This information should be read in conjunction with the consolidated financial statements and the notes thereto included in Item 1 of this Quarterly Report and the audited consolidated financial statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended August 29, 2008 contained in the Company's 2008 Annual Report on Form 10-K.

Certain statements contained in this filing are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and the Company intends that such forward-looking statements are subject to the safe harbors created thereby. Forward-looking statements may be identified by words such as "believes," "expects," "projects," "plans," "anticipates," and similar expressions, and include, for example, statements relating to expectations regarding future sales, income and cash flows. Forward-looking statements are based upon the Company's current expectations and assumptions, which are subject to a number of risks and uncertainties including, but not limited to: customer acceptance and effectiveness of recently introduced products; development of additional business for the Company's digital video and audio transmission product lines; effectiveness of the sales organization; the successful development and introduction of new products in the future; delays in the conversion by private and broadcast networks to next generation digital broadcast equipment; acceptance by various networks of standards for digital broadcasting; the Company's liquidity position and capital resources; general market and industry conditions which may not improve during fiscal year 2009 and beyond; and success of the Company's research and development efforts aimed at developing new products. Additional potential risks and uncertainties include, but are not limited to, economic conditions, customer plans and commitments, product demand, government regulation, rapid technological developments and changes, intellectual property disputes, performance issues with key suppliers and subcontractors, delays in product development and testing, availability of raw materials, new and existing well-capitalized competitors, and other risks and uncertainties detailed from time to time in the Company's periodic Securities and Exchange Commission filings, including the Company's most recent Annual Report on Form 10-K. Such forward-looking statements are subject to risks, uncertainties and other factors and are subject to change at any time, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Forward-looking statements speak only as of the date the statement was made. The Company does not undertake any obligation to update any forward-looking statements.

These risks are exacerbated by the recent crisis in national and international financial markets and the global economic downturn, and we are unable to predict with certainty what long-term effects these developments will continue to have on our Company. During 2008 and into 2009, the capital and credit markets have experienced unprecedented levels of extended volatility and disruption. We believe that these unprecedented developments have adversely affected our business, financial condition and results of operations in the first six months of fiscal 2009.

OVERVIEW

We design and manufacture satellite communications equipment through Wegener Communications, Inc. (WCI), a wholly-owned subsidiary. WCI is an international provider of digital solutions for video, audio and IP data networks. Applications include IP data delivery, broadcast television, cable television, radio networks, business television, distance education, business music and financial information distribution. COMPEL†, our network control system, provides network flexibility to regionalize programming, commercials and file transfers.

Revenues for the three months ended February 27, 2009 decreased $2,155,000 or 32.3% to $4,511,000 from $6,666,000 for the same period in fiscal 2008. Revenues for the six months ended February 27, 2009 decreased $4,858,000 or 41.5% to $6,834,000 from $11,692,000 for the same period in fiscal 2008. The operating results for the three and six months ended February 27, 2009 were net earnings of $8,000 or less than $0.01 per share and a net loss of $(1,184,000) or $(0.09) per share, respectively, compared to net earnings of $336,000 or $0.03 per share and $286,000 or $0.02 per share, respectively, for the three and six months ended February 29, 2008.

During the first and second quarters of fiscal 2009 bookings were approximately $1.3 and $1.7 million, respectively. Our fiscal 2009 bookings to date, as well as our fiscal 2008 bookings, particularly during the fourth quarter of fiscal 2008, were well below our expectations and internal forecast primarily as a result of customer delays in purchasing decisions, deferral of project expenditures, foreign exchange rate fluctuations, particularly with the Mexican peso, and general adverse economic and credit conditions.

Financial Position and Liquidity

Bookings and revenues during the first six months of fiscal 2009, as well as bookings and revenues subsequent to February 27, 2009, were insufficient to provide adequate levels of cash flow from operations or adequate levels of collateral to support our estimates of required borrowings during the remainder fiscal 2009 and into fiscal 2010. In addition, during the second quarter of fiscal 2009, our bank notified WCI of its intent not to renew our loan facility when it matures on September 30, 2009. As a result, we need to raise additional capital or obtain additional credit facilities during fiscal 2009 to continue as a going concern and to execute our business plan.

At February 27, 2009, we had line of credit borrowings outstanding of $3,472,000. Our $5,000,000 bank loan facility is subject to availability advance formulas based on eligible accounts receivable, import letter of credit commitment balances and inventories. At February 27, 2009, approximately $1,171,000 remained available to borrow under the advance formulas. At February 27, 2009, no letters of credit were outstanding. At March 27, 2009, approximately $818,000 was available to borrow under the advance formulas.

