amplifiers, voltage controlled oscillators, up and down converters, variable gain amplifiers, voltage variable attenuators, fixed attenuators and filters. These types of devices are widely used in telecommunications, satellite, defense, security, instrumentation, scientific and consumer systems. While we have developed, produced and sold such devices for several years as components of our module products, we first offered them for sale as stand-alone products in the latter part of 2009 and they have not yet become a significant source of revenue for us.

	•	Our integrated transceiver modules combine several electronic functions into a single RF sub-system. Historically, our main customers for these products have been telecommunication network original equipment manufacturers, or OEMs, and system integrators that utilize them in digital microwave radios. More recently we have identified and pursued uses for these products in additional product areas; however these alternate applications have not yet become a significant source of revenue for us.

• Proposed Merger ~~Our~~with semiconductor product line consists of a broad range of monolithic microwave integrated circuits, or MMICs, including amplifiers, voltage controlled oscillators, up and down converters, variable gain amplifiers, voltage variable attenuators, fixed attenuators and filters. These types of devices find wide application in numerous telecommunications, avionic, defense, homeland security, instrumentation and consumer systems. Our semiconductor product line was formally introduced to the market in the latter part of 2009 and has not yet become a significant source of revenue for us.GigOptix

On ~~April~~February 304, ~~2009~~2011, we entered into an ~~Asset~~Agreement ~~Purchase~~and ~~Agreement~~Plan of Merger with ~~Microsemi~~GigOptix, ~~Corporation~~Inc., or GigOptix, and Aerie ~~(“Microsemi”)~~ Acquisition ~~pursuant~~Corporation, toa ~~which~~wholly-owned ~~Microsemi~~subsidiary ~~purchased~~of ~~our~~GigOptix, which ~~Defense~~we ~~and~~refer ~~Security~~to RFas ~~module~~the ~~business~~Merger Subsidiary, pursuant to which ~~including~~ Merger ~~all~~Subsidiary ofwill, subject to the ~~outstanding~~satisfaction ~~capital~~or ~~stock~~waiver of the ~~our~~conditions ~~subsidiary~~therein, ~~Endwave~~merge ~~Defense~~with ~~Systems, Incorporated.~~and Asinto ~~consideration~~Endwave, ~~Microsemi~~the separate ~~assumed~~corporate ~~certain~~existence ~~liabilities~~of ~~associated~~Merger ~~exclusively~~Subsidiary ~~with~~shall cease and Endwave will be the ~~Defense~~surviving corporation of the merger and a ~~Security~~wholly-owned RFsubsidiary ~~module~~of ~~business~~GigOptix. We refer to this agreement as the Merger Agreement and ~~paid~~the ~~$28.0 million~~proposed inmerger contemplated ~~cash.~~by ~~Additionally,~~the Merger Agreement as ~~part~~the Merger. Upon the consummation of the ~~sale~~Merger, ~~approximately~~(i) the ~~130~~outstanding ~~employees~~shares ~~associated~~of Endwave ~~with~~common stock will be converted into the ~~Defense~~right to receive an aggregate number of shares of GigOptix common stock equal to the product of (.425/.575) and ~~Security~~the RFnumber ~~module~~of shares of GigOptix ~~business~~ common ~~transferred~~stock outstanding immediately prior to ~~Microsemi.~~consummation ~~Accordingly~~of the Merger, weless ~~reclassified~~42.5% of the ~~results~~shares described in clause (ii) of ~~our~~this ~~Defense~~sentence and ~~Security~~ (ii) in-the-money options RFto ~~module~~acquire ~~business~~Endwave ascommon astock ~~discontinued~~outstanding ~~operation~~immediately prior into ~~our~~the ~~consolidated~~consummation ~~statements~~of the Merger will be converted into that number of shares of GigOptix common stock determined by ~~operations~~ dividing ~~for~~the ~~all~~spread ~~periods~~value ~~presented~~of insuch ~~this~~options ~~Quarterly~~at ~~Report~~closing by the closing price of GigOptix’s common stock on ~~Form~~the ~~10-Q~~trading day prior to closing, such that following the Merger, the pre-Merger holders of common stock and ~~all~~restricted ~~amounts~~stock ~~set~~units will own that ~~forth~~ number inof ~~this~~shares ~~Management’s~~equal ~~Discussion~~to ~~and~~42.5% ~~Analysis~~of the outstanding stock of ~~Financial~~the combined ~~Condition~~company, ~~and~~less ~~Results~~42.5% of ~~Operation~~the shares issued in respect of ~~reflect~~ Endwave ~~such~~stock ~~reclassification~~options.

~~Critical Accounting Policies~~ 17

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. In many instances, we could have reasonably used different accounting estimates, and in other instances changes in the accounting estimates are reasonably likely to occur from period-to-period. Accordingly, actual results could differ significantly from the estimates made by our management. To the

~~extent~~ The ~~that~~Merger ~~there~~Agreement ~~are~~includes ~~material~~customary ~~differences~~representations, warranties ~~between~~and ~~these~~covenants ~~estimates~~of Endwave and ~~actual~~GigOptix. ~~results~~Endwave has agreed to conduct its operations and the operations of its subsidiaries according to its ordinary and usual course of business consistent with past practice until the effective time of the Merger. The Merger Agreement contains customary “no-solicitation” covenants pursuant to which neither Endwave nor GigOptix is permitted to solicit any alternative acquisition proposals, ~~our~~provide any information to any person in ~~future~~ connection ~~financial~~with ~~statement~~any ~~presentation~~alternative acquisition proposal, participate ~~financial~~in ~~condition~~any discussions or negotiations relating to any alternative acquisition proposal, ~~results~~approve, endorse or recommend any alternative acquisition proposal, or enter into any agreement relating to any alternative acquisition proposal. The “no-solicitation” provision is subject to certain exceptions that permit the Board of ~~operations~~Directors of each of Endwave and ~~cash~~GigOptix, ~~flows~~as the case may be, to comply with their ~~will~~ respective fiduciary duties, which, under certain circumstances, would enable Endwave or GigOptix, as the case may be, ~~affected~~to provide information to, and engage in discussions or negotiations with, third parties with respect to alternative acquisition proposals.

We The ~~believe~~Merger ~~that~~Agreement ~~the~~contains ~~following~~certain ~~critical~~termination ~~accounting~~rights ~~policies involve our more significant~~for ~~judgments,~~ both ~~assumptions~~Endwave and ~~estimates~~GigOptix and, ~~therefore,~~further ~~could~~provides ~~potentially~~that, ~~have a significant impact on~~upon ~~our~~ termination ~~consolidated~~of ~~financial~~the ~~statements:~~Merger ~~Revenue~~Agreement ~~recognition;~~under ~~Allowance~~certain ~~for~~circumstances, Endwave ~~doubtful~~may ~~accounts; Warranty~~be ~~reserves;~~obligated ~~Inventory~~to ~~valuation;~~pay ~~Stock-based~~GigOptix ~~compensation;~~a ~~Deferred~~termination ~~taxes;~~fee ~~Long-lived~~of ~~assets;~~ $1,000,000 ~~Goodwill~~plus ~~and~~certain ~~intangible~~reasonable ~~assets~~documented ~~with~~expenses ~~an indefinite life; Fair value measurement; and~~of ~~Business combinations~~ GigOptix.

~~There~~ We ~~have~~currently ~~been~~expect noto ~~material~~complete ~~changes in~~ the ~~matters~~Merger ~~for which we make critical accounting estimates~~ in the ~~preparation~~second quarter of ~~our~~2011. ~~condensed~~GigOptix’s ~~consolidated~~and ~~financial~~Endwave’s ~~statements~~obligations ~~during~~to consummate the ~~nine months~~Merger ~~ended~~are ~~September 30,~~subject ~~2010~~to asthe ~~compared~~satisfaction toor ~~those~~waiver of ~~disclosed~~customary inclosing ~~our~~conditions ~~Annual~~and ~~Report~~regulatory onapprovals, ~~Form 10-K~~as ~~for~~ well as the ~~year~~approval ~~ended~~of ~~December 31,~~the ~~2009~~merger ~~filed~~by ~~with~~ the ~~Securities~~stockholders ~~and Exchange Commission (“SEC”) on~~of ~~March 24, 2010~~ Endwave.

Results of Operations

Three ~~and nine~~ months ended ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010

The following table sets forth certain statement of operations data as a percentage of total revenues for the periods indicated:

	Three months ended						Nine months ended
	Three Months
	September 30,						September 30,
	Ended
	2010			2009			2010			2009
	March 31,
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%
	2010			2010
Cost of product revenues		78.1			75.8			83.8			71.6
Total revenues		100.0	%		100.0	%
Research and development		30.1			46.5			26.1			28.0
Cost of product revenues		83.8			70.1
Sales and marketing		14.6			19.0			13.8			10.4
Research and development		107.3			20.8
General and administrative		24.5			44.0			23.8			28.9
Sales and marketing		38.3			12.1
Restructuring		1.6			(0.7	)		0.4			7.6
General and administrative		117.5			23.4
Total costs and expenses		148.9			184.5			147.9			146.5
Restructuring		65.0			(0.3	)
Loss from continuing operations		(48.9	)		(84.5	)		(47.9	)		(46.5	)
Total costs and expenses		411.8			126.1
Interest and other income (expense), net		(0.4	)		(0.1	)		(0.3	)		1.2
Loss from operations		(311.8	)		(26.1	)
Loss from continuing operations before benefit from income taxes		(49.3	)		(84.6	)		(48.2	)		(45.3	)
Interest and other income (expense), net		(0.6	)		(0.4	)
Benefit from income taxes		—			(0.3	)		—			(0.2	)
Loss from operations before provision for income taxes		(312.4	)		(26.5	)
Loss from continuing operations		(49.3	)		(84.3	)		(48.2	)		(45.1	)
Provision for income taxes		0.6			—
Income from discontinued operations, net of tax		—			1.3			—			110.2
Net loss		(312.9	)%		(26.5	)%
Net income (loss)		(49.3	)%		(83.0	)%		(48.2	)%		65.1	%

Total revenues

	Three months ended September 30,							Nine months ended September 30,
	Three Months Ended
	2010		2009		% Change			2010		2009		% Change
	March 31,
	(In thousands)							(In thousands)
	2011		2010		% Change
Total revenues	$	4,058	$	3,126		29.8	%	$	12,645	$	15,948		(20.7	)%
	(In thousands)
Total revenues	$	1,237	$	4,834		(74.4	)%

~~Total revenues primarily consist of product revenues for sales of our transceiver module and~~ ~~semiconductor products.~~ 18

During the third quarter of 2010, total revenues increased by $932,000 or 29.8%, compared to the third quarter of 2009 primarily due to an increased demand for our new module designs supporting next generation, high capacity, internet protocol-based radios.

During first nine months of 2010, total revenues decreased by $3.3 million, or 20.7%, compared to the same period in 2009 primarily due to a rapid drop in sales for a key legacy product for a major customer’s radio platform while sales of our new module designs supporting next-generation radios were just beginning their production ramp. During the first nine months of 2010, the increased revenues from the new module designs did not offset the decline in revenues from the legacy product.

~~During~~ Total ~~the~~revenues ~~fourth~~primarily ~~quarter~~consist of ~~2010,~~product ~~we expect~~ revenues tofor ~~be comparable to revenues in the~~sales ~~third quarter~~ of ~~2010. We expect revenues from~~ our ~~new~~transceiver module ~~designs~~ and ~~to a lesser extent our~~ semiconductor ~~product line to offset the continued decline in revenues from our legacy~~ products.

During the three months ended March 31, 2011, total revenues decreased by $3.6 million, or 74%, compared to the same period in 2010. During 2010, our customers faced increasing competition, which we believe has resulted in their loss of market share. The decline in our customers’ market share has led to decreased demand for our products and contributed to the reduced revenues we experienced in 2010 and the first quarter of 2011. In addition, total revenues decreased during the first three months of 2011 because we experienced operational delays as a result of a delay in receiving regulatory approval for export of certain of our transceiver modules. This approval has since been obtained and we expect to make all delayed shipments in the second quarter.

We believe our 2011 revenues will likely be below our 2010 revenues because we are uncertain about our customers’ ability to regain market share given the competitive nature of the industry.

Cost of product revenues

	Three months ended September 30,									Nine months ended September 30,
	Three Months Ended
	2010			2009			% Change			2010			2009			% Change
	March 31,
	(In thousands)									(In thousands)
	2011			2010			% Change
Cost of product revenues	$	3,169		$	2,369			33.8	%	$	10,596		$	11,425			(7.3	)%
	(In thousands)
Percentage of total revenues		78.1	%		75.8	%					83.8	%		71.6	%
Cost of product revenues	$	1,036		$	3,391			(69.4	)%
Percentage of total revenues		83.8	%		70.1	%

Cost of product revenues consists primarily of: costs of direct materials; equipment depreciation; costs associated with procurement, production control, quality assurance and manufacturing engineering; fees paid to our offshore manufacturing vendor; reserves for potential excess or obsolete material; costs related to stock-based compensation; and accrued costs associated with potential warranty returns offset by the benefit of usage of materials that were previously written off.

