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, 2009, as a percentage of total sales were United States Government 13%, Halliburton Energy 9% and NextG 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 ended
                                               August 31, 2009   August 31, 2008
                                                -------------   -------------

          Net Sales                             $  1,896,852    $  2,009,712

          Gross profit margin percent                    44%             38%
          Operating profit (loss)                $   841,734    $    755,978

          Net income (loss)                      $  (107,948)   $     93,792
          Net income (loss) per share            $     (0.05)   $       0.04

          Total assets                           $ 8,123,342    $  9,064,952

          Long term debt                         $         -    $          -
          Total liabilities                      $   659,640    $  1,104,456

          Capital expenditures                   $    31,201    $          -
          Dividends                              $         -    $          -

Results of Operations

First Quarter Ended August 31, 2009 ("2010"), Compared to First Quarter Ended August 31, 2008 ("2009")

PHAZAR CORP's consolidated sales from operations were $1,896,852 for the quarter ended August 31, 2009 compared to sales of $2,009,712 for the first quarter ended August 31, 2008. The Company's revenue fell $112,860, or 5.6%, a decline in sales of both military and commercial product lines ($352,834) offset by initial sales in the new mesh radio product line ($239,974).

Cost of sales and contracts for the operations were $1,055,118 for the quarter ended August 31, 2009 compared to $1,253,734 for the first quarter ended August 31, 2008, down $198,616, or 15.8%. The reduction in cost of goods sold is attributable to lower raw material costs and an improved product mix, resulting in a 6% increase in the gross profit margin for the first quarter of fiscal year 2010 at 44% compared to 38% for the same period in 2009.

PHAZAR CORP's operating profit margin for the first quarter of fiscal year 2010 was -12% compared to -1% in the first quarter of fiscal year 2009.

Sales and administration expenses were higher in the first quarter of the fiscal year 2010, $1,071,180 versus $776,140 for the first quarter of fiscal year 2009. The $295,040, or 38.0% increase in sales and administration expense includes a $217,136 increase in discretionary research and development costs quarter over quarter associated with the continued development of our mesh radio wireless networking product line.

Discretionary product development spending for the quarter ended August 31, 2009 was $376,145, or 19.8% of sales, compared to $159,009, or 7.9% of sales for the comparable period last year. The spending level is up $217,136 as the Company continues development on our mesh radio wireless networking products for commercial and military applications. During the quarter ended August 31, 2009, 13% of the Company's revenues were from the mesh radio product line.

Other income for the three month period ended August 31, 2009 is $50,489 down from $123,601, impacted by the Company no longer having investments in high yield auction-rate securities.

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.

Liquidity and Capital Resources

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. The Company's operating subsidiary has a $2,000,000 revolving note facility with a bank collateralized by the subsidiary's inventory and accounts with PHAZAR CORP, the parent company, signing as the guarantor. The amount available under the revolving note facility at August 31, 2009 was $2,000,000. At August 31, 2009, the Company had a tangible net worth of $7,463,702 and had working capital of $6,198,952. As of August 31, 2009, Antenna Products Corporation had drawn $0 of the $2,000,000 line of credit with $2,000,000 of the borrowing base available and unused. PHAZAR CORP believes that its cash and the credit available at August 31, 2009, is sufficient to fund the Company's operations for at least twelve months.

Interest is payable monthly at the prime rate (3.25% at August 31, 2009 and May 31, 2009) until October 2, 2009, when any unpaid principal and interest shall be due. The Company is currently in the process of renewing this agreement. Under the agreement, the Company must maintain a minimum working capital of $2,500,000, a tangible net worth of $4,000,000 and a debt service ratio of 1.25 and a maximum debt worth no greater than .5:1.

Previously, on December 16, 2008, NASDAQ gave notice to the Company of non-compliance with listing standards due to lacking a majority of independent directors and provided until October 14, 2009 to return to compliance. With Mr. Wraight's resignation as a director as stated in Item 9B of our Form 10-K for the year ending May 31, 2009, the Company now has a majority of independent directors and has obtained compliance with the number of independent directors listing standard.

On September 3, 2009, NASDAQ notified the Company that it now complies with listing rule 5605(b)(1) and the matter is now closed.

Capital Requirements

Management of the operating subsidiaries evaluates the facilities and reviews 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 2010, there were $31,201 in capital expenditures for new and replacement equipment and no expenditures in the first quarter of fiscal year 2009. The Company intends to limit the fiscal year 2010 capital program to less than $100,000 for improvements and new equipment.

At August 31, 2009, PHAZAR CORP had cash and cash equivalents of $2,927,442. There were no deferred revenues at August 31, 2009.

Cash Flows

Operating Activities

Cash and cash equivalents of $2,927,442 at August 31, 2009 are down $393,205, or 11.8% on a balance of $3,320,647 as of May 31, 2009. (separated into two paragraphs)

The negative $351,697 of cash flow from operations consists of a $183,393 increase in inventory, a $107,948 net loss and a $93,869 increase in prepaid expenses. The 7.2% increase in inventory levels for the quarter ended August 31, 2009 compared to fiscal year end May 31, 2009, represents a continued effort by management to take advantage of lower raw material costs and increase stock levels in certain finished goods products. The net loss of $107,948 in the first quarter of fiscal year 2010 represents a 5.6% drop in revenues and a 38% increase in selling, general and administrative expenses on first quarter of fiscal year 2009. Commenting on the quarter, Garland P. Asher, Chairman and CEO, stated "Given the long lead time in production of much of our product line, 90 to 120 days on average, the lower sales reported in the first quarter reflected the soft bookings we experienced in the February through May period". The increase of $295,040, or 38% in sales and administrative expenses included a $217,136 increase in research and development costs quarter over quarter associated with continued development of our mesh radio wireless networking product line. Prepaid and other current assets of $170,130 as of August 31, 2009 were up $93,869 compared to $76,261 as of May 31, 2009, the increase represents prepaid deposits along with annual maintenance contracts being amortized over the appropriate periods.

Investing Activities

Cash of $41,508 was used in investing activities during the first quarter ending August 31, 2009, which consists of the $31,201 of capital expenditures and $10,307 for the purchase of treasury stock. Cash was not used in investing activities during the quarter ended August 31, 2008.

Financing Activities

There were no financing activities requiring cash during the first quarter ending August 31, 2009 and 2008. At August 31, 2009 and 2008, PHAZAR CORP had no long-term debt outstanding.