During the first six months of fiscal 2009, our line of credit net outstanding borrowings increased $1,589,000 to $3,472,000 at February 27, 2009, from $1,883,000 at August 29, 2008. Operating activities used $1,034,000 of cash and investing activities used $552,000 of cash, which consisted of capitalized software additions of $539,000, equipment additions of $1,000, and $12,000 for legal fees related to the filing of applications for various patents and trademarks.

(See the Liquidity and Capital Resources section on page 20 for further discussion.)

RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED FEBRUARY 27, 2009 COMPARED TO THREE AND SIX MONTHS
ENDED FEBRUARY 29, 2008
The following table sets forth, for the periods indicated, the components of our
results of operations as a percentage of sales:

                                      Three months ended                     Six months ended
                                February 27,       February 29,       February 27,       February 29,
                                    2009               2008               2009               2008
Revenues                                100.0 %            100.0 %            100.0 %            100.0 %
Cost of products sold                    65.9               61.9               68.4               60.6
Gross margin                             34.1               38.1               31.6               39.4
Selling, general, and
administrative                           22.8               21.1               32.1               22.8
Research & development                   10.4               11.5               15.8               13.5
Operating income (loss)                    .9                5.5              (16.3 )              3.1
Interest expense                         ( .7 )             ( .5 )            ( 1.0 )             ( .6 )
Net earnings (loss)                        .2 %              5.0 %            (17.3 )%             2.4 %

The operating results for the three and six months ended February 27, 2009 were net earnings of $8,000 or less than $0.01 per share and a net loss of $(1,184,000) or $(0.09) per share, respectively, compared to net earnings of $336,000 or $0.03 per share and $286,000 or $0.02 per share, respectively, for the three and six months ended February 29, 2008.

Revenues - Revenues for the three months ended February 27, 2009 decreased $2,155,000 or 32.3% to $4,511,000 from $6,666,000 for the same period in fiscal 2008. Revenues for the six months ended February 27, 2009 decreased $4,858,000 or 41.6% to $6,834,000 from $11,692,000 for the same period in fiscal 2008.

Our fiscal 2009 revenues and bookings to date were adversely impacted by customer delays in purchasing decisions, deferral of project expenditures, foreign exchange rate fluctuations, particularly with the Mexican peso, and general adverse economic and credit conditions. Our revenues and bookings are subject to the timing of significant orders from customers and new product introductions, and as a result revenue levels may fluctuate from quarter to quarter.

Direct Broadcast Satellite (DBS) revenues (including service revenues) decreased $2,151,000 or 32.3% in the second quarter of fiscal 2009 to $4,511,000 from $6,662,000 in the same period of fiscal 2008. For the six months ended February 27, 2009, DBS revenues decreased $4,852,000 or 41.6% to $6,824,000 from $11,676,000 for the six months ended February 29, 2008. Fiscal 2009 second quarter and first six month revenues included iPump® 6420 media servers and Compel® network control software for Dial Global's network expansion, continued shipments of our new Encompass LE2, our next generation business music audio receiver, to business music provider, Muzak LLC., and shipments to MegaHertz for distribution of our products to the U.S. cable market. The second quarter and first six months of fiscal 2008 benefited from completion of shipments of our Unity® 4600 to the Big Ten Network for the new cable network being distributed by Fox Cable Networks and shipments of our SMD 515 IPTV set top box to Conklin-Intracom for use in providing premium IPTV services by telco operators in North America.

For the three months ended February 27, 2009, two customers accounted for 47.6% and 11.6% of revenues, respectively. For the six months ended February 27, 2009, two customers accounted for 37.2% and 13.2% of revenues, respectively. For the three months ended February 29, 2008, three customers accounted for 31.9%, 18.8% and 10.6% of revenues, respectively. For the six months ended February 29, 2008, the same three customers accounted for 26.4%, 13.8% and 14.4% of revenues, respectively. Sales to a relatively small number of major customers have typically comprised a majority of our revenues and that trend is expected to continue throughout fiscal 2009 and beyond.

Our backlog is comprised of undelivered, firm customer orders which are scheduled to ship within eighteen months. The backlog was approximately $5.9 million at February 27, 2009, compared to $8.5 million at August 29, 2008, and $9.8 million at February 29, 2008. Two customers accounted for 52.3% and 18.6 %, respectively, of the backlog at February 29, 2008. The total multi-year backlog at February 27, 2009, was approximately $9.7 million compared to $13.3 million at August 29, 2008 and $15.7 million at February 29, 2008.

