Phazar (ANTP) 10-Q 2013 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSSION

Washington D.C.  20549

Form 10-Q

(Mark One)

[  X  ]	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended December 31, 2012
[      ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
	For the transition period from ______________ to _______________

Commission file number 0-12866
PHAZAR CORP  (Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of Incorporation or organization)	75-1907070 (IRS Employer Identification No.)
101 S.E. 25th Avenue, Mineral Wells, Texas 76067 (Address of principal executive offices)	(940) 325-3301 (Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act
Title of each class Common Stock, $0.01 par value	Name of each exchange on which registered NASDAQ Stock Market
Securities registered pursuant to Section 12(g) of the Act: None _________________________________

Indicate by check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing to such filing requirements for the past 90 days.  Yes þ  No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  Yes þ  No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and smaller reporting company” in Rule 12-b2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer (do not check if a smaller reporting company) o	Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  oYes  xNo

As of January 30, 2013, 2,324,537 shares of Common Stock were outstanding.

PHAZAR CORP AND SUBSIDIARIES

INDEX TO FORM 10-Q

		PAGE
PART I	FINANCIAL INFORMATION	NUMBER
Item 1.	Financial Statements for PHAZAR CORP
	and Subsidiaries
	Consolidated Balance Sheets -
	December 31, 2012 (unaudited), and June 30, 2012	3
	Consolidated Statements of Operations (unaudited) -
	Three and Six Months Ended December 31, 2012 and 2011	4
	Consolidated Statements of Cash Flows (unaudited) -
	Six Months Ended December 31, 2012 and 2011	5
	Notes to the Unaudited Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of
	Financial Condition and Results of Operations	9
Item 4.	Controls and Procedures	12
	Management's Evaluation of Internal Control over Financial Reporting	12
	Disclosure Controls and Procedures	12
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	12
Item 5.	Other Information	12
Item 6.	Exhibits and Reports on Form 8-K	12
	Signature	13
	Certifications

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Item 1.             Financial Statements

PHAZAR CORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
	December 31, 2012 (Unaudited)			June 30, 2012
CURRENT ASSETS
Cash and cash equivalents	$	639,548		$	528,876
Accounts receivable:
Trade, net of allowance for doubtful accounts of $0
as of December 31, 2012 and June 30, 2012		429,117			880,342
Inventories (net of slow moving reserve)		2,041,634			2,376,427
Note receivable (net of impairment reserve)		-			1,477,161
Prepaid expenses and other assets		76,063			95,231
Income taxes receivable		29,321			29,321
Deferred income taxes		-			211,674
Total current assets		3,215,683			5,599,032
Property and equipment, net		931,819			997,426
Long-term deferred income tax		-			301,547
TOTAL ASSETS	$	4,147,502		$	6,898,005
CURRENT LIABILITIES
Accounts payable	$	348,345		$	274,628
Accrued liabilities		391,211			300,637
Deferred revenues		68,226			19,619
Liabilities held for discontinued operations		114,571			114,571
Total current liabilities	$	922,353		$	709,455
TOTAL LIABILITIES	$	922,353		$	709,455
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Preferred Stock, $1 par, 2,000,000 shares authorized, none issued
or outstanding, attributes to be determined when issued		-			-
Common stock, $0.01 par, 6,000,000 shares authorized
2,323,537 issued and outstanding on December 31, 2012 and 2,391,628     issued  June 30, 2012		23,236			23,917
Additional paid in capital		4,576,649			4,735,800
Treasury stock, at cost, 0 and 74,691 shares on December 31, 2012     and June 30, 2012, respectively		-			(215,918	)
Retained earnings (deficit)		(1,374,736	)		1,644,751
Total shareholders’ equity		3,225,149			6,188,550
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	4,147,502		$	6,898,005

See accompanying Notes to the Unaudited Consolidated Financial Statements.

