10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form 10-Q

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

 For the quarterly period ended December 31, 2005

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  x   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 x 

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

As of January 31, 2006, there were 5,786,125 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-KSB for the year ended March 31, 2005.

TECHNOLOGY RESEARCH CORPORATION 

TABLE OF CONTENTS 

December 31, 2005

PART I — FINANCIAL INFORMATION
	Item 1.  Financial Statements
	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)

	December 31, 2005		March 31, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	1,216,631		815,411
Short-term investments		498,127		487,072
Trade and other accounts receivable, net of allowance for
doubtful accounts of $97,000 and $171,725		9,013,913		13,114,548
Inventories		11,131,614		11,460,302
Deferred income taxes		461,161		488,413
Prepaid expenses and other current assets		318,235		514,922
Total current assets		22,639,681		26,880,668
Property and equipment, net of accumulated depreciation of
$9,019,506 and $8,089,950		5,133,789		5,470,156
Other assets		64,658		96,004
Total assets	$	27,838,128		32,446,828

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	1,000,000		3,000,000
Trade accounts payable		5,488,280		7,970,920
Accrued expenses		906,035		1,327,944
Accrued dividends		100,461		100,175
Income taxes payable		115,312		112,239
Total current liabilities		7,610,088		12,511,278
Long-term debt, less current portion		2,000,000		2,350,000
Deferred income taxes		337,956		378,143
Total liabilities		9,948,044		15,239,421
Shareholders' equity:
Common stock $0.51 par value; 10,000,000 shares authorized, 5,797,375 shares and
5,795,375 shares issued and 5,786,125 shares and 5,773,875 shares outstanding		2,961,889		2,955,641
Additional paid-in capital		8,545,458		8,483,237
Retained earnings		6,422,882		5,808,674
Common stock held in treasury, 21,500 shares, at cost		(40,145	)	(40,145	)
Total shareholders' equity		17,890,084		17,207,407
Total liabilities and shareholders' equity	$	27,838,128		32,446,828

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

TECHNOLOGY RESEARCH CORPORATION AND SUBSIDIARY

  Condensed Consolidated Statements of Operations

  (Unaudited)

			Three Months Ended December 31,						Nine Months Ended December 31,
			2005			2004			2005			2004
Revenues:
Commercial	$		7,858,376			6,822,319			21,324,243			14,830,849
Military			3,495,926			2,879,845			9,268,494			9,014,404
Royalties			-			2,631			-			60,013
Total revenues		11,354,302			9,704,795			30,592,737			23,905,266
Cost of sales			8,501,716			7,652,981			23,668,111			17,088,245
Gross profit		2,852,586			2,051,814			6,924,626			6,817,021
Operating expenses:
Selling and marketing			643,633			655,771			1,850,510			1,836,786
General and administrative			707,483			667,165			2,392,680			1,817,162
Research and development			418,827			565,433			1,444,250			1,533,327
Total operating expenses		1,769,943			1,888,369			5,687,440			5,187,275
Income from operations		1,082,643			163,445			1,237,186			1,629,746
Other income (expense):
Other income, net			4,093			6,595			24,134			21,208
Interest expense			(54,026	)		(742	)		(168,495	)		(1,485	)
Other income (expense), net		(49,933		)	5,853			(144,361		)	19,723
Income before income taxes		1,032,710			169,298			1,092,825			1,649,469
Income tax expense			206,542			6,385			218,565			494,841
Net income	$	826,168			162,913			874,260			1,154,628
Earnings per share - basic	$		0.14			0.03			0.15			0.20
Earnings per share - diluted	$		0.14			0.03			0.15			0.19
Shares outstanding - basic			5,783,500			5,756,292			5,778,325			5,752,015
Shares outstanding - diluted			5,811,161			5,913,005			5,828,818			5,955,391
Dividends declared per share	$		0.015			0.015			0.045			0.045

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

TECHNOLOGY RESEARCH CORPORATION AND SUBSIDIARY

  Condensed Consolidated Statements of Cash Flows

  (Unaudited)

		Nine Months Ended December 31,
	2005			2004
Cash flows from operating activities:
Net income	$	874,260			1,154,628
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Tax benefit of stock options exercised		8,427			8,612
Gain on disposal of assets		-			1,390
Stock compensation expense		38,400			-
Depreciation		932,353			677,115
Accretion of interest on short-term investments		(4,911	)		(3,879	)
Changes in operating assets and liabilities:
Trade and other accounts receivable, net		4,100,635			(3,139,649	)
Income taxes receivable		-			(8,951	)
Inventories		328,688			(4,563,113	)
Deferred income taxes		(12,935	)		(15,628	)
Prepaid expenses and other current assets		196,687			(283,901	)
Other assets		31,346			(52,158	)
Trade accounts payable		(2,482,640	)		3,941,132
Accrued expenses		(421,909	)		31,701
Income taxes payable		3,073			(431,093	)
Deferred revenue		-			(7,893	)
Net cash provided (used) by operating activities		3,591,474			(2,691,687	)
Cash flows from investing activities:
Purchase of short-term investments		(6,144	)		(480,000	)
Capital expenditures		(595,986	)		(3,292,439	)
Net cash used by investing activities		(602,130	)		(3,772,439	)
Cash flows from financing activities:
Borrowings under revolving credit agreement		10,200			2,000,000
Repayments under revolving credit agreement		(2,360,200	)		-
Proceeds from the exercise of stock options		21,642			49,248
Cash dividends paid		(259,766	)		(258,423	)
Net cash (used) provided by financing activities		(2,588,124	)		1,790,825
Net increase (decrease) in cash and cash equivalents		401,220			(4,673,301	)
Cash and cash equivalents at beginning of period		815,411			5,968,122
Cash and cash equivalents at end of period	$	1,216,631			1,294,821

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

Notes to the Consolidated Financial Statements

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.  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-KSB for the year ended March 31, 2005. 