During the ~~third~~first ~~quarter~~three months of ~~2010~~2011, the cost of product revenues aswas a$1.0 million ~~percentage of revenues increased~~ compared to ~~the~~$3.4 million ~~third quarter of 2009 primarily due to a shift~~ in the ~~product~~first ~~mix~~three ~~toward lower~~months ~~margin~~of ~~products~~2010. The ~~cost~~decrease ~~of product revenues~~ in ~~both~~dollars ~~periods~~for ~~was favorably impacted by~~ the ~~utilization~~ cost of ~~inventory~~product ~~that~~revenues was ~~previously~~primarily ~~written~~due ~~off, amounting~~ to ~~approximately~~decreased ~~$219,000 during the third quarter of 2010 and $32,000 during the third quarter of 2009~~revenue.

During the first ~~nine~~three months of ~~2010~~2011, ~~the~~our ~~cost~~inventory ~~of product revenues as a percentage of revenues~~reserves increased ~~compared~~by toa ~~the~~net ~~first~~$124,000, ~~nine~~which ~~months~~was ~~of 2009,~~ primarily due to ~~the write-off of inventory~~an ~~associated~~ increase ~~with excess material related to a rapid drop~~ in ~~sales~~reserves ~~of a legacy product~~ for aexcess ~~major customer’s~~materials ~~radio~~partially ~~platform.~~offset ~~The cost of product revenues in both periods was favorably impacted~~ by ~~the~~ a utilization of inventory that was previously written off~~, amounting to approximately $321,000 during the first nine months of 2010 and $97,000 during the first nine months of 2009~~.

We During ~~continue~~the tofirst ~~focus~~three onmonths ~~reducing~~of 2010, the cost of product ~~revenues as a percentage of total~~ revenues ~~through~~favorably ~~the introduction of new designs and technologies and further improvements to our offshore manufacturing processes. In addition, our product costs are~~ impacted by the ~~mix~~utilization ~~and volume~~ of ~~products~~inventory ~~sold~~that was ~~and~~previously ~~will~~written ~~continue~~off towas ~~fluctuate~~approximately ~~as a result~~$10,000.

~~Research~~ We continue to focus on reducing the cost of product revenues as a percentage of total revenues through the introduction of new designs and ~~development~~technology ~~expenses~~and further improvements to our offshore manufacturing processes. In addition, our product costs are impacted by the mix and volume of products sold and will continue to fluctuate as a result.

	Three months ended September 30,									Nine months ended September 30,
	2010			2009			% Change			2010			2009			% Change
	(In thousands)									(In thousands)
Research and development expenses	$	1,221		$	1,452			(15.9	)%	$	3,302		$	4,463			(26.0	)%
Percentage of total revenues		30.1	%		46.5	%					26.1	%		28.0	%

Research and development


	Three Months Ended
	March 31,
	2011			2010			% Change
	(In thousands)

Research and development	$	1,327		$	1,006			31.9	%
Percentage of total revenues		107.3	%		20.8	%

Research and development expenses consist primarily of salaries and related expenses for research and development personnel, outside professional services, prototype materials, supplies and labor, depreciation for related equipment, allocated facilities costs and expenses related to stock-based compensation.

~~During the third quarter of 2010, research and development costs decreased in absolute dollars~~ ~~compared to the third quarter of 2009 which was primarily due to a $173,000 decrease in stock-based~~ ~~compensation expense, a $30,000 decrease in personnel-related expenses and a $24,000 decrease in~~ 19 ~~project related expenses.~~

During the first nine months of 2010, research and development costs decreased in absolute dollars compared to the first nine months of 2009 primarily due to a $555,000 decrease in personnel-related expenses, a $309,000 decrease in stock-based compensation expenses and a $300,000 decrease in project related expenses.

During the ~~remainder~~first three months of ~~2010~~2011, weresearch ~~will~~and ~~continue~~development costs were $1.3 million compared to ~~invest~~$1.0 million in the ~~our~~first ~~semiconductor~~three ~~product~~months ~~line~~of ~~and expect~~2010. The increase in research and development ~~expenses~~costs was primarily due to ~~moderately~~a $281,000 increase ~~relative~~for project-related toexpenses ~~research~~ and a $93,000 increase in ~~development~~ personnel-related expenses ~~incurred~~which ~~during~~were ~~the~~partially ~~third~~offset ~~quarter~~by ofan $86,000 ~~2010~~decrease in stock-based compensation.

Sales and marketing

	Three months ended September 30,									Nine months ended September 30,
	Three Months Ended
	2010			2009			% Change			2010			2009			% Change
	March 31,
	(In thousands)									(In thousands)
	2011			2010			% Change
Sales and marketing	$	594		$	594			0.0	%	$	1,745			$1,656			5.4	%
	(In thousands)
Percentage of total revenues		14.6	%		19.0	%					13.8	%		10.4	%
Sales and marketing	$	474		$	584			(18.8	)%
Percentage of total revenues		38.3	%		12.1	%

Sales and marketing consist primarily of salaries and related expenses for sales and marketing personnel, professional fees, facilities costs, expenses related to stock-based compensation and promotional activities.

During the ~~third~~first ~~quarter~~three months of ~~2010~~2011, sales and marketing costs were ~~comparable~~$474,000 tocompared ~~the third quarter of 2009 primarily due~~ to a $94584,000 ~~increase~~ in ~~sales~~the ~~commissions,~~first athree ~~$59,000~~months ~~increase in~~of ~~personnel-related~~ 2010. ~~expenses~~The ~~and~~decrease ain ~~$20,000~~sales ~~increase~~and inmarketing ~~travel~~costs ~~expenses~~was ~~which~~primarily due ~~were~~to ~~offset~~a ~~by an~~ $~~180~~96,000 decrease in ~~stock~~personnel-~~based~~related ~~compensation~~ expenses.

During the first nine months of 2010, sales and marketing costs increased in absolute dollars compared to the first nine months of 2009 primarily due to an $177,000 increase in sales commissions, a $73,000 increase in personnel-related expenses, a $67,000 increase in marketing expenses and a $59,000 increase in travel expenses which were partially offset by a $321,000 decrease in stock-based compensation expenses.

During the remainder of 2010, we expect sales and marketing expenses to remain flat on a quarterly basis relative to sales and marketing expenses incurred during the third quarter of 2010.

General and administrative

	Three months ended September 30,									Nine months ended September 30,
	Three Months Ended
	2010			2009			% Change			2010			2009			% Change
	March 31,
	(In thousands)									(In thousands)
	2011			2010			% Change
General and administrative	$	996		$	1,374			(27.5	)%	$	3,009		$	4,605			(34.7	)%
	(In thousands)
Percentage of total revenues		24.5	%		44.0	%					23.8	%		28.9	%
General and administrative	$	1,453		$	1,131			28.5	%
Percentage of total revenues		117.5	%		23.4	%

General and administrative consist primarily of salaries and related expenses for executive, finance, accounting, legal, information technology and human resources personnel, professional fees, facilities costs, and expenses related to stock-based compensation.

During the ~~third~~first ~~quarter~~three months of ~~2010~~2011, general and administrative costs were $~~996,000~~1.5 million compared to $1.41 million in the ~~third~~first ~~quarter~~three months of ~~2009~~2010. The increase ~~decrease~~ in general and administrative costs was primarily due to a $~~351~~488,000 ~~decrease~~of intransaction ~~stock-based~~costs ~~compensation~~related ~~and~~to the proposed Merger which were partially offset by a $~~147~~61,000 decrease in ~~personnel-related~~ professional ~~expenses~~fees, ~~which~~a ~~were~~$30,000 ~~partially~~decrease ~~offset~~in bypublic company-related expenses and a $~~114~~28,000 ~~increase~~decrease ~~for~~in ~~professional fees~~stock-based compensation.

During the ~~first~~second ~~nine~~quarter ~~months~~ of ~~2010~~2011, ~~general~~we ~~and~~expect ~~administrative costs were $3.0 million~~additional ~~compared~~ Merger-related ~~to $4.6 million in the first nine months of 2009. The decrease in~~ general and administrative ~~costs~~expenses ~~was primarily due~~ to ~~a $758,000 decrease in personnel-related expenses, a~~continue ~~$729,000~~ as ~~decrease~~we incomplete ~~stock-based compensation and a $106,000 decrease for professional fees. The decrease in personnel-related expenses is primarily due to~~ the ~~restructuring~~proposed ~~activities undertaken during fiscal 2009~~Merger.

During the remainder of 2010, we expect general and administrative expenses to remain flat on a quarterly basis relative to general and administrative expenses incurred during the third quarter of 2010.

Restructuring

	Three months ended September 30,								Nine months ended September 30,
	Three Months Ended
	2010		2009			% Change			2010		2009		% Change
	March 31,
	(In thousands)								(In thousands)
	2011		2010			% Change
Restructuring expenses	$	63	$	(21	)		400.0	%	$	49	$	1,212		(96.0	)%
	(In thousands)
Restructuring	$	804	$	(14	)		5,842.9	%

During the first quarter of ~~2009~~2011, we undertook certain restructuring activities to reduce expenses. ~~These~~We ~~terminations~~vacated ~~affected all areas of~~ our ~~operations. The components of the~~ ~~restructuring~~ facilities ~~charge~~in ~~included severance~~Salem, ~~benefits,~~New ~~payroll~~Hampshire ~~taxes~~ and ~~other costs associated with~~terminated ~~employee~~ 12 employees ~~terminations.~~in ~~The~~order ~~net~~to ~~charge~~reduce ~~for~~our ~~these~~cost ~~restructuring~~structure. ~~activities~~The employee interminations ~~the~~affected ~~first~~all ~~quarter~~areas of ~~2009~~ ~~was~~our $1operations.~~2 million.~~ OfThe components ~~this~~of ~~amount,~~the ~~approximately~~ $~~182~~804,000 ~~has~~restructuring ~~been~~charges included ~~in income from~~the ~~discontinued~~ following: ~~operations.~~$527,000 ~~During~~for ~~the~~severance, ~~first~~benefits ~~quarter~~and ofpayroll ~~2010~~taxes, $18,000 wefor ~~recorded~~the aincremental ~~$14,000~~fair ~~positive adjustment~~value as a result of ~~lower~~the acceleration ~~benefit~~of ~~charges~~certain instock ~~connection~~awards ~~with~~for ~~our~~the ~~first~~affected ~~quarter 2009~~personnel, ~~restructuring~~ $203,000 ~~plan~~for ~~than~~facilities ~~were~~charges ~~originally anticipated.~~related

~~During the second quarter of 2009, we undertook certain additional restructuring activities to~~ ~~reduce expenses. These terminations affected all areas of our operations. The components of the~~ ~~restructuring charge included severance, benefits, payroll taxes and other costs associated with~~ 20 the employee terminations. The net charge for these restructuring activities was $243,000 and all cash payments have been made. Of this amount, approximately $39,000 has been included in the discontinued operations line item on the consolidated statements of operations.

DuringTable the third quarter of 2009, we recorded an adjustment of $6,000 to the first quarter 2009 restructuring plan and an adjustment of $15,000 to the second quarter 2009 restructuring plan. Contents

~~During the third quarter of 2010, we undertook certain additional restructuring activities to~~ ~~reduce~~ to ~~expenses.~~exiting ~~The components of~~ the ~~restructuring~~lease ~~charge~~in ~~included severance~~Salem, ~~benefits,~~New ~~payroll taxes~~Hampshire and ~~other~~a ~~costs~~$56,000 ~~associated~~loss on ~~with~~disposal anof ~~employee~~fixed ~~termination.~~assets ~~The net charge~~ for ~~these restructuring~~impaired ~~activities~~leasehold ~~was $63,000~~ improvements and isequipment ~~expected~~related to ~~be substantially paid by~~ the ~~end~~closure of the ~~fourth~~ ~~quarter~~Salem ~~of 2010~~facility.

We incurred cash charges of approximately $730,000 related to our first quarter 2011 restructuring activities for severance, benefits, payroll taxes and facilities charges and the payments are expected to be substantially completed by the end of the fourth quarter of 2011. The charges related to the acceleration of stock awards and the loss on disposal of fixed assets are non-cash charges.

During the first quarter of 2010, we recorded a $14,000 positive adjustment as a result of lower benefit charges in connection with our first quarter 2009 restructuring plan than were originally anticipated. No adjustments were recorded during the first quarter of 2011.

Interest and other income (expense), net

	Three months ended September 30,									Nine months ended September 30,
	Three Months Ended
	2010			2009			% Change			2010			2009		% Change
	March 31,
	(In thousands)									(In thousands)
	2011			2010			% Change
Interest and other income (expense), net	$	(14	)	$	(3	)		(366.7	)%	$	(40	)	$	197		(120.3	)%
	(In thousands)
Interest and other income (expense), net	$	(7	)	$	(19	)		(63.2	)%

Interest and other income (expense), net consists primarily of interest income earned on our cash, cash equivalents and investments, ~~the amortization of the deferred gain from the sale of our Diamond Springs, California location which ended in June 2009,~~ gains and losses related to foreign currency transactions and interest expense imputed for a long-term restructuring liability.

The decrease in the dollar value of interest and other income (expense), net during ~~both~~ the three ~~and~~months ~~nine~~ended March 31, 2011, compared to the three months ended ~~September~~ March 3031, 2010 , was primarily the result of decreased ~~interest~~banking ~~earned~~fees onrelated to our investments ~~and increased interest expense for a long-term restructuring liability~~.

