Technology Research (TRCI) 10-Q 2008 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

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 September 30, 2007

o TRANSITION REPORT PURSUANT TO SECTION  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 For the transition period from ______ to ______

0-13763
(Commission file No.)

TECHNOLOGY RESEARCH CORPORATION
(Exact name of registrant as specified in its charter)

FLORIDA	59-2095002
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

5250-140th Avenue North 
Clearwater, Florida 33760
(Address of principal executive offices)

(727) 535-0572
(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   No o.

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

 Large accelerated filer o  Accelerated filer o  Non-accelerated filer þ

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 

As of October 31, 2007, there were 5,888,828 shares of the Registrant’s common stock outstanding.  The information contained in this Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended March 31, 2007.

TECHNOLOGY RESEARCH CORPORATION

FORM 10-Q

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	Item 1.  Financial Statements  (Unaudited)
	Condensed Consolidated Balance Sheets
	Condensed Consolidated Statements of Operations
	Condensed Consolidated Statements of Cash Flows
	Notes to the Condensed Consolidated Financial Statements
	Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3.  Quantitative and Qualitative Disclosures About Market Risk
	Item 4.  Controls and Procedures
PART II — OTHER INFORMATION
	Item 1.  Legal Proceedings
	Item 1A.  Risk Factors
	Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
	Item 3.  Defaults Upon Senior Securities
	Item 4.  Submission of Matters to a Vote of Security Holders
	Item 5.  Other Information
	Item 6.  Exhibits
SIGNATURES
Exhibit 31.1 — Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2 — Certification of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1 — Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2 — Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002

PART I — FINANCIAL INFORMATION

Item 1.  Financial Statements.

TECHNOLOGY RESEARCH CORPORATION AND SUBSIDIARY

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

	September 30,			March 31,
ASSETS	2007			2007
Current assets:
Cash and cash equivalents	$	1,205			3,471
Short-term investments		998			498
Trade and other accounts receivable, net of allowance for doubtful
accounts of $298 at September 30, 2007 and $273 at March 31, 2007		5,787			6,950
Other receivable - current portion		947			884
Income taxes receivable		151
Inventories, net		9,798			9,294
Deferred income taxes		1,093			999
Prepaid expenses and other current assets		209			351
Total current assets		20,188			22,447
Property, plant and equipment, net of accumulated depreciation of
$11,077 and $10,472		3,928			4,412
Other receivable less current portion		850			850
Intangible asset, net of accumulated amortization of $89 and $59, respectively		493			523
Other assets		47			47
Total assets	$	25,506			28,279
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	-			1,000
Trade accounts payable		3,326			3,027
Accrued expenses		1,481			1,409
Accrued dividends		132			133
Income taxes payable		-			846
Total current liabilities		4,939			6,415
Long-term debt, less current portion		-			2,000
Deferred income taxes		109			139
Total liabilities		5,048			8,554
Stockholders' equity:
Common stock $0.51 par value; 10,000,000 shares authorized,
5,910,328 shares and 5,910,328 shares issued, and
5,888,828 shares and 5,888,828 shares outstanding		3,014			3,014
Additional paid-in capital		9,371			9,287
Retained earnings		8,113			7,464
Common stock held in treasury, 21,500 shares at cost		(40	)		(40	)
Total stockholders' equity		20,458			19,725
Total liabilities and stockholders' equity		25,506			28,279

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

TECHNOLOGY RESEARCH CORPORATION AND SUBSIDIARY

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share data)

Three Months Ended September 30,							Six Months Ended September 30,
	2007			2006			2007			2006
Revenues:
Commercial	$	5,306			7,227			11,212			15,181
Military		3,953			2,478			7,705			5,140
Total revenues		9,259			9,705			18,917			20,321
Cost of sales		6,405			7,739			13,223			15,925
Gross profit		2,854			1,966			5,694			4,396
Operating expenses:
Selling and marketing		731			724			1,467			1,445
General and administrative		1,133			1,121			2,119			2,279
Research and development		471			542			903			1,029
Total operating expenses		2,335			2,387			4,489			4,753
Income (loss) from operations		519			(421	)		1,205			(357	)
Other income (expense):
Other income, net		58			9			112			15
Interest expense		(20	)		(49	)		(75	)		(93	)
Other income (expense), net		38			(40	)		37			(78	)
Income (loss) before income taxes		557			(461	)		1,242			(435	)
Income tax expense (benefit)		156			(30	)		358			(24	)
Net income (loss)	$	401			(431	)		884			(411	)
Earnings (loss) per share - basic	$	0.07			(0.07	)		0.15			(0.07	)
Earnings (loss) per share - diluted	$	0.07			(0.07	)		0.15			(0.07	)
Shares outstanding - basic		5,888,828			5,888,828			5,888,828			5,880,017
Shares outstanding - diluted		5,921,154			5,888,828			5,929,621			5,880,017

