==============================================================================
                        Securities and Exchange Commission
                              Washington D.C. 20549

                                   Form 10-KSB
 (Mark One)
      [  X  ]     ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

                     For the Fiscal Year Ended May 31, 2002

                                       OR
      [     ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE EXCHANGE ACT OF 1934

                         Commission file number 0-12866


                                   PHAZAR CORP
                          (fka ANTENNA PRODUCTS, INC.)
             (Exact name of registrant as specified in its charter)


                  Delaware                                75-1907070
     (State or other jurisdiction of         (IRS Employer Identification No.)
     Incorporation or organization)

101 S.E. 25th Avenue, Mineral Wells, Texas 76067           (940) 325-3301
------------------------------------------------           --------------
   (Address of principal executive offices)          (Issuer's telephone number)

Securities registered pursuant to Section 12(b) of the Act:
                                                              None
Securities registered pursuant to Section 12(g) of the Act:

                               Title of each class
                               -------------------
                          Common Stock, $0.01 par value

Check  whether  the issuer has (i) filed all  reports  required by Section 13 or
15(d) of the  Exchange  ACT during the past 12 months,  and (ii) been subject to
such filing requirements for the past ninety (90) days. Yes [ X ] No [ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements  incorporated by reference in Part III of the Form 10-KSB
or any amendment to this Form 10-KSB. [ X ]

The Company's net sales for Fiscal Year ended May 31, 2002 was $10,815,669.

As of August 1, 2002,  2,175,828 shares of Common Stock were outstanding and the
aggregate  market  value of the Common Stock (based on the latest price of known
transactions  on the Nasdaq  Smallcap  Market) held by  non-affiliates  (887,394
shares) was approximately $1,473,074.


                                        i
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE

The Company's  Proxy  Statement  dated August 30, 2002 for its annual meeting of
shareholders  to be held October 8, 2002 is  incorporated by reference into Part
III of this report.

Transitional Small Business Disclosure Format (check one):  Yes [   ]  No [ X ]
================================================================================
















































                                       ii
<PAGE>
                                     PART 1

Item 1.  BUSINESS

General

A majority of the shareholders of Antenna  Products,  Inc. approved changing the
corporate  name to PHAZAR CORP because  there had been a tendency to confuse the
Antenna  Products,  Inc.  name with that of its original  operating  subsidiary,
Antenna Products Corporation.  The name change was effective on the Nasdaq Stock
Market as of the open of business on March 12, 2001. The trading symbol remained
"ANTP".

At the same time, the name of API  Acquisition  Corp.  dba The Upholstery  Shop,
Inc.!,  another  operating  subsidiary,  was changed to Phazar Aerocorp Inc. The
Subsidiary  began using the name Phazar  Aerocorp Inc. in October 2001 after the
Subsidiary moved into a new 59,500 square foot facility at Meacham International
Airport in Fort Worth, Texas.

PHAZAR CORP  operates as a holding  company with Antenna  Products  Corporation,
Phazar Aerocorp Inc. (dba The Upholstery Shop, Inc.!),  Phazar Antenna Corp. and
Thirco, Inc. as its subsidiaries.  Antenna Products Corporation, Phazar Aerocorp
Inc. and Phazar  Antenna Corp.  are  operating  subsidiaries  with Thirco,  Inc.
serving as an equipment leasing company to PHAZAR CORP's operating units. PHAZAR
CORP has no other  business  activity.  PHAZAR  CORP's  address is 101 S.E. 25th
Avenue, Mineral Wells, Texas 76067. The telephone number is (940) 325-3301.

Product   information   is   available   from   the   Internet   web   page  at:
//www.antennaproducts.com and at: //www.phazar.com.

Antenna Products Corporation

Antenna  Products  Corporation  was  incorporated in Texas in 1984 to continue a
business  started in 1972 and operated as a closely held "C"  corporation  until
January 24, 1992.  Thereafter,  Antenna Products Corporation has operated,  as a
wholly owned Subsidiary of PHAZAR CORP. Antenna Products  Corporation's  address
is 101 S.E. 25th Avenue,  Mineral Wells,  Texas 76067.  The telephone  number is
(940) 325-3301.