During the ~~third~~first ~~quarter~~three months of ~~2010~~2011, we earned $2015,000 of interest income, which was offset by interest expense for a long-term restructuring liability, ~~and~~ banking charges and losses on foreign currency transactions. During the ~~third quarter~~first ofthree ~~2009~~months of 2010, we earned $21,000 of interest income, which was offset by interest expense for a long-term restructuring liability, banking charges and losses on foreign currency transactions.

~~During~~ Our ~~the~~functional ~~first~~currency ~~nine~~is ~~months~~the ofU.S. Dollar. ~~2010,~~Transactions wein foreign ~~earned~~currencies ~~$66,000~~other ofthan ~~interest~~the ~~income~~functional ~~which~~currency ~~was offset by~~are ~~interest~~ remeasured ~~expense~~into ~~for~~the afunctional ~~long-term~~currency ~~restructuring~~at ~~liability,~~the ~~banking~~time ~~charges~~of ~~and losses on foreign~~the ~~currency transactions~~ transaction. ~~During~~Foreign ~~the~~currency ~~first~~transaction ~~nine~~losses ~~months~~consist of ~~2009,~~the remeasurement wegains ~~earned $175,000 of interest income~~ and ~~recognized~~losses ~~$76,000~~that ofarise ~~other~~from ~~income~~exchange ~~from~~rate fluctuations ~~the~~related ~~amortization~~to ofour ~~the~~operations ~~deferred~~in ~~gain~~Thailand. ~~from~~During the first ~~sale~~three months of ~~our~~ ~~Diamond~~2011 ~~Springs~~and 2010, ~~California~~we ~~location~~recorded ~~which~~foreign currency ~~were~~transaction ~~partially~~losses ~~offset~~of by$2,000 ~~banking charges~~ and ~~losses on~~$3,000, ~~foreign currency transactions~~respectively.

22 Provision for income taxes


	Three Months Ended
	March 31,
	2011		2010		% Change
	(In thousands)

Provision for income taxes	$	7	$	—		100.0	%

During the first three months of 2011, we recorded a $7,000 provision for income taxes for Thailand income taxes.

No other income tax expense (benefit) has been recorded because we have incurred operating losses that cannot be benefitted due to a full valuation allowance.

Our functional currency is the U.S. Dollar. Transactions in foreign currencies other than the functional currency are remeasured into the functional currency at the time of the transaction. Foreign currency transaction losses consist of the remeasurement gains and losses that arise from exchange rate fluctuations related to our operations in Thailand. During the third quarter of 2010, we recorded a foreign currency transaction gain of $1,000 and during the third quarter of 2009, we recorded a foreign currency transaction loss of $12,000. During the first nine months of 2010 and 2009, we recorded foreign currency transaction losses of $4,000 and $15,000, respectively.

Benefit from income taxes

	Three months ended September 30,								Nine months ended September 30,
	2010		2009			% Change			2010		2009			% Change
	(In thousands)								(In thousands)
Benefit from income taxes	$	—	$	(11	)		(100.0	)%	$	—	$	(32	)		(100.0	)%

During the third quarter of 2009, we recorded an income tax benefit of $11,000 due to a benefit from refundable research and development tax credits in the United States. During the nine months ended September 30, 2009, we recorded an income tax benefit of $32,000 due to a benefit from refundable research and development tax credits in the United States. No other income tax expense (benefit) has been recorded because we have incurred operating losses that cannot be benefitted due to a full valuation allowance.

Income from discontinued operations, net of tax

	Three months ended September 30,							Nine months ended September 30,
	2010		2009		% Change			2010		2009		% Change
	(In thousands)							(In thousands)
Income from discontinued operations, net of tax	$	—	$	41		(100.0	)%	$	—	$	17,571		(100.0	)%

On April 30, 2009, we entered into an Asset Purchase Agreement with Microsemi pursuant to which Microsemi purchased our Defense and Security RF module business including all of the outstanding capital stock of Endwave Defense Systems Incorporated. As consideration, Microsemi assumed certain liabilities associated exclusively with the Defense and Security RF module business and paid $28.0 million in cash.

We classified the results of the Business as a discontinued operation in our condensed consolidated statements of operations for all periods presented. During the nine months ended September 30, 2009, we recognized income from discontinued operations of $17.6 million net of tax expenses. The income was a result of the gain on sale of the discontinued operations of $19.6 million partially offset by a $2.0 million loss from the discontinued operations in 2009.

In the third quarter of 2009, based upon updated forecasts, we calculated a tax liability of $0 for the full year of 2009. As such, during the third quarter of 2009, we reversed the prior income tax accrual of $41,000 related to the sale.

Liquidity and Capital Resources

At ~~September~~March 3031, ~~2010~~2011, we had $9.83 million of cash and cash equivalents, $1411.9 million in short-term investments, working capital of $2822.68 million and no debt outstanding. The following table sets forth selected condensed consolidated statement of cash flows data:


	Three Months Ended
	March 31,
	2011			2010
	(In thousands)

Net cash used in operating activities	$	(2,120	)	$	(436	)
Net cash provided by investing activities		4,291			1,656
Net cash used in (provided by) financing activities		24			(36,156	)
Cash, cash equivalents and short-term investments at end of period	$	21,222		$	29,441

During the first three months of 2011, operating activities used $2.1 million of cash as compared to $436,000 during the first three months of 2010. Our net loss adjusted for depreciation and other non-cash items, was $3.4 million during the first three months of 2011 as compared to $663,000 during the first quarter of 2010. During the first three months of 2011, the remaining provision of $1.3 million in cash was primarily due to a $1.3 million decrease in accounts receivable, a $185,000 increase in accrued compensation, restructuring, other current and other long-term liabilities and a $178,000 decrease in other assets, which were partially offset by a $276,000 decrease in accounts payable and a $134,000 decrease in accrued warranty. During the first three months of 2010, the remaining provision of $227,000 in cash was primarily due to a $681,000 increase in accounts payable and a $375,000 decrease in accounts receivable which were partially offset by a $658,000 increase in inventories and a $291,000 decrease in accrued compensation, restructuring, other current and other long-term liabilities.

During the first three months of 2011, investing activities provided cash of $4.3 million as compared to $1.7 million of cash in the first three months of 2010. The primary source of cash during the first three months of 2011 was net sales and maturities of investments of $4.5 million, partially offset by the purchase of leasehold improvements and equipment of $163,000. The primary source of cash during the first three months of 2010 was net sales and maturities of investments of $2.0 million, partially offset by the purchase of leasehold improvements and equipment of $345,000.

During the first three months of 2011, financing activities provided $24,000 of cash primarily due to the proceeds from the exercise of employee stock options which were partially offset by payment of capital leases. Financing activities used $36.2 million of cash during the first three months of 2010 primarily due to the $36.2 million repurchase of our preferred stock.

At March 31, 2011, we had a net unrealized gain of $5,000 related to $9.5 million of investments in fourteen debt securities. The increase in the value of these investments is primarily related to changes in interest rates. The investments all mature during 2011 and we believe that we have the ability to hold these investments until the maturity date. We recorded a foreign currency transaction loss of $2,000 and $3,000 during the first three months of 2011 and 2010, respectively.

We believe that our existing cash and investment balances will be sufficient to meet our operating and capital requirements for at least the next 12 months. With the exception of operating leases discussed in the notes to the consolidated financial statements included in this report, we have not entered into any off-balance sheet financing arrangements and we have not established or invested in any variable interest entities. We have not guaranteed the debt or obligations of other entities or entered into options on non-financial assets.

The following table summarizes our future cash obligations for operating leases as of March 31, 2011:


	Payments Due by Period
			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
	(In thousands)

Contractual Obligations:
Operating lease obligations	$	490	$	418	$	72	$	—	$	—

	Nine months ended
	September 30,
	2010			2009
	(in thousands)
Net cash used in operating activities	$	(4,544	)	$	(2,480	)
Net cash (used in) provided by investing activities		(4,780	)		17,695
Net cash (used in) provided by financing activities		(36,000	)		560
Cash, cash equivalents, short-term investments at end of period	$	24,726		$	68,238

During the first nine months of 2010, operating activities used $4.5 million of cash as compared to $2.5 million in the first nine months of 2009. During the first nine months of 2010, our net loss, adjusted for depreciation and other non-cash items, used $4.8 million of cash as compared to the first nine months of 2009, which used $4.5 million of cash. During the first nine months of 2010, the remaining provision of $239,000 of cash was primarily due to a $836,000 increase in accounts payable, a $376,000 decrease in inventories and a $357,000 decrease in other assets, which were partially offset by a $632,000 increase in accounts receivable, a $420,000 decrease in accrued compensation and other liabilities and a $278,000 decrease in accrued warranty. During the first nine months of 2009, the remaining provision of $2.0 million of cash was primarily due to a $3.4 million decrease in inventories, a $528,000 increase in accounts payable and a $478,000 decrease in accounts receivable, which were partially offset by a $1.0 million increase in other assets, a $831,000 decrease in accrued compensation and other liabilities and a $631,000 decrease in accrued warranty.

During the first nine months of 2010, investing activities used $4.8 million of cash as compared to the first nine months of 2009 which provided $17.7 million of cash. The use of cash during the first nine months of 2010 was due to a net increase in investments of $3.8 million, and the purchase of $934,000 of property and equipment. The source of cash during the first nine months of 2009 was due to the $28.0 million proceeds from sale of our Defense and Security RF module business and a $600,000 decrease to restricted cash, which were partially offset by a net increase in investments of $10.6 million and the purchase of $289,000 of property and equipment.

Financing activities used $36.0 million of cash during the first nine months of 2010 primarily due to the $36.2 million repurchase of our preferred stock, which was partially offset by $167,000 of proceeds from the exercise of stock options and $74,000 of cash from the proceeds of stock issuance. Financing activities provided $560,000 of cash during the first nine months of 2009 primarily due to $331,000 of proceeds from the exercise of stock options and $242,000 of cash from the proceeds of stock issuance, which were partially offset by capital lease payments.

At September 30, 2010, we had a net unrealized gain of $3,000 related to $14.9 million of investments in 20 debt securities. The investments all mature through 2011 and we believe that we have the ability to hold these investments until their maturity dates. During the first nine months of 2010 and 2009, we recorded foreign currency transaction losses of $4,000 and $15,000, respectively.

In order to maintain and enhance our competitive position, we must be able to satisfy our customers’ short lead-times and rapidly-changing needs. As a result of these challenges, we may increase our raw materials and finished goods inventory so that they will be better-positioned to meet their customers’ demand. These potential increases in raw materials and finished goods may increase our working capital needs in the future.

	Payments Due by Period
			Less Than						More Than
	Total		1 Year		1 – 3 Years		3-5 Years		5 Years
	(In thousands)
Contractual Obligations:
Capital lease obligations, including interest	$	6	$	6	$	—		—	$	—
Operating lease obligations		872		539		318		15		—
Total	$	878	$	545	$	318	$	15	$	—

Recent Accounting Pronouncements

In ~~October 2009,~~July 2010 the Financial Accounting Standards Board (“FASB”) issued new standards ~~for~~which amend the ~~revenue~~ receivable ~~agreements~~disclosure ~~with~~requirements, ~~multiple~~including ~~deliverables.~~the ~~These~~credit ~~new~~quality of ~~standards~~financing ~~impact~~receivables and the ~~determination~~allowance offor ~~when~~credit losses. ~~the~~ These ~~individual~~standards ~~deliverables~~require ~~included~~additional indisclosures athat ~~multiple-element~~will facilitate ~~arrangement~~financial ~~may~~statement beuser’s ~~treated~~evaluation asof ~~separate~~the ~~units~~ nature of ~~accounting.~~credit ~~Additionally,~~risk ~~these~~inherent ~~new~~in ~~standards~~financing ~~modify~~receivables, ~~the~~how that ~~manner~~risk is analyzed in ~~which~~arriving at the ~~transaction consideration~~allowance isfor ~~allocated~~credit losses, ~~across~~and the ~~separately~~reason ~~identified~~for ~~deliverables~~any bychanges noin ~~longer permitting~~ the ~~residual~~allowance ~~method~~for credit ~~of allocating arrangement consideration~~losses. These new standards are required to be adopted for ininterim ~~the~~and ~~first~~annual ~~quarter~~reporting ofperiods ~~2011;~~beginning ~~however,~~on ~~early~~or ~~adoption~~after December 15, ~~is permitted~~2010. We doadopted ~~not expect~~ these ~~new~~ standards towhich ~~significantly~~did not have a material impact on our consolidated financial statements.

In October 2009, the FASB issued new standards for the accounting for certain revenue arrangements that include software elements. These new standards amend the scope of pre-existing software revenue guidance by removing from the guidance non-software components of tangible products and certain software components of tangible products. These new standards are required to be adopted in the first quarter of 2011; however, early adoption is permitted. We do not expect these new standards to significantly impact our consolidated financial statements.

In January 2010, the FASB issued new standards for fair value measurement and disclosures. These new standards require disclosures for significant transfers in and out of Level 1 and Level 2 fair value measurements and the reasons for the transfers and activity. For Level 3 fair value measurements, purchases, sales, issuances and settlements must be reported on a gross basis. Further, additional disclosures are required by class of assets or liabilities, as well as inputs used to measure fair value and valuation techniques. These standards were required to be adopted in the first quarter of 2010. We adopted these standards which did not have a material impact on our consolidated financial statements.