 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 per share:

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

 Diluted earnings per share have been computed by dividing net income 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.  

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

	Three months ended December 31,				Nine months ended December 31,
	2005		2004		2005		2004
Net income	$	826,168		162,913		874,260		1,154,628
Weighted average shares outstanding - basic		5,783,500		5,756,292		5,778,325		5,752,015
Dilutive common shares issuable upon exercise of stock options		27,661		156,713		50,493		203,376
Weighted average shares outstanding - diluted		5,811,161		5,913,005		5,828,818		5,955,391
Earnings per share:
Basic	$	0.14		0.03		0.15		0.20
Diluted	$	0.14		0.03		0.15		0.19

 For the three-month period and nine-month period ended December 31, 2005, options to purchase 506,900 shares of common stock were considered anti-dilutive for the purposes of calculating earnings per share.  For the three-month and nine-month period ended December 31, 2004, options to purchase 255,400 and 245,400 shares of common stock, respectively, were considered anti-dilutive for purposes of calculating earnings per share.

3.  Short-term investments: 

 Short-term investments totaled $498,127 as of December 31, 2005 and consisted of $1,752 of corporate securities and $496,375 of U.S. Treasury Bills at original cost plus accrued interest.  As of March 31, 2005, short-term investments totaled $487,072 and consisted of corporate securities of $2,079 and  $484,993 of U.S. Treasury Bills at original cost plus accrued interest.  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:

		December 31, 2005	March 31, 2005
Raw materials	$	7,651,520	8,669,678
Work-in-process		496,155	628,622
Finished goods		2,983,939	2,162,002
Total	$	11,131,614	11,460,302

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 for the three and nine months ended December 31, 2005 and 2004 is as follows:

		Three months ended				Nine months ended
		December 31, 2005		December 31, 2004		December 31, 2005		December 31, 2004
Beginning balance	$	270,462		40,219		310,447		20,000
Warranty expense		80,087		47,741		402,626		70,908
Warranty claims		(213,770	)	(6,349	)	(576,294	)	(9,297	)
Ending balance	$	136,779		81,611		136,779		81,611

6.  Debt: 

 On December 22, 2005, the Company extended the maturity date of the revolving credit agreement with its institutional lender to September 30, 2007.  The loan facility provides for borrowings up to $6,000,000.  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.  The Company is currently borrowing under the LIBOR option (6.01% as of December 31, 2005).  The loan is collateralized with a perfected first security interest which attaches to all of its 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 December 31, 2005, the Company had $3,000,000 in outstanding borrowings, of which $1,000,000 was recorded as current portion of long-term debt and $2,000,000 was recorded as long-term debt, less current portion.  The Company has the right to prepay any outstanding borrowings at any time and intends to repay the $1,000,000 in current portion of long-term debt prior to December 31, 2006, and accordingly, the Company has classified this amount as a current liability.  The Company was in compliance with the covenants under the revolving credit agreement as of December 31, 2005.

 On April 14, 2005, the Company entered into a $3,000,000 six-month term loan agreement with its institutional lender.  This credit facility was only to be used in the event that the Company's cash requirements extended beyond the existing line of credit noted above.  The provisions of the term loan agreement are substantively identical to those of the existing line of credit.  No borrowings were made under this term loan agreement.  On October 13, 2005, this credit facility was extended for 90 days.  The credit facility expired unused on January 14, 2006.

7.  Stock-Based Compensation: 

 The Company accounts for stock options at intrinsic value in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and related interpretations.  Had compensation cost for the Company’s stock options been determined based upon the fair value at the grant date for awards under the plans consistent with the methodology prescribed under Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), the Company’s net income (loss) would have been adjusted to the pro forma amounts indicated below:

	Three months ended December 31,						Nine months ended December 31,
	2005			2004			2005			2004
Net income - as reported	$	826,168			162,913			874,260			1,154,628
Deduct:  Total stock-based compensation
expense determined under fair
value based method, net of taxes		(646	)		(189,956	)		(1,344,887	)		(575,634	)
Add:   Stock compensation expense, net of taxes		-			-			30,720			-
Net income (loss) - pro forma	$	825,522			(27,043	)		(439,907	)		578,994
Basic earnings (loss) per share:
As reported	$	0.14			0.03			0.15			0.20
Pro forma	$	0.14			0.00			(0.08	)		0.10
Diluted earnings (loss) per share
As reported	$	0.14			0.03			0.15			0.19
Pro forma	$	0.14			0.00			(0.08	)		0.10

 In December 2004, the Financial Accounting Standards Board published Statement of Financial Accounting Standards No. 123R (Revised 2004), Share-Based Payment ("SFAS 123R"), which is effective for small business issuers from the first annual period that begins after December 15, 2005, that will require compensation cost related to share-based payment transactions, including stock options, be recognized in the financial statements.  Accordingly, the Company will implement the revised standard in its first quarter ending June 30, 2006.  Currently, the Company accounts for its share-based payment transactions under the provisions of APB 25, which does not necessarily require the recognition of compensation cost in the consolidated statement of operations.

