8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 7, 2006 (March 1, 2006)

M-WAVE, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation) 33-45449 (Commission File Number) 36-3809819 (IRS Employer Identification No.)

11533 Franklin Avenue, 2^nd Floor, Franklin Park, Illinois 60131

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (630) 562-5550

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

* Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

* Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

* Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

* Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry Into a Material Definitive Agreement.

On March 1, 2006 (the “Closing Date”), M-Wave, Inc., a Delaware corporation (the “Registrant”) entered into, and simultaneously consummated, an agreement (“Agreement”) whereby it issued an aggregate of 45,648 shares of Series B Convertible Preferred Stock (“Series B Stock”), which are convertible into shares of the Registrant’s common stock (the “Conversion Shares”), to the following entities: (i) Mercator Momentum Fund, LP; (ii) Mercator Momentum Fund III, LP; and (iii) Monarch Pointe Fund, Ltd. (collectively, the “Purchasers”). Each share of Series B Stock has a stated value of $100.00. The Registrant issued the Series B Stock in consideration of the Purchasers canceling $4,564,800 of indebtedness owed to them by the Registrant. In connection with the Agreement, the Registrant reduced the exercise prices of certain common stock purchase warrants previously issued to the Purchasers and to M.A.G. Capital, LLC (“MAG”).

Pursuant to the terms of the Agreement, the Registrant agreed to issue and the Purchasers agreed to purchase an additional 19,000 shares of Series B Stock on March 15, 2006 in exchange for $1,900,000 to be paid to the Registrant in cash on such date.

Background

On the Closing Date, the Registrant issued 45,648 shares of Series B Stock (valued at $4,564,800) to the Purchasers in exchange for the Purchasers canceling $4,564,800 of indebtedness owed to them by the Registrant. The Registrant agreed to issue to the Purchasers an additional 19,000 shares of Series B Stock on March 15, 2006 in exchange for the payment by the Purchasers of $1,900,000 on such date; such funds to be held in a reserve account at the bank currently utilized by the Registrant and released therefrom only upon a resolution by a majority of the Registrant’s independent directors to the effect that the release of such funds (or any portion thereof) is necessary or appropriate under the Registrant’s budget (as approved by the audit committee of the Registrant’s Board of Directors).

The number of Conversion Shares that any of the Purchasers may acquire at any time is subject to limitations in the Certificate of Designations of Preferences and Rights of Series B Stock, as filed with the Secretary of State of the State of Delaware on March 1, 2006, such that the sum of the number of Conversion Shares plus the number of shares of the Registrant’s common stock already owned by any of the Purchasers, does not exceed 9.99% of the Registrant’s then outstanding common stock.

Series B Stock

The Series B Stock is non-voting and is entitled to receive monthly dividends at an annual rate equal to 15%, subject to reduction to 9% after the Registration Statement (as defined below) is declared effective by the Securities and Exchange Commission (“SEC”). The monthly dividends are payable in cash. The number of shares into which one share of Series B Stock shall be convertible shall be determined by dividing $100.00 by $0.79 (subject to adjustment). In addition, the Series B Stock has liquidation preferences and certain other privileges.

Registration of Stock

Pursuant to a Registration Rights Agreement between the Purchasers, MAG and the Registrant, the Registrant agreed to use it best efforts to file a registration statement covering the resale of the Conversion Shares, the shares of common stock underlying the Warrants (as defined below) and the Series A Convertible Preferred Stock issued by the Registrant to the Purchasers on June 17, 2004 (the “Registration Statement”). Such registration rights are more fully set forth in the Registration Rights Agreement attached to this Current Report on Form 8-K as Exhibit 10.2.

The information set forth herein with respect to the Agreement, the Series B Stock, the Warrants and the Registration Rights Agreement is intended to be a summary only. The entire agreements are attached hereto as Exhibits to this Current Report on Form 8-K.

Item 3.02 Unregistered Sales of Equity Securities.

See Item 1.01 of this Current Report on Form 8-K, which item is incorporated herein by reference, for a description of the terms of a preferred stock instrument which is convertible into shares of the Registrant’s common stock.

Item 3.03 Material Modification to Rights of Security Holders.

On the Closing Date, warrants to purchase 2,131,449 shares of common stock of the Registrant previously issued to MAG and to the Purchasers (the “Warrants”) were modified to reduce the exercise prices of the Warrants (previously between $1.27 and $1.02) to the price that was $0.01 above the closing bid price on the business day immediately preceding the Closing Date, or $0.69 per share.

Item 5.03 Amendments to Articles of Incorporation.

See Item 3.02 of this Current Report on Form 8-K, which Item is incorporated herein by reference, for more detailed descriptions of the terms of the transaction that include the issuance of Series B Shares and the filing of the Certificate of Designations of the Preferences and Rights thereof.

Item 7.01. Regulation FD Disclosure.

On March 1, 2006, the Registrant issued a press release announcing completion of the transaction described in Items 1.01, 3.02 and 3.03 above. The press release is attached hereto as Exhibit 99. 1 and is incorporated herein by reference. The press release and the information in this Item 7.01 of this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act, except as shall be expressly set forth by specific reference in such filing.

Item 8.01. Other Events.

NASDAQ compliance

As a result of the Series B Stock financing, the Registrant believes it now complies with the shareholders’ equity requirement for continued listing on The Nasdaq Capital Market and will evidence full compliance with this requirement upon the filing of the Form 10-Q for the quarter ended March 31, 2006.  Specifically, the Registrant expects to report shareholders’ equity in excess of the $2.5 million minimum requirement set forth in Nasdaq Marketplace Rule 4310(c)(2)(B).  As previously disclosed, as of the quarter and nine month period ended September 30, 2005, the Registrant failed to satisfy the $2.5 million shareholders’ equity requirement for continued listing on The Nasdaq Capital Market.  The Registrant presented its plan to regain compliance with that requirement at a hearing before the NASDAQ Listing Qualifications Panel on February 16, 2006.  The Registrant has not yet received a formal decision from the Panel as a result of the hearing and, until such time as the Panel deems the Registrant to be in compliance with the NASDAQ listing criteria, the Registrant can provide no assurances that the Panel will determine to continue the Registrant’s listing on NASDAQ.

Additional information regarding the NASDAQ Staff Deficiency Letter can be found on the Current Report on Form 8-K filed by the Registrant on November 28, 2005.

Voting Agreement

Joseph Turek, Chairman of the Board, President and Chief Operating Officer of the Registrant (“Turek”), has entered into a voting agreement with MAG and Mercator Momentum Fund, LP whereby Turek has agreed to vote all voting securities of the Registrant currently owned or thereafter acquired by him in favor of a significant acquisition of another company, or of the business or assets of another company, that is recommended by the Special Committee of the Registrant’s Board of Directors. The voting agreement terminates on the earlier of its one-year anniversary or upon the closing of any such acquisition. The voting agreement is attached hereto as Exhibit 10.4.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

Exhibit No.	Description
3.1	Certificate of Designations of Preferences and Rights of Series B Convertible Preferred Stock of M-Wave, Inc.
10.1	Subscription Agreement by and among: M-Wave, Inc.; Mercator Momentum Fund, LP; Mercator Momentum Fund III, LP; Monarch Pointe Fund, Ltd.; and M.A.G. Capital, LLC dated March 1, 2006.
10.2	Registration Rights Agreement by and among: M-Wave, Inc.; Mercator Momentum Fund, LP; Mercator Momentum Fund III, LP; Monarch Pointe Fund, Ltd.; and M.A.G. Capital, LLC dated March 1, 2006.
10.3	Amendment modifying the terms of existing warrants held by Mercator Momentum Fund, LP; Mercator Momentum Fund III, LP; Monarch Pointe Fund, Ltd.; and M.A.G. Capital, LLC, dated March 1, 2006.
10.4	Voting Agreement by and among Joseph A. Turek, M.A.G. Capital, LLC, and Mercator Momentum Fund III, LP.
99.1	Press Release of M-Wave, Inc. dated March 1, 2006.

This Current Report on Form 8-K may contain, among other things, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements with respect to the Registrant’s plans, objectives, expectations and intentions; and (ii) other statements identified by words such as “may”, “could”, “would”, “should”, “believes”, “expects”, “anticipates”, “estimates”, “intends”, “plans” or similar expressions. These statements are based upon the current beliefs and expectations of the Registrant’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond the Registrant’s control).

SIGNATURES

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

	M-WAVE, INC.
	(Registrant)
	By	/s/ Jim Mayer
		Jim Mayer
	Interim Chief Executive Officer
Dated: March 7, 2006

EX-3.1

State of Delaware

Secretary of State

Division of Corporations

Filed 04:02 PM 03/01/2006

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CERTIFICATE OF DESIGNATIONS OF PREFERENCES AND RIGHTS OF

SERIES B CONVERTIBLE PREFERRED STOCK

OF

M-WAVE, INC.

a Delaware corporation

The undersigned, Joseph A. Turek and Jeffrey Figlewicz, certify that:

1. They are the duly acting President and Secretary, respectively, of M-WAVE, INC., a corporation organized and existing under the Corporations Code of the State of Delaware (the “Corporation”).

2. Pursuant to authority conferred upon the Board of Directors by the Certificate of Incorporation of the Corporation, and pursuant to the provisions of the Corporations Code of the State of Delaware said Board of Directors, pursuant to unanimous written consent dated February 27, 2006, adopted a resolution establishing the rights, preferences, privileges and restrictions of, and the number of shares comprising, the Corporation's Series B Convertible Preferred Stock, which resolution is as follows:

RESOLVED, that a series of Preferred Stock in M-Wave, Inc., a Delaware corporation (the “Corporation”), having the rights, preferences, privileges and restrictions, and the number of shares constituting such series and the designation of such series, set forth below be, and it hereby is, authorized by the Board of Directors of the Corporation pursuant to authority given by the Corporation's Certificate of Incorporation.

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes and determines the Designations of, the number of shares constituting, and the rights, preferences, privileges and restrictions relating to, a new series of Preferred Stock as follows:

(a) Determination.   The series of Preferred Stock is hereby designated Series B Convertible Preferred Stock (the “Series B Preferred Stock”).

(b) Authorized Shares.   The number of authorized shares constituting the Series B Preferred Stock shall be seventy thousand 70,000 shares of such series.

(c) Dividends.   Commencing on the date of issuance of the Series B Preferred Stock, the Corporation shall pay on each outstanding share of Series B Preferred Stock out of funds legally available therefor a monthly dividend (the “Dividend”), at an annual rate equal to 15%; provided, however, that the annual rate shall be 9% from and after the date the Registration Statement (as defined in the Subscription Agreement for the Series B Preferred Stock) is declared effective by the Securities and Exchange Commission. The Dividend shall be payable monthly in arrears in cash on the last day of each month based on the number of shares of Series B Preferred Stock outstanding as of the first day of such month. The holder of the Series B Preferred Stock shall also be entitled to receive, when, as and if declared by the Board of Directors, out of any assets of the Corporation legally available therefor, any such other dividends as may be declared from time to time by the Board of Directors.

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State of Delaware

Secretary of State

Division of Corporations

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(d) LiquidationPreference.

(i) Preference upon Liquidation, Dissolution or Winding Up.   In the event of any dissolution or winding up of the Corporation, whether voluntary or involuntary, holders of each outstanding share of Series B Preferred Stock shall be entitled to be paid first out of the assets of the Corporation available for distribution to shareholders, whether such assets are capital, surplus or earnings, an amount equal to (x) the Series B Purchase Price per share of Series B Preferred Stock held (as adjusted for any stock splits, stock dividends or recapitalizations of the Series B Preferred Stock) plus (y) any declared but unpaid dividends on such share plus (z) in the event of a Sale Transaction that is deemed by the Corporation to be a liquidation, dissolution or winding up of the Corporation pursuant to subsection (iii) of this paragraph (d), an amount equal to the six percent (6%) of the Series B Purchase Price per share of Series B Preferred Stock held, before any payment shall be made to the holders of the Common Stock, or any other stock of the Corporation ranking junior to the Series B Preferred Stock with regard to any distribution of assets upon liquidation, dissolution or winding up of the Corporation. The holders of the Series B Preferred Stock shall be entitled to share ratably, in accordance with the respective preferential amounts payable on such stock, in any distribution which is not sufficient to pay in full the aggregate of the amounts payable thereon. If, upon any liquidation, dissolution or winding up of the Corporation, the assets to be distributed to the holders of the Series B Preferred Stock shall be insufficient to permit payment to such shareholders of the full preferential amounts aforesaid, then all of the assets of the Corporation available for distribution to shareholders shall be distributed to the holders of Series B Preferred Stock. Each holder of the Series B Preferred Stock shall be entitled to receive that portion of the assets available for distribution as the number of outstanding shares of Series B Preferred Stock held by such holder bears to the total number of shares of Series B Preferred Stock. Such payment shall constitute payment in full to the holders of the Series B Preferred Stock upon the liquidation, dissolution or winding up of the Corporation. After such payment shall have been made in full, or funds necessary for such payment shall have been set aside by the Corporation in trust for the account of the holders of Series B Preferred Stock, so as to be available for such payment, such holders of Series B Preferred Stock shall be entitled to no further participation in the distribution of the assets of the Corporation.