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PHAZAR CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2012			2011			2012			2011
	(Unaudited)						(Unaudited)
Sales and contract revenues	$	1,495,130		$	2,092,367		$	2,654,966		$	3,507,585
Cost of sales and contracts		931,556			1,273,062			2,250,962			2,052,381
Gross profit		563,574			819,305			404,004			1,455,204
Selling, general and administration expenses		593,552			719,588			1,131,548			1,464,958
Impairment of note receivable		1,516,338			-			1,516,338			-
Research and development costs		184,876			127,398			358,972			226,860
Total operating expenses		2,294,766			846,986			3,006,858			1,691,818
Operating loss		(1,731,192	)		(27,681	)		(2,602,854	)		(236,614	)
Other income
Interest income		34,448			29,585			51,767			67,877
Other income (expense)		(23,941	)		4,871			45,030			11,351
Total other income		10,507			34,456			96,797			79,228
Income (loss) from operations before income taxes		(1,720,685	)		6,775			(2,506,057	)		(157,386	)
Income tax expense (benefit)		513,430			2,304			513,430			(53,511	)
Net income (loss) before discontinued operations		(2,234,115	)		4,471			(3,019,487	)		(103,875	)
Loss from discontinued operations		-			-			-			(18,044	)
Income tax benefit from discontinued operations		-			-			-			6,135
Net loss from discontinued operations		-			-			-			(11,909	)
Net income (loss)	$	(2,234,115	)	$	4,471		$	(3,019,487	)	$	(115,784	)
Basic loss per common share
Continuing operations	$	( 0.96	)	$	-		$	(1.30	)	$	(0.04	)
Discontinued operations		-			-			-			(0.01	)
Net loss	$	(0.96	)	$	-		$	(1.30	)	$	(0.05	)
Diluted loss per common share
Continuing operations	$	(0.96	)	$	-		$	(1.30	)	$	(0.04	)
Discontinued operations		-			-			-			(0.01	)
Net loss	$	(0.96	)	$	-		$	(1.30	)	$	(0.05	)
Basic weighted average of common shares outstanding		2,322,578			2,313,569			2,320,319			2,312,346
Diluted weighted average of common shares outstanding		2,322,578			2,313,569			2,320,319			2,312,346

See accompanying Notes to the Unaudited Consolidated Financial Statements.

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PHAZAR CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
	Six Months Ended
	December 31, 2012 (Unaudited)			December 31, 2011 (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,019,487	)	$	(115,784	)
Adjustments to reconcile net loss to net cash   provided by operating activities:
Depreciation		65,607			64,692
Provision for slow moving inventory		600,000			-
Impairment of note receivable		1,516,338			-
Loss from discontinued operations		-			11,909
Stock based compensation		56,086			27,114
Deferred federal income tax		513,221			(33,512	)
Changes in operating assets and liabilities:
Accounts receivable		451,225			338,158
Inventories		(265,207	)		84,928
Income taxes receivable		-			(24,955	)
Prepaid expenses and other assets		19,168			62,996
Accounts payable		73,717			22,498
Accrued liabilities		90,574			170,493
Deferred revenues		48,607			19,618
Net cash used in discontinued operations		-			(75,398	)
Net cash provided by operating activities		149,849			552,757
CASH FLOWS FROM INVESTING ACTIVITIES:
Funding of note receivable		(39,177	)		(256,235	)
Purchase of property and equipment		-			(37,250	)
Net cash used in investing activities		(39,177	)		(293,485	)
Net increase  in cash and cash equivalents		110,672			259,272
CASH AND CASH EQUIVALENTS, beginning of period		528,876			1,169,318
CASH AND CASH EQUIVALENTS, end of period	$	639,548		$	1,428,590

See accompanying Notes to the Unaudited Consolidated Financial Statements.

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PART I

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1    BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments (consisting of only normal recurring adjustments and items noted below under “Use of Estimates and Assumptions”) necessary to present fairly the financial position as of December 31, 2012, the results of operations for the three and six months ended December 31, 2012 and December 31, 2011, and the cash flows for the six months ended December 31, 2012 and 2011.  These results have been determined on the basis of generally accepted accounting principles in the United States of America and have been applied consistently with those used in the preparation of the Company’s audited consolidated financial statements for its fiscal year ended June 30, 2012.  These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended June 30, 2012.

Use of Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with U.S. generally accepted accounting principles.  Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could vary from the estimates that were used.

An impairment reserve of $1,516,338 was placed against the note receivable as of December 31, 2012, see Note 4.

An additional $513,430 tax valuation allowance has been recorded against the current and non-current deferred tax assets, see Note 6.

The Company changed its policy in estimating slow moving inventory to more accurately value inventory that may have become impaired or obsolete due to advancing technology or changes in demand of product by some customers.  The new policy to estimate the slow moving reserve is based on a sliding scale reserve that increases on a separate and distinct level as raw material and finished goods age.  As such, during the first quarter of fiscal year 2013, the Company incurred a charge of approximately $600,000.