 On May 24, 2005, in response to SFAS 123R, the Company's Board of Directors approved accelerating the vesting of all out-of-the-money, unvested stock options held by current employees, including executive officers and directors, effective May 25, 2005.  An option was considered out-of-the-money if, on the effective date, the stated option exercise price was greater than the closing price of the Company's common stock, $5.07.  The decision to accelerate vesting of these options was made primarily to avoid recognizing significant compensation cost in the Company's future financial statements upon the effectiveness of SFAS 123R.

    Stock compensation expense, net of tax, in the amount of $30,720 for the nine months ended December 31, 2005 was related to the acceleration of the unvested stock options for Jerry T. Kendall, former President and Chief Executive Officer, as specified in his Separation from Service Agreement dated August 1, 2005.  These options expired unexercised on November 1, 2005.

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

 As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, "we,"  "our," "us," the "Company" and "TRC" refer to Technology Research Corporation and its Honduran subsidiary.

FORWARD-LOOKING STATEMENTS

 Some of the statements in this report constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934, and any forward looking statements made herein are based on current expectations of the Company, 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.  In evaluating these statements, you should specifically consider the information described below in section Item 1A, entitled Risk Factors.  Other key factors include, but are not limited to, the acceptance of any new products, such as Fire Shield®, into the marketplace, the effective utilization of our Honduran manufacturing facility and Far East contract manufacturers, changes in manufacturing efficiencies and the impact of competitive products and pricing.  We cannot provide any assurance that predicted future results, levels of activity, performance or goals will be achieved, and we disclaim any obligation to revise any forward-looking statements subsequent to events or circumstances or the occurrence of unanticipated events.  The factors that could cause actual results to differ materially include: interruptions or cancellation of existing contracts, impact of competitive products and pricing, product demand and market acceptance, risks, the presence of competitors with greater financial resources, product development and commercialization risks, changing economic conditions in developing countries, and an inability to arrange additional debt or equity financing.  More information about factors that potentially could affect our financial results or otherwise described from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-KSB for the year ended March 31, 2005.

OVERVIEW

 Technology Research Corporation was incorporated under the laws of the State of Florida in 1981 (the "Company" or "TRC").  TRC 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 prevent electrical fires in the home and workplace.  Based on its core technology in ground fault sensing and leakage current detection, the Company's products are designed to meet the needs of the consumer, commercial and industrial markets worldwide.  TRC also supplies power monitoring and control equipment to the United States military and its prime contractors of its tactical vehicles, naval vessels and mobile electric generators.

 The Company's core commercial and military product applications form the foundation upon which its technological expertise may be further refined and applied to new product offerings and resulting business expansion.  The Company's Fire Shield® and Surge Guard Plus™ product lines are examples of such a strategy, and the Company is now focused on developing the markets for these products to their full potential.  The most recent significant opportunity for the Company's commercial market expansion was created by the adoption of the Underwriter's Laboratory ("UL") requirement for cord fire protection on room air conditioners ("RAC") manufactured for domestic sale after August 1, 2004.  The Company's Fire Shield® Leakage Current Detection Interrupter ("LCDI") Power Cord effectively responds to such requirement, and the Company will continue to pursue additional UL mandates for other applications which could benefit from the Company's technologies.

 The Company's revenues related to the new RAC market in fiscal 2005 were approximately $12.5 million, and based upon the orders that the Company has received through the nine-month period ended December 31, 2005, the Company expects continued growth in this market in fiscal 2006.  Revenues relating to the Company's RAC products are seasonal with the majority of revenues being generated during the Company's first, third and fourth fiscal quarters.  The Company expects to achieve modest growth in its non-RAC commercial products with military revenues remaining steady in fiscal 2006 compared to fiscal 2005.  

 The Company’s primary challenge for fiscal 2005 was to penetrate the new RAC market.  In implementing its plan to support this new market, the Company incurred additional operating expenses and start-up costs, including those associated with manufacturing inefficiencies, warranty repair costs, freight expense and higher than expected material costs, all of which negatively impacted net income.  The timing and customization of RAC orders and the implementation and coordination of ramping up its manufacturing plant in Honduras and bringing on line several Far East contract manufacturers in a compressed time frame presented significant challenges in meeting the demands of this new market.  The first RAC season effectively ended during the month of May 2005, and except for certain RAC products which are shipped year round, the next RAC season began in November 2005 and will run through May of 2006.  The Company has performed more efficiently in the second RAC season than in the first by leveraging its fiscal 2005 capital investment and expanding its manufacturing capabilities.

 The Company's operating strategy is based on these key objectives:

• to increase profitability by improving operating efficiencies;
• to strengthen and expand its markets and distribution channels;
• to broaden the applications within target markets for its existing products;
• to expand the scope of its product content;
• to expand its manufacturing capabilities;
• to maintain a conservative capital structure; and
• to pursue strategic acquisitions to the extent favorable opportunities are presented.

 Actual results could, however, differ materially from those projected or assumed in any of its forward-looking statements within this report.  The Company's future financial condition and results of operations, as well as its operational and financial expectations, are subject to inherent risks and uncertainties.  Some, but not all, of the factors impacting these risks and uncertainties are set forth below in section Item 1A, entitled Risk Factors.

RESULTS OF OPERATIONS

 Revenues for the third quarter ended December 31, 2005 were $11,354,302 compared to $9,704,795 reported in the same quarter last year, an increase of 17.0%.  Commercial revenues, which includes RAC revenues, increased by $1,036,057 and military revenues increased by $616,081.  Revenues for the nine-month period ended December 31, 2005 were $30,592,737 compared to $23,905,266 reported in the same period of the prior year, an increase of 28.0%.  Commercial and military revenues increased by $6,493,394 and $254,090, respectively, and royalties decreased by $60,013.  