TECHNOLOGY RESEARCH CORPORATION AND SUBSIDIARY

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Six Months Ended September 30,
		2007		2006
Cash flows from operating activities:
Net income (loss)	$	884		(411	)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Accretion of interest on short-term investments and other receivables		(82	)	(9	)
Change in allowance for doubtful accounts		25		35
Depreciation		613		572
In-process research and development		-		17
Amortization of intangible assets		30		27
Stock compensation expense		84		49
Deferred income taxes		(124	)	(286	)
Changes in operating assets and liabilities,
net of effect of acquisition:
Trade and other accounts receivable		1,146		2,991
Income taxes receivable		-		-
Inventories		(504	)	(306	)
Prepaid expenses and other current assets		142		46
Other assets		-		2
Trade accounts payable		299		(1,192	)
Accrued expenses		72		(71	)
Income taxes payable		(997	)	(252	)
Net cash provided by operating activities		1,588		1,212
Cash flows from investing activities:
Maturities of short-term investments		500		499
Purchase of short-term investments		(989	)	(500	)
Acquisition of business		-		(331	)
Purchases of property and equipment		(129	)	(345	)
Net cash used in investing activities		(618	)	(677	)
Cash flows from financing activities:
Borrowings of short-term debt		-		-
Repayments of short-term and long-term debt		(3,000	)	(2,000	)
Proceeds from the exercise of stock options		-		52
Tax benefit of stock option exercised		-		5
Cash dividends paid		(236)		(176	)
Net cash used in financing activities		(3,236	)	(2,119	)
Net decrease in cash and cash equivalents		(2,266	)	(1,584	)
Cash and cash equivalents at beginning of period		3,471		2,607
Cash and cash equivalents at end of period	$	1,205		1,023
Non-cash investing in financing activities:
Common stock issued upon acquisition of recreational vehicle product line business	$	-		347

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

TECHNOLOGY RESEARCH CORPORATION AND SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements

(In thousands, except share data)

1.  Basis of Presentation: 

 The unaudited interim condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Accordingly, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with United States generally accepted accounting principles have been omitted pursuant to such rules and regulations.  The accompanying unaudited interim condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Technology Research Corporation (the “Company”) Annual Report on Form 10-K for the year ended March 31, 2007.  Operating results for the six-month period ended September 30, 2007 are not necessarily an indication of the results that may be expected for the fiscal year ending March 31, 2008.

 The information furnished reflects, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial results for the interim periods presented. 

2.  Earnings (Loss) Per Share:

 Basic earnings (loss) per share have been computed by dividing net income (loss) by the weighted average number of common shares outstanding.

 Diluted earnings (loss) per share have been computed by dividing net income (loss) by the weighted average number of common and common equivalent shares outstanding.  The weighted average common and common equivalent shares outstanding has been adjusted to include the number of shares that would have been outstanding if the stock options had been exercised, at the average market price of the period, with the proceeds being used to buy shares from the market, if dilutive.  

 The table below reconciles the calculation of basic and diluted earnings (loss) per share:

	Three months ended  September 30,				Six months ended  September 30,
		2007	2006			2007	2006
Net income (loss)	$	401	(431	)		884	(411	)
Weighted average shares outstanding - basic		5,888,828	5,888,828			5,888,828	5,880,017
Dilutive common shares issuable upon exercise of stock options		32,326	-			40,793	-
Weighted average shares outstanding - diluted		5,921,154	5,888,828			5,929,621	5,880,017
Earnings (loss) per share:
Basic	$	0.07	(0.07	)		0.15	(0.07	)
Diluted	$	0.07	(0.07	)		0.15	(0.07	)

 For both the three-month and six-month periods ended September 30, 2007, options to purchase 311,900 shares of common stock were considered anti-dilutive for the purposes of calculating earnings per share.  For both the three-month and six-month periods ended September 30, 2006, options to purchase 304,935 shares of common stock were considered anti-dilutive for purposes of calculating earnings (loss) per share.

3.  Short-term Investments: 

 The value of short-term investments totaled $998 as of September 30, 2007, consisting of corporate securities in the amount of $3 and original cost plus accrued interest on U.S. Treasury Bills in the amount of $995.  As of March 31, 2007, the value of short-term investments totaled $498, consisting of corporate securities in the amount of $3 and original cost plus accrued interest on U.S. Treasury Bills in the amount of $495.  The Company considers all of its short-term investments to be held-to-maturity, and therefore, are recorded at amortized cost.

4.  Inventories:

 Inventories consist of the following:

September 30, 2007			March 31, 2007
Raw materials	$	6,690	6,102
Work-in-process		630	461
Finished goods		2,478	2,731
Total	$	9,798	9,294

5. Warranty: 

 The Company generally provides a one year warranty period for all of its products.  The Company also provides coverage on certain of its surge products for “downstream” damage of products not manufactured by the Company.  The Company's warranty provision represents management's best estimate of probable liabilities, calculated as a function of sales volume and historical repair experience for each product under warranty.  A roll-forward of the activity in the Company's warranty liability, included in accrued expenses, for the three and six months ended September 30, 2007 and 2006 is as follows:

		Three months ended September 30,				Six months ended September 30,
		2007		2006		2007		2006
Beginning balance	$	145		130		90		111
Warranty expense		24		32		108		80
Warranty claims		(48	)	(30	)	(77	)	(59	)
Ending balance	$	121		132		121		132

6.  Debt: 

 The maturity date of the revolving credit agreement with the Company's institutional lender has been extended to September 30, 2008.  The loan facility provides for borrowings up to $6.0 million.  The Company has the option of borrowing at the lender's prime rate of interest minus 100 basis points or the 30-day London Interbank Offering Rate (“LIBOR”) plus 160 basis points.  Prior to paying down the remaining debt, the Company was borrowing under the LIBOR option (7.13% as of most recent borrowing).  The loan is collateralized with a perfected first security interest which attaches to all of the Company's accounts receivable and inventories, and a blanket security interest attaching to all of its assets, and requires the Company to maintain certain financial ratios.  As of September 30, 2007, the Company had no outstanding borrowings.  As of March 31, 2007, the Company had $3.0 million in outstanding borrowings, of which $1.0 million was recorded as current portion of long-term debt and $2.0 million was recorded as long-term debt, less current portion.  The Company paid down all of its remaining debt in the second quarter ended September 30, 2007.

7.  Income taxes:

 The Company's effective income tax rate was 28.0% and 6.5% for the three months ended September 30, 2007 and 2006, respectively.  For the six months ended September 30, 2007 and 2006, the Company's effective income tax rate was 28.8% and 5.5%, respectively.  The effective income tax rate is based on the estimated income for the year and the composition of this income from the U.S. and from our Honduran subsidiary.  The income tax rate on income earned from Honduras is zero due to a tax holiday and, therefore, the corporate effective rate is lower than the U.S. statutory rate due to the mix of income earned in the U.S. versus income earned in Honduras.