Gross Profit Margins - The Company's gross profit margin percentages were 34.1% and 31.6 % for the three and six month periods ended February 27, 2009, compared to 38.1% and 39.4 % for the three and six month periods ended February 29, 2008. Gross profit margin dollars decreased $1,004,000 and $2,442,000, respectively, for the three and six months ended February 27, 2009, compared to the same periods in fiscal 2008. The decreases in margin percentages and dollars for the three and six months ended February 29, 2008 were mainly due to the decrease in revenues which resulted in higher unit fixed costs. Profit margins in the second quarter of fiscal 2009 included an inventory reserve charge of $215,000 and a reversal of an accrued warranty liability of $130,000 for previously estimated provisions that were no longer required. In addition, profit margins in the three and six month periods of fiscal 2009 were favorably impacted by decreases in capitalized software amortization expense of $79,000 and $119,000, respectively.

Selling, General and Administrative - Selling, general and administrative (SG&A) expenses decreased $379,000, or 27.0%, to $1,026,000 for the three months ended February 27, 2009, from $1,405,000 for the three months ended February 29, 2008. For the six months ended February 27, 2009, SG&A expenses decreased $473,000, or 17.7%, to $2,196,000 from $2,669,000 for the same period ended February 29, 2008. Corporate SG&A expenses in the second quarter of fiscal 2009 decreased $99,000, or 35.4%, to $181,000 from $280,000 for the same period in fiscal 2008. For the six months ended February 27, 2009, corporate SG&A expenses decreased $57,000, or 11.6%, to $435,000 from $492,000 in the same period in fiscal 2008. The corporate SG&A decreases for the periods were mainly due to lower professional fees. WCI's SG&A expenses for the three months ended February 27, 2009 decreased $280,000, or 24.9%, to $845,000 from $1,125,000 and for the six months ended February 27, 2009, decreased $416,000, or 19.1%, to $1,761,000 from $2,177,000 compared to the same periods in fiscal 2008. The decrease in WCI's SG&A expenses for the three months ended February 27, 2009 was mainly due to decreases in salaries of $86,000, sales and marketing expenses of $95,000, general overhead costs of $79,000 and bad debt provisions of $20,000. The decrease in WCI's SG&A expenses for the six months ended February 27, 2009 was mainly due to decreases in salaries of $42,000, sales and marketing expenses of $221,000, general overhead costs of $118,000 and bad debt provisions of $35,000.

For the three and six months ended February 27, 2009, there was no share-based compensation expense compared to $8,000 and $8,000, respectively, for the same periods in fiscal 2008. As a percentage of revenues, SG&A expenses were 22.8% and 32.1% for the three and six month periods ended February 27, 2009, compared to 21.1% and 22.8% in the same periods in fiscal 2008.

Research and Development - Research and development (R&D) expenditures, including capitalized software development costs, were $756,000, or 16.7% of revenues, and $1,619,000, or 23.7% of revenues, for the three and six month periods ended February 27, 2009, compared to $1,121,000, or 16.8% of revenues, and $2,123,000, or 18.2%, of revenues, for the same periods in fiscal 2008. The decreases in expenditures in the three and six months ended February 27, 2009, compared to the same periods of fiscal 2008, were mainly due to lower salaries, as a result of reduced head count and a reduction in Company-wide paid working hours, and lower consulting costs. Capitalized software development costs amounted to $250,000 and $539,000 for the second quarter and first six months of fiscal 2009 compared to $352,000 and $545,000 for the same periods in fiscal 2008. The decreases in capitalized software costs were related to completed projects. R&D expenses, excluding capitalized software expenditures, were $770,000, or 10.4% of revenues, and $1,579,000, or 15.8% of revenues, for the three and six months ended February 27, 2009, compared to $770,000, or 11.5% of revenues, and $1,579,000, or 13.5%, of revenues, in the same periods of fiscal 2008. The decreases in expenses in the three and six month periods of fiscal 2009 compared to the same periods in fiscal 2008 were mainly due to the decrease in salaries and consulting costs.

Interest Expense - Interest expense increased $2,000 to $32,000 for the three months ended February 27, 2009, from $30,000 for the three months ended February 29, 2008. For the six months ended February 29, 2008, interest expense decreased $1,000 to $71,000 from $72,000 for the same period ended February 29, 2008. During the six months ended February 27, 2009, interest expense was favorably impacted by a lower average bank prime rate which was offset by an increase in the average outstanding line-of-credit balance.