Antenna  Products  Corporation  designs,  manufactures  and markets standard and
custom antennas, guyed and self supported towers, monopoles, support structures,
masts  and  communication  accessories  worldwide.  Customers  include  the U.S.
Government,  both military and civil agencies, U.S. Government prime contractors
and  commercial  clients.   Examples  of  Antenna  Products  Corporation's  U.S.
Government   supplied  products  include  ground  to  air  collinear   antennas,
instrument landing antennas and towers,  fixed system multi-port antenna arrays,
tactical  quick erect antennas and masts,  shipboard  antenna  tilting  devices,
transport  pallets,  surveillance  antennas,  antenna rotators,  positioners and
controls, and high power broadcast baluns.  Examples of the Company's commercial
products   include   panel,    sector,    omnidirectional    and   closed   loop
telecommunications   antennas,   automatic   meter  reading  (AMR),   instrument
scientific medical (ISM), cellular, paging and yagi antennas, guyed towers, self
supported towers and monopoles.



                                        1
<PAGE>
Antenna Products  Corporation's  customer base is primarily U.S.  Government and
U.S. Government prime contractor focused, but this is slowly changing as Antenna
Products  Corporation  continues to develop and market new commercial  products.
Antenna  Products  Corporation's  market  is  international  in  scope.  Antenna
Products Corporation  currently focuses on developing domestic markets and has a
limited  amount of foreign  sales.  The  specialized  need of  Antenna  Products
Corporation's  customers and the technology  required to meet those needs change
constantly.  Accordingly, Antenna Products Corporation stresses its engineering,
installation,   service  and  other  support   capabilities.   Antenna  Products
Corporation  uses its own sales and  engineering  staff to service its principal
markets. Some of Antenna Products Corporation's  contracts are large relative to
total annual sales volume and,  therefore,  the composition of the customer base
is different  year to year. In 2002 the U.S.  Government  was the single largest
customer and accounted for 13% of the total sales volume.  Thales ATM, Inc. (fka
AIRSYS ATM, Inc.) was the second largest customer and accounted for 12% of total
sales.  Orders for equipment in some of these product  categories are in backlog
and,  therefore,  the U.S.  Government  and Thales ATM,  Inc. are expected to be
major clients again in 2003.

Antenna  Products  Corporation  is one of many suppliers of antennas and related
manufacturing  services  to  the  U.S.  Government  and  U.S.  Government  prime
contractors.  Antenna  Products  Corporation  competes  on the basis of cost and
product  performance in a market with no dominant  supplier.  Due to fixed-price
contracts and pre-defined contract specifications  prevalent within this market,
Antenna Products  Corporation  competes primarily on the basis of its ability to
provide state-of-the-art  solutions in the technologically demanding marketplace
while maintaining its competitive pricing.

Antenna  Products  Corporation  is  primarily a build to order  company and most
manufacturing requirements are established on a contract basis. For this reason,
the  majority of the  inventory is work in process.  Approximately  24% of total
inventory,  $487,661 is currently maintained in stock for delivery to customers.
Some raw materials are also inventoried to support customer delivery  schedules.
Antenna  Products  Corporation  performs work for the United  States  Government
primarily under fixed-price prime contracts and subcontracts.  Under fixed-price
contracts,  Antenna  Products  Corporation  realizes  any  benefit or  detriment
occasioned by lower or higher costs of performance.

Antenna Products Corporation is subject to certain risks common to all companies
that derive a portion of their revenues from the United States Government. These
risks  include  rapid  changes in  technology,  changes in levels of  government
spending, and possible cost overruns.  Recognition of profits on major contracts
is based upon  estimates  of final  performance,  which may change as  contracts
progress.   Contract  prices  and  costs  incurred  are  subject  to  Government
Procurement  Regulations,  and costs may be questioned by the Government and are
subject to disallowance.  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.  Collections  are  generally set in
accordance  with  federal  acquisition  standards,   which  require  payment  in
accordance  with "Net 30" terms  after  acceptance  of goods.  Antenna  Products
Corporation is not directly  regulated by any governmental  agency in the United




                                        2
<PAGE>
States. Most of Antenna Products  Corporation's  customers,  and the antenna and
tower  industries  in  general,   are  subject  to  meeting  various  government
standards.    These   performance   standards   necessitate   Antenna   Products
Corporation's  ability  to  produce  antenna  designs,  which can be  updated to
conform to customer  requirements in a changing  regulatory  environment.  These
regulations have not adversely affected operations.