 As of April 1, 2007, the Company adopted FASB Interpretation Number 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109.  The interpretation contains a two step approach to recognizing and measuring uncertain tax positions.  The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.  The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement.  As a result of implementing FIN No. 48, we did not recognize any cumulative effect adjustment impacting retained earnings as of the beginning of fiscal 2008. 

 As of April 1, 2007, there are no unrecognized tax benefits and no accrued interest and penalties.  As of September 30, 2007, the Company has unrecognized tax benefits of $10, accrued interest of $2, and there are no accrued penalties.  After adoption of FIN 48, the Company’s policy is to recognize interest and penalties in the provision for income taxes.

 The Company files U.S. Federal and Florida income tax returns.  The Company has substantially concluded all U.S. federal income tax matters through fiscal 2004 year.  Federal income tax returns for fiscal years 2005 through 2007 and state income tax returns for fiscal years 2004 through 2007 remain subject to audit.

8.  Stock-Based Compensation: 

 As of April 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123R, Share-Based Payment, (“SFAS 123R”) for its share-based compensation plans.  Previously, the Company accounted for these plans under the principles of Accounting Principles Board Opinion No. 25, Accounting for Stock issued to Employees (“APB 25”) and related interpretations and disclosure requirements set by Statement of Financial Accounting Standard No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), as amended by Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure.

 Following the principles of APB 25, no compensation expense was recognized in earnings for the Company’s stock options, except for the acceleration of vesting of options for a former officer of the Company in September 2005 and reflected in the financial results for the fiscal year ended March 31, 2006.  The pro forma effects on net income and earnings per share resulting from the stock options were disclosed in a footnote to the financial statements.  Under SFAS 123R, share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense in earnings over the requisite service period.

 The Company adopted SFAS 123R using the modified prospective transition method.  Under this method, prior periods are not restated to reflect the impact of SFAS 123R.  Under SFAS 123R, companies are required to estimate the fair value of share-based payment awards on the date of grant using an option pricing model.  The Company adopted the Black Scholes model to estimate the fair value of options.  The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Consolidated Statements of Operations. 

 The implementation of SFAS 123R had no impact on the Company’s cash position.  Since stock compensation expense of $84 and $49, respectively, resulting from the implementation of SFAS 123R was included in earnings for the six months ended September 30, 2007 and 2006, the consolidated statement of cash flows for the six months ended September 30, 2007 and 2006, include adjustments to reconcile net income to net cash provided by operating activities of $84 and $49, respectively, due to this non-cash stock compensation expense.

 Cash received from the exercises of stock options under all share-based payment arrangements for the six months ended September 30, 2007 and 2006 was zero and $52, respectively.  Currently, the Company expects to utilize available registered shares when share-based awards are issued.

Stock Option Plans

 The Company has adopted stock plans that provide for the grant of equity based awards to employees and directors, including incentive stock options, non-qualified stock options and restricted stock awards of Company common stock (the “Plans”).  Employee stock options generally vest over a three year period and director stock options vest over a two year period.  The exercise price of incentive stock options granted under the Plans will not be less than 100% of the fair market value of shares of common stock on the date of grant.  For any participant owning stock representing more than 10% of the voting power of all classes of Company stock, the exercise price will not be less than 110% of the fair market value of the shares on the date of grant.  The term of options may not exceed ten years.  Except in highly unusual circumstances, non-qualified stock options will be granted at the fair market value on the date of grant.

 The Company's 1993 Incentive Stock Option Plan and the Company's 1993 Amended and Restated Non-Qualified Stock Option Plan have expired, and no options will be granted from these plans in the future.  Certain options under these plans, however, are still outstanding and can be exercised in the future.

  The Company’s 1996 Stock Option Performance Plan provided for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code and non-qualified stock options to employees.  A total of 400,000 shares of common stock were reserved for issuance under this plan.  The 1996 Stock Option Performance Plan was terminated on July 1, 2006.  A total of 150,000 shares available for grant expired, and a total of 210,976 options outstanding expired unexercised.  No shares will be granted from this plan in the future, and no shares are available for exercise.

 On March 24, 2000, the Company' Board of Directors adopted the 2000 Long Term Incentive Plan and it was approved by the Company's stockholders in August 2000 at its annual meeting.  The 2000 Long Term Incentive Plan provides for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code to employees and non-qualified stock options to either employees or directors of the Company.  The 2000 Long Term Incentive Plan also allows for the grant of restricted stock awards to officers and directors.  A total of 1.1 million shares of common stock have been reserved for issuance under the 2000 Long Term Incentive Plan, of which 283,850 remain available for awards as of September 30, 2007.

 The table below summarizes stock option activity for the Plans from April 1, 2007 through September 30, 2007:

			Aggregate(1)	Weighted	Weighted
	Shares		intrinsic	average	average
	available	Options	value	exercise	remaining
	for grant	outstanding	(in thousands)	price	contractual life
Balance as of March 31, 2007	403,850	344,935	$ 107	$ 9.10	7.44
Options authorized	-	-		-	-
Options expired	-	-		-	-
Options granted	(120,000)	120,000		$ 3.43	9.87
Options canceled	-	-		-	-
Options exercised	-	-		-	-
Balance as of September 30, 2007	283,850	464,935	$  105	$ 7.63	7.70
Exercisable as of September 30, 2007		294,935	$  105	$ 9.66	6.60
_____________________________
Footnote: 1  The aggregate intrinsic value represents the total pretax intrinsic value, based on the Company’s closing stock price of $4.92 as of March 31, 2007 and of $3.74 as of September 28, 2007 and on the dates options were granted or exercised, which would have been received by the option holders had all option holders exercised their options as of that date, including only those options that are in-the-money.