In February 2010, the FASB issued new standards that amend the subsequent event disclosure requirements for public company filers. An entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated. These standards were effective upon issuance and did not have a material impact on our consolidated financial statements.

In July 2010, the FASB issued new standards which amend the receivable disclosure requirements, including the credit quality of financing receivables and the allowance for credit losses. These standards require additional disclosures that will facilitate financial statement user’s evaluation of the nature of credit risk inherent in financing receivables, how that risk is analyzed in arriving at the allowance for credit losses, and the reason for any changes in the allowance for credit losses. These new standards are required to be adopted for interim and annual reporting periods beginning on or after December 15, 2010. We do not expect these new standards to significantly impact our consolidated financials.


Item 3.	*Quantitative and Qualitative Disclosures about Market Risk*

There have been no material changes in our reported market risks since our report on market risks in our Annual Report on Form 10-K for the year ended December 31, ~~2009~~2010 under the heading corresponding to that set forth above. Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. In order to reduce this interest rate risk, we usually invest our cash primarily in investments with short maturities. As of ~~September~~March 3031, ~~2010~~2011, our investments in our portfolio were classified as cash equivalents and short-term investments. The cash equivalents and short-term investments consisted primarily of United States ~~treasury notes~~Treasury note, United States government agency notes, United States government money market funds, ~~corporate~~ ~~bonds~~commercial papers and ~~commercial~~corporate ~~paper~~notes. Since our investments consist of cash equivalents and short-term investments, a change in interest rates would not have a material effect on our financial condition or results of operations. Declines in interest rates over time will, however, reduce interest income.

25 Currently, all sales to international customers are denominated in United States dollars and, accordingly we are not exposed to foreign currency rate risks in connection with these sales. However, if the dollar were to strengthen relative to other currencies that could make our products less competitive in foreign markets and thereby lead to a decrease in revenues attributable to international customers.

~~Table~~ We currently pay a number of ~~Contents~~expenses related to our Thai personnel and office in Thai Bhat. During the first quarter of 2011, the total payments made in Thai Bhat were $297,000 and we recorded a related foreign currency transaction loss of $2,000. During the first quarter of 2010, the total payments made in Thai Bhat were $199,000 and we recorded a related foreign currency transaction loss of $3,000.

have a material effect on our financial condition or results of operations. Declines in interest rates over time will, however, reduce interest income.

Currently, all sales to international customers are denominated in United States dollars and, accordingly, we are not exposed to foreign currency rate risks in connection with these sales. However, if the dollar were to strengthen relative to other currencies that could make our products less competitive in foreign markets and thereby lead to a decrease in revenues attributable to international customers.

We currently pay a number of expenses related to our Thai personnel and office in Thai Bhat. During the first nine months of 2010, the total payments made in Thai Bhat were $634,000 and we recorded a related foreign currency transaction loss of $4,000. During the first nine months of 2009, the total payments made in Thai Bhat were $608,000 and we recorded a related foreign currency transaction loss of $15,000.


Item 4.	*Controls and Procedures*


(a)	Evaluation of disclosure controls and procedures.

Based on their evaluation as of the end of the period covered by this Quarterly Report on ~~Form~~ Form 10-Q, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, ~~(the~~or “the Exchange Act”)) were effective as of the end of the period covered by by this report.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and our chief executive officer and our chief financial officer have concluded that these controls and procedures are effective at the “reasonable assurance” level. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can ~~provide~~ provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.


(b)	Changes in internal controls over financial reporting.

There were no changes in our internal controls over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION


Item 1.	*Legal Proceedings*

On October 31, 2008, we filed a complaint with the Canadian Superior Court in Montreal, Quebec alleging that Advantech Advanced Microwave Technologies Inc., or Advantech, the parent company of Allgon Microwave Corporation AB, or Allgon, had breached its contractual obligations with Endwave and owes us $994,500, ~~which~~for ~~includes~~ amounts ~~owed~~outstanding under ~~the~~a note receivable and for ~~purchased~~ purchased inventory and authorized ~~and~~finished ~~accepted~~goods purchase orders ~~resulting in shippable finished goods~~. We cannot predict the outcome of these proceedings.

In a related action, we have filed a creditor’s claim for $994,500 against Allgon in the composition of creditors’ proceedings now pending in a Stockholm, Sweden bankruptcy court. Although a recovery under Swedish bankruptcy law is not assured, if it occurs any recovery will be a set-off in the Montreal action against Allgon’s parent, Advantech.

The Company is not a party to any other material legal proceeding which is expected to have a material adverse effect on our consolidated financial statements or results of operations. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. These claims, even if not meritorious, could result in the expenditure of significant financial resources and diversion of management efforts.


Item 1A.	*Risk Factors*

You should consider carefully the following risk factors as well as other information in this report before investing in any of our securities. If any of the following risks actually occur, our business, operating results and financial condition could be adversely affected. This could cause the market price of our common stock to decline, and you may lose all or part of your investment.

** Indicates risk factor has been updated since our Annual Report on Form 10-K for the year ended December 31, ~~2009~~2010.

Risks Relating to the Merger with GigOptix

Because the conversion ratio is not adjustable based on the market price of either GigOptix or Endwave common stock, you cannot be sure of the value of the merger consideration that you will receive.

The number of shares of common stock to be issued by GigOptix in the merger is not adjustable based on the market price of either GigOptix or Endwave common stock and the merger agreement may not be terminated as a result of any such changes. The market value of the shares of GigOptix common stock that Endwave stockholders will be entitled to receive when the merger is completed will depend on the market value of shares of GigOptix common stock at that time, which could vary significantly from the market value of shares of GigOptix common stock on the date the merger agreement was executed, the date of this report or the date of the special meeting. Accordingly, at the time of the special meeting, Endwave stockholders will not know or be able to calculate the market value of the consideration they would receive upon completion of the merger. These variations may result from, among other factors, changes in the business, operations, results and prospects of GigOptix, market expectations of the likelihood that the merger will be completed and the timing of completion, the prospects of post-merger operations, the effect of any conditions or restrictions imposed on or proposed with respect to GigOptix by regulatory agencies and authorities, general market and economic conditions and other factors.

GigOptix may fail to realize the anticipated benefits of the merger.**

GigOptix’ future success will depend in significant part on its ability to utilize Endwave’s cash and cash equivalents and to realize the cost savings, operating efficiencies and new revenue opportunities that it expects to result from the integration of the GigOptix and Endwave businesses. GigOptix’ operating results and financial condition will be adversely affected if GigOptix is unable to integrate successfully the operations of GigOptix and Endwave, fails to achieve or achieve on a timely basis such cost savings, operating efficiencies and new revenue opportunities, or incurs unforeseen costs and expenses or experiences unexpected operating difficulties that offset anticipated cost savings or Endwave’s cash and cash equivalents, in whole or in part. In particular, the integration of GigOptix and Endwave may involve, among other matters, integration of sales, marketing, billing, accounting, manufacturing, engineering, management, personnel, payroll, quality control, regulatory compliance, network

infrastructure and other systems and operating hardware and software, some of which may be incompatible and therefore may need to be replaced.

The cost savings estimates expected to result from the merger do not include one-time adjustments that GigOptix will record in connection with the merger. In addition, the estimates are based upon assumptions by the managements of GigOptix and Endwave concerning a number of factors, including operating efficiencies, the consolidation of functions, and the integration of operations, systems, marketing methods and procedures. These assumptions are uncertain and are subject to significant business, economic and competitive conditions that are difficult to predict and often beyond the control of management.

Endwave will be subject to business uncertainties and contractual restrictions while the merger is pending that could adversely affect its business.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on Endwave and consequently on GigOptix following the merger. These uncertainties may impair each company’s ability to attract, retain and motivate key personnel until the merger is completed and for a period of time thereafter, and could cause customers, suppliers and others that deal with Endwave to seek to change existing business relationships with Endwave. Employee retention may be particularly challenging during the pendency of the merger, as employees may experience uncertainty about their future roles with Endwave. If, despite Endwave’s retention efforts, key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Endwave, Endwave’s business and consequently the business of GigOptix following the merger could be seriously harmed.

Failure to complete the merger could negatively affect GigOptix and Endwave.

If the merger is not completed for any reason, GigOptix and Endwave may be subject to a number of material risks, including the following:


	•	the companies will not realize the benefits expected from becoming part of a combined company, including a potentially enhanced competitive and financial position;

	•	the trading price of each company’s common stock may decline to the extent that the current market price of the common stock reflects a market assumption that the merger will be completed; and

	•	some costs related to the merger, such as legal, accounting and some financial advisory fees, must be paid even if the merger is not completed.

Endwave’s ability to pursue alternatives to the merger is restricted.

The merger agreement contains customary “no-solicitation” covenants pursuant to which neither Endwave nor GigOptix is permitted to solicit any alternative acquisition proposals, provide any information to any person in connection with any alternative acquisition proposal, participate in any discussions or negotiations relating to any alternative acquisition proposal, approve, endorse or recommend any alternative acquisition proposal, or enter into any agreement relating to any alternative acquisition proposal. The “no-solicitation” provision is subject to certain exceptions that permit the board of directors of each of Endwave and GigOptix, as the case may be, to comply with their respective fiduciary duties, which, under certain circumstances, would enable Endwave or GigOptix, as the case may be, to provide information to, and engage in discussions or negotiations with, third parties with respect to alternative acquisition proposals. Upon termination of the merger agreement under certain circumstances, Endwave may be obligated to pay GigOptix a termination fee of $1,000,000 plus certain reasonable documented expenses of GigOptix. These provisions could discourage a potential acquiror that might have an interest in acquiring all or a significant part of Endwave from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than the consideration GigOptix proposes to pay in the merger or might result in a potential competing acquiror proposing to pay a lower per share price to acquire Endwave than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable to GigOptix in certain circumstances.

Endwave stockholders will have reduced ownership and voting interests in GigOptix and will be able to exercise less influence over management following the merger.**

Immediately after the merger, based on the conversion ratios contained in the merger agreement, the pre-merger holders of Endwave common stock and restricted stock units will own that number of shares equal to approximately 42.5% of the outstanding stock of the combined company, less 42.5% of the shares issued in the merger in respect of Endwave stock options. Consequently, stockholders of Endwave will be able to exercise less influence over the management and policies of GigOptix than they currently exercise over the management and policies of Endwave.

There may be a limited public market for shares of GigOptix common stock, and the ability of its stockholders to dispose of their common stock may be limited.**

GigOptix common stock has been traded on the OTC Bulletin Board since December 2008. GigOptix cannot foresee the degree of liquidity that will be associated with its common stock. A holder of its common stock may not be able to liquidate his, her or its investment in a short time period or at the market prices that currently exist at the time the holder decides to sell. The market price for GigOptix’ common stock may fluctuate in the future, and such volatility may bear no relation to its performance.

Substantial future sales of GigOptix’ common stock in the public market could cause GigOptix’ stock price to fall.**

The sale of GigOptix’ outstanding common stock or shares issuable upon exercise of options or warrants, or the perception that such sales could occur, could cause the market price of GigOptix common stock to decline. As of April 28, 2011, GigOptix had approximately 12,374,947 shares of common stock, options to purchase 7,384,549 shares of GigOptix’ common stock and warrants to purchase approximately 2,257,159 shares of GigOptix’ common stock outstanding. These shares of common stock, including shares of common stock issued upon exercise of options and warrants, have either been registered under the Securities Act and as such are freely tradable without restriction or are otherwise freely tradeable without restriction (subject to the requirements of Rule 144 under the Securities Act), unless the shares are purchased by “affiliates” as that term is defined in Rule 144 under the Securities Act. Any shares purchased by an affiliate may not be resold except pursuant to an effective registration statement or an applicable exemption from registration, including an exemption under Rule 144 of the Securities Act. In addition, one of the stockholders of GigOptix, the DBSI Liquidating Trust, holds 1,715,161 shares of GigOptix stock and warrants to purchase 1,000,000 shares of GigOptix’ common stock. GigOptix filed a Registration Statement on Form S-1 for the resale registration of the 1,715,161 shares held directly by the DBSI Liquidity Trust, and to the extent it is permitted to do so, GigOptix will file an amendment to the registration statement for the purpose of registering the 1,000,000 shares underlying the warrants. GigOptix may issue additional shares of GigOptix common stock in the future in private placements, public offerings or to finance mergers or acquisitions.

The exercise of options and warrants and other issuances of shares of common stock or securities convertible into common stock will dilute the interest of GigOptix stockholders.**

As of April 28, 2011, there were outstanding options to purchase an aggregate of 7,384,549 shares of GigOptix common stock at a weighted-average exercise price of $2.66 per share, of which options to purchase 2,480,935 shares at a weighted-average exercise price of $3.58 per share were exercisable as of such date. As of April 28, 2011, there were warrants outstanding to purchase 2,257,159 shares of GigOptix common stock at a weighted average exercise price of $5.86 per share. Certain of these warrants contain adjustment provisions that will reset the exercise price per share of such warrants to any lower price than the existing exercise price at which GigOptix issues shares of its common stock in the future for so long as those warrants are outstanding. The exercise of options and warrants at prices below the market price of GigOptix common stock could adversely affect the price of shares of GigOptix common stock. Additional dilution may result from the issuance of shares of GigOptix capital stock in connection with acquisitions or in connection with financing efforts.

