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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
 
 
   
 
   
 
3
 
   
 
4
 
   
 
5
 
 
6
 
 
 
9
 
12
 
 
12
 
 
12
 
PART II
OTHER INFORMATION
 
 
12
 
12
 
12
 
 
13
 
 
Certifications
 
 
 
2

 

Item 1.             Financial Statements
 
 
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.
 
 
3

 

 
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.
 
 
4

 

 
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.

 
5

 


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.

 
6

 

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.

 
7

 

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.

 
8

 

PHAZAR CORP AND SUBSIDIARIES

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.

 
9

 
 
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.

 
10

 
 
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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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.


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


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


None.


(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



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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