 The weighted average grant date fair value of options granted during the six months ended September 30, 2007 and 2006 was $3.43 per share and $4.33 per share, respectively.  The total intrinsic value of options exercised during the six months ended September 30, 2006 was $13.

 As of September 30, 2007, there was $388 of unrecognized compensation cost related to non-vested stock options that is expected to be recognized over a weighted average period of 1.58 years.  The total fair value of stock options vested during the six months ended September 30, 2007 and 2006 was $84 and $49, respectively.

 The Company estimated the fair value of stock-based payment awards on the date of grant using the Black-Scholes option pricing model, which is impacted by the Company’s stock price as well as assumptions regarding several subjective variables including the Company’s expected stock price volatility over the term of the awards, actual and projected employee option exercise experience, the risk free interest rate and expected dividends.  The estimated expected term of options that have been granted was based on historical option exercise trends.  Estimated volatility was based on historical volatility over the expected term and the risk free interest rate was based on U.S. Treasury Bills similar to the expected term.  The expected dividend yield was based on the Company’s experience with paying dividends over the past 12 months.  The Company is also required to estimate forfeitures at the time of the grant and to revise these estimates in later periods if actual forfeitures differ from those estimates.  Historical data was used to estimate pre-vesting forfeitures and record stock-based compensation expense only for those awards that are expected to vest.

 The assumptions used to value option grants for the three and six months ended September 30, 2007 and 2006 are as follows:

	Three months ended September 30,		Six months ended September 30,
	2007	2006	2007	2006
Expected dividend yield	1.78%	N/A	1.78%	1.12%
Risk free interest rate	4.65%	N/A	4.65%	5.05%
Expected volatility	82.23%	N/A	82.23%	88.29%
Expected life	7.12 years	N/A	7.12 years	6.48 years

9.  Litigation

 On February 16, 2007, Shanghai ELE Manufacturing Corporation (“ELE”) filed a declaratory judgment action against the Company in the Central District of California alleging that the Company’s United States Patent No. 6,292,337 (“the 337 patent”) is invalid and not infringed by ELE.  The Company had previously written a letter to ELE requesting that they cease all infringing activity relating to the '337 patent.  In April 2007, the Company filed a counterclaim against ELE asserting that the patent is valid, and that ELE's Leakage Current Detectors and Interrupters (LCDIs),  infringe the '337 patent, among other things. The Company is also seeking monetary damages against ELE for past infringement of the '337 patent.  The '337 patent underlies the Company’s Fire Shield® technology for cord fire prevention.  The Company filed a motion to transfer the ELE action to the United States District Court for the Middle District of Florida, where the Company is headquartered.  On May 18, 2007, Judge R. Gary Klausner granted the Company’s motion and transferred the action to the Middle District of Florida.  The Company intends to vigorously pursue its claim of patent infringement against ELE in this new venue.

 The Company is involved in various claims and legal actions arising in the ordinary course of business.  In the Company's opinion, the ultimate disposition of these matters will not have a material adverse effect on its financial condition, result of operations or cash flows.

10.  New Accounting Standards

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”).  SFAS No. 157 establishes a single definition of fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements.  The Company is currently evaluating whether SFAS No. 157 will result in a change to its fair value measurements.  The measurement and disclosure requirements are effective for the Company beginning in the first quarter of fiscal 2009.

 In June 2006, the FASB ratified the Emerging Issues Task Force (“EITF”) consensus on Issue No. 06-03, How Taxes Collected from Customers and Remitted to Government Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation) (“EITF No. 06-03”).  The Company adopted the provisions of EITF No. 06-03 for the fiscal year beginning April 1, 2007, electing the net basis of reporting.  EITF No. 06-03 will not have a material impact on the Company’s fiscal 2008 consolidated financial statements.

 In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities (“SFAS No. 159”).  SFAS 159 allows companies to make an election to carry certain eligible financial assets and liabilities at fair value, even if fair value measurement has not historically been required for such assets and liabilities under U.S. GAAP.  The provisions of SFAS No. 159 are effective for the Company’s fiscal year beginning April 1, 2008.  The Company is currently assessing the impact SFAS No. 159 may have on its consolidated financial statements.

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

 As used in this interim report on Form 10-Q, “we”, “our”, “us”, the “Company” and “TRC” all refer to Technology Research Corporation and its subsidiary unless the context otherwise requires.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This interim report on Form 10-Q contains forward-looking statements, which are subject to the safe harbor provisions created by of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934.  Any forward looking statements made herein are based on our current expectations, involve a number of risks and uncertainties and should not be considered as guarantees of future performance.  Such statements may be identified by terminology such as “may,” “will,” “should,” “expects,” “scheduled,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “potential,” or “continue,” or the negative of such terms, or other comparable terminology.  These statements are only predictions, and actual events as well as results may differ materially.  

 The identification of certain statements as “forward-looking” is not intended to mean that other statements not specifically identified are not forward-looking.  Forward-looking statements include, but are not limited to, statements that relate to our future revenue, product development, demand, acceptance and market share, competitiveness, gross margins, levels of research and development (R & D), outsourcing plans and operating expenses, tax expenses, our management’s plans and objectives for our current and future operations, the levels of customer spending or R & D activities, general economic conditions and the sufficiency of financial resources to support future operations, and capital expenditures.  Such statements are based on current expectations and are subject to risks, uncertainties, and changes in condition, significance, value and effect, including those discussed below under the heading “Risk Factors” within the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other documents we file from time to time with the Securities and Exchange Commission (“SEC”), such as our last filed Annual Report on Form 10-K for the fiscal year ended March 31, 2007, our quarterly reports on Form 10-Q, and our current reports on Form 8-K.  Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on information currently and reasonably known to us.  We undertake no obligation to release the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances which occur after the date hereof or to reflect the occurrence or effect of anticipated or unanticipated events.