Any issuance of GigOptix common stock that is not made solely to then-existing stockholders proportionate to their interests, such as in the case of a stock dividend or stock split, will result in dilution to each stockholder by reducing his, her or its percentage ownership of the total outstanding shares. Moreover, if GigOptix issues options or warrants to purchase its common stock in the future and those options or warrants are exercised, or if GigOptix issues restricted stock, stockholders may experience further dilution.

In addition, certain warrants to purchase shares of GigOptix’ common stock currently contain an exercise price above the current market price for the common stock. These warrants are known as “above-market” warrants. As a result, it is possible that the holders of these warrants may choose not to exercise them prior to their expiration, in which case GigOptix may not realize any proceeds from their exercise.

The combined company will not be able to fully utilize Endwave’s current net operating loss carryforwards. **

As of December 31, 2010, Endwave had a federal net operating loss carryforward of approximately $205.6 million, federal research and development tax credit carryforwards of approximately $2.2 million and a California net operating loss carryforward of approximately $82.2 million. These amounts, if not subject to limitation, would be available to offset the income of Endwave (and, after the merger, GigOptix) that would otherwise be subject to federal and California taxation. However, federal and state net operating loss carryforwards are and will continue to be subject to limitations based on ownership changes of Endwave as well as the combined company after the merger. Due to ownership changes that have occurred to date, only $29.9 million of Endwave’s federal net operating loss carryforwards currently may be used to offset Endwave’s taxable income, which amount would increase (to the extent not utilized) by $4.4 million in 2011 and 2012 and $1.5 million in subsequent tax years through 2027, for total of $61.8 million. The consummation of the merger will result in an additional limitation on the ability to utilize Endwave’s current net operating loss carryforwards. Based on Endwave’s most recent Section 382 analysis and Endwave’s estimate of the value of the shares to be issued in the merger and its balance sheet as of the closing of the merger, and assuming no further ownership changes until the date the merger is consummated, Endwave believes the completion of the merger with GigOptix would have the effect of decreasing the amount of realizable federal net operating loss carryforwards to approximately $400,000 per year, which would have the effect of reducing Endwave’s total realizable federal net operating loss carryforwards from approximately $61.8 million to $7.8 million.

Risks Relating to Our Business

We have had a history of losses and may not be profitable in the future.**

We had a net loss from continuing operations of $23.09 million ~~for~~in ~~the~~first ~~third~~ quarter of ~~2010~~2011. We also had a net loss from continuing operations of $108.61 million and $410.06 million for the years ended December 31, ~~2009~~ 2010 and ~~2008~~2009, respectively. There is no guarantee that we will achieve or maintain profitability in the future.

We depend on a small number of key customers in the mobile communication industry for ~~substantially~~a ~~all~~significant portion of our revenues. AsIf ~~this industry~~we lose any of our major customers or there is ~~negatively~~any material ~~impacted~~reduction byin ~~the~~orders ~~global~~for ~~economic~~our ~~downturn~~products from any of these customers, our ~~revenues~~business, financial condition and ~~our~~results ~~profitability~~of ~~could~~ operations ~~continue~~would tobe ~~suffer~~adversely affected. In addition, consolidation in this industry could result in delays or cancellations of orders for our products, adversely impacting our results of operations.**

~~The~~ We ~~global~~depend, ~~economic~~and ~~downturn~~expect ~~has~~to ~~impacted~~continue ~~the~~to depend, on a relatively small number of mobile communication ~~industry~~customers for a significant part of our revenues. IfThe ~~the~~loss ~~downturn~~of any of our major customers or any material reduction in ~~the~~orders ~~mobile~~from ~~communication~~any ~~industry~~such ~~persists,~~customers ~~our~~would have ~~revenues~~a ~~will~~material ~~continue~~adverse toeffect ~~suffer~~on our business, financial condition and weresults ~~may~~of ~~be forced~~operations. toFor ~~write~~the ~~off~~three ~~excess~~months ~~inventories~~ended March 31, ~~uncollectible~~2011, ~~accounts~~two ~~receivable~~customers ~~and~~each ~~abandoned~~accounted orfor ~~obsolete~~greater ~~equipment~~ than 10% of total revenues and ~~attempt~~combined tothey ~~reduce~~accounted for 92% of our ~~operating~~total ~~expenses~~revenues, ~~through~~the ~~additional~~larger ~~restructuring~~of ~~activities~~which was Nokia Siemens Networks which accounted for 79% of our total revenues. For the We three ~~cannot~~months ~~guarantee~~ended ~~that~~March 31, we2010, ~~will~~three becustomers ~~able~~each accounted tofor ~~reduce~~greater ~~operating~~than ~~expenses~~10% toof atotal ~~level~~revenues ~~commensurate~~and ~~with~~combined ~~the~~ they ~~lower~~accounted for 94% of our total revenues, ~~resulting~~the ~~from~~largest ~~such~~of which awas ~~prolonged~~Nokia ~~industry~~Siemens ~~downturn~~Networks, which accounted for 45% of our total revenues.

The mobile communication industry has undergone significant consolidation in the past few years. For example, during April 2007, Nokia and Siemens merged their mobile communication network businesses. The acquisition of one of our major customers in this market, or one of the communications service providers supplied by one of our major customers, could result in delays or cancellations of orders for our products and, accordingly, delays or reductions in our anticipated revenues and reduced profitability or increased net losses.

We depend on a small number of key customers in the mobile communication industry for a significant portion of our revenues. If we lose any of our major customers or there is any material reduction in orders for our products from any of these customers, our business, financial condition and results of operations would be adversely affected.**

We depend, and expect to continue to depend, on a relatively small number of mobile communication customers for a significant part of our revenues. The loss of any of our major customers or any material reduction in orders from any such customers, would have a material adverse effect on our business, financial condition and results of operations. For the three months ended September 30, 2010, three customers each accounted for greater than 10% of total revenues and combined they accounted for 92% of our total revenues. For the three months ended September 30, 2009, three customers each accounted for greater than 10% of total revenues and combined they accounted for 91% of our total revenues. In the first nine months of 2010, three customers each accounted for greater than 10% of total revenues and combined they accounted for 93% of our total revenues. In the first nine months of 2009, two customers accounted for 90% of our total revenues and no other customer accounted for more than 10% of our total revenues.

The ~~current~~mobile ~~turmoil~~communication industry has undergone significant consolidation in the ~~global~~past ~~economy~~few ~~could~~years. ~~adversely~~For ~~impact~~example, during January 2011, Ceragon Networks Ltd. entered into a definitive agreement to merge with Nera Networks AS. The acquisition of one of our major ~~operations~~customers in this market, or one of the communications service providers supplied by one of our major customers, could result in delays or cancellations of orders for our products and, ~~financial~~accordingly, delays or reductions in our anticipated ~~results~~ revenues and reduced profitability or increased net losses.**

Over the past several years, global economic conditions have continued to remain weak and uncertain. For example, credit continues to be severely restricted. This restriction in credit has materially impacted our operations and financial results and we expect it to continue to do so. Our customers often rely on credit markets to finance the build-out of their networks and systems. With the current restriction in credit markets, capital may not be available to our customers or may only be available at unfavorable terms. Without appropriate capital, our customers may have difficulty funding their on-going operations and may reduce their orders for our products. This could significantly impact our operations and financial results. Additionally, our vendors may rely on credit markets to finance their operations. With the current restriction in credit markets, capital may not be available to our vendors or may only be available at unfavorable terms. Without appropriate capital, our vendors may have difficulty funding their on-going operations and may not be able to fulfill requirements for their products. This could significantly impact our operations and financial results through a reduction in our revenues.

Our semiconductor product line will require us to incur significant expenses and may not be successful.**

Our ~~new~~ semiconductor product line will require us to incur expenses to design, test, manufacture and market these ~~new~~ products including the purchase of inventory, supplies and capital equipment. The future success of our semiconductor product line will depend on our ability to develop these ~~new~~ products in a cost-effective and timely manner and to market them effectively. The development of our products is complex, and from time to time we may experience delays in completing the development and introduction of our new products or fail to efficiently manufacture such products in the early production phase. The semiconductor product line may have ~~little~~ little immediate impact on our revenue because a new ~~standard~~ product may not generate meaningful revenue. In the meantime, we will have incurred expenses to design, produce and market the ~~products~~product, and we we may not recover these expenses, and thus adversely affect operating results, if demand for the product fails to reach forecasted levels ~~which may adversely affect our operating results~~.

Because of the shortages of some components and our dependence on single source suppliers and custom components, we may be unable to obtain an adequate supply of components of sufficient quality in a timely fashion, or we may be required to pay higher prices or to purchase components of lesser quality.**.

Many of our products are customized and must be qualified ~~with~~by our customers. This means that we cannot change components in our products easily without the risks and delays associated with requalification. Accordingly, while a number of the components we use in our products are made by multiple suppliers, we may effectively have single source suppliers for some of these components. Further, we have recently experienced extended lead times for many components.

In We ~~addition, we~~ currently purchase a large number of components, some from single source suppliers, including, but not limited to:

• semiconductor devices; • application-specific monolithic microwave integrated circuits; • voltage regulators; • passive components; • unusual or low usage components; • surface mount components compliant with the EU’s Restriction of Hazardous Substances, or RoHS, Directive; • custom metal parts; • high-frequency circuit boards; and • custom connectors.

• Any ~~application-specific~~delay ~~monolithic~~or ~~microwave~~interruption ~~integrated~~in ~~circuits;~~the supply of these or other components could impair our ability to manufacture and deliver our products, harm our reputation and cause a reduction in our revenues. In addition, any increase in the cost of the components that we use in our products could make our products less competitive and lower our margins. In the past, we suffered from shortages of and quality issues with various components. These shortages and quality issues adversely impacted our product revenues and could reappear in the future. Our single source suppliers could enter into exclusive agreements with or be acquired by one of our competitors, increase their prices, refuse to sell their products to us, discontinue products or go out of business. Even to the extent alternative suppliers are available to us and their components are qualified by our customers on a timely basis, identifying them and entering into

• voltage-controlled oscillators;

• voltage regulators;

• passive components;

• unusual or low usage components;

• surface mount components compliant with the EU’s Restriction of Hazardous Substances, or RoHS, Directive;

• custom metal parts;

• arrangements ~~high-frequency~~with ~~circuit~~them ~~boards;~~may be difficult and time consuming, and they may not meet our quality standards. We may not be able to obtain sufficient quantities of required components on the same or substantially the same terms.

• Competitive conditions ~~custom~~often ~~connectors~~require us to reduce prices and, as a result, require us to reduce our costs in order to be profitable.**

~~Any~~ In ~~delay~~the orpast, ~~interruption~~we inreduced the ~~supply~~prices of ~~these~~many orof ~~other components could impair~~ our ~~ability~~ to telecommunication ~~manufacture and deliver our~~ products, ~~harm our reputation and cause a reduction~~ in ~~our~~order ~~revenues. In~~to ~~addition,~~remain ~~any increase in the cost of the components that we use in our products could make our products less~~ competitive and ~~lower our margins. In the past,~~ we ~~suffered from shortages of and~~ ~~quality~~ expect ~~issues~~market ~~with~~conditions ~~various~~will ~~components.~~cause ~~These~~us ~~shortages~~to ~~and~~reduce ~~quality issues adversely impacted~~ our prices ~~product~~ again ~~revenues and could reappear~~ in the future. ~~Our~~In ~~single~~order ~~source~~to ~~suppliers~~reduce ~~could enter into~~our ~~exclusive~~ per-unit cost ~~agreements with or be acquired by one~~ of ~~our~~product ~~competitors~~revenues, ~~increase~~we ~~their~~must ~~prices,~~continue ~~refuse~~ to ~~sell~~design ~~their~~and re-design products to ~~us,~~utilize ~~discontinue~~lower ~~products~~cost ormaterials goand ~~out~~improve our ofmanufacturing ~~business~~efficiencies. ~~Even~~The tocombined ~~the~~effects ~~extent alternative~~of ~~suppliers are available to us and their components are qualified with our customers on~~these a actions ~~timely basis, identifying them and entering into arrangements with them~~ may be ~~difficult~~insufficient ~~and~~to ~~time consuming,~~achieve ~~and~~the ~~they~~cost ~~may~~reductions needed ~~not meet our quality standards. We may not be able~~ to ~~obtain~~maintain ~~sufficient quantities~~or ofincrease ~~required~~our ~~components~~gross onmargins ~~the same~~ or ~~substantially the same terms~~achieve profitability.

Competitive conditions often require us to reduce prices and, as a result, we need to reduce our costs in order to be profitable.**

Over the past year, we reduced the prices of many of our telecommunication products in order to remain competitive and we expect market conditions will cause us to reduce our prices in the future. In order to reduce our per-unit cost of product revenues, we must continue to design and re-design products to require lower cost materials and improve our manufacturing efficiencies. The combined effects of these actions may be insufficient to achieve the cost reductions needed to maintain or increase our gross margins or achieve profitability.

Our operating results may be adversely affected by substantial quarterly and annual fluctuations and market downturns.