(ii)Consolidation, Merger and Other Corporate Events.   A consolidation or merger of the Corporation (except into or with a subsidiary corporation) or any reclassification of the stock of the Corporation (other than a change in par value or from no par to par, or from par to no par or as the result of an event described in subsection (iv), (v), (vi) or (viii) of paragraph (f)), shall be regarded as a liquidation, dissolution or winding up of the affairs of the Corporation within the meaning of this paragraph (d); provided however, in the case of a merger, if (a) the Company is the surviving entity, (b) the Company’s shareholders hold a majority of the shares of the surviving entity, and (c) the Company’s directors hold a majority of the seats on the board of directors of the surviving entity, then such merger shall not be regarded as a liquidation, dissolution or winding up within the meaning of this paragraph (d). In no event shall the issuance of new classes of stock, whether senior, junior or on a parity with the Series B Preferred Stock, or any stock splits, be deemed a “reclassification” under or otherwise limited by the terms hereof.

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State of Delaware

Secretary of State

Division of Corporations

Filed 04:02 PM 03/01/2006

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(iii) Sale of Assets.   In the event of a sale, lease, mortgage, pledge, exchange, transfer or other disposition of material assets of the Corporation other than in the ordinary course of business (a “Sale Transaction”), the proceeds of such Sale Transaction shall be held in a reserve account at the bank currently utilized by the Corporation and, for so long as any shares of Series B Preferred Stock are outstanding, none of such proceeds shall be released from such account except to satisfy amounts due to holders of Series B Preferred Stock pursuant to subsection (i) of this paragraph (d). For purposes of this subsection (iii), a sale, lease, mortgage, pledge, exchange, transfer or other disposition of assets shall be considered material if the proceeds from the disposition thereof exceed $25,000, net of selling and vendor expenses allocated to such asset. The Corporation may elect to regard a Sale Transaction as a liquidation, dissolution or winding up of the affairs of the Corporation within the meaning of this paragraph (d).

(iv) Distribution of Cash and Other Assets.   In the event of a liquidation, dissolution or winding up of the Corporation resulting in the availability of assets other than cash for distribution to the holders of the Series B Preferred Stock, the holders of the Series B Preferred Stock shall be entitled to a distribution of cash and/or assets equal to the value of the liquidation preference stated in subsection (i) of this paragraph (d), which valuation shall be made solely by the Board of Directors, and provided that such Board of Directors was acting in good faith, shall be conclusive.

(v) Distribution to Junior Security Holders.   After the payment or distribution to the holders of the Series B Preferred Stock of the full preferential amounts aforesaid, the holders of Series B Preferred Stock shall have no further rights in respect of such Series B Preferred Stock which shall become null and void and the holders of the Common Stock then outstanding, or any other stock of the Corporation ranking as to assets upon liquidation, dissolution or winding up of the Corporation junior to the Series B Preferred Stock, shall be entitled to receive ratably all of the remaining assets of the Corporation.

(vi) Preference; Priority.   References to a stock that is “senior” to, on a “parity” with or “junior” to other stock as to liquidation shall refer, respectively, to rights of priority of one series or class of stock over another in the distribution of assets on any liquidation, dissolution or winding up of the Corporation. The Series B Preferred Stock shall be senior to the Common Stock of the Corporation and senior to any subsequent series of Preferred Stock issued by the Corporation.

(e)Voting Rights.   Except as otherwise required by law, the holder of shares of Series B Preferred Stock shall not have the right to vote on matters that come before the shareholders.

(f)Conversion Rights.   The holders of Series B Preferred Stock will have the following conversion rights:

(i)Right to Convert.   Subject to and in compliance with the provisions of this paragraph (f), any issued and outstanding shares of Series B Preferred Stock may, at the option of the holder, be converted at any time or from time to time into fully paid and non-assessable shares of Common Stock at the conversion rate in effect at the time of conversion, determined as provided herein; provided, that a holder of Series B Preferred Stock may at any given time convert only up to that number of shares of Series B Preferred Stock so that, upon conversion, the aggregate beneficial ownership of the Corporation’s Common Stock (calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of such holder and all persons affiliated with such holder is not more than 9.99% of the Corporation’s Common Stock then outstanding.

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State of Delaware

Secretary of State

Division of Corporations

Filed 04:02 PM 03/01/2006

SRV 060204240 - 2286816 FILE

(ii) Mechanics of Conversion.   Before any holder of Series B Preferred Stock shall be entitled to convert the same into shares of Common Stock, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Common Stock, and shall give written notice to the Corporation at such office that he elects to convert the same and shall state therein the number of shares of Series B Preferred Stock being converted. Thereupon, the Corporation shall promptly issue and deliver at such office to such holder of Series B Preferred Stock a certificate or certificates for the number of shares of Common Stock to which he shall be entitled. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Series B Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.

(iii) Conversion Price.   The number of shares into which one share of Series B Preferred Stock shall be convertible shall be determined by dividing $100.00 (the “Series B Purchase Price”) by the then existing Conversion Price (as set forth below) (the “Conversion Ratio”). The "Conversion Price" per share for the Series B Preferred Stock shall be $0.79, subject to adjustment upon the occurrence of any event in paragraph (f)(iv)-(vi).

(iv) Adjustment for Stock Splits and Combinations.   If the Corporation shall at any time, or from time to time after the date shares of the Series B Preferred Stock are first issued (the “Original Issue Date”), effect a subdivision of the outstanding Common Stock, the Conversion Price in effect immediately prior thereto shall be proportionately decreased, and conversely, if the Corporation shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Conversion Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this paragraph (f)(iv) shall become effective at the close of business on the date the subdivision or combination becomes effective.

(v) Adjustment for Certain Dividends and Distributions.   In the event the Corporation at any time, or from time to time after the Original Issue Date, shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then and in each such event the Conversion Price then in effect shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Conversion Price then in effect by a fraction:

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State of Delaware

Secretary of State

Division of Corporations

Filed 04:02 PM 03/01/2006

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(A) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

(B) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter, the Conversion Price shall be adjusted pursuant to this paragraph (f)(v) as of the time of actual payment of such dividends or distributions.

(vi) Adjustments for Other Dividends and Distributions.   In the event the Corporation at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, then and in each such event provision shall be made so that the holders of such Series B Preferred Stock shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they would have received had their Series B Preferred Stock been converted into Common Stock on the date of such event and had thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period giving application to all adjustments called for during such period under this paragraph (f) with respect to the rights of the holders of the Series B Preferred Stock.

(vii) Adjustment for ReclassificationExchange or Substitution.   If the Common Stock issuable upon the conversion of the Series B Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation or sale of assets provided for elsewhere in this paragraph (f)), then and in each such event the holder of each share of Series B Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification or other change, by holders of the number of shares of Common Stock into which such shares of Series B Preferred Stock might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein.

(viii) Reorganization, Mergers, Consolidations or Sales of Assets.   If at any time or from time to time there shall be a capital reorganization of the Common Stock (other than a subdivision, combination, reclassification or exchange of shares provided for elsewhere in this paragraph (f)) or a merger or consolidation of the Corporation with or into another corporation, or the sale of all or substantially all of the Corporation’s properties and assets to any other person, then, as a part of such reorganization, merger, consolidation or sale, provision shall be made so that the holders of the Series B Preferred Stock shall thereafter be entitled to receive upon conversion of such Series B Preferred Stock, the number of shares of stock or other securities or property of the Corporation or of the successor corporation resulting from such merger or consolidation or sale, to which a holder of Common Stock deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation or sale. In any such case, appropriate adjustment shall be made in the application of the provisions of this paragraph (f) with respect to the rights of the holders of the Series B Preferred Stock after the reorganization, merger, consolidation or sale to the end that the provisions of this paragraph (f) (including adjustment of the Conversion Price then in effect and the number of shares purchasable upon conversion of the Series B Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable.

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State of Delaware

Secretary of State

Division of Corporations

Filed 04:02 PM 03/01/2006

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(ix)Certificate of Adjustment.   In each case of an adjustment or readjustment of the Conversion Price or the securities issuable upon conversion of the Series B Preferred Stock, the Corporation shall compute such adjustment or readjustment in accordance herewith and the Corporation’s Chief Financial Officer shall prepare and sign a certificate showing such adjustment or readjustment, and shall mail such certificate by first class mail, postage prepaid, to each registered holder of the Series B Preferred Stock at the holder’s address as shown in the Corporation’s books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based.

(x) Notices of Record Date.   In the event of (A) any taking by the Corporation of a record of the holders of any class or series of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution or (B) any reclassification or recapitalization of the capital stock of the Corporation, any merger or consolidation of the Corporation or any transfer of all or substantially all of the assets of the Corporation to any other corporation, entity or person, or any voluntary or involuntary dissolution, liquidation or winding up of the Corporation, the Corporation shall mail to each holder of Series B Preferred Stock at least 10 days prior to the record date specified therein, a notice specifying (1) the date on which any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution, (2) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective and (3) the time, if any is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares, of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up.

(xi) Fractional Shares.   No fractional shares of Common Stock shall be issued upon conversion of the Series B Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to the product of such fraction multiplied by the fair market value of one share of the Corporation’s Common Stock on the date of conversion, as determined in good faith by the Board of Directors.

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State of Delaware

Secretary of State

Division of Corporations

Filed 04:02 PM 03/01/2006

SRV 060204240 - 2286816 FILE

(xii) Reservation of Stock Issuable Upon Conversion.   The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series B Preferred Stock, 8,183,291 shares of Common Stock, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series B Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

(xiii) Notices.   Any notice required by the provisions of this paragraph (f) to be given to the holders of shares of Series B Preferred Stock shall be deemed given (A) if deposited in the United States mail, postage prepaid, or (B) if given by any other reliable or generally accepted means (including by facsimile or by a nationally recognized overnight courier service), in each case addressed to each holder of record at his address (or facsimile number) appearing on the books of the Corporation.

(xiv) Payment of Taxes.   The Corporation will pay all transfer taxes and other governmental charges that may be imposed in respect of the issue or delivery of shares of Common Stock upon conversion of shares of Series B Preferred Stock.

(xv) No Dilution or Impairment.   The Corporation shall not amend its Certificate of Incorporation or participate in any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, for the purpose of avoiding or seeking to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, without the approval of a majority of the then outstanding Series B Preferred Stock.

(g) No Reissuance of Preferred Stock.   Any shares of Series B Preferred Stock acquired by the Corporation by reason of purchase, conversion or otherwise shall be canceled, retired and eliminated from the shares of Series B Preferred Stock that the Corporation shall be authorized to issue. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth in the Certificate of Incorporation or in any certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law.

(h) Non-transferable.   The Series B Preferred Stock is non-transferable except by operation of law.

(i)Severability.   If any right, preference or limitation of the Series B Preferred Stock set forth herein is invalid, unlawful or incapable of being enforced by reason of any rule, law or public policy, all other rights, preferences and limitations set forth herein that can be given effect without the invalid, unlawful or unenforceable right, preference or limitation shall nevertheless remain in full force and effect, and no right, preference or limitation herein shall be deemed dependent upon any other such right, preference or limitation unless so expressed herein.

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State of Delaware

Secretary of State

Division of Corporations

Filed 04:02 PM 03/01/2006

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3. The number of authorized shares of Preferred Stock of the Corporation is one million (1,000,000), and the number of shares of Series B Preferred Stock, none of which has been issued, is 70,000.

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State of Delaware

Secretary of State

Division of Corporations

Filed 04:02 PM 03/01/2006

SRV 060204240 - 2286816 FILE

Each of the undersigned declares under penalty of perjury that the matters set out in the foregoing Certificate are true of his own knowledge. Executed at West Chicago, Illinois, on this 1^st day of March, 2006.

/s/ Joseph A. Turek

Name: Joseph A. Turek

Title:   President

/s/ Jeffrey Figlewicz

Name: Jeffrey Figlewicz

Title:   Secretary

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EX-10.1

M-Wave, Inc.