Income Tax Expenses - For the six months ended February 27, 2009, no income tax benefit was recorded due to an increase in the deferred tax asset valuation allowance. The valuation allowance increased $427,000 in the first six months of fiscal 2009. At February 27, 2009, net deferred tax assets of $6,305,000 were fully reserved by the valuation allowance. At February 27, 2009, we had a federal net operating loss carryforward of approximately $10,596,000, which expires beginning fiscal 2020 through fiscal 2028. Additionally, we had an alternative minimum tax credit of $134,000 and state income tax credits of $199,000 expiring in fiscal 2009, both of which were fully offset by the valuation allowance.

LIQUIDITY AND CAPITAL RESOURCES
SIX MONTHS ENDED FEBRUARY 27, 2009

Our fiscal 2009 bookings to date, as well as our fiscal 2008 bookings, particularly during the fourth quarter of fiscal 2008, were well below our expectations primarily as a result of customer delays in purchasing decisions, deferral of project expenditures, foreign exchange rate fluctuations, particularly with the Mexican peso, and general adverse economic and credit conditions. WCI's backlog scheduled to ship within eighteen months was approximately $5.9 million at February 27, 2009, compared to $8.5 million at August 29, 2008, and $9.8 million at February 29, 2008. The total multi-year backlog at February 27, 2009, was approximately $9.7 million, compared to $13.3 million at August 29, 2008 and $15.7 million at February 29, 2008. Approximately $2.6 million of the February 27, 2009 backlog is scheduled to ship during the remainder of fiscal 2009.

Significant fiscal 2009 shippable bookings are currently required to meet our financial projections in the third and fourth quarters of fiscal 2009. Our bookings and revenues to date have been insufficient to provide adequate levels of cash flow from operations or adequate levels of collateral to support our estimates of required borrowings during the remainder of fiscal 2009 and into fiscal 2010.

At February 27, 2009, our net inventory balances were $6,229,000 compared to $6,295,000 at August 29, 2008, and $3,380,000 at August 31, 2007. The increase in inventories during fiscal 2008 was primarily due to our new product introductions of the iPump® 562 Enterprise Media Server, the Unity® 552 receiver and the Encompass-LE2 audio receiver. In addition, inventory levels were increased for the iPump® 6400 Media Server and Nielsen Media Research products. These inventory purchases were made based on existing orders and expected future bookings.

During the fourth quarter of fiscal 2008 and first six months of fiscal 2009, we made reductions in headcount to bring the current number of employees to 81, and reduced engineering consulting and other overhead expenses. Beginning in January 2009, we reduced paid working hours Company-wide by approximately 10%. Subsequent to February 27, 2009, additional reductions to headcount were made. In order to stay within our borrowing availability limits subsequent to February 27, 2009, we negotiated extended payment terms with our offshore vendors and have been extending other vendors beyond normal payment terms. In addition, subsequent to February 27, 2009, we retained a second financial advisor to assist us in a possible refinancing of our debt and our continuing efforts to raise capital and explore possible strategic opportunities. Should adequate capital or financing not be available, and should increased revenues not materialize, we are committed to further reducing operating costs to bring them in line with reduced revenue levels. No assurances can be given that operating costs can be sufficiently reduced to allow us to continue as a going concern. If we are unable to continue as a going concern, we will likely be forced to seek protection under the federal bankruptcy laws.

During the second quarter of fiscal 2009, our bank notified WCI of its intent not to renew our loan facility upon maturity (see Financing Agreements below). As a result, we need to raise additional capital or obtain additional credit facilities during fiscal 2009 to continue as a going concern and to execute our business plan. Although we are in discussions with potential financing sources, there is no assurance that such financing will be available or, if available, that we will be able to complete financing on satisfactory terms. Our ability to continue as a going concern will depend upon our ability to obtain additional capital or financing in the very short term and subsequently to increase our bookings and revenues in the longer term to attain profitable operations.

The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. The audit report relating to the consolidated financial statements for the year ended August 29, 2008, contained an explanatory paragraph regarding the Company's ability to continue as a going concern.