Our revenues, earnings and other operating results have fluctuated in the past and our revenues, earnings and other operating results may fluctuate in the future. These fluctuations are due to a number of factors, many of which are beyond our control. These factors include, among others, global economic conditions, overall growth in our target markets, the ability of our customers to obtain adequate capital, U.S. export law changes, changes in customer order patterns, customer consolidation, availability of components from our suppliers, the gain or loss of a significant customer, changes in our product mix and market acceptance of our products and our customers’ products. These factors are difficult to forecast, and these, as well as other factors, could materially and adversely affect our quarterly or annual operating results.

~~Implementing~~ We rely ~~our~~on ~~acquisition~~the ~~strategy~~semiconductor ~~could~~foundry ~~result~~operations inof ~~dilution~~third-party semiconductor foundries to ~~our~~manufacture ~~stockholders~~the ~~and~~integrated ~~operating~~circuits ~~difficulties~~ sold ~~leading~~directly to aour ~~decline~~customers and contained in ~~revenues~~our products. The loss of our relationship with any of these foundries without adequate notice would adversely impact our ability to fill customer orders and ~~operating~~could ~~profit~~damage our customer relationships.

We intend to pursue acquisitions in our markets that we believe will be beneficial to our business. The process of investigating, acquiring and integrating any business into our business and operations is risky and may create unforeseen operating difficulties and expenditures. The areas in which we may face difficulties include:

• diversion of our management from the operation of our core business;

• assimilating the acquired operations and personnel;

• integrating information technology and reporting systems;

• retention of key personnel;

• retention of acquired customers; and

• implementation of controls, procedures and policies in the acquired business.

In addition to the factors set forth above, we may encounter other unforeseen problems with acquisitions that we may not be able to overcome. Future acquisitions may require us to issue shares of our stock or other securities that dilute our other stockholders, expend cash, incur debt, assume liabilities, including contingent or unknown liabilities, or create additional expenses related to write-offs or amortization of intangible assets with estimated useful lives, any of which could materially adversely affect our operating results.

We rely on the semiconductor foundry operations of third-party semiconductor foundries to manufacture the integrated circuits sold directly to our customers or contained in our products. The loss of our relationship with any of these foundries without adequate notice would adversely impact our ability to fill customer orders and could damage our customer relationships.

We utilize both industry standard semiconductor components and our own custom-designed semiconductor devices. However, we do not own or operate a semiconductor fabrication facility, or foundry, and rely on a limited number of third parties to produce our custom-designed components. If any of our semiconductor suppliers is unable to deliver semiconductors to us in a timely fashion, the resulting delay could severely impact our ability to fulfill customer orders and could damage our relationships with our customers. In addition, the loss of our relationship with or our access to any of the semiconductor foundries we currently use for the fabrication of custom designed components and any resulting delay or reduction in the supply of semiconductor devices to us, would severely impact our ability to fulfill customer orders and could damage our relationships with our customers.

We may not be successful in forming alternative supply arrangements that provide us with a sufficient supply of gallium arsenide devices. Gallium arsenide devices are used in a substantial portion of the products we manufacture. Because there are a limited number of semiconductor foundries that use the particular process technologies we select for our products and that have sufficient capacity to meet our needs, using alternative or additional semiconductor foundries would require an extensive qualification process that could prevent or delay product shipments and revenues. We estimate that it may take up to six months to shift production of a given semiconductor circuit design to a new foundry.

We rely heavily on a Thailand facility of HANA, a contract manufacturer, to produce our RF modules and to package our microwave and millimeter wave integrated circuits. If HANA is unable to produce or package these modules inand circuits in sufficient quantities or with adequate quality, or it chooses to terminate our manufacturing arrangement, we will be forced to find an alternative manufacturer and may not be able to fulfill our production commitments to our customers, which could cause sales to be delayed or lost and could harm our reputation.**

We outsource the assembly and testing of our products to a Thailand facility of HANA, a contract manufacturer. We plan to continue this arrangement as a key element of our operating strategy. If HANA does not provide ~~us with high quality products and services in a timely manner,~~ terminates its relationship with us, or is unable to produce our products due to financial difficulties or political instability we may be unable to obtain a satisfactory replacement to fulfill customer orders on a timely basis. In the event of an interruption of supply from HANA, sales of our products could be delayed or lost and our reputation could be harmed. Our latest manufacturing agreement with HANA expires in October 2011, but will renew automatically for successive one-year periods unless either party notifies the other of its desire to terminate the agreement at least one year prior to the expiration of the term. No such notification has been sent to or received from HANA. In addition, either party may terminate the agreement without cause upon 365 days prior written notice to the other party, and either party may terminate the agreement if the non-terminating party is in material breach and does not cure the breach within 30 days after notice of the breach is given by the terminating party. There can be no guarantee that HANA will not seek to terminate its agreement with us.

us with high quality products and services in a timely manner, terminates its relationship with us, or is unable to produce our products due to financial difficulties or political instability we may be unable to obtain a satisfactory replacement to fulfill customer orders on a timely basis. In the event of an interruption of supply from HANA, sales of our products could be delayed or lost and our reputation could be harmed. Our latest manufacturing agreement with HANA expires in October 2011, but will renew automatically for successive one-year periods unless either party notifies the other of its desire to terminate the agreement at least one year prior to the expiration of the term. No such notification has been sent to or received from HANA. In addition, either party may terminate the agreement without cause upon 365 days prior written notice to the other party, and either party may terminate the agreement if the non-terminating party is in material breach and does not cure the breach within 30 days after notice of the breach is given by the terminating party. There can be no guarantee that HANA will not seek to terminate its agreement with us.

A prior misclassification of certain products under the Export Administration Regulations may result in liability for Endwave.**

In December 2009, we sought and obtained a formal commodity classification from the Department of Commerce’s Bureau of Industry and Security, or BIS, regarding certain amplifier products rated to operate between 34 and 40 GHz. Prior to our request, we believed based on our internal review that the products and related technology were properly classified as EAR99 and that export licenses were not required to any destination in which we had operations or sold products. In response to our commodity classification request, however, BIS determined that our MMIC amplifiers rated to operate between 34 and 40 GHz are classified under Export Classification Control Number, or ECCN, 3A001, which controls MMIC power amplifiers rated for operation at frequencies exceeding 31.8 GHz up to and including 37.5 GHz without regard to power output or fractional bandwidth limits. Products falling under ECCN 3A001 are controlled for national security purposes and are subject to export licensing requirements for most countries. Similarly, technology for the development or production of items controlled under ECCN 3A001 falls under ECCN 3E001. Exports of such technology are likewise controlled for national security purposes and subject to restrictive licensing requirements. License exceptions are available under the Export Administration Regulations for items and technology classified under ECCNs 3A001 and 3E001, respectively.

In March 2011, we submitted a voluntary self-disclosure to BIS detailing the affected transactions. In May 2011, we received BIS authorization to release the affected products. Because we were unable to ship certain transceiver products in the first quarter while the authorization was pending, our revenues were adversely affected in the first quarter. Even though BIS approval was obtained, we may be responsible for monetary penalties for the misclassification.

Our products may contain component, manufacturing or design defects or may not meet our customers’ performance criteria, which could cause us to incur significant repair expenses, harm our customer relationships and industry reputation, and reduce our revenues and profitability.

We have experienced manufacturing quality problems with our products in the past and may have similar problems in the future. As a result of these problems, we have replaced components in some products, or replaced the product, in accordance with our product warranties. Our product ~~warranties~~ warranties typically last twelve to thirty months. As a result of component, manufacturing or design defects, we may be required to repair or replace a substantial number of products under our product warranties, incurring significant expenses as a result. Further, our customers may discover latent defects in our integrated circuits and module products that were not apparent when the warranty period expired. These latent defects may cause us to incur significant repair or replacement expenses beyond the normal warranty period. In addition, any component, manufacturing or design defect could cause us to lose customers or revenues or damage our customer relationships and industry reputation.

We may not be able to design our products as quickly as our customers require, which could cause us to lose sales and may harm our reputation.

~~months. As a result of component~~ timeframe, ~~manufacturing or design defects,~~ we may belose ~~required~~a ~~to repair~~potential orsale. ~~replace~~Our aability ~~substantial~~to ~~number of~~ design products ~~under~~within ~~our~~the ~~product~~time ~~warranties,~~constraints ~~incurring significant~~demanded ~~expenses~~by as a ~~result.~~customer ~~Further,~~will depend ~~our~~on ~~customers~~the ~~may~~number ~~discover~~of ~~latent~~product ~~defects~~design inprofessionals ~~our~~who are ~~integrated~~ available ~~circuits~~to ~~and~~focus ~~module~~on ~~products~~ that ~~were~~customer’s ~~not~~project ~~apparent~~and ~~when~~ the ~~warranty period expired.~~ ~~These~~ availability ~~latent~~of ~~defects~~professionals ~~may~~with ~~cause~~the usrequisite tolevel ~~incur~~of expertise ~~significant~~is ~~repair~~limited. orWe ~~replacement~~have, ~~expenses~~in ~~beyond~~ the ~~normal~~ ~~warranty period. In addition~~past, ~~any~~expended ~~component,~~significant resources ~~manufacturing~~on orresearch and design ~~defect~~efforts ~~could~~on ~~cause~~potential uscustomer to products ~~lose~~that ~~customers~~did ornot ~~revenues~~result orin ~~damage~~additional ~~our customer relationships and industry reputation~~revenue.

We may not be able to design our products as quickly as our customers require, which could cause us to lose sales and may harm our reputation.

Existing and potential customers typically demand that we design products for them under difficult time constraints. In the current market environment, the need to respond quickly is particularly important. If we are unable to commit the necessary resources to complete a project for a potential customer within the requested timeframe, we may lose a potential sale. Our ability to design products within the time constraints demanded by a customer will depend on the number of product design professionals who are available to focus on that customer’s project and the availability of professionals with the requisite level of expertise is limited. We have, in the past, expended significant resources on research and design efforts on potential customer products that did not result in additional revenue.

Each of our communication products is designed for a specific range of frequencies. Because different national governments license different portions of the frequency spectrum for the mobile communication market, and because communications service providers license specific frequencies as they become available, in order to remain competitive we must adapt our products rapidly to use a wide range of different frequencies. This may require the design of products at a number of different frequencies simultaneously. This design process can be difficult and time consuming, could increase our costs and could cause delays in the delivery of products to our customers, which may harm our reputation and delay or cause us to lose revenues.

Our customers often have specific requirements that can be at the forefront of technological development and therefore difficult and expensive to meet. If we are not able to devote sufficient resources to these products, or we experience development difficulties or delays, we could lose sales and damage our reputation with those customers.

We depend on our key personnel. Skilled personnel in our industry can be in short supply. If we are unable to retain our current personnel or hire additional qualified personnel, our ability to develop and successfully market our products would be harmed.

We believe that our future success depends upon our ability to attract, integrate and retain highly skilled managerial, research and development, manufacturing and sales and marketing personnel. Skilled personnel in our industry can be in short supply. As a result, our employees are highly sought after by competing companies and our ability to attract skilled personnel is limited. To attract and retain qualified personnel, we may be required to grant large stock option or other stock-based incentive awards, which may harm our operating results or be dilutive to our other stockholders. We may also be required to pay significant base salaries and cash bonuses, which could harm our operating results.

Due to our relatively small number of employees and the limited number of individuals with the skill set needed to work in our industry, we are particularly dependent on the continued employment of our senior management team and other key personnel. If one or more members of our senior management team or other key personnel were unable or unwilling to continue in their present positions, these persons would be very difficult to replace, and our ability to conduct our business successfully could be seriously harmed. We do not maintain key person life insurance policies.

The length of our sales cycle requires us to invest substantial financial and technical resources in a potential sale before we know whether the sale will occur. There is no guarantee that the sale will ever occur and if we are unsuccessful in designing integrated circuits and module products for a particular generation of a customer’s products, we may need to wait until the next generation of that product to sell our products to that particular customer.

Our products are highly technical and the sales cycle can be long. Our sales efforts involve a collaborative and iterative process with our customers to determine their specific requirements either in order to design an appropriate solution or to transfer the product efficiently to our offshore contract manufacturer. Depending on the product and market, the sales cycle can take anywhere from 2 to 24 months, and we incur significant expenses as part of this process without any assurance of resulting revenues. We generate revenues only if our product is selected for incorporation into a customer’s system and that system is accepted in the marketplace. If our product is not selected, or the customer’s development program is discontinued, we generally will not have an opportunity to sell our product to that customer until that customer develops a new generation of its system. There is no guarantee that our product will be selected for that new generation system. The length of our product development and sales cycle makes us particularly vulnerable to the loss of a significant customer or a significant reduction in orders by a customer because we may be unable to quickly replace the lost or reduced sales.

We may not be able to manufacture and deliver our products as quickly as our customers require, which could cause us to lose sales and would harm our reputation.

We may not be able to manufacture products and deliver them to our customers at the times and in the volumes they require. Manufacturing delays and interruptions can occur for many reasons, including, but not limited to:

• the failure of a supplier to deliver needed components on a timely basis or with acceptable quality; • lack of sufficient capacity; • poor manufacturing yields; • equipment failures; • manufacturing personnel shortages; • transportation disruptions; • changes in import/export regulations; • infrastructure failures at the facilities of our offshore contract manufacturer; • natural disasters; • acts of terrorism; and • political instability.