Shares of Series B Convertible Preferred Stock

SUBSCRIPTION AGREEMENT

	March 1, 2006
M.A.G. Capital, LLC
Mercator Momentum Fund, LP
Mercator Momentum Fund III, LP
Monarch Pointe Fund, Ltd.
555 South Flower Street, Suite 4200
Los Angeles, California 90071

Ladies and Gentlemen:

M-Wave, Inc., a Delaware corporation (the "Company"), hereby confirms its agreement with Mercator Momentum Fund, LP ("MMF"), Mercator Momentum Fund III, LP ("MMF III"), and Monarch Pointe Fund, Ltd. ("Monarch" and, together with MMF and MMF III, the "Purchasers"), and M.A.G. Capital, LLC ("MAG") as set forth below.

1. The Securities.   Subject to the terms and conditions herein contained, the Company proposes to issue and sell to the Purchasers an aggregate of: (a) 64,648 shares (the "Shares") of its Series B Convertible Preferred Stock (the "Series B Stock"), which shall be convertible into shares (the "Conversion Shares") of the Company's Common Stock (the "Common Stock") in accordance with the formula set forth in the Certificate of Designations further described below. The rights, preferences and privileges of the Series B Stock are as set forth in the Certificate of Designations of Series B Preferred Stock as filed with the Secretary of State of the State of Delaware (the "Certificate of Designations") in the form attached hereto as Exhibit A. The numbers of Conversion Shares that any Purchaser may acquire at any time are subject to limitation in the Certificate of Designations, so that the aggregate number of shares of Common Stock of which such Purchaser and all persons affiliated with such Purchaser have beneficial ownership (calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended) does not at any time exceed 9.99% of the Company's then outstanding Common Stock.

The Shares are sometimes herein referred to as the "Securities." This Agreement, the Certificate of Designations and the Registration Rights Agreement, in the form attached hereto as Exhibit B (the "Registration Rights Agreement") are sometimes herein collectively referred to as the "Transaction Documents."

The Securities will be offered and sold to the Purchasers without such offers and sales being registered under the Securities Act of 1933, as amended (together with the rules and regulations of the Securities and Exchange Commission (the "SEC") promulgated thereunder, the "Securities Act"), in reliance on exemptions therefrom.

Each Purchaser and MAG acknowledges that notwithstanding the terms of the Registration Rights Agreement, the Company may issue the Conversion Shares in unregistered form; provided, however, that the immediately preceding clause shall not affect the obligations of the Company under this Agreement and under Section 2 and Section 3 of the Registration Rights Agreement to file the Registration Statement and to use its best efforts to cause the Registration Statement to become effective with the SEC within the applicable periods described herein and in the Registration Rights Agreement.

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In connection with the sale of the Securities, the Company has made available (including electronically via the SEC's EDGAR system) to Purchasers its periodic and current reports, forms, schedules, proxy statements and other documents (including exhibits and all other information incorporated by reference) filed with the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These reports, forms, schedules, statements, documents, filings and amendments, are collectively referred to as the "Disclosure Documents." All references in this Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" in the Disclosure Documents (or other references of like import) shall be deemed to mean and include all such financial statements and schedules, documents, exhibits and other information which is incorporated by reference in the Disclosure Documents.

2. Representations and Warranties of the Company.   Except as set forth in the Disclosure Documents and on the Disclosure Schedule contained in Schedules A through D attached hereto and made a part hereof (the"Disclosure Schedule"), the Company represents and warrants to and agrees with Purchasers and MAG as follows:

(a) The Disclosure Documents as of their respective dates did not and will not as of the Closing Date (after giving effect to any updated disclosures therein), contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Disclosure Documents and the documents incorporated or deemed to be incorporated by reference therein, at the time they were filed or hereafter are filed with the SEC, complied and will comply, at the time of filing, in all material respects with the requirements of the Securities Act and/or the Exchange Act, as the case may be, as applicable.

(b) Schedule A attached hereto sets forth a complete list of the subsidiaries of the Company (the "Subsidiaries"). Except as set forth in the Disclosure Documents or on Schedule A, each of the Company and its Subsidiaries has been duly incorporated and each of the Company and the Subsidiaries is validly existing in good standing as a corporation under the laws of its jurisdiction of incorporation, with the requisite corporate power and authority to own its properties and conduct its business as now conducted as described in the Disclosure Documents and is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions where the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, have a material adverse effect on the business, condition (financial or other), properties, prospects or results of operations of the Company and the Subsidiaries, taken as a whole (any such event, a "Material Adverse Effect"); as of the Closing Date, the Company will have the authorized, issued and outstanding capitalization set forth in on Schedule B attached hereto (the "Company Capitalization"); except as set forth in the Disclosure Documents or on Schedule A, the Company does not have any subsidiaries or own directly or indirectly any of the capital stock or other equity or long-term debt securities of or have any equity interest in any other person; all of the outstanding shares of capital stock of the Company and the Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and were not issued in violation of any preemptive or similar rights and are owned free and clear of all liens, encumbrances, equities, and restrictions on transferability (other than those imposed by the Securities Act and the state securities or "Blue Sky" laws) or voting; except as set forth in the Disclosure Documents, all of the outstanding shares of capital stock of the Subsidiaries are owned, directly or indirectly, by the Company; except as set forth in the Disclosure Documents, no options, warrants or other rights to purchase from the Company or any Subsidiary, agreements or other obligations of the Company or any Subsidiary to issue or other rights to convert any obligation into, or exchange any securities for, shares of capital stock of or ownership interests in the Company or any Subsidiary are outstanding; and except as set forth in the Disclosure Documents or on Schedule C, there is no agreement, understanding or arrangement among the Company or any Subsidiary and each of their respective stockholders or any other person relating to the ownership or disposition of any capital stock of the Company or any Subsidiary or the election of directors of the Company or any Subsidiary or the governance of the Company's or any Subsidiary's affairs, and, if any, such agreements, understandings and arrangements will not be breached or violated as a result of the execution and delivery of, or the consummation of the transactions contemplated by, the Transaction Documents.

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(c) The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under the Transaction Documents. Each of the Transaction Documents has been duly and validly authorized by the Company and, when executed and delivered by the Company, will constitute a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms except as the enforcement thereof may be limited by (A) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally or (B) general principles of equity and the discretion of the court before which any proceeding therefore may be brought (regardless of whether such enforcement is considered in a proceeding at law or in equity) (collectively, the "Enforceability Exceptions").

(d) The Shares have been duly authorized and, when issued upon payment thereof in accordance with this Agreement, will have been validly issued, fully paid and non-assessable. The Conversion Shares issuable have been duly authorized and validly reserved for issuance, and when issued upon conversion of the Shares in accordance with the terms of the Certificate of Designations, will have been validly issued, fully paid and non-assessable. The Common Stock of the Company conforms to the description thereof contained in the Disclosure Documents. The stockholders of the Company have no preemptive or similar rights with respect to the Common Stock.

(e) No consent, approval, authorization, license, qualification, exemption or order of any court or governmental agency or body or third party is required for the performance of the Transaction Documents by the Company or for the consummation by the Company of any of the transactions contemplated thereby, or the application of the proceeds of the issuance of the Securities as described in this Agreement, except for such consents, approvals, authorizations, licenses, qualifications, exemptions or orders (i) as have been obtained on or prior to the Closing Date, (ii) as are not required to be obtained on or prior to the Closing Date that will be obtained when required, or (iii) the failure to obtain which would not, individually or in the aggregate, have a Material Adverse Effect.

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(f) Except as set forth on Schedule D, none of the Company or the Subsidiaries is (i) in material violation of its certificate of incorporation or bylaws (or similar organizational document), (ii) in breach or violation of any statute, judgment, decree, order, rule or regulation applicable to it or any of its properties or assets, which breach or violation would, individually or in the aggregate, have a Material Adverse Effect, or (iii) except as described in the Disclosure Documents, in default (nor has any event occurred which with notice or passage of time, or both, would constitute a default) in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan agreement, note, lease, license, franchise agreement, permit, certificate or agreement or instrument to which it is a party or to which it is subject, which default would, individually or in the aggregate, have a Material Adverse Effect.

(g) The execution, delivery and performance by the Company of the Transaction Documents and the consummation by the Company of the transactions contemplated thereby and the fulfillment of the terms thereof will not (a) violate, conflict with or constitute or result in a breach of or a default under (or an event that, with notice or lapse of time, or both, would constitute a breach of or a default under) any of (i) the terms or provisions of any contract, indenture, mortgage, deed of trust, loan agreement, note, lease, license, franchise agreement, permit, certificate or agreement or instrument to which any of the Company or the Subsidiaries is a party or to which any of their respective properties or assets are subject, (ii) the Certificate of Designations or bylaws of any of the Company or the Subsidiaries (or similar organizational document) or (iii) any statute, judgment, decree, order, rule or regulation of any court or governmental agency or other body applicable to the Company or the Subsidiaries or any of their respective properties or assets or (b) result in the imposition of any lien upon or with respect to any of the properties or assets now owned or hereafter acquired by the Company or any of the Subsidiaries; which violation, conflict, breach, default or lien would, individually or in the aggregate, have a Material Adverse Effect.

(h) The audited consolidated financial statements included in the Disclosure Documents present fairly the consolidated financial position, results of operations, cash flows and changes in shareholders' equity of the entities, at the dates and for the periods to which they relate and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis; the interim un-audited consolidated financial statements included in the Disclosure Documents present fairly the consolidated financial position, results of operations and cash flows of the entities, at the dates and for the periods to which they relate subject to year-end audit adjustments and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis with the audited consolidated financial statements included therein; the selected financial and statistical data included in the Disclosure Documents present fairly the information shown therein and have been prepared and compiled on a basis consistent with the audited financial statements included therein, except as otherwise stated therein; and each of the auditors previously engaged by the Company or to be engaged in the future by the Company is an independent certified public accountant as required by the Securities Act.

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(i) Except as described in the Disclosure Documents, there is not pending or, to the knowledge of the Company, threatened any action, suit, proceeding, inquiry or investigation, governmental or otherwise, to which any of the Company or the Subsidiaries is a party, or to which their respective properties or assets are subject, before or brought by any court, arbitrator or governmental agency or body, that, if determined adversely to the Company or any such Subsidiary, would, individually or in the aggregate, have a Material Adverse Effect or that seeks to restrain, enjoin, prevent the consummation of or otherwise challenge the issuance or sale of the Securities to be sold hereunder or the application of the proceeds therefrom or the other transactions described in the Disclosure Documents.

(j) The Company and the Subsidiaries own or possess adequate licenses or other rights to use all patents, trademarks, service marks, trade names, copyrights and know-how that are necessary to conduct their businesses as described in the Disclosure Documents. None of the Company or the Subsidiaries has received any written notice of infringement of (or knows of any such infringement of) asserted rights of others with respect to any patents, trademarks, service marks, trade names, copyrights or know-how that, if such assertion of infringement or conflict were sustained, would, individually or in the aggregate, have a Material Adverse Effect.

(k) Each of the Company and the Subsidiaries possesses all licenses, permits, certificates, consents, orders, approvals and other authorizations from, and has made all declarations and filings with, all federal, state, local and other governmental authorities, all self-regulatory organizations and all courts and other tribunals presently required or necessary to own or lease, as the case may be, and to operate its respective properties and to carry on its respective businesses as now or proposed to be conducted as set forth in the Disclosure Documents ("Permits"), except where the failure to obtain such Permits would not, individually or in the aggregate, have a Material Adverse Effect and none of the Company or the Subsidiaries has received any notice of any proceeding relating to revocation or modification of any such Permit, except as described in the Disclosure Documents and except where such revocation or modification would not, individually or in the aggregate, have a Material Adverse Effect.

(l) Subsequent to the respective dates as of which information is given in the Disclosure Documents and except as described therein, (i) the Company and the Subsidiaries have not incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions not in the ordinary course of business or (ii) the Company and the Subsidiaries have not purchased any of their respective outstanding capital stock, or declared, paid or otherwise made any dividend or distribution of any kind on any of their respective capital stock or otherwise (other than, with respect to any of such Subsidiaries, the purchase of capital stock by the Company), (iii) there has not been any material increase in the long-term indebtedness of the Company or any of the Subsidiaries, (iv) there has not occurred any event or condition, individually or in the aggregate, that has a Material Adverse Effect, and (v) the Company and the Subsidiaries have not sustained any material loss or interference with respect to their respective businesses or properties from fire, flood, hurricane, earthquake, accident or other calamity, whether or not covered by insurance, or from any labor dispute or any legal or governmental proceeding.

