Amended Current Report

Notes to Consolidated Financial Statements

March 31, 2011 and 2010

(In thousands, except share and per share data)

Technology Research Corporation and subsidiaries (the “Company”) is a recognized leader in providing cost effective engineered solutions for applications involving power management and control, intelligent battery systems technology and electrical safety products based on our proven ground fault sensing and Fire Shield ^® technology. These products are designed, manufactured and distributed to the consumer, commercial and industrial markets worldwide. The Company also supplies power monitors and control equipment to the United States Military and its prime contractors.

Our corporate headquarters are located in Clearwater, Florida. We incorporated TRC Honduras, S.A. de C.V., a wholly owned subsidiary, for the purpose of manufacturing our high volume products in Honduras. On March 31, 2010, we completed an acquisition of all of the common stock of Patco Electronics, Inc. (“Patco”), a Titusville, Florida based company. Patco designs and manufactures battery management tools for secondary or re-chargeable batteries in several battery chemistries, including lead acid and lithium ion. Patco’s product solutions support customers in military, commercial and industrial sectors. On November 19, 2010, we acquired the assets associated with the Shoreline Reels® product line owned by TDI Products Inc. (“TDI”), an Atlantic Beach, Florida based company. We now produce, assemble, promote, and sell manual and motorized cord and hose reels, marketed under the Shoreline Reels trademark, for recreational vehicles, boats, and other industrial applications.

We primarily sell our products direct to the customer, through retail stores, to original equipment manufacturers and through electrical distributors involved in a variety of industries and to governmental entities. We perform credit evaluations of all new customers and generally do not require collateral. Our customers are located throughout the world. We also license our technology for use by others in exchange for a royalty or product purchases.

The preparation of the consolidated financial statements requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

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Notes to Consolidated Financial Statements - Continued

The consolidated financial statements include the financial statements of Technology Research Corporation and our wholly owned subsidiaries, TRC Honduras, S.A. de C.V. and Patco Electronics, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

Cash equivalents amounted to $23 as of March 31, 2011 and 2010, and consisted of money market accounts. For purposes of the consolidated statements of cash flows, we consider all short-term investments with original maturities of three months or less to be cash equivalents.

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

We may enter into government contracts that fall within the scope of FASB ASC Topic 912-605, “Contractors-Federal Government Revenue Recognition”. Currently we do not have any transactions being accounted for within the scope of FASB ASC Topic 912-605. We may enter into government contracts that fall within the scope of FASB ASC Topic 605-35, “Revenue Recognition, Construction-Type and Production-Type Contracts”. For government contracts within the scope of FASB Topic 605-35, we record revenue under a units-of-delivery model with revenue and costs equal to the average unit value times the number of units delivered. Any estimated loss on an overall contract would be recognized in the period determined in accordance with FASB ASC Topic 605-35. We have not experienced past losses on government contracts.

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

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Notes to Consolidated Financial Statements - Continued

We sell products to customers throughout the world and in many markets including retail, distribution, OEM, and directly to consumers. Customers are reviewed for creditworthiness, and we maintain an allowance for anticipated losses. We had one customer with an accounts receivable balance at March 31, 2011 and 2010 of $0.7 million and $1.1 million, respectively, and one customer with an accounts receivable balance at March 31, 2011 and 2010 of $0.6 and $0.5 million, respectively. In addition, we had a new customer (due to the acquisition of Patco) with an accounts receivable balance of $0.6 million at March 31, 2011. These were the only customers with an accounts receivable balance equal to more than 10% of total accounts receivable at March 31, 2011 and 2010.

Inventories are stated at the lower of cost or market. Market represents net realizable value. Cost is determined using the first-in, first-out method.

Property, plant, and equipment are stated at cost. Depreciation is calculated on the straight-line half-year method over the estimated useful lives of the assets.

We review long-lived assets for possible impairment of carrying value whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with relevant accounting guidance related to long-lived assets. In evaluating the fair value and future benefit of our assets, management performs an analysis of the anticipated undiscounted future net cash flows to be derived from the use of individual assets over their remaining amortization period. If the carrying amount of an asset exceeds its anticipated undiscounted cash flows, we recognize an impairment loss equal to the difference between its carrying value and its fair value.

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Notes to Consolidated Financial Statements - Continued

Goodwill, representing the excess of acquisition costs over the fair value of net assets of acquired businesses, is not amortized but is reviewed for impairment at least annually. Fair value is based on a projection of the estimated discounted future net cash flows expected to result from the reporting unit, using a discount rate reflective of our cost of funds. For the purposes of performing this impairment test, our business segments are our reporting units. The fair value of our reporting units, to which goodwill has been assigned, is compared with the reporting units’ recorded values. If recorded values are less than the fair values, no impairment is indicated. If fair values are less than recorded values, an impairment charge is recognized for the difference between the carrying value and the fair value. We perform our annual goodwill impairment testing for all reporting units in the fourth quarter of each year.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employees’ requisite service period. In order to determine the fair value of stock options on the date of grant, we apply the Black-Scholes option-pricing model. Inherent in the model are assumptions related to risk-free interest rate, dividend yield, expected stock-price volatility, and expected option term. We use these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of stock options granted, any fluctuations in these calculations could have a material effect on the results presented in our Consolidated Statements of Income. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on our financial statements.