Revenue Recognition

Revenue from short-term contracts calling for delivery of products is recognized as the product is shipped. Revenue and costs under certain long-term fixed price contracts with the United States Government are recognized on the units of delivery method.  This method recognizes as revenue the contract price of units of the products delivered during each period and the costs allocable to the delivered units as the cost of earned revenue.  Costs allocable to undelivered units are reported in the balance sheet as inventories.  Amounts in excess of agreed upon contract price for customer directed changes, constructive changes, customer delays or other causes of additional contract costs are recognized in contract value if it is probable that a claim for such amounts will result in additional revenue and the amounts can be reasonably estimated. Revisions in cost and profit estimates are reflected in the period in which the facts requiring the revision become known and are estimable.  Losses on contracts are recorded when identified.

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NOTE  2     NET INCOME (LOSS) PER COMMON SHARE

Earnings per share are computed by dividing net loss by the weighted average number of common shares outstanding during the period, as follows:

	Six Months Ended
	December 31, 2012			December 31, 2011
Numerator:
Net loss	$	(3,019,487	)	$	(115,784	)
Numerator for basic and diluted           loss per share	$	(3,019,487	)	$	(115,784	)
Denominator:
Weighted-average shares outstanding-basic		2,320,319			2,312,346
Effect of dilutive securities:
Stock options		-			-
Denominator for diluted income (loss) per share-           Weighted-average shares		2,320,319			2,312,346
Basic income (loss) per share	$	(1.30	)	$	(0.05	)
Diluted income (loss) per share	$	(1.30	)	$	(0.05	)

NOTE 3     CONTINGENCIES

        Legal Proceedings

Neither PHAZAR CORP nor any of its subsidiaries are currently parties to any litigation or arbitrations.

NOTE 4.   NOTE RECEIVABLE

On December 8, 2009, the Company entered into a $500,000 Principal 8% Per Year Senior Secured     Convertible Note with Tracciare, Inc. with an original maturity date of May 31, 2011.  In addition, the Company received a warrant to purchase up to eighty percent of Tracciare’s equity for a total price of $500,000.  In March 2011, the note was amended to extend the maturity date to June 30, 2013.  At December 31, 2012, Tracciare, Inc. had drawn all of the $500,000 note, along with additional fundings in the amount of $833,941 all under separate notes with the same terms and agreements as the original note and amendment.  The $1,542,800 note receivable balance at December 31, 2012 includes $208,859 of accrued interest receivable.

Beginning in May 2012 PHAZAR CORP significantly decreased the amount of funding that it provided to Tracciare under the notes.  PLAZAR CORP envisions that it will provide very little additional capital to Tracciare in the future.  Given Tracciare’s cash requirements and lack of a forseeable source of capital for Tracciare, PHAZAR CORP finds it highly unlikely that it will recover any significant amount on the note receivable when it comes due on June 30, 2013.  As a result, as of December 31, 2012, the collectability of the note receivable is unlikely and management has provided a $1,516,338 impairment reserve against the note receivable.

NOTE 5.  TREASURY STOCK

On November 29, 2012 management advised Computershare Trust Company, N.A., PHAZAR CORP’s transfer agent to cancel the 74,691 shares of treasury stock and reduce the number of common stock shares issued and outstanding by the number of treasury stock cancelled.

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NOTE 6.  DEFERRED TAX ASSETS

As of June 30, 2012, PHAZAR CORP had deferred tax assets of $787,291 with a valuation allowance of $273,861 against the deferred tax assets related to the net operating losses.  The valuation allowance had been established for the deferred tax assets related to net operating losses because PHAZAR CORP could not demonstrate that it would be more likely than not that this deferred tax asset would be realized.

During the second quarter of the year ending June 30, 2013, PHAZAR CORP has 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.  PHAZAR CORP has recorded a deferred tax expense in the amount $513,430 as a result of the additional valuation allowance.

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PHAZAR CORP AND SUBSIDIARIES

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 December 31,						Six Month Period Ended 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.

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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.

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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.

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Item 4.  Controls and Procedures

Management’s Evaluation of Internal Controls over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and disposition of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The scope of management’s assessment of the effectiveness of internal control over financial reporting includes all of the Company’s subsidiaries. Subject to the above, the Company’s internal control over financial reporting is effective.

The Company has had no change during the quarter ending December 31, 2012 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer evaluated the Company’s disclosure controls and procedures as of December 31, 2012. In making their assessment, the Company's Chief Executive Officer and Chief Financial Officer were guided by the releases issued by the SEC and to the extent applicable was based upon the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2012.