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(m) There are no material legal or governmental proceedings nor are there any material contracts or other documents required by the Securities Act to be described in a prospectus that are not described in the Disclosure Documents. Except as described in the Disclosure Documents, none of the Company or the Subsidiaries is in default under any of the contracts described in the Disclosure Documents, has received a notice or claim of any such default or has knowledge of any breach of such contracts by the other party or parties thereto, except for such defaults or breaches as would not, individually or in the aggregate, have a Material Adverse Effect.

(n) Each of the Company and the Subsidiaries has good and marketable title to all real property described in the Disclosure Documents as being owned by it and good and marketable title to the leasehold estate in the real property described therein as being leased by it, free and clear of all liens, charges, encumbrances or restrictions, except, in each case, as described in the Disclosure Documents or such as would not, individually or in the aggregate, have a Material Adverse Effect. All material leases, contracts and agreements to which the Company or any of the Subsidiaries is a party or by which any of them is bound are valid and enforceable against the Company or any such Subsidiary, are, to the knowledge of the Company, valid and enforceable against the other party or parties thereto and are in full force and effect.

(o) Each of the Company and the Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns, except where the failure to so file such returns would not, individually or in the aggregate, have a Material Adverse Effect, and has paid all taxes shown as due thereon; and other than tax deficiencies which the Company or any Subsidiary is contesting in good faith and for which adequate reserves have been provided in accordance with generally accepted accounting principles, there is no tax deficiency that has been asserted against the Company or any Subsidiary that would, individually or in the aggregate, have a Material Adverse Effect.

(p) None of the Company or the Subsidiaries is, or immediately after the Closing Date will be, required to register as an "investment company" or a company "controlled by" an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act").

(q) None of the Company or the Subsidiaries or, to the knowledge of any of such entities' directors, officers, employees, agents or controlling persons, has taken, directly or indirectly, any action designed, or that might reasonably be expected, to cause or result in the stabilization or manipulation of the price of the Common Stock.

(r) None of the Company, the Subsidiaries or any of their respective Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act) directly, or through any agent, engaged in any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) in connection with the offering of the Securities or engaged in any other conduct that would cause such offering to be constitute a public offering within the meaning of Section 4(2) of the Securities Act. Assuming the accuracy of the representations and warranties of the Purchasers in Section 6 hereof, it is not necessary in connection with the offer, sale and delivery of the Securities to the Purchasers in the manner contemplated by this Agreement to register any of the Securities under the Securities Act.

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(s) There is no strike, labor dispute, slowdown or work stoppage with the employees of the Company or any of the Subsidiaries which is pending or, to the knowledge of the Company or any of the Subsidiaries, threatened.

(t) Each of the Company and the Subsidiaries carries general liability insurance coverage comparable to other companies of its size and similar business.

(u) Each of the Company and the Subsidiaries maintains internal accounting controls which provide reasonable assurance that (A) transactions are executed in accordance with management's authorization, (B) transactions are recorded as necessary to permit preparation of its financial statements and to maintain accountability for its assets, (C) access to its material assets is permitted only in accordance with management's authorization and (D) the values and amounts reported for its material assets are compared with its existing assets at reasonable intervals.

(v) The Company does not know of any claims for services, either in the nature of a finder's fee or financial advisory fee, with respect to the offering of the Shares and the transactions contemplated by the Transaction Documents.

(w) The Common Stock is traded on the NASDAQ Small Cap Market. Except as described in the Disclosure Documents, the Company currently is not in violation of, and subject to approval of the Company's shareholders, the consummation of the transactions contemplated by the Transaction Documents will not violate, any rule of the NASDAQ Small Cap Market.

(x) The Company is eligible to use SB-2 for the resale of the Conversion Shares by Purchasers or their transferees. The Company has no reason to believe that it is not capable of satisfying the registration or qualification requirements (or an exemption therefrom) necessary to permit the resale of the Conversion Shares under the securities or "blue sky" laws of any jurisdiction within the United States.

3. Purchase, Sale and Delivery of the Shares.

(a) On the basis of the representations, warranties, agreements and covenants herein contained and subject to the terms and conditions herein set forth, the Company agrees to issue and sell to the Purchasers, and Purchasers agree to purchase from the Company on the Closing Date (as defined below), 45,648 Shares of Series B Stock as follows:

(i) MMF agrees to purchase 7,100 Shares of Series B Stock in exchange for tendering the Promissory Note in the principal amount of $710,000 plus accrued interest issued by the Company in favor of MMF on June 16, 2005;

(ii) MMF III agrees to purchase 25,148 Shares of Series B Stock in exchange for tendering the Promissory Note in the principal amount of $350,000 plus accrued interest issued by the Company in favor of MMF III on June 16, 2005 and for the cancellation of all indebtedness of the Company to MMF III pursuant to the "Loans", as such term is defined in that certain First Amendment to Loan and Security Agreements dated January 25, 2006, among the Company, M-Wave DBS, an Illinois corporation and MMF III; and

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(iii) Monarch agrees to purchase 13,400 Shares of Series B Stock in exchange for tendering the Promissory Note in the principal amount of $1,340,000 plus accrued interest issued by the Company in favor of Monarch on June 16, 2005.

(b) Effective as of the Closing, all warrants previously issued by the Company to any of the Purchasers or to MAG shall be amended such that the Warrant Price (as defined in the warrants) for each such warrant shall be $0.65 per share. Promptly upon delivery of any such warrants by any Purchaser or MAG to the Company, the Company shall issue a replacement warrant that shall reflect such amended Warrant Price.

(c) One or more certificates in definitive form for the Shares that the Purchasers have agreed to purchase, shall be delivered by or on behalf of the Company, against delivery by or on behalf of each of the Purchasers, of the securities to be tendered pursuant to Sections 3(a) and 3(b) above, each of the Purchasers, MAG and the Company shall deliver the Registration Rights Agreement, duly executed by such party, and each of MMF III and the Company shall deliver such instruments as the other may reasonably request to effect and to evidence the cancellation of the indebtedness under the Loans pursuant to Section 3(a)(ii) above. Such delivery of and payment for the Shares shall be made at the offices of M.A.G., LLC, 555 South Flower Street, Suite 4200, Los Angeles, California 90071, at not later than 5:00 p.m. (Los Angeles Time) on March 1, 2006 (the "Closing"), or at such date as the Purchasers and the Company may agree upon, such time and date of delivery against payment being herein referred to as the "Closing Date." On the Closing Date, the Company shall deliver by wire transfer of immediately available funds to the account or accounts designated by MAG, the aggregate amount of interest accrued through the Closing Date on the Promissory Notes and Loans described in Sections 3(a)(i), (ii) and (iii) above.

(d) On the basis of the representations, warranties, agreements and covenants herein contained and subject to the terms and conditions herein set forth, the Company agrees to issue and sell to the Subsequent Purchasers (as defined below), and the Subsequent Purchasers agree to purchase from the Company on March 15, 2006 (the "Second Closing Date"), an aggregate of 19,000 Shares of Series B Stock for an aggregate purchase price of $1,900,000 (the "Second Purchase Price"); provided, however, that the Subsequent Purchasers shall have no obligation to consummate the transactions contemplated to occur on the Second Closing Date unless all of the following conditions have been met as of the Second Closing Date: (i) no Event of Default shall have occurred and remain uncured, (ii) there shall have been no breach by the Company of any covenant under this Agreement, (iii) the Subsequent Purchasers shall have received certificates, dated as of the Second Closing Date and signed by the Chief Executive Officer and Chief Financial Officer of the Company, to the effect of Sections 5(a) and 5(b) hereof, (iv) the Company shall be current in all of its public filings, (v) the Subsequent Purchasers shall have received an opinion from the Company's counsel with respect to the authorization of the securities to be issued to the Subsequent Purchasers and other customary matters, and (vi) the Company shall not, after the date of this Agreement but prior to the Second Closing Date, have consummated or entered into any agreement to effect a transaction that would be regarded as a liquidation, dissolution or winding up of the affairs of the Company under the Certificate of Designations. The term "Subsequent Purchasers," means, with respect to a given Second Closing Date, the Purchaser or Purchasers designated by MAG in writing prior to the Second Closing Date.

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(e) One or more certificates in definitive form for the Shares that the Purchasers have agreed to purchase pursuant to Section 3(d) above, shall be delivered by or on behalf of the Company, against delivery by or on behalf of each of the Subsequent Purchasers of the Second Purchase Price by wire transfer of immediately available funds to the account of the Company previously designated by it in writing. Such delivery of and payment for the Shares shall be made at the offices of M.A.G., LLC, 555 South Flower Street, Suite 4200, Los Angeles, California 90071, at not later than 5:00 p.m. (Los Angeles Time) on the Second Closing Date.

(f) The proceeds from the Second Purchase Price shall be held in a reserve account at the bank currently utilized by the Company and shall be released therefrom only upon a resolution by a majority of the Company's independent directors (as defined in the NASD Manual) that the release of such proceeds (or a portion thereof) is necessary or appropriate under the Company's budget (as approved by the Finance Committee of the Company's Board of Directors).

4. Certain Covenants of the Company.   The Company covenants and agrees with each Purchaser as follows:

(a) None of the Company or any of its Affiliates will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any "security" (as defined in the Securities Act) which could be integrated with the sale of the Securities in a manner which would require the registration under the Securities Act of the Securities.

(b) The Company will not become, at any time prior to the expiration of three years after the Closing Date, an open-end investment company, unit investment trust, closed-end investment company or face-amount certificate company that is or is required to be registered under the Investment Company Act.

(c) None of the proceeds of the Series B Stock will be used to reduce or retire any insider note or convertible debt held by an officer or director of the Company.

(d) Subject to Section 9 of this Agreement, the Conversion Shares will be traded on the NASDAQ Small Cap Market, or such market on which the Company's shares are subsequently listed or traded, immediately following the later of (i) their issuance or (ii) declaration of effectiveness of the Registration Statement by the SEC.

(e) The Company will use commercially reasonable efforts to do and perform all things required to be done and performed by it under this Agreement and the other Transaction Documents and to satisfy all conditions precedent on its part to the obligations of the Purchasers to purchase and accept delivery of the Securities.

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(f) The Purchasers shall have a right of first refusal on any financing in which the Company is the issuer of debt or equity securities between the date of this Agreement and the date of effectiveness of the Registration Statement.

(g) For so long as any shares of Series B Stock are outstanding, the Company shall not issue any debt or equity securities with rights or preferences superior to those of the Series B Stock with respect to the distribution of assets on any liquidation, dissolution or winding up of the Company.

5. Conditions of the Purchasers' Obligations.   The obligation of each Purchaser to purchase and pay for the Securities is subject to the following conditions unless waived in writing by the Purchaser:

(a) The representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects (other than representations and warranties with a Material Adverse Effect qualifier, which shall be true and correct as written) on and as of the Closing Date; the Company shall have complied in all material respects with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date.

(b) None of the issuance and sale of the Securities pursuant to this Agreement or any of the transactions contemplated by any of the other Transaction Documents shall be enjoined (temporarily or permanently) and no restraining order or other injunctive order shall have been issued in respect thereof; and there shall not have been any legal action, order, decree or other administrative proceeding instituted or, to the Company's knowledge, threatened against the Company or against any Purchaser relating to the issuance of the Securities or any Purchaser's activities in connection therewith or any other transactions contemplated by this Agreement, the other Transaction Documents or the Disclosure Documents.

(c) The Purchasers shall have received certificates, dated the Closing Date and signed by the Chief Executive Officer and the Chief Financial Officer of the Company, to the effect of paragraphs 5(a) and (b).

(d) The Purchasers shall have received an opinion of legal counsel to the Company, with respect to the authorization of the Shares and other customary matters in the form attached hereto as Exhibit C.

6. Representations and Warranties of the Purchasers and MAG.

(a) Each Purchaser and MAG represents and warrants to the Company that the Securities to be acquired by it hereunder (including the Conversion Shares that it may acquire upon conversion thereof) are being acquired for its own account for investment and with no intention of distributing or reselling such Securities (including the Conversion Shares that it may acquire upon conversion thereof) or any part thereof or interest therein in any transaction which would be in violation of the securities laws of the United States of America or any State. Nothing in this Agreement, however, shall prejudice or otherwise limit a Purchaser's or MAG's right to sell or otherwise dispose of all or any part of such Conversion Shares under an effective registration statement under the Securities Act and in compliance with applicable state securities laws or under an exemption from such registration. By executing this Agreement, each Purchaser and MAG further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to any Person with respect to any of the Securities.