Antenna  Products  Corporation  plans  to  reinvest  from 2% to 5% of  sales  in
research and development  projects and bid and proposal  activities.  The mix of
expenditures between the two areas in any given year is a function of the demand
for new independently developed innovative systems and the level of requirements
solicited.  In 2002  Antenna  Products  Corporation  invested  2.8% of  sales in
independent  research  and  development  (R&D) and bid and  proposal  activities
(B&P).  The level of expenditures as a ratio to sales is expected to continue at
this  level in 2003.  The  level of  expenditures  for R&D and B&P as a ratio to
sales was 2.1% of sales in 2001. Antenna Products  Corporation does not consider
patents  to be  material  to its  operations  nor would the loss of any  patents
adversely affect operations.

Phazar  Aerocorp Inc. (fka API  Acquisition  Corp.) (dba "The  Upholstery  Shop,
Inc.!")

Phazar Aerocorp Inc. is an 80% owned Subsidiary of PHAZAR CORP. It was formed on
January 24, 2000 as a Texas  corporation.  Phazar  Aerocorp  Inc.  purchased the
assets and business of The  Upholstery  Shop,  Inc.!  on January 27,  2000.  The
assets  purchased  included  machinery and equipment.  No land or buildings were
included as part of this acquisition. The acquisition was recorded as a purchase
transaction and the operations of the Upholstery  Shop, Inc.! have been included
in the financials from the date of acquisition.

Phazar  Aerocorp Inc. moved in October 2001 to a new 59,500 square foot facility
at Meacham  International  Airport in Fort Worth Texas.  Phazar  Aerocorp Inc.'s
address at Meacham  International  Airport is 4701 N. Main  Street,  Fort Worth,
Texas 76106. The telephone number is (817) 626-2842.

Phazar  Aerocorp Inc. leased the new facility at Meacham  International  Airport
from a  partnership  that is 80% owned by Gary W. Havener,  Principal  Executive
Officer  and  Director  of  PHAZAR  CORP and 20% owned by Brian  Perryman,  Vice
President of Phazar Aerocorp Inc.

Phazar  Aerocorp  Inc.  provides  complete  refurbishment  for a full  range  of
corporate  and  executive  aircraft  interiors.  The  range  and  scope of these
services  includes  design and  fabrication of seats,  side panels,  headliners,
galleys and cabinets, as well as the design and installation of custom lighting,
entertainment systems and cabin management systems.

Phazar  Aerocorp Inc.  removes  existing  interiors of aircraft and installs new
interiors designed to customer  specifications and coordinates the refurbishment
of exteriors for customers when  required.  Phazar  Aerocorp Inc.  provides this
service on virtually all-executive and corporate class aircraft,  including, but
not limited to: Lear, Cessna, Gulfstream,  Galaxy, Dassault, and Bombardier. The
refurbishments  are diverse with the lower range being a minor upgrading of Lear
25's to total  interior  upgrading of the larger  aircraft of the Gulfstream and
Falcon family.


                                        3
<PAGE>
Phazar Antenna Corp.

Phazar Antenna Corp. is a wholly owned  Subsidiary of PHAZAR CORP. It was formed
as a Delaware  Corporation  and activated on June 1, 2000.  Phazar Antenna Corp.
operates as a marketing, research and development unit.

To reduce costs and  streamline  operations,  Phazar  Antenna  Corp.  closed the
Company  offices in  Ronkonkoma,  New York on May 31, 2002 and moved the Company
offices  to the  facilities  of Antenna  Products  Corporation.  Phazar  Antenna
Corp.'s new address is 101 S.E. 25th Avenue,  Mineral  Wells,  Texas 76067.  The
telephone number is (940) 325-3301.

Phazar Antenna Corp.  provides a complete line of commercial  wireless fixed and
mobile  antennas for ISM (instrument  scientific  medical),  wireless  Internet,
wireless LAN, wireless local loop, fixed GPS, MMDS (fixed wireless) and embedded
Bluetooth market  applications.  This product line complements  Antenna Products
Corporations  existing  product  lines of  cellular,  PCS,  paging,  ISM and AMR
(automatic meter reading)  omni-directional  and sector wireless  antennas.  The
Phazar  Antenna Corp.  commercial  wireless  product lines are  manufactured  at
Antenna Products Corporation's plant in Mineral Wells, Texas.