Actual results could, however, differ materially from those projected or assumed in any of our forward-looking statements within this report. Our future financial condition and results of operations, as well as our operational and financial expectations, are subject to inherent risks and uncertainties.  See part Part II, Item 1A, entitled Risk Factors.

OVERVIEW

 Technology Research Corporation is an internationally recognized leader in the design, manufacture and marketing of electrical safety products that save lives, protect people against serious injury from electrical shock and/or prevent electrical fires in the home and workplace.  Based on our core technology in ground fault sensing and leakage current detection, our products are designed to meet the needs of the consumer, commercial and industrial markets worldwide.  TRC also designs and supplies power monitoring and control equipment to the United States military and its prime contractors for its tactical vehicles, naval vessels and mobile electric generators.

 TRC was incorporated in Florida in 1981.  Our principal offices are located at 5250-140th Avenue North, Clearwater, Florida 33760, our telephone number is (727) 535-0572 and our website can be accessed at www.trci.net.  Information contained or referenced on our website is not incorporated by reference into, and does not form a part of, this Quarterly Report on Form 10-Q.

 Our operating strategy is based on these key objectives:

• to strengthen our current markets and channels of distribution with new proprietary products;
• to broaden the number of applications within target markets by developing products for these applications;
• to identify and pursue strategic acquisitions that will be accretive to earnings;
• to improve profitability and customer satisfaction through ongoing continuous improvement programs and benchmarking all aspects of TRC’s business with best practices;
• to invest in the education of employees to enable then to have the tools to more effectively grow the business and improve business productivity.

     Revenues were $0.4 million lower in the second quarter of fiscal 2008 than in the second quarter of the prior year. Gross profit improved $0.9 million principally due to favorable product mix and to a lower inventory valuation adjustment in the current quarter than in the second quarter of the prior year. Net income for the second fiscal quarter ended September 30, 2007 was $.4 million compared with a net loss of $.4 million for the second quarter of last year. Diluted net income per share is $.07 for the quarter ended September 30, 2007 compared with a diluted loss of $.07 per share for last year’s second quarter.

 Our second quarter results reflect a continuation of the financial improvement from prior year periods that began in the first quarter of fiscal 2008. As a result, through the six months ended September 2007, net income has improved from a loss of $.4 million to net income of $.9 million in the current fiscal year and diluted net income per share for the same period has improved from a $.07 loss per share to net income per share of $.15.

RESULTS OF OPERATIONS

            Revenues for the second quarter ended September 30, 2007 were $9.3 million compared to $9.7 million reported in the same quarter last year, a decrease of 4.6%.  Commercial revenues, which includes RAC revenues, decreased by $1.9 million while military revenues increased $1.5 million. Revenues for the six-month period ended September 30, 2007 were $18.9 million compared to $20.3 million reported in the same period of the prior year, a decrease of 6.9%.  Commercial revenues for the six months ended September 30, 2007 decreased 26.3% while military revenues increased 49.9%.   The decrease in commercial revenues for the three and six-month periods ended September 30, 2007 compared to the same periods in the prior year was primarily attributed to a reduction of room air conditioner (“RAC”) and international product shipments. The decline in RAC continues the trend from prior quarters due to competition from low cost off-shore manufacturers. The reduction in international revenues resulted from our focus on reducing very low margin business. The increase in military revenues is mostly attributable to an increase in demand resulting from the lifting of government budget restrictions that were in effect last year for the quarter ended September 30, 2006.

 Gross profit increased $0.9 million, or 45.2%, to $2.9 million for the quarter ended September 30, 2007 and increased $1.3 million, or 29.5%, to $5.7 million for the six months ended September 30, 2007 compared to the same periods in the prior year.  The increase in gross profit for the three and six months ended September 30, 2007 was primarily due to product mix with higher volumes of military revenues and lower volumes of RAC and international revenues as well as a $.3 million lower inventory valuation adjustment in the current quarter compared with the $.5 million inventory valuation adjustment for the quarter ended September 30, 2006. Gross profit as a percentage of total revenues increased to 30.8% for the three months ended September 30, 2007 from 20.3% for the three months ended September 30, 2006.  Gross profit as a percent of revenues increased to 30.1% for the six months ended September 30, 2007 from 21.6% for the six months ended September 30, 2006. The increase in gross profit as a percentage of revenues is primarily due to product mix and the lower inventory valuation adjustment in the current quarter compared with the large write-down in last year’s second fiscal quarter.

 Selling and marketing expense of $0.7 million, or 7.9% of revenues, was unchanged from $0.7 million or 7.5% of revenues for the quarter ended September 30, 2007.  For the six months ended September 30, 2006, selling and marketing expense of $1.5 million, or 7.8% of revenues increase from $1.4 million or 7.1% of revenue compared with the prior year. The increase in selling and marketing expense as a percentage of revenues for both the three and six-month periods was primarily due to lower revenues in the current year.

 General and administrative expense of $1.1 million, or 12.2% of revenues, was unchanged from $1.1 million, or 11.6% of revenues for the quarter ended September 30, 2007.  For the six months ended September 30, 2007, general and administrative expense of $2.1 million, or 11.2% of revenues, decreased by $0.2 million compared to $2.3 million, or 11.2% of revenues, for the same period last year.  As a percentage of revenues, general and administrative expense increased 1.0% for the three months, and was unchanged for the six months, ended September 30, 2007.  The increase in general and administrative expense as a percent of revenues for the three month period was primarily due to the decrease in revenues.