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(b)Each Purchaser and MAG understands that the Securities (including the Conversion Shares that it may acquire upon conversion thereof) have not been registered under the Securities Act and may not be offered, resold, pledged or otherwise transferred except (a) pursuant to an exemption from registration under the Securities Act (and, if requested by the Company, based upon an opinion of counsel acceptable to the Company) or pursuant to an effective registration statement under the Securities Act and (b) in accordance with all applicable securities laws of the states of the United States and other jurisdictions.

Each Purchaser and MAG agrees to the imprinting, so long as appropriate, of the following legend on the Securities (including the Conversion Shares that it may acquire upon conversion thereof):

The shares of stock evidenced by this certificate have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered, sold, pledged or otherwise transferred ("transferred") in the absence of such registration or an applicable exemption therefrom. In the absence of such registration, such shares may not be transferred unless, if the Company requests, the Company has received a written opinion from counsel in form and substance satisfactory to the Company stating that such transfer is being made in compliance with all applicable federal and state securities laws.

Further with regard to the Series B Stock, the following legend shall be included:

Additional restrictions on transfer pursuant to agreements exist and are available upon request from the Company.

The legend set forth above may be removed if and when the Conversion Shares are disposed of pursuant to an effective registration statement under the Securities Act or in the opinion of counsel to the Company experienced in the area of United States Federal securities laws such legends are no longer required under applicable requirements of the Securities Act. The Shares and the Conversion Shares shall also bear any other legends required by applicable Federal or state securities laws, which legends may be removed when in the opinion of counsel to the Company experienced in the applicable securities laws, the same are no longer required under the applicable requirements of such securities laws. The Company agrees that it will provide each Purchaser, upon request, with a substitute certificate, not bearing such legend at such time as such legend is no longer applicable. Each Purchaser agrees that, in connection with any transfer of the Conversion Shares by it pursuant to an effective registration statement under the Securities Act, it will comply with all prospectus delivery requirements of the Securities Act. The Company makes no representation, warranty or agreement as to the availability of any exemption from registration under the Securities Act with respect to any resale of the Shares or the Conversion Shares.

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(c) Each Purchaser and MAG is an "accredited investor" within the meaning of Rule 501(a) of Regulation D under the Securities Act. Neither Purchaser nor MAG learned of the opportunity to acquire Shares or any other security issuable by the Company through any form of general advertising or public solicitation.

(d) Each Purchaser and MAG represents and warrants to the Company that it has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, having been represented by counsel, and has so evaluated the merits and risks of such investment and is able to bear the economic risk of such investment and, at the present time, is able to afford a complete loss of such investment.

(e) Each Purchaser represents and warrants to the Company that (i) the purchase of the Securities to be purchased by it has been duly and properly authorized and this Agreement has been duly executed and delivered by it or on its behalf and constitutes the valid and legally binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights generally and to general principles of equity; (ii) the purchase of the Securities to be purchased by it does not conflict with or violate its charter, by-laws or any law, regulation or court order applicable to it; and (iii) the purchase of the Securities to be purchased by it does not impose any penalty or other onerous condition on the Purchaser under or pursuant to any applicable law or governmental regulation.

(f) Each Purchaser and MAG represents and warrants to the Company that neither it nor any of its directors, officers, employees, agents, partners, members, or controlling persons has taken, or will take, directly or indirectly, any actions designed, or that might reasonably be expected to cause or result in, the destabilization or manipulation of the price of the Common Stock.

(g) Each Purchaser and MAG acknowledges it or its representatives have reviewed the Disclosure Documents and further acknowledges that it or its representatives have been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and the Company's financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment in the Securities; and (iii) the opportunity to obtain such additional information which the Company possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy and completeness of the information contained in the Disclosure Documents.

(h) Each Purchaser and MAG represents and warrants to the Company that it has based its investment decision solely upon the information contained in the Disclosure Documents and such other information as may have been provided to it or its representatives by the Company in response to its inquiries, and has not based its investment decision on any research or other report regarding the Company prepared by any third party ("Third Party Reports"). Each Purchaser and MAG understands and acknowledges that (i) the Company does not endorse any Third Party Reports and (ii) its actual results may differ materially from those projected in any Third Party Report.

-12-

(i) Each Purchaser and MAG understands and acknowledges that (i) any forward-looking information included in the Disclosure Documents is subject to risks and uncertainties, including those risks and uncertainties set forth in the Disclosure Documents; and (ii) the Company's actual results may differ materially from those projected by the Company or its management in such forward-looking information.

(j)Each Purchaser and MAG understands and acknowledges that (i) the Securities are offered and sold without registration under the Securities Act in a private placement that is exempt from the registration provisions of the Securities Act and (ii) the availability of such exemption depends in part on, and that the Company and its counsel will rely upon, the accuracy and truthfulness of the foregoing representations and Purchaser hereby consents to such reliance.

7. Covenants of Purchasers.   Purchasers and MAG, on behalf of themselves and their affiliates and the permitted assignee of any Conversion Shares hereby covenant and agree not to, directly or indirectly, offer to "short sell", contract to "short sell" or otherwise "short sell" any securities of the Company, including, without limitation, shares of Common Stock that will be received as a result of the conversion of the Series B Stock.

8. Termination.

(a) This Agreement may be terminated in the sole discretion of the Company by notice to each Purchaser if at the Closing Date:

(i) the representations and warranties made by any Purchaser in Section 6 are not true and correct in all material respects; or

(ii) as to the Company, the sale of the Securities hereunder (i) is prohibited or enjoined by any applicable law or governmental regulation or (ii) subjects the Company to any penalty, or in its reasonable judgment, other onerous condition under or pursuant to any applicable law or government regulation that would materially reduce the benefits to the Company of the sale of the Securities to such Purchaser, so long as such regulation, law or onerous condition was not in effect in such form at the date of this Agreement.

(b) This Agreement may be terminated by any Purchaser by notice to the Company given in the event that (i) the Company shall have failed, refused or been unable to satisfy all material conditions on its part to be performed or satisfied hereunder on or prior to the Closing Date or (ii) if after the date of this Agreement but prior to the Closing Date, trading in securities of the Company on the NASDAQ Small Cap Market shall have been suspended and the Company ceases to be publicly traded.

(c) This Agreement may be terminated by mutual written consent of all parties.

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9. Registration. The Company shall use its best efforts to prepare and file with the SEC on or prior to the Filing Deadline (as defined below) a Registration Statement covering the resale of the maximum number of Conversion Shares issuable upon conversion of the Shares (collectively, the "Registrable Securities"), for an offering to be made on a continuous basis pursuant to Rule 415 (the "Registration Statement") based on the Conversion Price set forth in the Certificate of Designations. The term "Filing Deadline" means (i) in the event that within 45 days after the Closing Date the Company enters into any agreement (a "Merger Agreement") to effect a merger, reorganization, consolidation, recapitalization, sale of substantial assets or similar transaction, the date that is 45 days after the Company enters into such Merger Agreement, or (ii) in the event that the Company does not enter into a Merger Agreement within 45 days after the Closing Date, the date that is 60 days after the Closing Date. The Company shall use its best efforts to ensure that the Registration Statement is declared effective by the SEC (i) in the event that the Company enters into a Merger Agreement within 45 days after the Closing Date, not later than 150 days after the date the Company enters into such Merger Agreement and (ii) in the event that the Company does not enter into a Merger Agreement within 45 days after the Closing Date, within 60 days of the date the Registration Statement is filed with the SEC.

10. Event of Default.   An "Event of Default" means the Company's failure to: (i) file the Registration Statement with the SEC on or prior to the Filing Deadline (as defined in Section 9 hereof), (ii) maintain trading of the Company's Common Stock on the NASDAQ Small Cap Market or other publicly traded market, or (iii) deliver to Purchasers, or Purchasers' broker, as directed, Common Stock that Purchasers have converted within three (3) business days of such conversions.

11. Notices.   All communications hereunder shall be in writing and shall be hand delivered, mailed by first-class mail, couriered by next-day air courier or by facsimile and confirmed in writing (i) if to the Company, at the addresses set forth below, or (ii) if to a Purchaser or MAG, to the address set forth for such party on the signature page hereto, with a copy to Sheppard, Mullin, Richter & Hampton, LLP, 333 South Hope Street, Los Angeles, California 90071, Attention: David Ulich, Esq.

If to the Company:

M-Wave, Inc.

11533 Franklin Avenue, 2^nd Floor

Franklin Park, Illinois 60131

Attention: Jim Mayer

Telephone: 630-562-4751

Facsimile: 630-562-1775

with a copy to:

Ellenoff Grossman & Schole LLP

370 Lexington Avenue, Floor 19

New York, New York 10017

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Attn: Barry I. Grossman

Telephone: 212-370-1300

Facsimile: 212-370-7889

All such notices and communications shall be deemed to have been duly given: (i) when delivered by hand, if personally delivered; (ii) five business days after being deposited in the mail, postage prepaid, if mailed certified mail, return receipt requested; (iii) one business day after being timely delivered to a next-day air courier guaranteeing overnight delivery; (iv) the date of transmission if sent via facsimile to the facsimile number as set forth in this Section or the signature page hereof prior to 6:00 p.m. (Pacific time) on a business day, or (v) the business day following the date of transmission if sent via facsimile at a facsimile number set forth in this Section or on the signature page hereof after 6:00 p.m. (Pacific time) or on a date that is not a business day. Change of a party's address or facsimile number may be designated hereunder by giving notice to all of the other parties hereto in accordance with this Section.

12. Survival Clause.   The respective representations, warranties, agreements and covenants of the Company and the Purchasers set forth in this Agreement shall survive until the first anniversary of the Closing.

13.Fees and Expenses.   Concurrently with the execution of this Agreement, the Company shall pay, by wire transfer of immediately available funds to an account or accounts designated by MAG, $40,000 for Purchasers' and MAG's legal expenses incurred in connection with the preparation and negotiation of the Transaction Documents.

14. Enforcement.   If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement or the Certificate of Designations, the prevailing party or parties shall be entitled to receive from the other party or parties reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which the prevailing party or parties may be entitled.

15. Successors.   This Agreement shall inure to the benefit of and be binding upon Purchasers, MAG and the Company and their respective successors and legal representatives, and nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained; this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person. Neither the Company nor any Purchaser may assign this Agreement or any rights or obligation hereunder without the prior written consent of the other party.

16. No Waiver; Modifications in Writing.   No failure or delay on the part of the Company, MAG or any Purchaser in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the Company, MAG or any Purchaser at law or in equity or otherwise. No waiver of or consent to any departure by the Company, MAG or any Purchaser from any provision of this Agreement shall be effective unless signed in writing by the party entitled to the benefit thereof, provided that notice of any such waiver shall be given to each party hereto as set forth below. Except as otherwise provided herein, no amendment, modification or termination of any provision of this Agreement shall be effective unless signed in writing by or on behalf of each of the Company, MAG and the Purchasers. Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the Company, MAG or any Purchaser from the terms of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances.

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17. Entire Agreement.   This Agreement, together with the other Transaction Documents, constitutes the entire agreement among the parties hereto and supersedes all prior agreements, understandings and arrangements, oral or written, among the parties hereto with respect to the subject matter hereof and thereof. Disclosure by the Company in any Schedule to this Agreement shall be deemed applicable to all applicable provisions hereof.

18. Severability.   If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby.

19. APPLICABLE LAW.   THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO PROVISIONS RELATING TO CONFLICTS OF LAW TO THE EXTENT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ACTIONS, SUITS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT ONLY IN STATE OR FEDERAL COURTS LOCATED IN THE CITY OF LOS ANGELES, CALIFORNIA AND HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS FOR SUCH PURPOSE.

20. Counterparts.   This Agreement may be executed in two or more counterparts and may be delivered by facsimile transmission, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

21. If the foregoing correctly sets forth our understanding, please indicate your acceptance thereof in the space provided below for that purpose, whereupon this Agreement shall constitute a binding agreement among the Company, the Purchasers and MAG.

