U.S. 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

                           January 26, 1998
                           (Date of Report)


                       DIGITAL POWER CORPORATION
        (Exact name of registrant as specified in its charter)

            CALIFORNIA                      1-12711           94-1721931
  (State or other jurisdiction of         (Commission      (I.R.S. Employer
  incorporation or organization)          File Number)     Identification No.)

  41920 Christy Street, Fremont, California 94538-3158; 510-657-2635
     (Address and telephone number of principal executive offices)


ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS.

     Pursuant  to  an  Asset  Sale  Agreement (the "Agreement"), on January 26,
1998, Digital Power Corporation, a California  corporation  ("Digital  Power"),
acquired from Gresham Lion Technology Limited, an English corporation ("Gresham
Lion"),  certain assets of and assumed certain trade payables of Gresham  Power
Electronics  ("Gresham  Power"),  formerly  a  division  of  Gresham Lion.  The
consideration  paid  for  the acquisition was US$2.7 million, which  amount  is
subject to adjustment depending upon the net asset value (accounts receivables,
fixed assets and inventory  less  liabilities) ("NAV") as of  the closing date.
Specifically,  pursuant  to the Agreement,  the  acquisition  amount  shall  be
increased by US$1.6284 for  each  United Kingdom pound that Gresham Power's NAV
exceeds UK<pound-sterling>1,100,000  as  of  the  closing  date,  and  shall be
reduced  by  US$1.6284 for each United Kingdom pound that the NAV is less  than
UK<pound-sterling>1,100,000 as of the closing date.

     In addition  to the foregoing, if the NAV as of  March 31, 1998, equals or
exceeds UK<pound-sterling>1,606,000,  Gresham  Lion shall be paid an additional
US$300,000 subject to a reduction of US$1.6284 for  every  United Kingdom pound
NAV is less than GB<pound-sterling>1,606,000.  Further, Digital Power shall pay
Gresham Lion an additional US$1.15 for every United Kingdom  pound  of earnings
before  interest  and  taxes which exceeds UK<pound-sterling>250,000, up  to  a
maximum additional payment  of  US$300,000.  Pursuant to the Agreement, Gresham
Lion or its affiliates shall not  compete  with  Gresham  Power for a period of
three (3) years from the closing date.

     The foregoing description of the acquisition of Gresham Power is a summary
of certain of its provisions and reference is made to a copy  of the Agreement,
a copy of which is attached hereto as Exhibit 2.1 and incorporated  herein  by
this reference for all of its terms and conditions.

     Headquartered  in Salisbury, England, Gresham Power designs, manufactures,
and distributes switching  power  supplies, uninterruptible power supplies, and
frequency converters for the commercial and military markets.  Headquartered in
Fremont, California, Digital Power designs, develops, manufactures, and markets


<PAGE>2


switching  power  supplies for sale to  manufacturers  of  computer  and  other
electronic equipment.


ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.

     (a)   Financial statements of businesses acquired.

     (b)   Pro forma information

     Financial  statements  of  Gresham Power and pro forma information will be
filed by amendment within 60 days of the due date of this Form 8-K.

     (b)   Exhibits.

           2.1  Asset Sale Agreement  between  Digital  Power  Corporation  and
                Gresham Lion technology



                               SIGNATURE

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

Dated: February 6, 1998               DIGITAL POWER CORPORATION,
                                      A CALIFORNIA CORPORATION



                                      /S/ ROBERT O. SMITH

                                      Robert O. Smith,
                                      Chief Executive Officer
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U.S. 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

                           January 26, 1998
                           (Date of Report)

                       DIGITAL POWER CORPORATION
        (Exact name of registrant as specified in its charter)

            CALIFORNIA                      1-12711           94-1721931
  (State or other jurisdiction of         (Commission      (I.R.S. Employer
  incorporation or organization)          File Number)     Identification No.)

  41920 Christy Street, Fremont, California 94538-3158; 510-657-2635
     (Address and telephone number of principal executive offices)

ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS.

     Pursuant  to  an  Asset  Sale  Agreement (the "Agreement"), on January 26,
1998, Digital Power Corporation, a California  corporation  ("Digital  Power"),
acquired from Gresham Lion Technology Limited, an English corporation ("Gresham
Lion"),  certain assets of and assumed certain trade payables of Gresham  Power
Electronics  ("Gresham  Power"),  formerly  a  division  of  Gresham Lion.  The
consideration  paid  for  the acquisition was US$2.7 million, which  amount  is
subject to adjustment depending upon the net asset value (accounts receivables,
fixed assets and inventory  less  liabilities) ("NAV") as of  the closing date.
Specifically,  pursuant  to the Agreement,  the  acquisition  amount  shall  be
increased by US$1.6284 for  each  United Kingdom pound that Gresham Power's NAV
exceeds UK
1,100,000  as  of  the  closing  date,  and  shall be
reduced  by  US$1.6284 for each United Kingdom pound that the NAV is less  than
UK
1,100,000 as of the closing date.

     In addition  to the foregoing, if the NAV as of  March 31, 1998, equals or
exceeds UK
1,606,000,  Gresham  Lion shall be paid an additional
US$300,000 subject to a reduction of US$1.6284 for  every  United Kingdom pound
NAV is less than GB
1,606,000.  Further, Digital Power shall pay
Gresham Lion an additional US$1.15 for every United Kingdom  pound  of earnings
before  interest  and  taxes which exceeds UK
250,000, up  to  a
maximum additional payment  of  US$300,000.  Pursuant to the Agreement, Gresham
Lion or its affiliates shall not  compete  with  Gresham  Power for a period of
three (3) years from the closing date.

     The foregoing description of the acquisition of Gresham Power is a summary
of certain of its provisions and reference is made to a copy  of the Agreement,
a copy of which is attached hereto as Exhibit 2.1 and incorporated  herein  by
this reference for all of its terms and conditions.

     Headquartered  in Salisbury, England, Gresham Power designs, manufactures,
and distributes switching  power  supplies, uninterruptible power supplies, and
frequency converters for the commercial and military markets.  Headquartered in
Fremont, California, Digital Power designs, develops, manufactures, and markets
2

switching  power  supplies for sale to  manufacturers  of  computer  and  other
electronic equipment.

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.

     (a)   Financial statements of businesses acquired.

     (b)   Pro forma information

     Financial  statements  of  Gresham Power and pro forma information will be
filed by amendment within 60 days of the due date of this Form 8-K.

     (b)   Exhibits.

           2.1  Asset Sale Agreement  between  Digital  Power  Corporation  and
                Gresham Lion technology

                               SIGNATURE

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

Dated: February 6, 1998               DIGITAL POWER CORPORATION,
                                      A CALIFORNIA CORPORATION

                                      /S/ ROBERT O. SMITH

                                      Robert O. Smith,
                                      Chief Executive Officer