 The increase in commercial revenues for the three and nine-month periods ended December 31, 2005, compared to the same periods of the prior year, was primarily attributed to RAC product shipments, and to a lesser extent, product expansion into retail stores and brand label shipments.  The Company expects continued growth in its commercial revenues in the fourth quarter of fiscal 2006.  Military revenues grew for the second consecutive quarter, which resulted from the Company receiving, after a delay in the first quarter, (i) certain follow-on releases of existing contracts for control devices related to the Tactical Quiet Generator ("TQG") programs; and (ii) certain direct military orders that could not be placed until June, when the Department of Defense released supplemental spending for its fiscal 2005 year.  The Company expects military sales in fiscal 2006 to remain comparable to fiscal 2005.  The decrease in royalty income for the three and nine-month periods ended December 31, 2005, compared to the same periods of the prior year, was due to non-recurring royalties, which were recorded in the prior year's quarter.  The Company does not expect to record any significant royalties in fiscal 2006.

 Gross profit increased $800,772, or 39.0%, to $2,852,586 for the three months ended December 31, 2005 and increased $107,605, or 1.6%, to $6,924,626 for the nine months ended December 31, 2005.  The increase for the quarter ended December 31, 2005 was due to an increase in the volume of sales and to a reduction in freight costs compared with the third quarter of the prior fiscal year.  The increase for the nine months ended December 31, 2005 from the comparable prior year period is due to an increase in sales volume largely offset by product mix.  Gross profit as a percentage of total revenues increased from 21.1% for the three months ended December 31, 2004 to 25.1% for the three months ended December 31, 2005.  This increase in gross profit as a percent of revenues was primarily due to improved efficiencies in the manufacture and distribution of the RAC products as well as product mix.  Gross profit as a percent of revenues declined from 28.5% for the nine months ended December 31, 2004 to 22.6% for the nine months ended December 31, 2005.  The decrease was primarily related to product warranty cost and severance cost in the Company's first and second quarters of fiscal 2006 plus higher raw material costs, primarily those related to plastic and copper.  The Company does not expect the cost of copper or plastic to materially change for the remainder of fiscal 2006.

 Selling and marketing expense decreased $12,138 , or 1.9%, to $643,633 for the quarter ended December 31, 2005 compared with $655,771 for the same quarter last year. For the nine-month period ended December 31, 2005, selling and marketing expense increased $13,724, or .7% to $1,850,510 compared with $1,836,786 for the same period last year.  As a percentage of revenues, selling and marketing expense declined 1.1% and 1.7%, respectively, for the three and nine month periods ended December 31, 2005.  The decrease in selling and marketing expense as a percentage of revenues for the three and nine month periods, was primarily due to the 17.0% and 28.0% increase in revenues, respectively.

 General and administrative expense increased $40,318, or 6.0%, to $707,483 for the quarter ended December 31, 2005 compared with $667,165 for the same quarter last year.  For the nine-month period ended December 31, 2005, general and administrative expense increased $575,518, or 31.7% to $2,392,680 compared with $1,817,162 for the same period last year.  The expense increase quarter over quarter was primarily due to legal fees related to the Company’s patent infringement suit against Tower Manufacturing Corporation and Fedders Corporation. For the nine-month period, the expense increase was mainly attributable to $238,000 in legal fees related to the Company’s patent infringement suit, $132,000 in salaries primarily related to Jerry T. Kendall’s (former President and CEO) termination package, $96,000 in legal and audit fees, $54,000 in write-offs of accounts receivable, and $53,000 for consulting fees related to section 404 of Sarbanes-Oxley.  As a percentage of revenues, general and administrative expense increased .7% and .2% , respectively, for the three and nine month periods ended December 31, 2005.  The increase in general and administrative expense as a percent of revenues for the three and nine month periods was primarily due to the above-described increases in expenses mostly offset by the 17.0% and 28.0% increase in revenues, respectively.

 Research and development expense decreased $146,606, or 25.9% to $418,827 for the quarter ended December 31, 2005 compared with $565,433 in the same quarter last year.  For the nine-month period ended December 31, 2005, research and development expense decreased $89,077, or 5.8% to $1,444,250 compared with $1,533,327 for the same period last year.  The decrease for both periods was primarily due to lower salary expense as a result of a reduction in force in the second quarter of fiscal 2006, offset in part by higher UL fees for the nine month period.  As a percent of revenues, research and development expense declined 2.1% and 1.7% , respectively, for the three and nine month periods ended December 31, 2005.  The decrease in research and development expense as a percent of revenues for the three and nine month periods was primarily due to the above-described decrease in salary expense and to the 17.0% and 28.0% increase in revenues, respectively.

 Other income (expense) was $(49,933) of expense for the quarter ended December 31, 2005, compared to income of $5,853 in the same quarter last year, an increase in expense of $55,786.  For the nine-month period ended December 31, 2005, other income and expense was an expense of $(144,361), compared to income of $19,723 for the same period last year, an increase in expense of $164,084.  The increase in expense for the three and nine-month periods ended December 31, 2005 over the comparable prior year periods was attributed to interest expense associated with a higher loan balance and less cash and cash equivalents and short-term investment balances on which to earn interest.  