Thirco, Inc.

Thirco,  Inc.  was formed on November 1, 1993 as a Delaware  company to purchase
and lease  equipment and facilities to the other operating units of PHAZAR CORP.
The primary lease  arrangements  are with Antenna Products  Corporation.  Thirco
will  occasionally  assist in  servicing  the  banking  needs of  PHAZAR  CORP's
operating units. Since all activity is internal to PHAZAR CORP and its operating
subsidiaries,  financial data is consolidated  with PHAZAR CORP. Thirco does not
employ  any full  time  employees  and  does not  intend  to  employ  any in the
foreseeable  future.  Thirco does not intend to engage in any  outside  business
transactions.

Seasonality

PHAZAR CORP's businesses are not dependent on seasonal factors.

Backlog

The  backlog  of orders at  Antenna  Products  Corporation  was $3.4  million at
year-end.  This  compares  to $3.1  million in backlog at the end of fiscal year
2001.  In July,  the backlog was $3.3 million.  Over 90% of this backlog will be
delivered in the 2003 fiscal year.

The backlog of orders at Phazar  Aerocorp  Inc.  was $128  thousand at year-end.
This  compares  to $1.2  million in backlog at the end of fiscal  year 2001.  In
July,  the backlog was $417  thousand of which all will be delivered in the 2003
fiscal year.

Phazar Antenna Corp. orders are normally shipped within 2 weeks;  hence,  Phazar
Antenna Corp. backlog of orders was negligible at year-end.





                                        4
<PAGE>
Raw Material Source and Supply

PHAZAR  CORP's  operating  subsidiaries'  principal  raw  materials  are  steel,
aluminum, other metal alloys, plastic and composite tubing, hardware, electrical
wire, wire rope, electronic or electro-mechanical  components,  leather, carpet,
wood veneers and laminates.  The materials are commonly  available from numerous
sources, including local distributors in quantities sufficient to meet the needs
of the  subsidiaries.  The  availability  and  supply  of raw  materials  is not
considered to be a problem for PHAZAR CORP.

Employees

As  of  August  1,  2002  Antenna  Products  Corporation  employed  a  total  of
seventy-seven   employees.   Of  the   seventy-seven,   ten  are   employed   in
administration  and  sales,  ten  in  engineering  and  technical  support,  and
fifty-seven in manufacturing.  None of Antenna Products Corporation's  employees
are subject to collective bargaining agreements.

Phazar Aerocorp Inc. employed a total of thirty-seven  employees as of August 1,
2002. Of the thirty-seven, eight are employed in administration and sales, three
in  avionics  design  and  support,  twenty  in the shop  areas,  and six in the
installation  crew.  None of Phazar  Aerocorp  Inc.'s  employees  are subject to
collective bargaining agreements.

Phazar Antenna Corp. closed the offices in Ronkonkoma,  New York on May 31, 2002
and  relocated  the  Company  offices  to the  facilities  of  Antenna  Products
Corporation in Mineral  Wells,  Texas.  Two employees  were  terminated and four
employees  were asked to continue their  employment  with Phazar Antenna Corp in
Texas.  One  employee  continued  his  employment  in sales and three  employees
elected to remain in New York and terminate  their  employment with the Company.
Antenna  Products  Corporation  employees  have assumed the  administrative  and
engineering  duties for Phazar Antenna Corp. Phazar Antenna Corp.  employees are
not subject to collective bargaining agreements.

Thirco does not employ any full time employees and does not intend to employ any
in the foreseeable future.

Foreign Sales

Antenna Products  Corporation's sales in international  markets are primarily to
foreign  governments or prime  contractors to foreign  governments and, as such,
represent a small percentage of the overall Company annual volume.  The level of
profits  from the  commitment  of assets to this  portion of the  business is no
greater or no less than that of other market segments.  International  sales for
2002 and 2001 were 8.2% and 6.2%, respectively, of total sales.

Phazar  Aerocorp Inc. and Phazar  Antenna  Corp.  have no  significant  sales to
international customers.

