The following is management's discussion and analysis of certain significant factors that affected the Company's financial condition and operating results for the periods 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           Six Month Period Ended
                                      December 31,                      December 31,
                                  2012             2011             2012            2011

Net Sales                     $   1,495,130     $ 2,092,367     $  2,654,966     $ 3,507,585

Gross profit margin percent              38 %            39 %             15 %            41 %

Net income (loss)             $  (2,234,115 )   $     4,471     $ (3,019,487 )   $  (115,784 )

Net income (loss) per share   $       (0.96 )   $     (0.00 )   $      (1.30 )   $     (0.05 )

Total assets                  $   4,147,502     $ 7,594,631     $  4,147,502     $ 7,594,631

Total liabilities             $     922,353     $   831,080     $    922,353     $   831,080

Capital expenditures          $           -     $         -     $          -     $    37,250

Results of Operations

Second Quarter Ended December 31, 2012 ("2013"), Compared to the Second Quarter Ended December 31, 2011 ("2012")

PHAZAR CORP's consolidated sales from operations were $1,495,130 for the quarter ended December 31, 2012 compared to sales of $2,092,367 for the quarter ended December 31, 2011. The Company's decline in revenues of $597,237, or -29 %, is attributed to a $1,116,454 non-recurring antenna shipment to EID-Portugal in the second quarter in fiscal year 2012 offset by an upturn in shipboard and safety climb product lines during the second quarter in fiscal year 2013.

Cost of sales and contracts from operations were $931,556 for the quarter ended December 31, 2012, compared to $1,273,062 for the quarter ended December 31, 2011, down $341,506, or -27%. Gross profit margin for the quarter, at 38% is down one basis point from the 39% gross profit margin reported in the comparable period last year.

Selling, general and administration expenses were up 193% for the quarter ended December 31, 2012, to $2,109,890 from $719,588 in the prior year, reflecting a $1,516,338 charge for an impairment on the Tracciare, Inc. note receivable offset by a $126,036 decline in recurring expenses quarter over quarter. The decline in selling, general and administration expense is related to an increase in plant utilization overhead charged to cost of goods sold. Discretionary product development spending for the quarter ended December 31, 2012 was $184,876, or 12% of sales, compared to $127,398, or 6% of sales for the comparable period last year.

During the second quarter of the year ended December 31, 2012, PHAZAR CORP reported large operating losses and projected cash flow shortfalls in the near future. Based on those facts, it is unlikely the remaining net deferred tax assets will be realized. Therefore, an additional valuation allowance of $513,430 has been recorded as a deferred tax expense.

The Company recorded a net loss of $2,234,115, or $(0.96) per share for the three month period ended December 31, 2012 compared to net income of $4,471 or $0.00 per share for the comparable period in the prior year.

Six Months Ended December 31, 2012 ("2013"), Compared to the Six Months Ended December 31, 2011 ("2012")

Consolidated sales from operations for PHAZAR CORP were $2,654,966 for the six months ended December 31, 2012 compared to $3,507,585 for the six months ended December 31, 2011. The Company's sales decreased by $852,619, or 24% attributable to a $1,116,440 non-recurring shipment in fiscal year 2012 to EID Portugal offset by an upturn in our shipboard antenna product line.

Costs of sales and contracts from operations were $2,250,962 for the six months ended December 31, 2012 compared to $2,052,381 for the six months ended December 3, 2011, up $198,581, or 10% due to the $600,000 slow moving inventory reserve recorded in the first quarter offset by the decline revenues for the first two quarters of fiscal year 2013. The gross profit margin for the six month period ended December 31, 2012, at 15% was down twenty six basis points compared to the gross profit margin of 41% for the same period in the prior year. The significant decline in gross profit margin is largely attributed to the $600,000 reserve for slow moving inventory that was recorded in the first quarter of fiscal year 2013.

Selling, general and administration expenses of $2,647,886 are up $1,182,928, or 81% for the six months ended December 31, 2012 compared to $1,464,958 for the six month period ended December 31, 2011. The increase in sales and administration expense reflects a $1,516,338 impairment charge on the Tracciare, Inc. note receivable offset by a $333,410 decline related to an increase in plant utilization overhead charged to cost of goods sold for the six month period ended December 31, 2012. Discretionary product development spending for the six month period ended December 31, 2012 was $358,972, or 14% of sales, compared to $226,860, or 7% of sales for the comparable period last year. Year over year there is an increase of $132,112 in discretionary product development spending. The increase represents continued product development for the commercial wireless product line.

During the second quarter of the year ended December 31, 2012, PHAZAR CORP reported large operating losses and projected cash flow shortfalls in the near future. Based on those facts, it is unlikely the remaining net deferred tax assets will be realized. Therefore, an additional valuation allowance of $513,430 has been recorded as a deferred tax expense.

The Company recorded a net loss of $3,019,487, or $(1.30) per share for the six month period ended December 31, 2012 compared to a net loss of $115,784, 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 and current cash balances, PHAZAR CORP believes there are not sufficient resources to run the Company's operations for the next twelve months. PHAZAR CORP has sought bank financing on its properties in Mineral Wells, Texas but was denied a loan due to its history of operating losses. PHAZAR CORP is actively pursuing funding sources and other strategic opportunities; however, there is no guarantee that any such funding will be successful and if a funding event is consummated, it is likely that it will involve substantial dilution to PHAZAR CORP'S existing shareholders. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to accomplish these business objectives.

Capital Requirements

Management of the operating subsidiaries evaluates the facilities and reviews equipment requirements for existing and projected contracts on a regular basis. For the six month period ended December 31, 2012, there were no capital expenditures for new and replacement equipment compared to $37,250 in capital expenditures in the comparable period of fiscal year 2011.

At December 31, 2012, PHAZAR CORP had cash and cash equivalents of $639,548. There was $68,226 of deferred revenues at December 31, 2012.

Cash Flows

Operating Activities

Cash and cash equivalents of $639,548 at December 31, 2012 are up $110,672, or 21% on a balance of $528,876 as of June 30, 2012. The primary components comprising the positive $149,849 of cash flow provided by operating activities, after taking into consideration the net loss and adjusting back for slow moving inventory reserve, impairment on the note receivable and the valuation allowance for the deferred tax assets, consists of a $451,225 decrease in accounts receivable related to the decline in revenues for the first two quarters of fiscal year 2013 offset by a $265,207 increase in inventories associated with work in process jobs scheduled to ship in the third and fourth quarters of fiscal year 2013.

Investing Activities

Cash of $39,177 was used in investing activities during the six month period ended December 31, 2012, which consists of $39,177 of funding for the note receivable.

Financing Activities

There were no financing activities during the six month periods ended December 31, 2012 and 2011. At December 31, 2012 and 2011, PHAZAR CORP had no long-term debt outstanding.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial conditions.

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.