• lack of sufficient capacity;

• poor manufacturing yields;

• equipment failures;

• manufacturing personnel shortages;

• transportation disruptions;

• changes in import/export regulations;

• infrastructure failures at the facilities of our offshore contract manufacturer;

• natural disasters;

• acts of terrorism; and

• political instability.

Manufacturing our products is complex. The yield, or percentage of products manufactured that conform to required specifications, can decrease for many reasons, including materials containing impurities, equipment not functioning in accordance with requirements or human error. If our yield is lower than we expect, we may not be able to deliver products on time. For example, in the past, we have on occasion experienced poor yields on certain products that have prevented us from delivering products on time and have resulted in lost sales. If we fail to manufacture and deliver products in a timely fashion, our reputation may be harmed, we may jeopardize existing orders and lose potential future sales, and we may be forced to pay penalties to our customers.

Although we do have long-term commitments from many of our customers, they are not for fixed quantities of product. As a result, we must estimate customer demand, and errors in our estimates ~~could~~ could have negative effects on our cash, inventory levels, revenues and results of operations.**

We have been required historically to place firm orders for products and manufacturing equipment with our suppliers up to six months prior to the anticipated delivery date and, on occasion, prior to receiving an order for the product, based on our forecasts of customer demands. Our sales process requires us to make multiple demand forecast assumptions, each of which may introduce error into our estimates. If we overestimate customer demand, we may allocate resources to manufacturing products that we may not be able to sell when we expect, if at all. As a result, we would have additional usage of cash, excess inventory and overhead expense, which would harm our financial results. On occasion, we have experienced adverse financial results due to excess inventory and excess manufacturing capacity. For example, the second quarter of 2010 included a $1.5 million write-off of inventory associated with excess materials related to a rapid drop in sales of a legacy product for a major customer’s radio platform.

Conversely, if we underestimate customer demand or if insufficient manufacturing capacity were available, we would lose revenue opportunities, market share and damage our customer relationships. On occasion, we have been unable to adequately respond to unexpected increases in customer purchase orders and were unable to benefit from this increased demand. There is no guarantee that we will be able to adequately respond to unexpected increases in customer purchase orders in the future, in which case we may lose the revenues associated with those additional purchase orders and our customer relationships and reputation may suffer.

product, based on our forecasts of customer demands. Our sales process requires us to make multiple demand forecast assumptions, each of which may introduce error into our estimates. If we overestimate customer demand, we may allocate resources to manufacturing products that we may not be able to sell when we expect, if at all. As a result, we would have additional usage of cash, excess inventory and overhead expense, which would harm our financial results. On occasion, we have experienced adverse financial results due to excess inventory and excess manufacturing capacity. The second quarter of 2010 included a $1.5 million write-off of inventory associated with excess materials related to a rapid drop in sales of a legacy product for a major customer’s radio platform.

Any failure to protect our intellectual property appropriately could reduce or eliminate any competitive advantage we have.**

Our success depends, in part, on our ability to protect our intellectual property. We rely primarily on a combination of patent, copyright, trademark and trade secret laws to protect ~~our~~ our proprietary technologies and processes. As of ~~September~~March 3031, ~~2010~~ 2011, we had 4243 United States patents issued, many with associated foreign filings and patents. Our issued patents include those relating to basic circuit and device designs, semiconductors, our multilithic microsystems technology and system designs. Our issued United States patents expire between 2013 and 2028. We maintain a vigorous technology development program that routinely generates potentially patentable intellectual property. Our decision as to whether to seek formal patent protection is done on a case by case basis and is based on the economic value of the intellectual property, the ~~anticipated~~ anticipated strength of the resulting patent, the cost of pursuing the patent and an assessment of using a patent as a strategy to protect the intellectual property.

To protect our intellectual property, we regularly enter into written confidentiality and assignment of rights to inventions agreements with our employees, and confidentiality and non-disclosure agreements with third parties, and generally control access to and distribution of our documentation and other proprietary information. These measures may not be adequate in all cases to safeguard the proprietary technology underlying our products. It may be possible for a third party to copy or otherwise obtain and use our products or technology without authorization, develop similar technology independently or attempt to design around our patents. In addition, effective patent, copyright, trademark and trade secret protection may be unavailable or limited outside of the United States, Europe and Japan. We may not be able to obtain any meaningful intellectual property protection in other countries and territories. Additionally, we may, for a variety of reasons, decide not to file for patent, copyright, or trademark protection outside of the United States. Moreover we occasionally agree to incorporate a customer’s or supplier’s intellectual property into our designs, in which case we have obligations with respect to the non-use and non-disclosure of that intellectual property. We also license technology from other companies, including Northrop Grumman Corporation. There are no limitations on our rights to make, use or sell products we may develop in the future using the chip technology licensed to us by Northrop Grumman Corporation. Steps taken by us to prevent misappropriation or infringement of our intellectual property or the intellectual property of our customers may not be successful. Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of proprietary rights of others, including our customers. Litigation of this type could result in substantial costs and diversion of our resources.

We may receive in the future, notices of claims of infringement of other parties’ proprietary rights. In addition, the invalidity of our patents may be asserted or prosecuted against us. Furthermore, in a patent or trade secret action, we could be required to withdraw the product or products as to which infringement was claimed from the market or redesign products offered for sale or under development. We have also at times agreed to indemnification obligations in favor of our ~~customers~~ customers and other third parties that could be triggered upon an allegation or finding of our infringement of other parties’ proprietary rights. These indemnification obligations would be triggered for reasons including our sale or supply to a customer or other third parties of a product which was later discovered to infringe upon another party’s proprietary rights. Irrespective of the validity or successful assertion of such claims we would likely incur significant costs and diversion of our resources with respect to the defense of such claims. To address any potential claims or actions asserted against us, we may seek to obtain a license under a third party’s intellectual property rights. However, in such an instance, a license may not be available on commercially reasonable terms, if at all.

With regard to our pending patent applications, it is possible that no patents may be issued as a result of these or any future applications or the allowed patent claims may be of reduced value and importance. If they are issued, any patent claims allowed may not be sufficiently broad to protect our technology. Further, any existing or future patents may be challenged, invalidated or circumvented thus reducing or eliminating their commercial value. The failure of any patents to provide protection to our technology might make it easier for our competitors to offer similar products and use similar manufacturing techniques.

would likely incur significant costs and diversion of our resources with respect to the defense of such claims. To address any potential claims or actions asserted against us, we may seek to obtain a license under a third party’s intellectual property rights. However, in such an instance, a license may not be available on commercially reasonable terms, if at all.

We are exposed to fluctuations in the market values of our investment portfolio.

Although we have not experienced any material losses on our cash, cash equivalents and short-term investments, future declines in their market values could have a material adverse effect on our financial condition and operating results. Although our portfolio has no direct investments in auction rate or sub-prime mortgage securities, our overall investment portfolio is currently and may in the future be concentrated in cash equivalents including money market funds. If any of the issuers of the securities we hold default on their obligations, or their credit ratings are negatively affected by liquidity, credit deterioration or losses, financial results, or other factors, the value of our cash equivalents and short-term and long-term investments could decline and result in a material impairment.

Risks Relating to Our Industry

Our failure to compete effectively could reduce our revenues and margins.

Among ~~merchant~~ suppliers in the mobile communication market who provide ~~integrated~~ integrated transceivers to radio OEMs, we primarily compete with Compel Electronics SpA, Filtronic plc, and ~~Microelectronics~~ Microelectronics Technology Inc. Additionally, there are mobile communication OEMs, such as Ericsson and NEC Corporation, that use their own captive resources for the design and manufacture of their transceiver modules, rather than using ~~merchant~~ suppliers like us. To the extent that mobile communication OEMs presently, or may in the future, produce their own transceiver modules, we lose the opportunity to provide our modules to them. However, aswhen we launched our semiconductor product line, we ~~gain~~gained the opportunity to provide integrated circuits to all radio OEMs.

Our failure to comply with any applicable environmental regulations could result in a range of consequences, including fines, suspension of production, excess inventory, sales limitations and criminal and civil liabilities.

Due to environmental concerns, the need for lead-free solutions in electronic components and systems is receiving increasing attention within the electronics industry as companies are ~~moving~~ moving towards becoming compliant with the RoHS Directive. The RoHS Directive is European Union legislation that restricts the use of a number of substances, including lead, after July 2006. We We believe that our products impacted by these regulations are compliant with the RoHS Directive and that materials will continue to be available to meet these ~~new~~ regulations. However, it is possible that unanticipated supply shortages or delays or excess non-compliant inventory may occur as a result of these new regulations. Failure to comply with any applicable environmental regulations could result in a range of consequences, including loss of sales, fines, suspension of production, excess inventory and criminal and civil liabilities.

Government regulation of the communications industry could limit the growth of the markets that we serve or could require costly alterations of our current or future products.

The markets that we serve are highly regulated. Communications service providers must obtain regulatory approvals to operate broadband wireless access networks within specified licensed ~~bands~~ bands of the frequency spectrum. Further, the Federal Communications Commission and foreign regulatory agencies have adopted regulations that impose stringent RF emissions standards on the communications industry that could limit the growth of the markets that we serve or could require costly alterations of our current or future products.

Our failure to continue to develop new or improved semiconductor process technologies could impair our competitive position.

Our future success depends in part upon our ability to continue to gain access to the current semiconductor process technologies in order to adapt to emerging customer requirements and competitive market conditions. If we fail to keep abreast of the new and improved semiconductor process technologies as they emerge, we may lose market share which could adversely affect our operating results.

The segment of the semiconductor industry in which we participate is intensely competitive, and our inability to compete effectively would harm our business.

The markets for our products are extremely competitive, and are characterized by rapid technological change and continuously evolving customer requirements. Many of our competitors have significantly greater financial, technical, manufacturing, sales and marketing resources than we do. As a result, our competitors may develop new technologies, enhancements of existing products or new products that offer price or performance features superior to ours. In addition, our competitors may be perceived by prospective customers to offer financial and operational stability superior to ours.

We expect competition in our markets to intensify, as new competitors enter the RF, microwave and ~~millimeterwave~~millimeter wave component market, existing competitors merge or form alliances, and new technologies emerge. If we are not able to compete effectively, our market share and revenue could be adversely affected, and our business and results of operations could be harmed.

Risks Relating to Ownership of Our Stock

The market price of our common stock has fluctuated historically and is likely to fluctuate in the future.**

The price of our common stock has fluctuated widely since our initial public offering in October 2000. In ~~the~~ first ~~nine~~three months of ~~2010~~2011, the lowest daily sales price for our common stock ~~was~~ was $2.0018 and the highest daily sales price for our common stock was $32.6195. In ~~2009~~2010, the lowest daily sales price for our common stock was $12.3600 and the highest daily sales price for our common stock was $3.4361. The market price of our common stock can fluctuate significantly for many reasons, including, but not limited to:

• our financial performance or the performance of our competitors; • the purchase or sale of common stock, short-selling or transactions by large stockholders; • technological innovations or other significant trends or changes in the markets we serve; • successes or failures at significant product evaluations or site demonstrations; • the introduction of new products by us or our competitors; • acquisitions, strategic alliances or joint ventures involving us or our competitors; • decisions by major customers not to purchase products from us or to pursue alternative technologies; • decisions by investors to de-emphasize investment categories, groups or strategies that include our company or industry; • market conditions in the industry, the financial markets and the economy as a whole; and • the low trading volume of our common stock.

• It ~~the~~is ~~purchase~~likely that our operating results in one or ~~sale~~more future quarters may be below the expectations of security analysts and investors. In that event, the trading price of our common stock would likely decline. In addition, ~~short-selling~~the stock market has experienced extreme price and volume fluctuations. These market fluctuations can be unrelated to the operating performance of particular companies and the market prices for securities of technology companies have been especially volatile. Future sales of substantial amounts of our common stock, or ~~transactions~~the byperception that ~~large~~such ~~stockholders;~~sales could occur, could adversely affect prevailing market prices for our common stock. Additionally, future stock price volatility for our common stock could provoke the initiation of securities litigation, which may divert substantial management resources and have an adverse effect on our business, operating results and financial condition. Our existing insurance coverage may not sufficiently cover all costs and claims that could arise out of any such securities litigation. We anticipate that prices for our common stock will continue to be volatile.

• technological innovations or other significant trends or changes in the markets we serve;

• successes or failures at significant product evaluations or site demonstrations;

• the introduction of new products by us or our competitors;

• acquisitions, strategic alliances or joint ventures involving us or our competitors;

• decisions by major customers not to purchase products from us or to pursue alternative technologies;

• decisions by investors to de-emphasize investment categories, groups or strategies that include our company or industry;

• market conditions in the industry, the financial markets and the economy as a whole; and

• the low trading volume of our common stock.

It is likely that our operating results in one or more future quarters may be below the expectations of security analysts and investors. In that event, the trading price of our common stock would likely decline. In addition, the stock market has experienced extreme price and volume fluctuations. These market fluctuations can be unrelated to the operating performance of particular companies and the market prices for securities of technology companies have been especially volatile. Future sales of substantial amounts of our common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock. Additionally, future stock price volatility for our common stock could provoke the initiation of securities litigation, which may divert substantial management resources and have an adverse effect on our business, operating results and financial condition. Our existing insurance coverage may not sufficiently cover all costs and claims that could arise out of any such securities litigation. We anticipate that prices for our common stock will continue to be volatile.