 Income tax expense as a percent of income before income taxes was 20.0% for the three and nine months ended December 31, 2005, compared with 3.8% and 30.0% for the three and nine months ended December 31, 2004, respectively.  The Company's effective tax rate varies based primarily on the mix of income before income taxes derived from the Company's 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, the Company makes its best estimate of the effective tax rate expected for the full fiscal year and applies 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.  The Company's income tax expense was only 3.8% of income in the third quarter of last year, because the Company reduced its estimate of the effective tax rate from 33.0% to 30.0% during that quarter resulting in the lower quarterly tax rate.  In accordance with SFAS 109, “Accounting for Income Taxes”, the Company does 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 the subsidiary will be remitted in the foreseeable future, but U.S. income taxes have not been recognized by the Company, the Company will record as an expense of the current period the U.S. income taxes attributed to that remittance.

         Net income for the quarter ended December 31, 2005 was $826,168, compared to net income of $162,913, in the same quarter last year, an increase of $663,255.  Basic and diluted earnings per share were $.14 for the quarter ended December 31, 2005, compared to basic and diluted earnings of $.03 per share for the same quarter last year.  Net income for the nine-month period ended December 31, 2005 was $874,260, compared to $1,154,628, for the same period in the prior year, a decrease of $280,368.  Basic and diluted earnings per share were $.15 for the nine-month period ended December 31, 2005, compared to basic earnings of $.20 per share and diluted earnings of $.19 for the same period of the prior year.  Net income for the three and nine-month periods ended December 31, 2005, compared to comparable periods, was impacted by those factors mentioned above.

LIQUIDITY AND CAPITAL RESOURCES

 As of December 31, 2005, the Company's cash and cash equivalents increased to $1,216,631 from $815,411 as of March 31, 2005.  Cash provided by operating activities was $3,591,474, cash used by investing activities was $602,130 and cash used by financing activities was $2,588,124, resulting in a total increase of $401,220 for the nine-month period ended December 31, 2005. 

 Cash provided by operating activities was primarily due to net income of $874,260, depreciation in the amount of $932,353 and a decrease in accounts receivable and inventories of $4,100,635 and $328,688, respectively, offset in part by a decrease in accounts payable of $2,482,640 and accrued expenses of $421,909.  The decrease in accounts receivable was primarily due to collections resulting from the Company's RAC customers.  Inventories decreased as a result of the Company using inventories for the new RAC season, which were purchased earlier in the fiscal year.  In general, due to the seasonality of the RAC market, accounts receivable and accounts payable will decrease in the Company's first and second fiscal quarters and increase in the Company's third and fourth fiscal quarters.  The decrease in accounts payable and accrued expenses was primarily the result of the Company's increased liquidity.  

 Cash used by investing activities was primarily for purchases of capital equipment.  The Company’s capital expenditures were $595,986 for the nine-month period ended December 31, 2005, compared to $3,292,439 for the same period last year, at which time the Company was tooling up for increased production to support the new RAC market in fiscal 2005.

 Cash used by financing activities was primarily due to the net reduction in debt in the amount of $2,350,000 and payments of $259,766 in cash dividends.

 On December 22, 2005, the Company extended the maturity date of the revolving credit agreement with its institutional lender to September 30, 2007.  The loan facility provides for borrowings up to $6,000,000.  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.  The Company is currently borrowing under the LIBOR option (6.01% as of December 31, 2005).  The loan is collateralized with a perfected first security interest which attaches to all of its 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 December 31, 2005, the Company had $3,000,000 in outstanding borrowings, of which $1,000,000 was recorded as current portion of long-term debt and $2,000,000 was recorded as long-term debt, less current portion.  The Company has the right to prepay any outstanding borrowings at any time and intends to repay the $1,000,000 in current portion of long-term debt prior to December 31, 2006, and accordingly, the Company has classified this amount as a current liability.  The Company was in compliance with the covenants under the revolving credit agreement as of December 31, 2005.

 On April 14, 2005, the Company entered into a $3,000,000 six-month term loan agreement with its institutional lender.  This credit facility was intended to be used in the event that the Company's cash requirements extend beyond the existing line of credit noted above.  The provisions of the term loan agreement were substantively identical to those of the existing line of credit.  No borrowings were made under this term loan agreement.  On October 13, 2005, this credit facility was extended for 90 days.  The credit facility expired unused on January 14, 2006.

 The Company believes cash flow from operations, the available bank borrowings and cash and cash equivalents will be sufficient to meet its working capital requirements for the next 12 months.

OFF-BALANCE SHEET ARRANGEMENTS

 The Company does 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, the Company is not exposed to any financing , liquidity, market or credit risk that could arise if the Company had such relationships.

NEW ACCOUNTING STANDARDS

 In November 2004, the FASB issued Statement of Financial Accounting Standard (SFAS) No. 151 - Inventory Costs, to amend the guidance in Chapter 4, "Inventory Pricing", of FASB Accounting Research Bulletin No. 43, Restatement and Revision of Accounting Research Bulletins.  SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and waste material (spoilage).  The Statement requires that items be recognized as current-period charges.  Additionally, SFAS No. 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities.  The adoption of SFAS No. 151 is not expected to have a material effect on the Company's financial condition, results of operations or cash flows.

 In December 2004, the FASB issued SFAS No. 123(R) - Accounting for Stock-Based Compensation.  SFAS No. 123(R) is a revision of SFAS No. 123 and supersedes APB Opinion No. 25, Accounting for Stock issued to Employees, and its related implementation guidance.  This statement establishes standards for the accounting for transactions in which an entity exchanges its equity for goods and services.  It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair market value of the entity's equity instruments or that may be settled by the issuance of those equity instruments.  The statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.  That cost is recognized over the period during which an employee is required to provide service in exchange for the award.  This statement is effective for small business issuers as of the beginning of the first interim or annual period that begins after December 15, 2005.  Depending on the nature and extent of any future share-based payments, the application of SFAS No. 123(R) may have a material effect on the Company's financial condition, results of operations and cash flows.

