The following is management's discussion and analysis of certain significant factors that 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., and Thirco, Inc. 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., 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. Antenna Products Corporation designs, manufactures and markets standard and custom antennas, guyed and self-supported towers, support structures, masts and communication accessories worldwide. The United States Government, military and civilian agencies and prime contractors are Antenna Products Corporation's principal customers. Phazar Antenna Corp. supplies a broad range of multiple band antennas for the telecommunication market.

PHAZAR CORP is primarily a build-to-order company. As such, most United States government and commercial orders are negotiated firm-fixed price contracts.

Executive Level Overview

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

                                       Three Month Period Ended
                                             September 30,
                                         2012             2011

Net Sales                            $  1,159,836      $ 1,415,218

Gross profit (loss) margin percent            (14 )%            45 %

Net loss                             $   (785,372 )    $  (120,255 )

Net loss per share                   $      (0.34 )    $     (0.05 )

Total assets                         $  6,240,533      $ 7,607,262

Total liabilities                    $    816,452      $   857,229

Capital expenditures                 $          -      $    37,250

Results of Operations

First Quarter Ended September 30, 2012 ("2012"), Compared to the First Quarter Ended September 30, 2011 ("2011")

PHAZAR CORP's consolidated sales from operations were $1,159,836 for the quarter ended September 30, 2012 compared to sales of $1,415,218 for the first quarter ended September 30, 2011. The Company's revenue decreased $255,382 or 18%, as sales from our Shipboard and safety climb product lines are down $123,755 and $108,045, respectively, quarter over quarter.

Cost of sales and contracts from operations were $1,319,406 for the quarter ended September 30, 2012 compared to $779,319 for the quarter ended September 30, 2011, up $540,087, or 69%. The $540,087 increase consists of approximately $600,000 reserve for slow moving inventory offset by a $59,943 (or 8%) decline in cost of goods sold on back of 18% decrease in sales quarter over quarter. The Company reviewed its policy in estimating slow moving inventory to more readily identify inventory that may have become impaired or obsolete due to advancing technology and changes in demand of product by some customers. As such, the Company incurred a charge of approximately $600,000 which represents a reserve of $197,794 and $402,206 against the raw material and finished goods inventories, respectively. Gross profit margins for the quarter, at 38% before the slow moving inventory charge, were down seven basis points from the 45% gross profit margin reported in the comparable period last year, related to a higher level of overhead rates and a change in product mix.

Sales and administration expense of $537,996 is down $207,374 or 27.8% for the three month period ended September 30, 2012 compared to the prior year expense of $745,370 related to an increase in plant utilization overhead. Research and development costs of $174,096 were up $74,634, for the three months ended September 30, 2012 compared to $99,462 in the prior year. The increase represents continued product development for the commercial wireless product line.

The Company recorded a net loss of $785,372, or $0.34 per share for the three month period ended September 30, 2012 compared to net loss of $120,255, or $0.05 per share for the comparable period in the prior year.

Liquidity and Capital Resources

Sources of Liquidity

Based on current trends, funds from operations, current cash balances and its reasonable belief on available bank financing, PHAZAR CORP believes there are sufficient resources to run the Company's operations for at least the next twelve months.

Capital Requirements

Management of the operating subsidiaries evaluates the facilities and reviews equipment requirements for existing and projected contracts on a regular basis. In the first quarter of fiscal year 2013, there were no capital expenditures for new and replacement equipment compared to $37,250 of expenditures in the first quarter of fiscal year 2012. At this time, the Company does not anticipate any significant capital expenditures for improvements and new equipment during fiscal year 2013.

At September 30, 2012, PHAZAR CORP had cash and cash equivalents of $797,814. There were $164,500 of deferred revenues as of September 30, 2012.

Cash Flows

Operating Activities

Cash and cash equivalents of $797,814 at September 30, 2012 are up $268,938, or 50.9% on a balance of $528,876 as of June 30, 2012. The primary components comprising the positive $268,938 of cash flow from operations consist of a $471,439 decrease in inventory, $465,576 decrease in accounts receivable offset by the net loss of $785,372. The decrease in inventory is attributed to the approximate $600,000 charge associated with a change to the slow moving inventory estimate offset by a $128,561 increase in work in progress inventory. The decrease in accounts receivable reflects the decline in revenues for the quarter ended September 30, 2012.

Investing Activities

Cash of $46,304 was used in investing activities during the three month period ended September 30, 2012, for funding of a note receivable.

Financing Activities

There were no financing activities during the quarters ended September 30, 2012 and 2011. At September 30, 2012 and 2011, PHAZAR CORP had no long-term debt outstanding.

Forward Looking Statement Disclaimer

This Form 10-Q contains forward-looking information within the meaning of
Section 29A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performances and underlying assumption and other statements, which are other than statements of historical facts. Certain statements contained herein are forward- looking statements and, accordingly, involve risks and uncertainties, which could cause actual results, or outcomes to differ materially from those expressed in the forward-looking statements. The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitations, management's examination of historical operating trends, data contained in the Company's records and other data available from third parties, but there can be no assurance that management's expectations, beliefs or projections will result, or be achieved, or accomplished.