Item 2.  PROPERTIES

Antenna Products Corporation owns a ten-acre  industrial site located along U.S.
Highway 180 in Mineral Wells,  Texas.  The facility  consists of a main building
containing  60,000 square feet of  manufacturing  area and 10,000 square feet of
administrative  and engineering  offices,  a second building  containing  20,000

                                        5
<PAGE>
square feet of manufacturing and shipping area; and a third building  containing
15,000 square feet utilized for receiving and material control. Three additional
auxiliary  buildings,  which total in excess of 13,350 square feet, are utilized
for chemical etching, painting and storage. The facilities are in good condition
and with the current compliment of machinery and equipment are suitable and more
than adequate to meet production  requirements.  Dependent on the mix of product
types in process in any given time period,  the company could  potentially  more
than double  output with  current and planned  plant,  property  and  equipment.
Antenna Products  Corporation carries a bank note on the manufacturing  facility
that is amortized over twenty years ending in the year 2011.

Phazar Aerocorp Inc. moved to a new facility on Meacham International Airport in
Fort Worth,  Texas in October 2001. This leased  facility  contains 2,000 square
feet of  administrative  and sales offices,  18,000 square feet of shop area and
39,500 square feet of aircraft hanger space.

Phazar Antenna Corp. leases a facility in Ronkonkoma, New York. The leased space
consists of 4,000 square feet of administrative,  sales and engineering  offices
plus an outside  area used as an antenna  test range.  The Company  vacated this
facility in June of 2002 and is attempting to sublet the facility.

Thirco owns a fifty-acre  test site in Mineral Wells,  Texas.  The site includes
three  buildings with 28,000 square feet of space.  The space is currently being
leased to Antenna  Products  Corporation  for test activity with some storage of
inventory.  The two larger buildings, if needed, are suitable with rearrangement
and some conversion expense, for additional manufacturing utilization.

Item 3.  LEGAL PROCEEDINGS

None.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders through the solicitation
of proxies or otherwise during the fourth quarter of fiscal year 2002.





















                                        6
<PAGE>
                                     PART II

Item 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
         HOLDER MATTERS

The  information in this item should be read in conjunction  with the Management
Discussion and Analysis of Financial Condition and Results of Operations in Item
7, and the  Consolidated  Financial  Statements and the Related Notes thereto in
Item 8.

Market Information For The Common Stock

PHAZAR CORP's common stock is traded on the Nasdaq Smallcap Market and is quoted
under the symbol "ANTP".

The table below  presents  the high and low prices for the last two fiscal years
and  reflects  inter-dealer  prices,   without  retail  mark-up,   mark-down  or
commission and may not represent actual transactions.

                                            BID
Quarter Ended                       High             Low

August 2000                         3.125            1.5
November 2000                       2.938            1.063
February 2001                       2.50             1.00
May 2001                            2.219            1.30

August 2001                         1.90             1.30
November 2001                       1.90             1.19
February 2002                       1.81             1.19
May 2002                            1.90             1.21

Holders

At August 1, 2002 there  were  approximately  1,320  holders of record of common
stock.

Dividends

PHAZAR CORP has never paid a regular  cash  dividend on common  stock and has no
plans to institute payment of regular dividends.

Recent Sales of Unregistered Securities

As partial  consideration  for  attending  the PHAZAR  CORP Board of  Directors'
meetings, Gary W. Havener, Clark D. Wraight, James Miles, and R. Allen Wahl each
received  1,000 shares of PHAZAR CORP common  stock.  James Kenney  received 600
shares of PHAZAR CORP  common  stock and Billy J. Perry  received  200 shares of
PHAZAR CORP common  stock.  Also,  as partial  consideration  for  attending the
PHAZAR  CORP  audit  committee  meetings,  James  Miles and R.  Allen  Wahl each
received an additional 300 shares of PHAZAR CORP common stock, and 100 shares of
PHAZAR CORP common stock was paid to James Kenney.  Each Director agreed to hold
the shares for investment  and not for further  distribution.  The  certificates
representing the shares bear a legend  restricting  transfer without  compliance
with the registration  requirements of the Federal  Securities Act of 1933 or in
reliance upon an applicable exemption  therefrom.  PHAZAR CORP relied on section
4(2) of the Securities Act of 1933 as its exemption from registration.
                                        7
<PAGE>
Item 6.  SELECTED FINANCIAL DATA

The  following  table  presents  selected  financial  data of PHAZAR CORP.  This
historical  data  should  be read in  conjunction  with  Consolidated  Financial
Statements and the Related Notes thereto in Item 8.