 In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets," effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005.  APB Opinion No. 29, "Accounting for Nonmonetary Transactions," was based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged.  The guidance in that Opinion, however, included certain exceptions to that principle.  SFAS 153 amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance.  The adoption of SFAS 153 will only affect the Company’s financial condition and results of operations if it has such exchanges in the future.

 In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,” effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.  SFAS 154 replaces APB Opinion 20 and SFAS 3.  Among other changes, SFAS 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impractical to determine either the periods-specific effects or the cumulative effect of the change.  SFAS 154 also requires that a change in depreciation, amortization, or depletion method for long-lived non-financial assets be accounted for as a change in accounting estimate affected by a change in accounting principle.  The adoption of SFAS 154 will only affect the Company’s financial condition and results of operations if it has such changes or corrections of errors in the future.

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 the Company’s financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on the Company’s financial condition and results of operations.  Specifically, critical accounting estimates have the following attributes:  (i) the Company is required to make assumptions about matters that are highly uncertain at the time of the estimate; and (ii) different estimates the Company 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 the Company’s financial condition or results of operations.

 Estimates and assumptions about future events and their effects cannot be determined with certainty.  The Company bases its 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 the Company’s operating environment changes.  These changes have historically been minor and have been included in the consolidated financial statements once known.  In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time.  These uncertainties are discussed in the section above entitled Forward-Looking Statements and in section Item 1A below, entitled Risk Factors.  Based on a critical assessment of its accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that the Company’s consolidated financial statements are fairly stated in accordance with United States generally accepted accounting principles and present a meaningful presentation of the Company’s financial condition and results of operations. 

 Management believes that the following are critical accounting policies:

 Revenue Recognition.  The Company recognizes revenue from commercial customers when an order has been received, pricing is fixed, title to the product has passed and collectibility 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.  There are no customer acceptance provisions included in the Company's sales contracts and the Company has 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. 

 The Company 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) ("non-standard" products) or fall outside the scope of SOP 81-1 ("standard" products).  For government contracts within the scope of SOP 81-1, the Company records 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, the Company records revenue the same as 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.  The Company has not experienced past losses on government contracts.  

 Allowance for Doubtful Accounts.  The Company records an allowance for estimated losses resulting from the inability of isolated customers to make timely payments of amounts due on account of product purchases.  The Company assesses the credit worthiness of its 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 the Company's customers were to worsen, additional write-offs could be required, resulting in write-offs not included in the Company's current allowance for doubtful accounts.

 Income Taxes.  Significant management judgment is required in developing the Company’s 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 the Company's intention to reinvest undistributed earnings of its 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 its foreign subsidiary are paid as dividends to the Company.  The Company applies the Comparable Profits Method for transfer pricing to determine the amounts its subsidiary charges to the parent.

 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 estimate of probable liabilities, calculated as a function of sales volume and historical repair experience for each product under warranty.  The Company's warranty reserve represents the Company's estimate of its liability for warranty repairs that it will incur over the warranty period.

 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 its 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).  A reserve is established for inventory that has had no activity for long periods of time or for which management believes is no longer salable.  This reserve is reviewed and approved by the senior management team.  In the future, based on our quarterly analysis, if we estimate that any remaining reserve for obsolescence is either inadequate or in excess of the inventory reserve required, we may need to adjust it. At present, based on our analysis, we believe the reserve is properly valued for the inventory held by us.

 Impairment of Long-Lived Assets.  The Company reviews 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 the Company's 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, the Company recognizes an impairment loss equal to the difference between its carrying value and its fair value.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

 The Company has no derivative instruments as of December 31, 2005.  The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s debt obligations due to its variable LIBOR Rate pricing.  Accordingly, a 1.0% change in LIBOR would result in an annual interest expense change of approximately $30,000.

Item 4.  Controls and Procedures.

 As of the end of the period covered by this interim report on Form 10-Q, the Company carried out, under the supervision and with the participation of the Company’s Chief Executive Officer ("CEO") and Chief Financial Officer (“CFO”) (the “Certifying Officers”), an evaluation of the effectiveness of its “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 the Company’s disclosure controls and procedures were effective. 

 Further, there were no changes in the Company’s internal control over financial reporting during the Company’s third fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.  Legal Proceedings.

 On August 3, 2005, the Company filed a lawsuit in the United States District Court, Middle District of Florida, Tampa Division, against Tower Manufacturing Corporation (Tower), of Providence, R. I., alleging willful infringement of U.S. Patent No. 6,292,337, which underlies the Company’s Fire Shield® technology for cord fire prevention.  The Company alleges in the lawsuit that the Tower LCDI, found on portable room air conditioners, infringes TRC’s patent.  As described in the Complaint, the Company is seeking injunctive relief, damages for infringement, cost recovery and any other relief deemed just by the Court.  On September 13, 2005, the Company added Fedders Corporation (NYSE-FJC), a global manufacturer of air treatment products, including room air conditioners, as a defendant in the previously filed lawsuit against Tower Manufacturing Corporation.  The amended complaint alleges that the Tower LCDI, found on the Fedders room air conditioners, infringes TRC’s patent.

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

Item 1A.  Risk Factors.