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	Very truly yours,
	M-Wave, Inc.
	By:	/s/ Joseph A. Turek
		Name:   Joseph A. Turek
		Title:     President and COO
ACCEPTED AND AGREED:

-17-

Mercator Momentum Fund, LP		Mercator Momentum Fund III, LP
By:	M.A.G. Capital, LLC	By:	M.A.G. Capital, LLC
Its:	General Partner	Its:	General Partner
	/s/ David Firestone		/s/ David Firestone
	David Firestone		David Firestone
	Managing Member		Managing Member

M.A.G. Capital, LLC		Monarch Pointe Fund, Ltd.
/s/ David Firestone		/s/ David Firestone
By:	David Firestone	By:	David Firestone
Its:	Managing Member	Its:	Managing Member

M.A.G. Capital, LLC		Addresses for Notice:
By:	/s/ David Firestone	M.A.G. Capital, LLC
	David Firestone	555 South Flower Street, Suite 4200
	Managing Member	Los Angeles, California 90071
		Attention: David Firestone
		Facsimile: (213) 533-8285
		with copy to:
		David C. Ulich, Esq.
		Sheppard, Mullin, Richter & Hampton LLP
		333 South Hope Street, 48th Floor
		Los Angeles, California 90071
		Facsimile: (213) 620-1398

-18-

Schedule A

Direct and Indirect Subsidiaries of M-Wave, Inc.

M-Wave DBS, Inc., an Illinois corporation (not in good standing)

-1-

Schedule B

Company Capitalization

See the Balance Sheet of the Company set forth in the Form 10-QSB for the period ended September 30, 2005 included in the Disclosure Documents.

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Schedule C

Agreements regarding ownership or disposition of capital stock

None

-1-

Schedule D

Violations/Breaches

None

-1-

Exhibit A

Certificate of Designations of

Series B Convertible Preferred Stock

of

M-Wave, Inc.

-1-

Exhibit B

Registration Rights Agreement

-1-

Exhibit C

Form of Legal Opinion

(Delivered to Purchasers at the Closing)

1. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, with corporate power to own its properties and to conduct its business.

2. The Company has the corporate power to execute, deliver and perform the transaction documents, including the Exhibits thereto (the "Transaction Documents"). The Transaction Documents have been duly authorized by all requisite corporate action by the Company and constitute the valid and binding obligations of the Company, enforceable in accordance with their terms (subject to bankruptcy, equitable principles and other customary exceptions).

(a) As of the date hereof, in accordance with its Certificate of Incorporation on file with the Secretary of State of Delaware, the authorized capital stock of the Company consists of 1,000,000 shares of Preferred Stock, and 20,000,000 shares of Common Stock.

(b) The shares of the Company's Series B Stock have been duly authorized and, upon issuance, delivery, and payment therefor as described in the Subscription Agreement, will be validly issued, fully paid and nonassessable.

(c) The shares of the Company's Common Stock initially issuable upon conversion of the shares of Series B Stock sold have been duly authorized and reserved for issuance and, upon issuance and delivery upon conversion of the Shares as described in the Certificate of Designations, will be validly issued, fully paid and nonassessable.

3. The Company's execution and delivery of the Transaction Documents and the issue and sale of the Shares, on the terms and conditions set forth in the Subscription Agreement, will not violate any law of the United States or the State of Delaware any rule or regulation of any governmental authority or regulatory body of the United States or the State of Delaware or any provision of the Company's Certificate of Incorporation or Bylaws.

4. No consent, approval, order or authorization of, and no notice to or filing with, any governmental agency or body or any court is required to be obtained or made by the Company for the issuance and sale of the Shares pursuant to the Transaction Documents or Agreement, except such as have been obtained or made and such as may be required under applicable securities laws.

5. On the assumption that the representations of the Company and the Purchasers in the Subscription Agreement are correct and complete, the offer and sale of the Shares pursuant to the terms of the Subscription Agreement are exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended, and, under such securities laws as they presently exist, the issuance of the Company's Common Stock upon conversion of the Shares would also be exempt from such registration.

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6. We know of no pending or overtly threatened action, proceeding or governmental investigation with respect to the Company's sale of Series B Stock pursuant to the Transaction Documents.

-2-

EX-10.2

EXHIBIT B

to Subscription Agreement

REGISTRATION RIGHTS AGREEMENT

AGREEMENT dated as of March 1, 2006, between MERCATOR MOMENTUM FUND, L.P., MERCATOR MOMENTUM FUND III, L.P, MONARCH POINTE FUND, LTD. (collectively, the "Funds") and M.A.G. CAPITAL, LLC ("MAG") (the Funds and MAG are referred to individually as a "Holder" and collectively as the "Holders"), and M-WAVE, INC., a Delaware corporation (the "Company").

WHEREAS, pursuant to that certain Subscription Agreement, dated as of March 1, 2006, among the Company and the Holders (the "Subscription Agreement"), the Funds are purchasing, in exchange for certain securities and the cancellation of certain indebtedness, an aggregate of 64,648 shares of Series B Convertible Preferred Stock (together, the "Series B Stock") from the Company, and have the right to cause their Series B Stock to be converted into shares of Common Stock (the "Common Stock"), of the Company, pursuant to the conversion formula set forth in the Certificate of Designations of Preferences and Rights of Series B Convertible Preferred Stock of M-Wave, Inc. (the "Certificate of Designations");

WHEREAS, pursuant to that certain Subscription Agreement, dated as of June 17, 2004, among the Company and the Holders (the "Series A Subscription Agreement"), the Funds purchased an aggregate of 30,000 shares of Series A Convertible Preferred Stock (together, the "Series A Stock") from the Company, and have the right to cause their Series A Stock to be converted into shares of Common Stock, pursuant to the conversion formula set forth in the Certificate of Designations of Preferences and Rights of Series A Convertible Preferred Stock of M-Wave, Inc.;

WHEREAS, the Holders acquired warrants (collectively, the "Warrants") from the Company pursuant to the Series A Subscription Agreement and in connection with Promissory Notes issued by the Company in favor of the Funds on June 16, 2005, and the Holders, together, have the right to purchase in the aggregate up to 2,131,449 shares of the Common Stock through the exercise of the Warrants;

WHEREAS, the Company desires to grant to the Holders the registration rights set forth herein with respect to the shares of Common Stock issuable upon the conversion of the Series A Stock and the Series B Stock and upon the exercise of the Warrants.

NOW, THEREFORE, the parties hereto mutually agree as follows:

1. Registrable Securities.   As used herein the terms "Registrable Security" means each of the shares of Common Stock (i) issued upon the conversion of the Series B Stock (the "B Conversion Shares"), (ii) issued upon the conversion of the Series A Stock (the "A Conversion Shares," and together with the A Conversion Shares, the "Conversion Shares") and (iii) issued upon exercise of the Warrants (the "Warrant Shares"), provided, however, that with respect to any particular Registrable Security, such security shall cease to be a Registrable Security when, as of the date of determination that (a) it has been effectively registered under the Securities Act of 1933, as amended (the "Securities Act"), and disposed of pursuant thereto, or (b) registration under the Securities Act is no longer required for the immediate public distribution of such security. The term "Registrable Securities" means any and/or all of the securities falling within the foregoing definition of a "Registrable Security." In the event of any merger, reorganization, consolidation, recapitalization or other change in corporate structure affecting the Common Stock, such adjustment shall be made in the definition of "Registrable Security" as is appropriate in order to prevent any dilution or enlargement of the rights granted pursuant to this Section 1.

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2. Registration.

(a) The Company shall file a registration statement (the "Registration Statement") with the Securities and Exchange Commission (the "Commission") on or prior to the Filing Deadline (as defined below), in order to register the resale of the Registrable Securities under the Securities Act. Once effective, the Company shall maintain the effectiveness of the Registration Statement until the earlier of (i) the date that all of the Registrable Securities have been sold, or (ii) the date that the Company receives an opinion of counsel to the Company that all of the Registrable Securities may be freely traded without registration under the Securities Act, under Rule 144 promulgated under the Securities Act or otherwise. The term "Filing Deadline" means (i) in the event that within 45 days after the Closing Date (as that term is defined in the Subscription Agreement) the Company enters into any agreement (a "Merger Agreement") to effect a merger, reorganization, consolidation, recapitalization, sale of substantial assets or similar transaction, the date that is 45 days after the Company enters into such Merger Agreement, or (ii) in the event that the Company does not enter into a Merger Agreement within 45 days after the Closing Date, the date that is 60 days after the Closing Date.

(b) The Company will initially include in the Registration Statement as Registrable Securities 11,870,453 shares of Common Stock.

(c) Depending on whether the Registration Statement has previously become effective with the Commission, the Company shall register additional shares if and as required pursuant to the Subscription Agreement or the Certificate of Designations either by amending the Registration Statement to increase the number of shares that it covers or by filing a new registration statement. Any such new registration statement shall thereafter be deemed part of the Registration Statement for the purposes of this Agreement.

3. Covenants of the Company with Respect to Registration.

The Company covenants and agrees as follows:

(a) The Company shall use its best efforts to cause the Registration Statement to become effective with the Commission as promptly as possible and (i) in the event that the Company enters into a Merger Agreement within 45 days after the Closing Date, not later than 150 days after the date the Company enters into such Merger Agreement and (ii) in the event that the Company does not enter into a Merger Agreement within 45 days after the Closing Date, within 60 days of the date the Registration Statement is filed with the Commission. If any stop order shall be issued by the Commission in connection therewith, the Company shall use its best efforts to obtain promptly the removal of such order. Following the effective date of the Registration Statement, the Company shall, upon the request of any Holder, forthwith supply such reasonable number of copies of the Registration Statement, preliminary prospectus and prospectus meeting the requirements of the Securities Act, and any other documents necessary or incidental to the public offering of the Registrable Securities, as shall be reasonably requested by the Holder to permit the Holder to make a public distribution of the Holder's Registrable Securities. The obligations of the Company hereunder with respect to the Holder's Registrable Securities are subject to the Holder's furnishing to the Company such appropriate information concerning the Holder, the Holder's Registrable Securities and the terms of the Holder's offering of such Registrable Securities as the Company may reasonably request in writing.

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(b) The Company shall pay all costs, fees and expenses in connection with the Registration Statement filed pursuant to Section 2 hereof including, without limitation, the Company's legal and accounting fees, printing expenses, and blue sky fees and expenses; provided, however, that each Holder shall be solely responsible for the fees of any counsel retained by the Holder in connection with such registration and any transfer taxes or underwriting discounts, commissions or fees applicable to the Registrable Securities sold by the Holder pursuant thereto.

(c) The Company will take all necessary actions which may be required to qualify or register the Registrable Securities included in the Registration Statement for the offer and sale under the securities or blue sky laws of such states as are reasonably requested by each Holder of such securities, provided that the Company shall not be obligated to execute or file any general consent to service of process or to qualify as a foreign corporation to do business under the laws of any such jurisdiction.

4. Additional Terms.

(a) The Company shall indemnify and hold harmless the Holders and each underwriter, within the meaning of the Securities Act, who may purchase from or sell for any Holder, any Registrable Securities, from and against any and all losses, claims, damages and liabilities caused by any untrue statement of a material fact contained in the Registration Statement, any other registration statement filed by the Company under the Securities Act with respect to the registration of the Registrable Securities, any post-effective amendment to such registration statements, or any prospectus included therein or caused by any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission based upon information furnished or required to be furnished in writing to the Company by the Holders or underwriter expressly for use therein, which indemnification shall include each person, if any, who controls any Holder or underwriter within the meaning of the Securities Act and each officer, director, employee and agent of each Holder and underwriter; provided, however, that the indemnification in this Section 4(a) with respect to any prospectus shall not inure to the benefit of any Holder or underwriter (or to the benefit of any person controlling any Holder or underwriter) on account of any such loss, claim, damage or liability arising from the sale of Registrable Securities by the Holder or underwriter, if a copy of a subsequent prospectus correcting the untrue statement or omission in such earlier prospectus was provided to such Holder or underwriter by the Company prior to the subject sale and the subsequent prospectus was not delivered or sent by the Holder or underwriter to the purchaser prior to such sale and provided further, that the Company shall not be obligated to so indemnify any Holder or any such underwriter or other person referred to above unless the Holder or underwriter or other person, as the case may be, shall at the same time indemnify the Company, its directors, each officer signing the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, from and against any and all losses, claims, damages and liabilities caused by any untrue statement of a material fact contained in the Registration Statement, any registration statement or any prospectus required to be filed or furnished by reason of this Agreement or caused by any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, insofar as such losses, claims, damages or liabilities are caused by any untrue statement or omission based upon information furnished in writing to the Company by the Holder or underwriter expressly for use therein.

-3-

(b) If for any reason the indemnification provided for in the preceding section is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations.

(c) Neither the filing of a Registration Statement by the Company pursuant to this Agreement nor the making of any request for prospectuses by the Holder shall impose upon any Holder any obligation to sell the Holder's Registrable Securities.

(d) Each Holder, upon receipt of notice from the Company that an event has occurred which requires a Post-Effective Amendment to the Registration Statement or a supplement to the prospectus included therein, shall promptly discontinue the sale of Registrable Securities until the Holder receives a copy of a supplemented or amended prospectus from the Company, which the Company shall provide as soon as practicable after such notice.

(e) If the Company fails to keep the Registration Statement referred to above continuously effective during the requisite period, then the Company shall, promptly upon the request of any Holder, use its best efforts to update the Registration Statement or file a new registration statement covering the Registrable Securities remaining unsold, subject to the terms and provisions hereof.

(f) Each Holder agrees to provide the Company with any information or undertakings reasonably requested by the Company in order for the Company to include any appropriate information concerning the Holder in the Registration Statement or in order to promote compliance by the Company or the Holder with the Securities Act.

(g) The Company agrees that it shall cause each of its directors, officers and shareholders owning ten percent (10%) or more of the Company's outstanding Common Stock to refrain from selling any shares of the Company's Common Stock until the Registration Statement has been declared effective.

-4-

(h) Each Holder, on behalf of itself and its affiliates and the permitted assignee of any Conversion Shares or Warrant Shares, hereby covenants and agrees not to, directly or indirectly, offer to "short sell", contract to "short sell" or otherwise "short sell" any securities of the Company, including, without limitation, shares of Common Stock that will be received as a result of the conversion of the Series B Stock or the exercise of the Warrants.

5. Governing Law.   The Registrable Securities will be, if and when issued, delivered in California. This Agreement shall be deemed to have been made and delivered in the State of California and shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal substantive laws of the State of California, without giving effect to the choice of law rules thereof.

6. Amendment.   This Agreement may only be amended by a written instrument executed by the Company and the Holders.

7.Entire Agreement.   This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.

8. Execution in Counterparts.   This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.

9. Notices.   All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed duly given when delivered by hand or mailed by registered or certified mail, postage prepaid, return receipt requested, as follows:

If to the Holders, M.A.G. Capital, LLC

Mercator Momentum Fund, L.P.

Mercator Momentum Fund III, L.P.

Monarch Pointe Fund, Ltd.

555 South Flower Street, Suite 4200

Los Angeles, CA 90071

Attention: David Firestone

With a copy to Sheppard Mullin Richter & Hampton LLP

333 South Hope Street

48th Floor

Los Angeles, CA 90071-1448

Telephone No.: (213) 620-1780

Facsimile No.: (213) 620-1398

Attention: David C. Ulich

If to the Company, M-Wave, Inc.

11533 Franklin Avenue, 2^nd Floor

Franklin Park, Illinois 60131

Telephone No.: 630-562-4751

-5-

Facsimile No.: 630-562-1775

Attention: Jim Mayer

With a copy to Ellenoff Grossman & Schole LLP

370 Lexington Avenue, Floor 19

New York, New York 10017

Telephone No.: 212-370-1300

Facsimile No.: 212-370-7889

Attention: Barry I. Grossman

10. Binding Effect; Benefits.   Any Holder may assign its rights hereunder. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective heirs, legal representatives, successors and assigns. Nothing herein contained, express or implied, is intended to confer upon any person other than the parties hereto and their respective heirs, legal representatives and successors, any rights or remedies under or by reason of this Agreement.

11. Headings.   The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.

12.Severability.   Any provision of this Agreement which is held by a court of competent jurisdiction to be prohibited or unenforceable in any jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

13. Jurisdiction.   Each of the parties irrevocably agrees that any and all suits or proceedings based on or arising under this Agreement may be brought only in and shall be resolved in the federal or state courts located in the City of Los Angeles, California and consents to the jurisdiction of such courts for such purpose. Each of the parties irrevocably waives the defense of an inconvenient forum to the maintenance of such suit or proceeding in any such court. Each of the parties further agrees that service of process upon such party mailed by first class mail to the address set forth in Section 8 shall be deemed in every respect effective service of process upon such party in any such suit or proceeding. Nothing herein shall affect the right of other party to serve process in any other manner permitted by law. Each of the parties agrees that a final non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner.

14. Attorneys' Fees and Disbursements.   If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party or parties shall be entitled to receive from the other party or parties reasonable attorneys' fees and disbursements in addition to any other relief to which the prevailing party or parties may be entitled.

[The balance of this page is intentionally left blank.]

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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the date first above written.

M-WAVE, INC.
By:	/s/ Joseph A.Turek
Name:	Joseph A.Turek
Its:	President
HOLDERS:
MERCATOR MOMENTUM FUND, L.P.
BY: M.A.G. CAPITAL, LLC
ITS GENERAL PARTNER
By:	/s/ David Firestone
Name:	David Firestone
Its:	Managing Member
MERCATOR MOMENTUM FUND III, L.P.
BY: M.A.G. CAPITAL, LLC
ITS GENERAL PARTNER
By:	/s/ David Firestone
Name:	David Firestone
Its:	Managing Member
M.A.G. CAPITAL, LLC
By:	/s/ David Firestone
Name:	David Firestone
Its:	Managing Member
MONARCH POINTE FUND, LTD.
By:	/s/ David Firestone
Name:	David Firestone
Its:	Managing Member

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EX-10.3

AMENDMENT

This Amendment (“Amendment”), dated as of March 1, 2006, is entered into by and among M-WAVE, INC., a Delaware corporation (the “Company”),and MERCATOR MOMENTUM FUND, LP (“MMF”), MERCATOR MOMENTUM FUND III, LP (“MMF III”), and MONARCH POINTE FUND, LTD. (“MONARCH” and, collectively with MMF and MMF III, the “Purchasers”), andM.A.G. CAPITAL, LLC (“MAG”), for the purpose of amending the terms of the common stock purchaser warrants listed on Exhibit A hereto (as amended, modified or supplemented from time to time, the “Warrants”) issued by the Company to MAG and the Purchasers. Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Warrants.

WHEREAS, the Company previously issued the Warrants to MAG at exercise prices ranging from $1.02 to $1.27 (“Exercise Prices”) in connection with both the purchase of Series A Convertible Preferred Stock of the Company and the issuances of the Company’s subordinated debt, both to MAG and the Purchasers.

WHEREAS, the Company has agreed to re-price the Warrants in connection with the purchase of Series B Convertible Preferred Stock of the Company by MAG and the Purchasers pursuant to the subscription agreement dated March 1, 2006 by and among the Company, MAG and the Purchasers (the “Series B Subscription Agreement”).

NOW, THEREFORE, in accordance with Section 5.6 of the Warrants and in consideration of the above, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto amend the Warrants and agree as follows:

1. The Company agrees to re-price the Exercise Prices of the Warrants from the Exercise Prices set forth therein to $0.69 (the price that is $0.01 above the closing bid price on the business day immediately preceding the date the Series B Subscription Agreement is entered into).

2. This Amendment shall be effective as of the date following the execution and delivery of same by each of the Company, MAG and the Purchasers.

3. Except as specifically set forth in this Amendment, there are no other amendments to the Warrants, and all of the other forms, terms and provisions of the Warrants shall remain unmodified and in full force and effect.

4. This Amendment shall be binding upon the parties hereto and their respective successors and permitted assigns and shall inure to the benefit of and be enforceable by each of the parties hereto and its successors and permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF CALIFORNIA. This Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument.

IN WITNESS WHEREOF, each of the Company, MAG and the Purchasers has caused this Amendment to be effective and signed in its name effective as of the date set forth above.

M-WAVE, INC.
By:	/s/ Jim Mayer
Name:	Jim Mayer
Title:	Interim Chief Executive Officer
MERCATOR MOMENTUM FUND, L.P.
BY: M.A.G. CAPITAL, LLC
ITS GENERAL PARTNER
By:	/s/ David Firestone
Name:	David Firestone
Its:	Managing Member
MERCATOR MOMENTUM FUND III, L.P.
BY: M.A.G. CAPITAL, LLC
ITS GENERAL PARTNER
By:	/s/ David Firestone
Name:	David Firestone
Its:	Managing Member
M.A.G. CAPITAL, LLC
By:	/s/ David Firestone
Name:	David Firestone
Its:	Managing Member
MONARCH POINTE FUND, LTD.
By:	/s/ David Firestone
Name:	David Firestone
Its:	Managing Member

[Signature Page to Amendment to Warrants, dated as of March 1, 2006]

2

EXHIBIT A

WARRANTS

Date	MMF III	MMF	Monarch	MAG	Total	Exercise  Price
June 2004	190,470	270,900	168,630	900,000	1,530,000	1.27
February 2005	0	114,783	233,043	86,957	434,783	1.15
June 2005	54,667	33,333	45,333	33,333	166,666	1.02
Total	245,137	419,016	447,006	1,020,290	2,131,449

EX-10.4

VOTING AGREEMENT

AGREEMENT (the "Agreement") entered into as of February 6, 2006, by and between Joseph A. Turek (the "Shareholder"), M.A.G. Capital, LLC, a California limited liability company ("M.A.G."), and Mercator Momentum Fund III, a California limited partnership (the "Lender"), Mercator Momentum Fund, a California limited partnership ("Momentum Fund"), and Monarch Pointe Fund, Ltd., a corporation organized under the laws of the British Virgin Islands ("MPF" and, with the Lender and Momentum Fund, the "M.A.G. Funds").

RECITALS

The Shareholder is the owner of voting securities of M-Wave, Inc., a Delaware corporation (the "Company"). M.A.G. and the M.A.G. Funds (together, the "M.A.G. Parties") also own securities issued by the Company. The Company is indebted to the Lender. The Company has requested that the Lender enter into an agreement with the Company entitled First Amendment to Loan and Security Agreements (the "Amendment") to modify certain of the terms of the indebtedness of the Company to the Lender.

The Company has further requested that the M.A.G. Funds enter into various agreements with the Company that provide for the exchange by the M.A.G. Funds of senior and subordinated indebtedness of the Company for its shares of Series B Preferred Stock of the Company and warrants to purchase common stock (the "Series B Agreements"). The Series B Agreements provide that the Series B Preferred Stock will be convertible into common stock of the Company, but that the amount of common stock that may be acquired pursuant to such conversion is limited to that number of shares of common stock that constitutes 19.9% of the outstanding common stock on the date of the Agreements unless and until the Shareholders of the Company approve the conversion of all of the Series B Preferred Stock into shares of common stock free from this limitation (the "Shareholder Approval").

The Company intends to attempt to identify and pursue a transaction in which the Company would make a significant acquisition of another company or the business or assets of another company (an "Acquisition"). The Board of Directors of the Company has established a special committee of the board (the "Committee") to review and consider potential Acquisitions.

The Lender requires, as a condition to its execution of the Amendment, and the M.A.G. Funds require, as a condition to their execution of the Series B Agreements, that the Shareholder enter into this Agreement, pursuant to which the Shareholder agrees to vote all of the voting securities of the Company that he owns or otherwise controls (i) in favor of any Acquisition that is recommended by the Committee (a "Recommended Acquisition"), (ii) in favor of any related proposal or transaction that is necessary to effect any Recommended Acquisition, and (iii) in favor of the Shareholder Approval. The Shareholder believes that the Amendment and the Series B Agreements will provide a direct benefit to the Company and an indirect benefit to him as a shareholder of the Company and has agreed to enter into this Agreement to induce the Lender to execute the Amendment and the M.A.G. Funds to execute the Series B Agreements.

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NOW, THEREFORE, in consideration of the mutual agreements, covenants, representations and warranties contained herein and intending to be legally bound hereby, the parties hereto agree as follows:

1. Voting Agreement.   The Shareholder hereby agrees to vote all voting securities of the Company now or at any time hereafter owned or controlled by him of record or beneficially or with respect to which he holds a proxy (i) in favor of any Recommended Acquisition, (ii) in favor of any related proposal or transaction that is necessary to effect any Recommended Acquisition and (iii) in favor of the Shareholder Approval. This undertaking shall terminate on the earlier of the first anniversary of this Agreement or the closing of the Recommended Acquisition.

2. Transfer Restriction.   The Shareholder shall not, until after the earlier of the first anniversary of this Agreement or the closing of the Recommended Acquisition, sell, assign, otherwise transfer or encumber any voting securities of the Company that he owns as of the date of this Agreement or that he acquires during the term of the commitment made in the preceding portion of this sentence, give up voting control over any voting securities of the Company with respect to which he holds a proxy or over which he otherwise has voting control on the date of this Agreement or with respect to which he obtains a proxy or over which he otherwise obtains voting control during the term of the commitment made in the preceding portion of this sentence or execute any proxy with respect to any of such voting securities or enter into any agreement or other arrangement relating to the voting of any of such voting securities other than this Agreement.