Financing Agreements

At February 29, 2008, our primary source of liquidity was a $5,000,000 bank loan facility, which is subject to availability advance formulas based on eligible accounts receivable, import letter of credit commitment balances and inventories. The loan facility consists of a term loan and a revolving line of credit with a combined borrowing limit of $5,000,000, bearing interest at the bank's prime rate (3.25% at February 27, 2009). The bank retained the right to adjust the interest rate, subject to the financial performance of the Company. The loan facility matures on September 30, 2009, or upon demand, and requires an annual facility fee of 2% of the maximum credit limit. During the second quarter of fiscal 2009, the bank notified WCI of its intent not to renew the loan facility upon maturity. Although we are in discussions with potential financing sources, there is no assurance that such financing will be available or, if available, that we will be able to complete financing on satisfactory terms.

During the first six months of fiscal 2009, our line of credit net outstanding borrowings increased $1,589,000 to $3,472,000 at February 27, 2009, from $1,883,000 at August 29, 2008. During the first six months of fiscal 2009, the average daily balance outstanding was $3,390,000 and the highest outstanding balance was $4,042,000. At February 27, 2009, approximately $1,171,000 was available to borrow under the advance formulas. At March 20, 2009, approximately $387,000 was available to borrow under the advance formulas.

The term loan facility provides for a maximum of $1,000,000 for advances of up to 80% of the cost of equipment acquisitions. Principal advances are payable monthly over 60 months with a balloon payment due at maturity. The revolving line of credit is subject to availability advance formulas of 80% against eligible accounts receivable; 20% of eligible raw materials inventories; 20% of eligible work-in-process kit inventories; and 40% to 50% of eligible finished goods inventories and 50% of import letter of credit commitment balances. In addition, the facility provides for advances in excess of the availability formulas of up to $1,000,000 during the term of the facility. The loan is secured by a first lien on substantially all of WCI's assets, including land and buildings, and is guaranteed by Wegener Corporation. At February 27, 2009, no borrowings were outstanding under the equipment term loan portions of the loan facility. The loan facility is also used to support import letters of credit issued to offshore manufacturers. At February 27, 2009, no letters of credit were outstanding.

Under the loan facility, at the end of fiscal 2009 we are required to maintain a minimum tangible net worth and a minimum fixed charge coverage ratio. In addition, we are required to retain certain executive officers, maintain certain financial ratios, and are precluded from paying dividends.

At February 27, 2009, we had land and buildings with a cost basis of $4,457,000 (including land held for sale of $354,000). Although land and buildings are subject to a lien under the loan facility, they are not currently used in the existing loan facility's availability advance formulas and have no mortgage balances outstanding. We are pursuing ways to utilize these assets to support additional overall borrowing capacities. During the third quarter of fiscal 2007, the Company's Board of Directors authorized and approved the listing for sale of the 4.4 acres of undeveloped land located adjacent to the Company's headquarters facility in Johns Creek, Georgia (see note 5 to the consolidated financial statements). On November 26, 2008, we executed a contract to sell the land for approximately $840,000, less applicable commissions and closing costs. The contract contained various contingencies, including an inspection period for determination of suitability for intended use and rezoning of the property. On March 23, 2009, pursuant to terms of the contract, the buyer terminated the contract. We intend to continue to market the property for sale. Proceeds from the sale of the land would be used to reduce any balances outstanding on the revolving line of credit.

Cash Flows

During the first six months of fiscal 2009, operating activities used $1,034,000 of cash. Net earnings adjusted for expense provisions and depreciation and amortization (before working capital changes) used $326,000 of cash. Changes in accounts receivable and customer deposit balances used $758,000 of cash, while changes in accounts payable and accrued expenses, inventories, deferred revenue and other assets provided $50,000 of cash. Cash used by investing activities was $552,000, which consisted of capitalized software additions of $539,000, legal fees related to the filing of applications for various patents and trademarks of $12,000 and equipment additions of $1,000. Financing activities provided $1,588,000 of cash from net line of credit borrowings.

We have two manufacturing and purchasing agreements for certain finished goods inventories. At February 27, 2009, outstanding purchase commitments under these agreements amounted to $34,000.

The Company has never paid cash dividends on its common stock and does not intend to pay cash dividends in the foreseeable future.

A summary of the Company's long-term contractual obligations as of February 27, 2009 consisted of:

                                                Payments Due by Period
                                                Fiscal          Fiscal          Fiscal
    Contractual Obligations      Total           2009          2010-2011       2012-2013
    Operating leases          $   106,000     $    82,000     $    24,000     $         -
    Bank line of credit         3,472,000       3,472,000               -               -
    Purchase commitments           34,000          34,000               -               -
    Total                     $ 3,612,000     $ 3,588,000     $    24,000     $         -
. . .