Total share-based compensation expense recorded in the consolidated statements of income was $446 and $475 for the years ended March 31, 2011 and 2010, respectively.

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Notes to Consolidated Financial Statements - Continued

In accordance with the relevant accounting guidance for computing earnings per share, unvested share-based payment awards that contain rights to receive non-forfeitable dividends (whether paid or unpaid) are participating securities, and should be included in the two-class method of computing earnings per share. As of April 1, 2009, we implemented the accounting guidance which required us to treat unvested shares of restricted stock as participating securities in accordance with the two-class method in the calculation of both basic and diluted earnings per share and required that all prior-period earnings per share data that is presented be adjusted retrospectively.

The following tables summarize the components of basic and diluted earnings per share computations.

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Notes to Consolidated Financial Statements - Continued

In October 2009, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance for revenue recognition with multiple deliverables. This guidance impacts the determination of when the individual deliverables included in a multiple-element arrangement may be treated as separate units of accounting. Additionally, this new accounting guidance modifies the manner in which the transaction consideration is allocated across the separately identified deliverables by no longer permitting the residual method of allocating arrangement consideration. The new guidance is effective for us prospectively for revenue arrangements entered into or materially modified beginning in the first quarter of fiscal 2011. This accounting guidance did not have a significant impact on our consolidated financial statements.

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Notes to Consolidated Financial Statements - Continued

In October 2009, the FASB issued new guidance for the accounting for certain revenue arrangements that include software elements. This new guidance amends the scope of pre-existing software revenue guidance by removing from the guidance non-software components of tangible products and certain software components of tangible products. This new guidance is effective for us prospectively for revenue arrangements entered into or materially modified beginning in the first quarter of fiscal 2011. The adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.

In January 2010, the FASB issued guidance related to fair value disclosure requirements. Under this guidance, companies will be required to make additional disclosures concerning significant transfers of amounts between the Level 1 and Level 2 fair value disclosures, as well as further disaggregation of the types of activity that were previously disclosed in the rollforward of Level 3 fair value disclosures. Further, the guidance clarifies the level of aggregation of assets and liabilities within the fair value hierarchy that may be presented. The adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.

In December 2010, the FASB issued updated accounting guidance for business combinations that specifies the disclosure method and supplemental pro forma disclosure required in business combinations. The amended guidance will be effective for business combinations for which the acquisition date is on or after April 1, 2011.

We account for advertising expenditures as expense in the period incurred. For the fiscal years ended March 31, 2011, and 2010, advertising expenses were $213 and $166, respectively.

Accounting guidance for fair value measurements specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources or reflect our own assumptions of market participant valuation. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:

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Notes to Consolidated Financial Statements - Continued

The fair value of short-term investments, trade and other accounts receivable, trade accounts payable, accrued liabilities, accrued dividends and income taxes receivable approximates their book value due to their short-term nature.

On November 19, 2010, we acquired the assets associated with the Shoreline Reels® product line owned by TDI in exchange for approximately $1.1 million in cash. TDI develops, produces, assembles, promotes, and sells manual and motorized cord and hose reels, marked under the Shoreline Reels trademark, for recreational vehicles, boats, and other industrial applications. We incurred approximately $0.1 million of transaction costs recorded in the fiscal year ended March 31, 2011, consisting primarily of broker’s commission and professional fees associated with the acquisition.

The allocation of the purchase price is based upon estimates of the assets and liabilities acquired in accordance with the relevant accounting guidance. The acquisition of the Shoreline Reels® product line will help expand our product portfolio in support of our specialty vehicle strategy. The expected long-term growth, market position and expected synergies to be generated by the Shoreline Reels® product line are the primary factors which gave rise to an acquisition price which resulted in the recognition of goodwill.

Identifiable intangible assets principally include employment agreements, customer relationships, and developed technologies (see Note 5).

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TECHNOLOGY RESEARCH CORPORATION

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Notes to Consolidated Financial Statements - Continued

On March 31, 2010, we completed an acquisition of all of the common stock of Patco for $5.0 million in cash, 674,950 shares of our common stock, and contingent cash payments if certain revenue targets are met for either or both of the two years after the closing of the transaction. Included in the purchase price is $0.7 million, the present value of the contingent cash payments that could be paid as additional earn-out payments based upon our best estimate of Patco’s future sales of its battery products. Patco designs and manufactures battery management tools for secondary or re-chargeable batteries in several battery chemistries, including lead acid and lithium ion. Patco’s product solutions support customers in military, commercial and industrial sectors. Additionally, we incurred approximately $0.5 million of transaction costs, recorded in the year ended March 31, 2010, consisting primarily of broker’s commissions and professional service fees associated with the Patco acquisition.