3. Representations and Warranties of the Shareholder.   The Shareholder represents and warrants to the M.A.G. Parties that:

(a) This Agreement is a valid and binding agreement of the Shareholder, enforceable against the Shareholder in accordance with its terms;

(b) Neither the execution of this Agreement by the Shareholder nor the performance by the Shareholder of his obligations hereunder will constitute a violation of or default under, or conflict with, any contract, commitment, agreement, understanding, arrangement or restriction of any kind by which the Shareholder is bound;

(c) No consent, approval, order or authorization of any court, administrative agency or other governmental entity or any other person as required by or with respect to the Shareholder in connection with the execution and delivery of this Agreement by the Shareholder;

(d) On the date hereof the Shareholder has sole voting power or power to direct the vote with respect to the voting securities of the Company described at the end of this Agreement, and the Shareholder has not granted any proxy with respect to such voting securities that is in effect on the date hereof;

(e) The Shareholder has not, with the exception of this Agreement, subjected any of the voting securities of the Company owned by him to any voting trust or any other agreement, understanding or arrangement; and

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(f) The Shareholder acknowledges that this Agreement is made for the benefit of each of the M.A.G. Parties, each of which may recover any damages from the Shareholder that it may suffer as a result of any breach of this Agreement by the Shareholder.

4.Representations and Warranties of the Shareholder.   The M.A.G. Parties represent and warrant to the Shareholder that:

(a) This Agreement is a valid and binding agreement of the M.A.G. Parties, enforceable against them in accordance with its terms;

(b) Neither the execution of this Agreement by the M.A.G. Parties nor the performance by the M.A.G. Parties of their obligations hereunder will constitute a violation of or default under, or conflict with, any contract, commitment, agreement, understanding, arrangement or restriction of any kind by which any of the M.A.G. Parties is bound; and

(c) No consent, approval, order or authorization of any court, administrative agency or other governmental entity or any other person as required by or with respect to the M.A.G. Parties in connection with the execution and delivery of this Agreement by the M.A.G. Parties.

5. Indemnification.   The Shareholder, in the one hand, and the M.A.G. Parties, on the other hand, each agree to indemnify and defend the other from and against all losses resulting from or arising out of (i) any inaccuracy in or any breach of any representation, warranty, covenant or agreement of the indemnifying party contained in this Agreement or (ii) any breach by the indemnifying party of any obligation imposed upon the indemnifying party by this Agreement; provided, however, that neither the aggregate liability of the Shareholder to the M.A.G. Parties under this Section 5, nor the aggregate liability of the M.A.G. Parties to the Shareholder under this Section 5, shall exceed the product of the closing price of the Common Stock of the Company on the date of this Agreement and the number of shares of the Common Stock of the Company held by the Shareholder on the date of this Agreement.

6. Specific Performance.   The Shareholder acknowledges that irreparable injury would occur in the event any of the provisions hereof were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the Shareholder agrees that each of the M.A.G. Parties shall be entitled to an injunction or injunctions to prevent breaches of the provisions hereof and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction in the United States or any state thereof, in addition to any other remedy to which any of the M.A.G. Parties may be entitled at law or equity.

7. Termination.   This Agreement shall terminate upon the termination of the commitment made by the Shareholder in Section 1.

8. Miscellaneous Provisions.

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(a) Addresses for Notices.  Any notice or other document required or permitted to be given or delivered to any of the M.A.G. Parties shall be delivered or forwarded to M.A.G. at 555 South Flower Street, Suite 4200, Los Angeles, California 90071, Attention: David F. Firestone (Facsimile No. 213/553-8285), or to such other address or number as shall have been furnished to the Shareholder in writing by M.A.G., with a copy to Sheppard Mullin Richter & Hampton LLP, 333 South Hope Street, 48th Floor, Los Angeles, California 90071-1448 Attention David C. Ulich (Facsimile No. 213/620-1398). Any notice or other document required or permitted to be given or delivered to the Shareholder shall be delivered or forwarded to the Shareholder at 11533 Franklin Avenue, Franklin Park, Illinois 60131 (Facsimile No. 630 929-9755), with a copy to ________________________________________ (Facsimile No. 630 390 2275), or to such other address or number as shall have been furnished to M.A.G. and the Lender in writing by the Shareholder.

(b) Effectiveness of Notices.  All notices, requests and approvals required by this Agreement shall be in writing and shall be conclusively deemed to be given (i) when hand-delivered to the other party, (ii) when received if sent by facsimile at the address and number set forth above; provided that notices given by facsimile shall not be effective, unless either (a) a duplicate copy of such facsimile notice is promptly given by depositing the same in the mail, postage prepaid and addressed to the party as set forth below or (b) the receiving party delivers a written confirmation of receipt for such notice by any other method permitted under this paragraph; and further provided that any notice given by facsimile received after 5:00 p.m. (recipient’s time) or on a non-business day shall be deemed received on the next business day; (iii) five (5) business days after deposit in the United States mail, certified, return receipt requested, postage prepaid, and addressed to the party as required by Section 8(a), or (iv) the next business day after deposit with an international overnight delivery service, postage prepaid, addressed to the party as required by Section 8(a) with next business day delivery guaranteed; provided that the sending party receives confirmation of delivery from the delivery service provider.

(c) Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of California as applied to agreements among California residents made and to be performed entirely within the State of California, without giving effect to the conflict of law principles thereof.

(d) Waiver, Amendments and Headings.  This Agreement and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by both parties (either generally or in a particular instance and either retroactively or prospectively). The headings in this Agreement are for purposes of reference only and shall not affect the meaning or construction of any of the provisions hereof.

(e) Jurisdiction.  Each of the parties irrevocably agrees that any and all suits or proceedings based on or arising under this Agreement may be brought only in and shall be resolved in the federal or state courts located in the City of Los Angeles, California and consents to the jurisdiction of such courts for such purpose. Each of the parties irrevocably waives the defense of an inconvenient forum to the maintenance of such suit or proceeding in any such court. Each of the parties further agrees that service of process upon such party mailed by first class mail to the address set forth in Section 6(a) shall be deemed in every respect effective service of process upon such party in any such suit or proceeding. Nothing herein shall affect the right of a party to serve process in any other manner permitted by law. Each of the parties agrees that a final non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner.

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(f)Attorneys' Fees and Disbursements.  If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party or parties shall be entitled to receive from the other party or parties reasonable attorneys’ fees and disbursements in addition to any other relief to which the prevailing party or parties may be entitled.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as the date first above written.

Voting Securities of the Company held by the Shareholder: 1,379,000.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

/s/ Joseph A. Turek
Joseph A. Turek
M.A.G. Capital, LLC
By:	/s/ David F. Firestone
	David F. Firestone,
	Managing Member
Mercator Momentum Fund III, L.P.
By:	M.A.G. Capital, LLC,
	General Partner
By:	/s/ David F. Firestone
	David F. Firestone,
	Managing Member

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Mercator Momentum Fund, L.P.
By:	M.A.G. Capital, LLC,
	General Partner
By:	/s/ David F. Firestone
	David F. Firestone,
	Managing Member
Monarch Pointe Fund, Ltd.
By:	/s/ David F. Firestone
	David F. Firestone,
	Managing Member

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EX-99.1

M-Wave Raises $6.5 Million in Equity - Including Elimination

of $4.6 Million in Debt

Financing Agreement with M.A.G. Capital Will Bring

Company Into Compliance With NASD Rules

FRANKLIN PARK, IL--(MARKET WIRE)— March 1, 2006 -- M-Wave, Inc. (NasdaqCM: MWAV - News), an international electronic procurement services firm and virtual manufacturer of customer-specified electronic components (“M-Wave”) indicated it has closed a $6.5 Million financial recapitalization lead by affiliates of M.A.G. Capital of Los Angeles (“M.A.G.”). The financing will eliminate all of M-Wave’s non-trade debt by converting approximately $2.2 Million in secured and $2.4 Million in unsecured liabilities into preferred equity, plus add approximately $1.9 Million of new capital.

M-Wave received a NASDAQ Staff Deficiency Letter on November 22, 2005 indicating that it failed to comply with the Stockholders' Equity, Market Value of Publicly Held Shares and Net Income from Continuing Operations requirements for continued listing set forth in NASDAQ Marketplace Rule 4310(c)(2)(B), which requires M-Wave to have a minimum of $2,500,000 in stockholder's equity or $35,000,000 market value of listed securities or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years. M-Wave’s common stock was thus subject to delisting. M-Wave made a written submission to the NASDAQ staff of its plan to achieve and sustain compliance with all of The NASDAQ Capital Market listing requirements, including the time frame for completion of such plan. Last week, M-Wave appeared before NASDAQ to appeal its delisting and disclosed it had reached an accord with M.A.G. that satisfies NASDAQ Marketplace Rule 4310(c)(2)(B) that requires it to have a minimum of $2.5 Million in stockholders’ equity.

The debt and equity is consolidated into new, restricted, fixed conversion, Series B Preferred shares issued at a premium to market of $.79 with no registration penalties and an incentive-based “step-down” dividend rate of 15% or 9% depending upon the timing in achieving certain registration and effectiveness requirements of the underlying common shares.

M-Wave previously issued approximately 2.1 Million common stock purchase warrants to M.A.G. between July 2004 and June 2005 at varying “strike” prices ranging between $1.02 and $1.27 per share. In connection with this issuance of the Series B Preferred shares it has agreed to re-price those warrants at a strike price of $.01 over the closing price of its publicly-traded common shares directly preceding closing of the Series B, or $0.69.

The restrictions on the Series B Preferred include a stipulation that M.A.G. will not have a voting stake in the Company nor hold common shares on a fully aggregated basis greater than 19.99% at any time. The conversion price is a fixed price of $.79 that represents approximately a 20% premium to market based upon pricing directly preceding closing. The dividend reduces from 15% to 9% at such time when registration of the underlying common shares becomes effective.

M-Wave believes it has achieved compliance with SEC accounting rules by the filing of its Amendment to Form 8-K on February 27, 2006 adding financial disclosure relating to the acquisition of Jayco Ventures, Inc. (initially disclosed in a Form 8-K filed on March 2, 2005). M-Wave expects to file a proxy statement, and seek to schedule a meeting of its shareholders in the coming 90 days to discuss a wide variety of corporate matters including actions to support its continued compliance with NASDAQ rules; extraordinary and routine matters normally covered in its Annual Meeting of Shareholders.

Jim Mayer, Interim CEO and Chief Restructuring office commented: “The new capital provides the Company the resources it needs to achieve NASDAQ compliance, complete its restructuring, including the liquidation of its former satellite components division, and to become increasingly efficient in its core business. It also allows us to investigate strategic options that may include a the eventual sale or combination of M-Wave with another company that would seek to achieve measurable shareholder value. We look at this as a significantly positive event.”

M-Wave expects to make further public announcements in the coming weeks.

Contact:

Jim Mayer, Interim CEO or

Jeff Figlewicz, Corporate Controller

630 562-5550 Ext. 4751

About M-Wave, Inc.

M-Wave provides supply chain services and sources printed circuit boards, custom electronic components and direct broadcasting satellite parts domestically and from Asia. M-Wave’s Electro-Mechanical Group division (EMG) sources high-performance printed circuit boards and custom and engineered electronic components from original equipment manufacturers and contract manufacturers in Asia and the US. The products are used in a wide range of telecommunications and industrial electronics products. EMG also offers domestic and international supply chain services and annual forecast financing for its middle market customers. M-Wave‘s website is located at www.mwav.com.

The discussion above contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements by their nature involve substantial risks and uncertainties, including M-Wave’s ability to develop a plan that will bring the company into compliance with the Nasdaq Capital Market listing requirements, Nasdaq’s determination that the plan is adequate, and M-Wave’s ability to effect its plan. M-Wave’s plan will be dependent on its anticipated future operations which may differ materially depending on a variety of factors, including, but not limited to the following: the achievement of M-Wave’s projected operating results, the achievement of efficient volume production and related sales revenue, the ability to integrate acquired companies into M-Wave’s existing business, the ability to restructure or dispose of some of its operations, and its ability to raise additional capital. Additional information with respect to the risks and uncertainties faced by M-Wave may be found in, and the prior discussion is qualified in its entirety by, the Risk Factors contained in the company’s filings with the Securities and Exchange Commission including M-Wave’s Report on Form 10-KSB for the year ended December 31, 2004, its Forms 10-QSB, and other SEC filings.