 Shareholders and investors should carefully consider the following risk factors, together with the other information contained in this Form 10-Q and in our Annual Report on Form 10-KSB, before making any investment decision with respect to the Company's securities: 

• Failure to achieve our operating strategy
• Access to capital to fund growth
• Availability and cost increases in raw materials and components
• The loss of or significant decrease in sales to large customers
• Adverse changes in the operations of global manufacturing facilities
• Interruptions in manufacturing operations
• Infringement or loss of proprietary rights
• Seasonality
• Competition from larger companies that produce similar products
• Newly acquired businesses or product lines
• Government regulations could adversely impact our operations

 The scope, complexity and seasonality of the RAC market has and continues to place substantial demands on our production capabilities, information technology systems and other resources.  To service this market effectively, we must: (i) maintain a high level of manufacturing quality and efficiency; (ii) properly manage our third party suppliers and independent sub-contract manufacturers; (iii) continue to enhance our operational, financial and management systems, including our database management, inventory control and distribution systems; (iv) expand, train and manage our employee base; (v) compete with aggressive price cutting by competitors; and (vi) vigorously protect and defend our Fire Shield® patents and intellectual property.

 Regarding compliance with Section 404 of the Sarbanes-Oxley Act of 2002, weaknesses in internal control over financial reporting, currently unknown, may be identified as we document, test, and assess such controls.

 The risks listed above are not the only risks that we face.  Additional risks that are not yet known or that we currently believe to be immaterial may also impair business operations.

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.

       Not applicable.

Item 5.  Other information.

 In December 2005, the Company hired Barry H. Black as its Chief Financial Officer, effective January, 2006.  The Company and Mr. Black agreed that they would enter into an agreement providing for a severance payment of one year’s base compensation if there is a change of control or ownership of the Company, or there is a change in the chief executive officer, and Mr. Black’s employment is Involuntarily Terminated (as that term is defined in the agreement executed on January 23, 2006).  A copy of the Change of Control  Agreement is attached to this Form 10-Q as Exhibit 10.1.

Item 6.  Exhibits.

Exhibits:
	Exhibit 10.1 —  Change of Control Agreement with Barry H. Black, VP of Finance and CFO, dated January 23, 2006.
	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
February 14, 2006	By:       /s/ Robert S. Wiggins
	Robert S. Wiggins
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)
February 14, 2006	By:       /s/ Barry H. Black
	Barry H. Black
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Robert S. Wiggins, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Technology Research Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant  and have:
		a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		b.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		c.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
		a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
		b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

DATE:   February 14, 2006	/s/ Robert S. Wiggins
	Robert S. Wiggins
	Chairman of the Board, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with this Interim Report on Form 10-Q of Technology Research Corporation (the “Company”) for the quarter ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned President and Chief Executive Officer certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  February 14, 2006	/s/ Robert S. Wiggins
	Robert S. Wiggins
	Chairman of the Board, President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Technology Research Corporation and will be retained by Technology Research Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

EX-10.1

Exhibit 10.1

CHANGE OF CONTROL AGREEMENT

THIS CHANGE OF CONTROL AGREEMENT (the "Agreement") is entered into as of January 23, 2006, by and between Technology Research Corporation, a Florida corporation (the "Company"), and Barry H. Black ("Executive").

BACKGROUND INFORMATION

On January 3, 2006, the Company issued a press release announcing that Executive was appointed as Vice President of Finance and Chief Executive Officer of the Company and further noted that the Company and Executive would formalize a change of control agreement by January 31, 2006. Because the Company and Executive have agreed that should a change in control or ownership in the Company occur, or a change in the Chief Executive Officer of the Company occur and the Executive’s employment is terminated for other than Cause or his voluntary resignation, Executive shall be entitled to a severance payment equal to one year of salary, but all employee benefits will terminate on the Executive’s termination date. Because the Company recognizes that the uncertainty which might arise in the context of a change in control of the Company or change in the position of the Chief Executive Officer of the Company could result in the distraction or departure of Executive to the detriment of the Company and its shareholders, the Company and the Executive desire to set forth in this Agreement the terms and conditions that will trigger a severance payment upon a change in the position of Chief Executive Officer or actual change of control of the Company.

In consideration of the mutual promises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive agree as follows:

OPERATIVE PROVISIONS

1.DEFINITIONS

1.1"Term" shall mean the period commencing with the effective date of this Agreement and continuing until the Executive’s employment with the Company is terminated.

1.2"Cause" shall mean a termination of Executive's employment which is a result of Executive’s:

(a)   felony conviction;

(b)   willful disclosure of material trade secrets or other material confidential information related to the business of the Company and its subsidiaries; or

(c)   willful and continued failure to substantially perform his duties with the Company (other than any such failure resulting from his incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by Executive for Good Reason) after a written demand for performance is delivered to Executive by the Company, which demand specifically identifies the manner in which the Company believes that Executive has not substantially performed Executive's duties, and which performance is not substantially corrected by Executive within a period of time to be specified by the Company's Board of Directors (the “Board"). For purposes of the previous sentence, no act or failure to act on Executive's part shall be deemed "willful" unless done, or omitted , by Executive in bad faith or without a good faith, reasonable belief that Executive's action or omission was in the best interest of the Company.