 Research and development expense of $0.5 million, or 5.1% of revenues, for the quarter ended September 30, 2007 was unchanged from the $0.5 million, or 5.6% of revenues, for the same quarter last year.  For the six months ended September 30, 2007, research and development expense was $0.9 million, or 4.8% of revenues, compared to $1.0 million, or 5.1% of revenues, for the same period last year. The decrease in research and development expense from the prior year period is primarily due to a reduction in compensation related expense resulting principally from a reduction in force in March.  As a percentage of revenues, research and development expense decreased 0.5% and 0.3%, respectively, for the three and six months ended September 30, 2007.  The decrease in research and development expense as a percent of revenues for the three and six month periods was primarily due to the decrease in compensation related expense.

 Other income (expense), net was $38 thousand of income for the quarter ended September 30, 2007, compared to $(40) thousand of expense in the same quarter last year. For the six months ended September 30, 2007, other income and expense was income of $37 thousand, compared to $(78) thousand of expense for the same period last year. The increase in other income, net was primarily due to the increase in interest income on the receivable due from Tower Manufacturing Corporation and the reduction in debt.

 Income tax (benefit) expense was $0.2 million expense for the quarter ended September 30, 2007 compared with a benefit of $(0) million (benefit) for the quarter ended September 30, 2006.  For the six months ended September 30, 2007, income tax expense was $0.4 million compared with a benefit of $(0) million for the same period last year.  Income taxes as a percent of income before income taxes was 28.0% and 28.8% for the quarter and six months ended September 30, 2007, compared with (6.5)% and (5.5)% for the quarter and six months ended September 30, 2006.  Our effective tax rate varies based primarily on the mix of income before income taxes derived from our Honduran subsidiary, which is not subject to income taxes, and the balance of income before income taxes, which is subject to U.S. income taxes.  At each reporting period, we make our best estimate of the effective tax rate expected for the full fiscal year and apply that rate to the current year-to-date income before income taxes.  Any difference between the current and preceding estimated effective tax rate expected for the full fiscal year is reflected as an adjustment in the current quarter's income tax expense.  In accordance with SFAS 109, “Accounting for Income Taxes”, we do not record deferred income taxes on the foreign undistributed earnings of an investment in a foreign subsidiary that is essentially permanent in duration.  If circumstances change, and it becomes apparent that some or all of the undistributed earnings of our subsidiary will be remitted in the foreseeable future, but U.S. income taxes have not been recognized, we will record as an expense of the current period the U.S. income taxes attributed to that remittance.

 Net income (loss) for the quarter ended September 30, 2007 was $0.4 million, compared to a net loss of $(0.4) million in the same quarter last year.  The basic and diluted income per share was $0.07 for the quarter ended September 30, 2007, compared to a basic and diluted loss of $(0.07) per share for the same quarter last year.  The net income for the six-month period ended September 30, 2007 was $0.9 million, compared to a net loss of $(0.4) million for the same period in the prior year.  The basic and diluted income per share was $0.15 for the six-month period ended September 30, 2007, compared to basic and diluted loss of $(0.07) per share for the same period of the prior year.  Net income for the three and six-month periods ended September 30, 2007, compared to comparable prior year periods, was primarily the result of favorable product mix with its attendant higher gross margins, lower inventory write-down in the current year compared to the prior year partially offset by higher income taxes.

LIQUIDITY AND CAPITAL RESOURCES

 Our cash and cash equivalents decreased from $3.5 million on March 31, 2007 to $1.2 million as of September 30, 2007.  Cash provided by operating activities was $1.6 million, cash used in investing activities was $0.6 million and cash used in financing activities was $3.2 million resulting in a total decrease in cash of $2.3 million for the six-month period ended September 30, 2007.

 Cash provided by operating activities primarily resulted from net income of $0.9 million, a decrease in trade accounts receivable of $1.1 million, depreciation of $0.6 million and an increase in trade accounts payable of $0.3 million,  partially offset by a decrease in income taxes payable of $1.0 million,  and an increase in inventories of $0.5 million. The decrease in accounts receivable was primarily due to improved collections from customers.  The increase in accounts payable was principally due to the increased level of inventory.  The decrease in income tax payable primarily reflects the payment of federal income taxes due to filing amended income tax returns for fiscal 2005 and fiscal 2006 and paying additional income tax resulting from deemed dividends from our Honduran subsidiary. The increase in inventory was primarily due to purchases of raw materials to be used in manufacturing new products and to the timing of in-transit inventory items. 

 Cash used in investing activities was due to purchase of short-term investments in excess of maturities and cash paid for purchases of property and equipment.

 Cash used in financing activities was primarily due to the reduction in debt in the amount of $3.0 million.

 The maturity date of the revolving credit agreement with our institutional lender is September 30, 2008.  The agreement provides for borrowings up to $6.0 million.  We have the option of borrowing at the lender's prime rate of interest minus 100 basis points or the 30-day London Interbank Offering Rate (“LIBOR”) plus 160 basis points.  We were borrowing under the LIBOR option (7.13% as of September 13, 2007).  The loan is collateralized with a perfected first security interest which attaches to all of our accounts receivable and inventories, and a blanket security interest attaching to all of our assets, and requires us to maintain certain financial ratios.  As of September 30, 2007, we were in compliance with the covenants under our revolving credit agreement.  As of March 31, 2007, we had $3.0 million in outstanding borrowings, of which $1.0 million was recorded as current portion of long-term debt based upon our intent to repay that amount in the next year and $2.0 million was recorded as long-term debt, less current portion.  As of September 30, 2007, we had no outstanding borrowings.

 We believe cash flow from operations, the available bank borrowings, current short-term investments and cash and cash equivalents will be sufficient to meet our working capital requirements for the next 12 months.