PART II

OTHER INFORMATION

Item 1.  Legal Proceedings

The information provided in Note 3 of the unaudited Consolidated Financial Statements is hereby incorporated into this Part II, Item I by reference.

Item 5.  Other Information

None.

Item 6.  Exhibits and Reports on Form 8-K

(a)           The following documents are filed as part of this report:

1.  Financial Statements.  See Item 1.

2.  Financial Statement Schedules.  Not applicable.

All other schedules have been omitted because the required information is shown in the consolidated financials or notes thereto, or they are not applicable.

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3.  Exhibits.  See Index to Exhibits for listing of exhibits which are filed herewith or incorporated by reference

(b)           Reports on Form 8-K.

On July 20, 2012, the registrant filed a Form 8-K for the purpose of announcing the pending retirement of Garland P. Asher, Chairman, President and CEO

On August 22, 2012, the registrant filed a Form 8-K for the purpose of announcing its fourth quarter 2012 financial results

On October 3, 2012, the registrant filed a Form 8-K for the purpose of announcing the appointment of Robert E. Fitzgerald as President, Chief Executive Officer and Director

On November 13, 2012, the registrant filed a Form 8-K for the purpose of announcing its first quarter 2013 financial results

On November 15, 2012, the registrant filed a Form 8-K for the purpose of announcing the election of Directors for fiscal year 2013

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PHAZAR CORP
Date:  February 11, 2013	/s/ Robert E. Fitzgerald
	Robert E. Fitzgerald, Principal Executive Officer and Director

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EXHIBIT INDEX

Exhibit 3.(i) -	Registrant's Articles of Incorporation, as amended, incorporated by reference to the like numbered exhibit in the Registrant's Annual Report on Form 10-KSB/A for the fiscal year ended May 31, 2000, filed on February 20, 2004
Exhibit 3.(ii) -	Registrant's By Laws, incorporated by reference to the like numbered exhibit in the Registrant's Annual Report on Form 10-KSB/A for the fiscal year ended May 31, 2000, filed on February 20, 2004
Exhibit 4.1(1) -	2006 Incentive Stock Option Plan, incorporated by reference as Exhibit A to the Registrant's Definitive Proxy Statement dated September 15, 2006 and filed on September 15, 2006. Also incorporated by reference to the like numbered exhibit in the Registrant's Form S-8 dated January 8, 2007 and filed on January 8, 2007
Exhibit 4.1(2) -	2009 Equity Compensation Plan dated April 22, 2009, incorporated by reference to Exhibit 10-1 of the Registrant's Form S-8, filed on April 27, 2009
Exhibit 10.b -	Amended and restated agreement with Garland Asher dated September 10, 2009, incorporated by reference to the like numbered exhibit in the Registrant's Form 10-Q, ended November 30, 2009 and filed on January 14, 2010
Exhibit 14.1-	Code of Ethics and Business Conduct for the Senior Executive Officers and Senior Financial Officers incorporated by reference to the like numbered exhibit in the Registrant's annual report on form 10-KSB for the fiscal year ended May 31, 2004, filed on August 6, 2004
Exhibit 21. -	A list of all subsidiaries of the Registrant, incorporated by reference to the like numbered exhibit in the Registrant's Annual Report on Form 10-KSB/A for the fiscal year ended May 31, 2000 filed on February 20, 2004
Exhibit 23.1 -	Consent of Weaver and Tidwell, L.L.P. incorporated by reference to the like numbered exhibit in the Registrant's Form 10-K/A for the fiscal year ended May 31, 2009, filed on March 24, 2010
Exhibit 31.1 -	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (attached)
Exhibit 31.2 -	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (attached)
Exhibit 32.1 -	Section 1350 Certification (attached)
Exhibit 99.1 -	Nominating Committee Charter incorporated by reference to the like numbered exhibit in the Registrant's Form 8-K filed on November 7, 2005
Exhibit 99.1(2) -	Revised Audit Committee Charter dated July 21, 2010 incorporated by reference to the like numbered exhibit in the Registrant's Form 10-K filed on August 19, 2010

Exhibit 101 -	EX-101.INS	XBRL Instance Document
	EX-101.SCH	XBRL Taxonomy Extension Schema
	EX-101.CAL	XBRL Taxonomy Extension Calculation Linkbase
	EX-101.LAB	XBRL Taxonomy Extension Label Linkbase
	EX-101.PRE	XBRL Taxonomy Extension Presentation Linkbase
	EX-101.DEF	XBRL Taxonomy Extension Definition Document

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