We have a few stockholders that each own a large percentage of our outstanding capital stock and, as a result of their significant ownership, are able to significantly affect the outcome of matters requiring stockholder approval.**

As of ~~May~~March 1431, ~~2010~~2011, our ~~four~~five largest stockholders together owned approximately 3740% of our outstanding common stock. Because most matters requiring approval of our stockholders require the approval of the holders of a majority of the shares of our outstanding capital stock present in ~~person~~ person or by proxy at the annual meeting, the significant ownership interest of these shareholders allows them to significantly affect the election of our directors and the outcome of ~~corporate~~ corporate actions requiring stockholder approval. This concentration of ownership may also delay, deter or prevent a change in control and may make some transactions more difficult or impossible to complete without their support, even if the transaction is favorable to our stockholders as a whole.

Our certificate of incorporation, bylaws and arrangements with executive officers could delay or prevent a change in control.

We are subject to certain Delaware anti-takeover laws by virtue of our status as a Delaware corporation. These laws prevent us from engaging in a merger or sale of more than 10% of our assets with any stockholder, including all affiliates and associates of any stockholder, who owns 15% or more of our outstanding voting stock, for three years following the date that the stockholder acquired 15% or more of our voting stock, unless our board of directors approved the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, or upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock of the corporation, or the business combination is approved by our board of directors and authorized by at ~~least~~ ~~66 2~~least 662/3% of our outstanding voting stock not owned by the interested stockholder. A corporation may opt out of the Delaware anti-takeover laws in its charter documents; however we have not chosen to do so. Our certificate of incorporation and bylaws include a number of provisions that may deter or impede hostile takeovers or changes of control of management, including a staggered board of directors, the elimination of the ability of our stockholders to act by written consent, discretionary authority given to our board of directors as to the issuance of preferred stock, and indemnification rights for our directors and executive officers. Additionally, we have adopted a Stockholder Rights Plan, providing for the distribution of one preferred share purchase right for each outstanding share of common stock that may lead to the delay or prevention of a change in control that is not approved by our board of directors. We have a Senior Executive Officer Severance Retention Plan, an Executive Officer Severance Plan and a Key Employee Severance and Retention Plan that provide for severance payments and the acceleration of vesting of a percentage of certain stock options granted to our executive officers and certain senior, non-executive employees under specified conditions.

These plans may make us a less attractive acquisition target or may reduce the amount a potential acquirer may otherwise be willing to pay for our company.


Item 6.	*Exhibits.*

Number		~~Description~~	Description
2.1(1)		Asset Purchase Agreement among the Registrant, Microsemi Corporation and SHR Corporation dated April 20, 2009.
	3	.1(2)	Amended and Restated Certificate of Incorporation effective October 20, 2000.
2.2(2)		Indemnification Agreement between the Registrant and Microsemi Corporation dated April 30, 2009.
	3	.2(3)	Certificate of Amendment of Amended and Restated Certificate of Incorporation effective June 28, 2002.
3.1(2)		Amended and Restated Certificate of Incorporation effective October 20, 2000.
	3	.3(4)	Certificate of Designation for Series A Junior Participating Preferred Stock.
3.2(3)		Certificate of Amendment of Amended and Restated Certificate of Incorporation effective June 28, 2002.
	3	.4(5)	Certificate of Designation for Series B Preferred Stock.
3.3(4)		Certificate of Designation for Series A Junior Participating Preferred Stock.
	3	.5(6)	Certificate of Amendment of Amended and Restated Certificate of Incorporation effective July 26, 2007.
3.4(5)		Certificate of Designation for Series B Preferred Stock.
	3	.6(7)	Amended and Restated Bylaws.
3.5(6)		Certificate of Amendment of Amended and Restated Certificate of Incorporation effective July 26, 2007.
	4	.1(2)	Form of Specimen Common Stock Certificate.
3.6(7)		Amended and Restated Bylaws.
	4	.2(4)	Rights Agreement dated as of December 1, 2005 between the Registrant and Computershare Trust Company, Inc.
4.1(2)		Form of Specimen Common Stock Certificate.
	4	.3(4)	Form of Rights Certificate
4.2(4)		Rights Agreement dated as of December 1, 2005 between the Registrant and Computershare Trust Company, Inc.
	4	.6(8)	Amendment No. 1 to Rights Agreement, dated as of December 21, 2007, between the Registrant and ComputerShare Trust Company, Inc.
4.3(4)		Form of Rights Certificate
	4	.7(22)	Amendment No. 2 to Rights Agreement, dated as of February 4, 2011, between the Registrant and ComputerShare Trust Company, N.A., successor in interest to Computershare Trust Company, Inc.
4.6(8)		Amendment No. 1 to Rights Agreement, dated as of December 21, 2007, between the Registrant and ComputerShare Trust Company, Inc.
	10	.1(2)	Form of Indemnity Agreement entered into by the Registrant with each of its directors and officers.
10.1(2)		Form of Indemnity Agreement entered into by the Registrant with each of its directors and officers.
	10	.2(2)*	1992 Stock Option Plan.
10.2(2)*		1992 Stock Option Plan.
	10	.3(2)*	Form of Incentive Stock Option under 1992 Stock Option Plan.
10.3(2)*		Form of Incentive Stock Option under 1992 Stock Option Plan.
	10	.4(2)*	Form of Nonstatutory Stock Option under 1992 Stock Option Plan.
10.4(2)*		Form of Nonstatutory Stock Option under 1992 Stock Option Plan.
	10	.5(9)*	2007 Equity Incentive Plan.
10.5(9)*		2007 Equity Incentive Plan.
	10	.6(10)*	Form of Stock Option Agreement under 2007 Equity Incentive Plan.
10.6(10)*		Form of Stock Option Agreement under 2007 Equity Incentive Plan.
	10	.7(10)*	Form of Stock Option Agreement for Non-Employee Directors under the 2007 Equity Incentive Plan.
10.7(10)*		Form of Stock Option Agreement for Non-Employee Directors under the 2007 Equity Incentive Plan.
	10	.8(2)*	2000 Employee Stock Purchase Plan.
10.8(18)*		Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement under the 2007 Equity Incentive Plan.
	10	.9(2)*	Form of 2000 Employee Stock Purchase Plan Offering.
10.9(2)*		2000 Employee Stock Purchase Plan.
	10	.10(11)*	2000 Non-Employee Directors’ Stock Option Plan, as amended.
10.10(2)*		Form of 2000 Employee Stock Purchase Plan Offering.
	10	.11(2)*	Form of Nonstatutory Stock Option Agreement under the 2000 Non-Employee Director Plan.
10.11(11)*		2000 Non-Employee Directors’ Stock Option Plan, as amended.
	10	.12(12)*	Description of Compensation Payable to Non-Employee Directors.
10.12(2)*		Form of Nonstatutory Stock Option Agreement under the 2000 Non-Employee Director Plan.
	10	.13(21)*	2010 Base Salaries for Named Executive Officers.
10.13(12)*		Description of Compensation Payable to Non-Employee Directors.
	10	.15(2)	License Agreement by and between TRW Inc. and TRW Milliwave Inc. dated February 28, 2000.
10.14(18)*		2010 Base Salaries for Named Executive Officers.
	10	.16(14)†	Purchase Agreement between Nokia and the Registrant dated January 1, 2006.
10.15(19)*		Executive Officer Severance Plan.
	10	.17(14)†	Frame Purchase Agreement by and between the Registrant and Siemens Mobile Communications Spa dated January 16, 2006.
10.16(19)*		Senior Executive Officer Severance and Retention Plan.
	10	.18(15)†	Lease Agreement by and between Legacy Partners I San Jose, LLC and the Registrant dated May 24, 2006.
10.17(2)		License Agreement by and between TRW Inc. and TRW Milliwave Inc. dated February 28, 2000.
	10	.19(16)†	Services Agreement by and between Hana Microelectronics Co., Ltd. and the Registrant dated October 15, 2006.
10.18(14)†		Purchase Agreement between Nokia and the Registrant dated January 1, 2006.
	10	.20(17)	Lease Agreement by and between 8812, a California limited partnership, and the Registrant dated May 20, 2008.
10.19(14)†		Frame Purchase Agreement by and between the Registrant and Siemens Mobile Communications Spa dated January 16, 2006.
	10	.21(17)†	Amended and Restated Supply Agreement by and between Northrop Grumman Space and Mission Systems Corp. and the Registrant dated May 12, 2008.
10.20(15)†		Lease Agreement by and between Legacy Partners I San Jose, LLC and the Registrant dated May 24, 2006.
	10	.22(18)†	First Amendment, dated as of December 1, 2008, to Amended and Restated Supply Agreement by and between Northrop Grumman Space and Mission Systems Corp. and the Registrant dated May 12, 2008.
10.21(16)†		Services Agreement by and between Hana Microelectronics Co., Ltd. and the Registrant dated October 15, 2006.
10.22(17)		Lease Agreement by and between 8812, a California limited partnership, and the Registrant dated May 20, 2008.
10.23(17)†		Amended and Restated Supply Agreement by and between Northrop Grumman Space and Mission Systems Corp. and the Registrant dated May 12, 2008.
10.24(13)†		First Amendment, dated as of December 1, 2008, to Amended and Restated Supply Agreement by and between Northrop Grumman Space and Mission Systems Corp. and the Registrant dated May 12, 2008.

Number		~~Description~~	Description
10.25(13)†		Amendment, dated as of February 13, 2009, to Amended and Restated Supply Agreement by and between Northrop Grumman Space and Mission Systems Corp. and the Registrant dated May 12, 2008.
	10	.23(18)†	Amendment, dated as of February 13, 2009, to Amended and Restated Supply Agreement by and between Northrop Grumman Space and Mission Systems Corp. and the Registrant dated May 12, 2008.
31.1		Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	10	.24(19)*	Executive Officer Severance Plan.
31.2		Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	10	.25(19)*	Senior Executive Officer Severance and Retention Plan.
32.1		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	10	.26(20)	Stock Purchase Agreement, dated January 21, 2010, between Oak Investment Partners XI, Limited Partnership and the Registrant.
	10	.27(22)	Amendment and Plan of Merger by and among the Registrant, Gigoptix, Inc., and Aerie Acquisition Corporation dated February 4, 2011.
	31	.1	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1)		Previously filed as an exhibit to the Registrant’s ~~Quarterly~~Current Report on Form 108-QK filed on ~~August~~April 1424, ~~2009~~2007 and incorporated herein by reference.
(2)		Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-41302) and incorporated herein by reference.
(3)		Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference.
(4)		Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on December 5, 2005 and incorporated herein by reference.
(5)		Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on April 26, 2006 and incorporated herein by reference.
(6)		Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 and incorporated herein by reference.
(7)		Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on July 28, 2008 and incorporated herein by reference.
(8)		Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on December 28, 2007 and incorporated herein by reference.
(9)		Previously filed as an appendix to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on June 13, 2007 and incorporated herein by reference.
(10)		Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-8 (Registration No. 333-144851) and incorporated herein by reference.
(11)		Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference.
(12)		Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on February 1, 2008 and incorporated herein by reference.
(13)		Previously filed as an exhibit to the Registrant’s ~~Quarterly~~Annual Report on Form 10-QK filed for the ~~quarter~~fiscal year ended ~~March~~December 31, ~~2009~~2007 and incorporated herein by reference.
(14)		Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-3 (Registration No. 333-144054) and incorporated herein by reference.
(15)		Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference.
(16)		Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and incorporated herein by reference.

(16)		Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and incorporated herein by reference.
(17)		Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter year ended June 30, 2008 and incorporated herein by reference.
(18)		Previously filed as an exhibit to the Registrant’s ~~Annual~~Quarterly Report on Form 10-KQ for the ~~fiscal~~quarter year ended ~~December~~March 31, 2009 and incorporated herein by reference.
(19)		Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on September 17, 2009 and incorporated herein by reference.
(20)		Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on January 21, 2010 and incorporated herein by reference.
(21)		Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and incorporated herein by reference.
(22)		Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on February 7, 2011 and incorporated herein by reference.
*		Indicates a management contract or compensatory plan or arrangement.
†		Confidential treatment has been requested for a portion of this exhibit.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Endwave Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ENDWAVE CORPORATION
Date: November 12, 2010
	By:	/s/ John J. Mikulsky
		John J. Mikulsky
		President and Chief Executive Officer(Duly Authorized Officer and Principal Executive Officer)
	By:	/s/ Curt P. Sacks
		Curt P. Sacks
		Chief Financial Officer and Senior Vice President (Duly Authorized Officer and Principal Financial and Accounting Officer)

ENDWAVE CORPORATION


	By:	/s/ John J. Mikulsky

John J. Mikulsky

President and Chief Executive Officer
(Duly Authorized Officer and Principal
Executive Officer)


	By:	/s/ Curt P. Sacks

Curt P. Sacks
Chief Financial Officer and
Senior Vice President
(Duly Authorized Officer and

Principal Financial and Accounting Officer)

Date: May 16, 2011

INDEX TO EXHIBITS

Number		~~Description~~	Description
31.1		Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.1	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32	.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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DuringTable the third quarter of 2009, we recorded an adjustment of $6,000 to the first quarter 2009 restructuring plan and an adjustment of $15,000 to the second quarter 2009 restructuring plan. Contents

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Filing Compare · ENDWAVE CORP