OFF-BALANCE SHEET ARRANGEMENTS

 We do not have financial partnerships with unconsolidated entities, such as entities often referred to as structured finance or variable interest entities, which are often established for the purposes of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.  As a result, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had such relationships.

NEW ACCOUNTING STANDARDS

 In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”).  SFAS No. 157 establishes a single definition of fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements.  We are currently evaluating whether SFAS No. 157 will result in a change to our fair value measurements.  The measurement and disclosure requirements are effective for us beginning in the first quarter of fiscal 2009.

 In June 2006, the FASB ratified the Emerging Issues Task Force (“EITF”) consensus on Issue No. 06-03, How Taxes Collected from Customers and Remitted to Government Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation) (“EITF No. 06-03”).  We are required to adopt the provisions of EITF No. 06-03 for the fiscal year beginning April 1, 2007, electing the net basis of reporting.  EITF No. 06-03 will not have a material impact on our fiscal 2008 consolidated financial statements.

 In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities (“SFAS No. 159”).  SFAS 159 allows companies to make an election to carry certain eligible financial assets and liabilities at fair value, even if fair value measurement has not historically been required for such assets and liabilities under U.S. GAAP.  The provisions of SFAS No. 159 are effective for our fiscal year beginning April 1, 2008.  We are currently assessing the impact SFAS No. 159 may have on our consolidated financial statements.

CRITICAL ACCOUNTING POLICIES

 The preparation of financial statements and related disclosures, in conformity with United States generally accepted accounting principles, requires management to make judgments, assumptions and estimates that affect the amounts reported.  Certain of these significant accounting policies are considered to be critical accounting policies, as defined below. 

 A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations.  Specifically, critical accounting estimates have the following attributes:  (i) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and (ii) different estimates that we could reasonably have used, or changes in the estimates actually used resulting from events that could be reasonably foreseen as likely to have a material effect on our financial condition or results of operations.

 Estimates and assumptions about future events and their effects cannot be determined with certainty.  We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances.  These estimates may change as new events occur, as additional information is obtained and as our operating environment changes.  These changes have historically been minor and have been included in the consolidated financial statements once known.  In addition, we are periodically faced with uncertainties, the outcomes of which are not within our control and will not be known for prolonged periods of time.  These uncertainties are discussed in the section above entitled Disclosure Regarding Forward-Looking Statements and in section Item 1A below, entitled Risk Factors.  Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, we believe that our consolidated financial statements are fairly stated in accordance with United States generally accepted accounting principles and present a meaningful presentation of our financial condition and results of operations. 

 We believe that the following are critical accounting policies:

 Revenue Recognition/Allowance for Doubtful Accounts.  We recognize revenue from commercial customers when an order has been received and accepted, pricing is fixed, delivery has occurred and title to the product has passed and collectability is reasonably assured.  Title generally passes upon shipment to the customer; however, in a limited number of cases, title passes upon receipt of shipment by the customer.  We have no installation obligation subsequent to product shipment.  Similarly, revenue from sales to distributors is recognized as title passes to them without additional involvement or obligation.  Collection of receivables related to distributor sales is not contingent upon subsequent sales to third parties.

 We may enter into government contracts that fall within the scope of Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts (SOP 81-1).  Products that fall outside SOP 81-1 are generally referred to as (“standard” products) and those products that are within the scope of SOP 81-1 are commonly referred to as “non-standard” products.  For government contracts within the scope of SOP 81-1, we record revenue under a units-of-delivery model with revenues and costs equal to the average unit value times the number of units delivered.  Any estimated loss on an overall contract would be recognized in the period determined in accordance with SOP 81-1.  For government contracts outside the scope of SOP 81-1, we record revenue the same as for commercial customers discussed above and would record a loss in the event the costs to fulfill a government contract are in excess of the associated revenues.  We have not experienced past losses on government contracts, and currently, we do not have any transactions being accounted for within the scope of SOP 81-1.

 We record an allowance for estimated losses resulting from the inability of customers to make payments of amounts due on account of product purchases.  We assess the credit worthiness of our customers based on multiple sources of information, including publicly available credit data, subscription based credit reports, trade association data, and analyzes factors such as historical bad debt experience, changes in customer payment terms or payment patterns, credit risk related to industry and geographical location and economic trends.  This assessment requires significant judgment.  If the financial condition of our customers were to worsen, additional write-offs could be required, resulting in write-offs not included in our current allowance for doubtful accounts.

 Inventories.  Because of the lead times required to obtain certain raw materials, we must maintain sufficient quantities on hand to meet expected product demand for each of our many products.  If actual demand is much lower than forecasted, we may not be able to dispose of our inventory at or above our cost.  We write down our inventory for estimated excess and obsolete amounts to the lower of cost or market.  We review the reasonableness of our estimates each quarter (or more frequently).  An allowance is established for inventory that has had no activity for long periods of time, for which management believes is no longer salable or for which is salable below current cost.  The allowance is reviewed and approved by the senior management team.  In the future, based on our quarterly analysis, if we estimate that any remaining allowance for excess or obsolescence is either inadequate or in excess of the inventory allowance required, we may need to adjust it.  At present, based on our analysis, we believe the allowance is properly valued for the inventory held by us.

 Income Taxes.  Significant management judgment is required in developing our provision for income taxes, including the determination of any accrual for tax contingencies, any foreign withholding taxes or any United States income taxes on undistributed earnings of the foreign subsidiary, deferred tax assets and liabilities and any valuation allowances that might be required to be applied against the deferred tax assets.  It is our intention to reinvest undistributed earnings of our foreign subsidiary and thereby indefinitely postpone their repatriation.  Accordingly, no provision has been made for foreign withholding taxes or United States income taxes which may become payable if undistributed earnings of our foreign subsidiary are paid to us as dividends.  We apply the Comparable Profits Method for transfer pricing to determine the amounts our subsidiary charges to the parent.