The allocation of the purchase price is based upon estimates of the assets and liabilities acquired in accordance with the relevant accounting guidance. The acquisition of Patco is based on management’s consideration of past and expected future performance as well as the potential strategic fit with our long-term goals. The expected long-term growth, market position and expected synergies to be generated by Patco are the primary factors which gave rise to an acquisition price which resulted in the recognition of goodwill.

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Notes to Consolidated Financial Statements - Continued

Identifiable intangible assets principally include employment agreements, trade secrets and purchased backlog (see Note 5).

Inventories at March 31, 2011 and 2010 consist of the following:

Approximately 47% and 40% of our inventories were located in Honduras as of March 31, 2011 and 2010, respectively.

Property, plant and equipment as of March 31, 2011 and 2010 consist of:

Approximately 26% and 25% of our property, plant and equipment was located in Honduras as of March 31, 2011 and 2010, respectively.

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Notes to Consolidated Financial Statements - Continued

Intangible assets as of March 31, 2011 are as follows:

Intangible assets as of March 31, 2010 were as follows:

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Notes to Consolidated Financial Statements - Continued

Amortization of intangibles over the next five years is as follows:

Accrued liabilities consisted of the following:

Effective October 25, 2010, we entered into the Second Amendment to Amended and Restated Loan Agreement (the “Loan Agreement”) and Promissory Note dated that same date (the “Replacement Note”) with Wells Fargo Bank, N.A. (“Wells Fargo”), our current institutional lender. The Replacement Note provides for an interest rate on our line of credit equal to the 30-day London Interbank Offering Rate (“LIBOR”) Market Index Rate plus a spread to be reset quarterly as follows:

The Loan Agreement extends the maturity date of our Wells Fargo credit facility until September 30, 2012.

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Notes to Consolidated Financial Statements - Continued

The Loan Agreement is for a credit facility of $3.0 million. As of March 31, 2011 and March 31, 2010, we had no borrowings on this credit facility. The revolving line of credit can be used for acquisitions, working capital and general corporate purposes. Revolving loans may be borrowed, repaid and re-borrowed until September 30, 2012, at which time all amounts borrowed must be repaid. Our Loan Agreement with Wells Fargo obligates us to pay a customary unused facility fee for a credit facility of this size. The revolving loans under the Loan Agreement are secured by a continuing security interest in most of our key assets, including accounts and notes receivable, inventory, investments, demand deposit accounts maintained with our lender and 65% of the voting stock of Technology Research Corporation/Honduras, S.A. DE C.V, our wholly-owned subsidiary.

We have no off-balance sheet arrangements and no debt relationships other than noted above.

Our effective income tax rate was (65.8%) and 32.8% for the years ended March 31, 2011 and 2010, respectively. The effective income tax rate is based on the estimated income for the year and the composition of this income from the U.S. and from our subsidiary in Honduras. The income tax rate on income earned from Honduras is zero due to a tax holiday and, therefore, the effective rate is generally lower than the U.S. statutory rate due to the mix of income earned in the U.S. versus income earned in Honduras.

Pursuant to the accounting for uncertainty in income taxes accounting guidance, we must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such uncertain tax positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. To the extent we prevail in matters for which accruals have been established or are required to pay amounts in excess of accruals, our effective tax rate in a given financial statement period could be affected. During the fiscal year ended March 31, 2011 our transfer pricing position was affirmed during a Federal tax audit for fiscal 2008. Consequently, we reversed the $303 previously accrued. As of March 31, 2011, we have unrecognized tax benefits of $20, all of which is included in income tax receivable. As of March 31, 2010, we had unrecognized tax benefits of $321, of which $18 was included in income taxes receivable and $303 was included in noncurrent income taxes payable. During fiscal 2010 we recorded $194 of unrecognized tax benefits primarily related to transfer pricing. Interest expense related to uncertain tax positions amounted to $(6) and $4, for fiscal 2010 and 2009, respectively. Total accrued interest at March 31, 2011 and 2010 was $4 and $7, respectively, and was included in income taxes receivable. There are no accrued penalties. It is our policy is to recognize interest and penalties in the provision for income taxes.

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Notes to Consolidated Financial Statements - Continued

A reconciliation of unrecognized tax benefits is as follows:

We file U.S. Federal and Florida income tax returns. Audits relating to all U.S. federal income tax matters for our income tax returns have been completed through the fiscal 2008 year. State income tax returns for fiscal years 2006 through 2010 have not been audited.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of March 31, 2011 and 2010 are presented below: