The following is management's discussion and analysis of certain significant factors that have affected the Company's financial condition and operating results for the period included in the consolidated financial statements in Item 1.

Company Overview

PHAZAR CORP's continuing operation is that of its subsidiaries, Antenna Products Corporation, Phazar Antenna Corp., Tumche Corp. and Thirco, Inc. As previously discussed in Item 1, for the purpose of this discussion, all results of Phazar Antenna Corp. are included with the results of Antenna Products Corporation. The management discussion presented in this item relates to the operations of subsidiary units and the associated consolidated financials.

PHAZAR CORP operates as a holding company with Antenna Products Corporation, Phazar Antenna Corp., Tumche Corp. and Thirco, Inc. as its wholly owned subsidiaries. Antenna Products Corporation and Phazar Antenna Corp. are operating subsidiaries with Thirco, Inc. serving as an equipment leasing company to PHAZAR CORP's operating units. Tumche Corp. has no sales or operations. Antenna Products Corporation designs, manufactures and markets antenna systems, towers and communication accessories worldwide. The United States Government, military and civil agencies and prime contractors are Antenna Products Corporation's principal customers. Phazar Antenna Corp. designs and markets fixed and mobile antennas for commercial wireless applications that include cellular, PCS, ISM (instrument scientific medical), AMR (automatic meter reading), wireless internet, wireless local area network, and other WiMax market applications.

PHAZAR CORP is primarily a build-to-order company. As such, most United States government and commercial orders are negotiated firm-fixed price contracts. PHAZAR CORP's sales to major customers at May 31, 2008, as a percentage of total sales were United States Government 24%, Page Iberica, S.A., 12% and General Dynamics 9%.

Executive Level Overview

The following table presents selected data of PHAZAR CORP. This historical data
should be read in conjunction with consolidated financial statements and the
related notes.

                                     Three Month Period ending
                               August 31, 2008      August 31, 2007

Net Sales                    $        2,009,712   $        1,861,576

Gross Profit Margin %                        38%                  45%
Operating Profit (loss)      $          755,978   $          834,558

Net income (loss)            $           93,792   $          176,242
Net income (loss) per share  $             0.04   $             0.08

Total assets                 $        9,064,952   $        8,960,874

Long term debt               $                -   $                -
Total liabilities            $        1,104,456   $        1,076,525

Capital expenditures         $                -   $                -
Dividends                    $                -   $                -

Results of Operations

First Quarter Ended August 31, 2008 ("2009"), Compared to First Quarter Ended August 31, 2007 ("2008")

PHAZAR CORP's consolidated sales from operations were $2,009,712 for the quarter ended August 31, 2008 compared to sales of $1,861,576 for the first quarter ended August 31, 2007. The Company's sales increased $148,136, or 8% in the first quarter of fiscal year 2009 due to higher level of shipments in the commercial wireless product line.

Cost of sales and contracts for the operations were $1,253,734 for the quarter ended August 31, 2008 compared to $1,027,018 for the first quarter ended August 31, 2007, up $226,716, or 22%. The higher level of cost of sales is primarily due to the mix of products sold in the quarter along with a non recurring inventory adjustment resulting in a benefit in prior year.

The gross profit margin for the first quarter of fiscal year 2009 was 38% compared to 45% for the first quarter of last year.

PHAZAR CORP's operating profit margin for the first quarter of fiscal year 2009 was -1% compared to 11% in the first quarter of fiscal year 2008.

Discretionary product development spending was $229,958, or 11.4% of sales, compared to $216,020, or 11.6% of sales for the comparable period last year. The spending level remains constant as the Company continues to develop new wireless antennas for commercial and military applications.

Sales and administration expenses were higher in the first quarter of the fiscal year 2009, $776,140 versus $621,011 for the first quarter of fiscal year 2008. The $155,129, or 25% increase in sales and administration expense is due to a rise in a compensation expense on fully vested stock options granted in August, 2008 along with an increase in legal fees associated with the UBS litigation and other non recurring professional fees. Sales and administration expense as a ratio of sales were 38.6% in the first quarter of this year compared to 33.4% in the same period last year.

Other income for the three month period ending August 31, 2008 is $123,601 up from $43,660, the increase is primarily due to interest income on a higher level of monies invested in auction rate securities and other investment in certificates of deposit.

United States Government contracts contain a provision that they may be terminated at any time for the convenience of the Government. In such event, the contractor is entitled to recover allowable costs plus any profits earned to the date of termination. The possibility that Government priorities could change, causing a delay or cancellation of this contract and any potential follow-on work, makes it impossible to accurately predict whether revenues will increase or decrease in the upcoming year.

Sources of Liquidity

Funds generated from operations are the major internal sources of liquidity and are supplemented by funds derived from capital markets, principally bank facilities. PHAZAR CORP has a $1.0 million revolving demand line of credit with a bank. The credit line is regulated under a borrowing base formula using inventories and accounts receivable as collateral. The interest rate is established as equal to Wall Street prime and is subject to a loan agreement with restrictive covenants. The most restrictive financial covenant requires the Company to maintain $3.0 million in tangible net worth and to maintain $1.0 million of working capital. At August 31, 2008, the Company had a tangible net worth of $8.0 million and had working capital of $4.6 million. As of August 31, 2008, Antenna Products Corporation had drawn $0 of the $1.0 million line of credit with $1.0 million of the borrowing base available and unused. The revolving credit line agreement was renewed with a $1.0 million limit on September 26, 2006 for a period of two years and then extended to November 24, 2008. We are in the process of renewing this agreement. PHAZAR CORP believes that its cash and the credit available at August 31, 2008, are sufficient to fund the Company's operations for at least 12 months.

As of February 29, 2008, the Company held $2.65 million of auction-rate securities at par value, which was equal to fair value as of that date. In mid February 2008, liquidity issues in the global credit markets resulted in the failure of auctions representing all of the auction rate securities the Company holds. The principal associated with failed auctions will not be accessible until successful auctions occur, a buyer is found outside the auction process, the issuers establish a different form of financing to replace these securities, or final payments come due according to contractual maturities ranging from 28-30 years.

The Company understands that the issuers and financial markets are working on alternatives that may improve liquidity, however it is not clear when or if such efforts will be successful. We expect that we will receive the principal associated with these auction-rate securities through one of the means described above. Due to the failed auctions and uncertainty regarding the liquidity of these securities, beginning in the fourth quarter of fiscal year 2008 we reclassified our investments in auction-rate securities from short-term to long-term investments.

On June 26, 2008, the Company filed a claim in arbitration against UBS Financial Services seeking, among other relief rescission of its purchases of the auction-rate securities and restoration in cash of its entire $2.65 million investment it purchased from UBS.

As of August 31, 2008 the Company continues to hold auction-rate securities with a par value of $2.65 million. The securities are backed by student loans covered by bond insurance and were rated AA3 by Moody's as of August 31, 2008.

During the first quarter of fiscal year 2009, UBS announced it had agreed to a settlement with the Securities and Exchange Commission, the New York Attorney General, the Massachusetts Securities Division, the Texas State Securities Board and other state regulatory agencies to restore liquidity to all remaining clients who hold auction-rate securities. UBS will purchase, at full value, from clients during a two-year time period. These offers will be available for client positions that were held in UBS accounts as of February 13, 2008. The Company anticipates selling its auction-rate securities back to UBS during the timeframe, January 1, 2009 through January 1, 2011 per the "Auction Rate Securities Summary of Settlement Terms" provided by UBS.

Capital Resources

Management of the operating subsidiaries evaluates the facilities and review equipment requirements for existing and projected contracts on a regular basis. An annual capital plan is generated by management and submitted to the Board of Directors for review and approval. In the first quarter of fiscal year 2009 there were no capital expenditures for new and replacement equipment. The Company anticipates that the existing facilities and equipment are adequate to handle the projected business in fiscal year 2009 and intends to limit the 2009 capital program to less than $100,000 for improvements and new equipment.

At August 31, 2008, PHAZAR CORP had cash and cash equivalents of $2.4 million. Deferred revenue at August 31, 2008, is $392,630.

Cash Flows

Operating Activities

Cash used by operating activities for the first quarter of fiscal year 2009 was $71,380 compared to $564,575 for the same period in prior year. Inventories increased to $2,019,196 at August 31, 2008 from $1,777,335 at May 31, 2008 due to normal completion and shipment of orders to customers. The increase in accounts receivable to $1,084,364 at August 31, 2008 from $987,258 at May 31, 2008 is due primarily to the uplift in shipments in the commercial wireless products line. Net income adjusted for non cash charges was $258, 820 for the three month period ending August 31, 2008 compared to $248, 049 for the same period in the prior year.

Investing Activities

Cash was not used in investing activities during the three month periods ending August 31, 2008 and 2007

Financing Activities

There were no financing activities requiring cash during the three month period ending August 31, 2008. The financing activities for the first quarter of fiscal year 2008 consisted primarily of proceeds from the exercise of stock options and the FIT benefit resulting from the exercise of stock options. At August 31, 2008 and 2007, PHAZAR CORP had no long-term debt outstanding.