 Warranty.  We generally provide a one year warranty period for all of our products.  We also provide coverage on certain of our surge products for “downstream” damage of products not manufactured by us.  Our warranty provision represents our estimate of probable liabilities, calculated as a function of sales volume and historical repair experience for each product under warranty.  Our warranty accrual represents our estimate of our liability for warranty repairs that we will incur over the warranty period.

 Impairment of Long-Lived Assets.  We review long-lived assets for possible impairment of carrying value whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with Statement of Financial Accounting Standards No. 144, Accounting for Impairment or Disposal of Long-Lived Assets.  In evaluating the fair value and future benefit of our assets, management performs an analysis of the anticipated undiscounted future net cash flows to be derived from the use of individual assets over their remaining amortization period.  If the carrying amount of an asset exceeds its anticipated undiscounted cash flows, we recognize an impairment loss equal to the difference between its carrying value and its fair value.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

 We do not engage in investing in or trading market risk sensitive instruments.  We also do not purchase, for investing, hedging, or for purposes “other than trading,” instruments that are likely to expose us to market risk, whether interest rate, foreign currency exchange, commodity price or equity price risk, except as noted in the following paragraph.  We have not entered into any forward or futures contracts, purchased any options or entered into any interest rate swaps.  Additionally, we do not currently engage in foreign currency hedging transactions to manage exposure for transactions denominated in currencies other than U.S. dollars.

 As of September 30, 2007, we had no debt.  Our loans are subject to changes in interest rates.  The rate of interest is based on either the lender’s prime rate or on the LIBOR rate at our option.  We have exposure to changes in interest rates from investments in held-to-maturity securities.  With our current level and term of investments, a 1% change in the market rate of interest would result in a change in interest income of approximately $10 thousand on an annual basis.  Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes.

Item 4.  Controls and Procedures.

Disclosure Controls and Procedures

 As of the end of the period covered by this interim report on Form 10-Q, we carried out, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”), an evaluation of the effectiveness of our “disclosure controls and procedures” (as the term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934 as amended).  Based on this evaluation, the Certifying Officers have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

 Further, there were no changes in our internal control over financial reporting during our first fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.  Legal Proceedings.

 On February 16, 2007, Shanghai ELE Manufacturing Corporation (“ELE”) filed a declaratory judgment action against us in the Central District of California alleging that our United States Patent No. 6,292,337 (“the 337 patent”) is invalid and not infringed by ELE.  We had previously written a letter to ELE requesting that they cease all infringing activity relating to the '337 patent.  In April, we filed a counterclaim against ELE asserting that the patent is valid, and that ELE's Leakage Current Detectors and Interrupters (LCDIs) infringe the '337 patent, among other things.  We are also seeking monetary damages against ELE for past infringement of the '337 patent.  The '337 patent underlies our Fire Shield® technology for cord fire prevention.  We filed a motion to transfer the ELE action to the United States District Court for the Middle District of Florida, where we are headquartered.  On May 18, 2007, Judge R. Gary Klausner granted our motion and transferred the action to the Middle District of Florida.  We intend to vigorously pursue our claim of patent infringement against ELE in this new venue.

 We are involved in various claims and legal actions arising in the ordinary course of business.  In our opinion, the ultimate disposition of these matters will not have a material adverse effect on our financial condition, result of operations or cash flows.

Item 1A.  Risk Factors.

 In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2007, which could materially affect our business, financial condition or future results.  As of the date of the filing of this first quarter Form 10-Q, there are no changes to these Risk Factors of which we are aware.  The risks described in our Annual Report on Form 10-K are not the only risks that we face.  Additional risks and uncertainties that are not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

 Not applicable.

Item 3.  Defaults Upon Senior Securities.

 Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders.

 On August 30, 2007, the Company held its 2007 Annual Meeting of Stockholders in Clearwater, Florida.  Out of 5,888,828 shares of common stock entitled to vote at the Annual Meeting, a total of 5,248,678 shares were present in person or by proxy.  The following is a tabulation of the voting on the proposals presented as the Annual Meeting:

 Proposal 1:  The following nominees were elected as directors to serve a one-year term of office:

	Shares Voted FOR	Shares WITHHELD
Robert S. Wiggins	4,802,039	446,639
Owen Farren	4,801,829	446,849
Raymond B. Wood	4,778,388	470,290
Gerry Chastelet	4,780,721	467,957
Patrick M. Murphy	4,804,672	444,006
Edmund F. Murphy, Jr.	4,777,254	471,424
David F. Walker	4,781,121	467,557

 Proposal 2:  The appointment of KPMG LLP as the Company's independent registered public accounting firm for

the year ending March 31, 2008 was ratified as such:

Shares Voted FOR	Shares WITHHELD	Shares ABSTAINED
5,072,886	159,062	16,730

Item 5.  Other information.

       Not applicable.

Item 6.  Exhibits.

Exhibit 31.1 — Certification of the CEO pursuant to Rule 13a-14(a) or Rule 15(d)-14(a).

Exhibit 31.2 — Certification of the CFO pursuant to Rule 13a-14(a) or Rule 15(d)-14(a).

Exhibit 32.1 — Certification pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the

                       Sarbanes-Oxley Act of 2002.

Exhibit 32.2 — Certification pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the

                       Sarbanes-Oxley Act of 2002.

SIGNATURES

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

	TECHNOLOGY RESEARCH CORPORATION
November 14, 2007	By:       /s/ Owen Farren
	Owen Farren
	President and Chief Executive Officer
	(Principal Executive Officer)
November 14, 2007	By:       /s/ Barry H. Black
	Barry H. Black
	Chief Financial Officer
	(Principal Financial and Accounting Officer)