1.3"Change of Control" means any of the following:

(i) the acquisition by any entity, person, or group of beneficial ownership, as that term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, of more than 35% of the voting power of the Company’s securities;

(ii) the Company's shareholders approve (A) a merger of the Company with or into any other corporation of which the Company is not the surviving corporation or in which the Company survives as a subsidiary of another corporation, (B) a consolidation of the Company with any other corporation, or (C) the sale or disposition of all or substantially all of the Company's assets or the adoption of a plan of complete liquidation;

(iii) the individuals who, as of the date of this Agreement, (x) constitute the Board (the "Current Directors"), (y) are individuals nominated to the Board by the Current Directors, or are individuals nominated by the Company for election at an annual meeting of the Company's stockholders, cease for any reason to constitute at least a majority of the Board; or

(iv) a change in the Company’s Chief Executive Officer occurs, thereby resulting in the resignation, retirement or appointment of a successor to the Company’s current Chief Executive Officer.

1.4"Change of Control Date" shall mean the earliest of:

(i)the date on which the Change of Control occurs;

(ii)the date on which the Company executes an agreement, the consummation of which would result in the occurrence of a Change in Control; and

(iii)the date the Board approves a transaction or series of transactions, the consummation of which would result in a Change in Control.

1.5"Code" means the Internal Revenue Code of 1986, as may be amended.

1.6"Disability" means the absence of the Executive from the Executive's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness that is determined to be total and permanent by a physician selected by the Company.

1.7“Good Reason” shall mean a resignation of Executive’s employment during the eighteen month period commencing on the Change of Control Date as a result of any of the following:

(a)   a meaningful and detrimental alteration in Executive’s position, or the nature or status of Executive’s responsibilities or in Executive’s reporting responsibilities from those in effect immediately prior to the Change in Control;

(b)   a reduction by the Company in Executive’s annual base salary as in effect immediately prior to the Change in Control Date or as the same may be increased from time to time thereafter or a reduction in Executive’s target annual bonus below the target in effect for Executive on the Change in Control Date; or

(c)   the relocation of the office of the Company where Executive is employed immediately prior to the Change in Control Date to a location which, in Executive’s good faith assessment, would cause a hardship in commuting from Executive’s principal residence.

1.8"Involuntary Termination" shall mean:

(a)   the termination of Executive's employment by the Company during the Term other than for Cause, death or Disability; or

(b)   Executive’s resignation of employment with the Company during the Term for Good Reason.

2.CHANGE OF CONTROL PAYMENT

2.1If, during the Term of this Agreement, a Change of Control occurs and Executive’s employment is Involuntarily Terminated, then the Executive shall be entitled to a severance payment of twelve (12) months of the Executive's base salary, payable in a lump sum payment within thirty days of Executive’s Involuntary Termination.

2.2All Company provided benefits shall terminate at midnight on Executive’s last day of employment with the Company; provided, that Executive shall be eligible to purchase continued health insurance COBRA benefits, as provided under the Consolidated Omnibus Budget Reconciliation Act of 1986, at his expense.

3.NO ASSIGNMENT

This Agreement may not be assigned by either party without the written consent of the other but shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, and distributees, devisees and legatees.

4.GENERAL PROVISIONS

4.1Notices.

All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be made by: (a) certified mail, return receipt requested; (b) Federal Express, Express Mail, or similar overnight delivery or courier service; or (c) delivery (in person or by facsimile, E-Mail or similar telecommunication transmission) to the party to whom it is to be given, to the address appearing elsewhere in this Agreement or to such other address as any party hereto may have designated by written notice forwarded to the other party in accordance with the provisions of this Section 4.1. Any notice or other communication given by certified mail shall be deemed given at the time of certification thereof, except for a notice changing a party’s address which shall be deemed given at the time of receipt thereof. Any notice given by other means permitted by this Section 4.1 shall be deemed given at the time of receipt thereof.

4.2Binding Agreements; Assignability.

Each of the provisions and agreements herein contained shall be binding upon and enure to the benefit of the respective parties hereto, as well as their personal representatives, heirs, devisees, successors and assigns.

4.3Entire Agreement.

This Agreement, and any other document referenced herein, constitute the entire understanding of the parties hereto with respect to the subject matter hereof, and no amendment, modification or alteration of the terms hereof shall be binding unless the same be in writing, dated subsequent to the date hereof and duly approved and executed by each of the parties hereto.

4.4Severability.

Every provision of this Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatever, such illegality or invalidity shall not affect the validity of the remainder of this Agreement.

4.5Headings.

The headings of this Agreement are inserted for convenience and identification only, and are in no way intended to describe, interpret, define or limit the scope, extent or intent hereof.

4.6Application of Florida Law.

This Agreement, and the application or interpretation thereof, shall be governed exclusively by its terms and by the laws of the State of Florida. Venue for all purposes shall be deemed to lie within Pinellas County, Florida.

4.7Counterparts.

This Agreement and any of its Exhibits may be executed in any number of counterparts, by means of multiple signature pages each containing less than all required signatures, and by means of facsimile signatures, each of which shall be deemed an original, but all of which together shall constitute one and the same document.

4.8Jurisdiction.

The parties agree that, irrespective of any wording that might be construed to be in conflict with this paragraph, this agreement is one for performance in Florida. The parties to this agreement agree that they waive any objection, constitutional, statutory or otherwise, to a Florida court’s taking jurisdiction of any dispute between them. By entering into this agreement, the parties, and each of them understand that they might be called upon to answer a claim asserted in a Florida court.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from its Board of Directors, the Company hascaused these presents to be executed in its name on its behalf, all as of the day and year first above written.

TECHNOLOGY RESEARCH CORPORATION

By:  /s/ Robert S. Wiggins 

Name: Robert S. Wiggins

Title: Chief Executive Officer

EXECUTIVE

        By:  /s/ Barry H.. Black     

        Barry H. Black