                           FISCAL YEAR ENDING MAY 31
                           -------------------------

                                                 2002                    2001
                                   ------------------      ------------------
Net Sales                                 $10,815,669             $15,060,237
Income (loss) from continuing
  operations                              $(1,149,526)            $   162,175

Income per share from
  continuing operations                   $     (0.53)            $       .08

Total Assets                              $ 7,810,120             $ 8,454,149

Long Term Debt                            $ 2,511,058             $ 2,851,385

Dividends                                 $      0.00             $      0.00


Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

Results of Operation

PHAZAR CORP's on-going  operation is that of its subsidiaries,  Antenna Products
Corporation,  Phazar  Aerocorp Inc.,  Phazar  Antenna 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 as
presented in Item 8.

Year ended May 31, 2002 ("2002") Compared with Year Ended May 31, 2001 ("2001")

Antenna  Products  Corporation  and Phazar Antenna Corp.  combined,  experienced
lower sales in the third and fourth  quarter of fiscal year 2002,  resulting  in
overall sales of $6.8 million in 2002. This is $1.5 million or 18% less than the
$8.3 million in sales in 2001.  Orders were down in both military and commercial
markets  from a total of $7.6  million  in 2001 to $7.2  million  in 2002.  This
resulted in an ending backlog of firm orders at year-end of $3.4 million, up 10%
from the prior year-end backlog of $3.1 million.

The gross  profit  margin for fiscal year 2002 was 33%  compared to 35% in 2001.
Sales and administrative  expenses as a ratio to sales were 46% of sales in 2002
compared  to 32% in 2001.  The  combined  operating  margin for 2002 was (12.7%)
compared  to 3.4% in 2001.  Warranty  charges  of  $27,389  were lower than last
year's  rate of  $37,331,  and  averaged  less than 1% of  sales.  Discretionary
products development  spending was $273,350,  or 4% of sales in 2002. This was a
slight  decrease  from $274,563 or 3.3% of sales in 2001.  Interest  expense for
Antenna Products Corporation and Phazar Antenna Corp. decreased from $205,905 in
2001 to $106,921 in 2002.
                                        8
<PAGE>
These subsidiaries  experienced a pre-tax loss of $1,171,921 in 2002 compared to
a pre-tax profit of $89,646 in 2001. Phazar Antenna Corp. was unable to meet the
sales volumes required to be self-supporting  and required the financial support
of Antenna  Products  Corporation in 2002.  Since Phazar Antenna  Corp.'s future
sales were  uncertain,  management  closed the  Ronkonkoma,  New York offices of
Phazar  Antenna Corp.  on May 31, 2002 and relocated the Company  offices to the
facilities of Antenna  Products in Mineral  Wells,  Texas.  Four  employees were
asked to continue  their  employment  with Phazar Antenna Corp. in Texas and the
balance of the staff was  terminated.  One employee  continued his employment in
sales for the  Company.  The other  employees  decided to remain in New York and
terminated  their  employment  with the Company.  Antenna  Products  Corporation
employees  have assumed the  administrative  and  engineering  duties for Phazar
Antenna Corp. This realignment of people and assets will help these subsidiaries
cut costs and be in a position to become profitable in 2003.

Phazar  Aerocorp Inc. sales were down from the previous year due to the economic
downturn that occurred in the general aviation  industry after the tragic events
on September 11, 2001.

Phazar  Aerocorp  Inc.'s overall sales for 2002 were $4.0 million.  This is $2.8
million  or 41% less  than the $6.8  million  in sales in 2001.  Demand  for the
services  provided  by Phazar  Aerocorp  Inc.  remained  slow  during the fourth
quarter  and this  resulted  in an ending  backlog of firm orders at year-end of
$128 thousand, down 89% from the prior year-end backlog of $1.2 million.

The gross  profit  margin for fiscal year 2002 was 10%  compared to 18% in 2001.
Sales and administrative  expenses as a ratio to sales were 19% of sales in 2002
compared to 10% in 2001.  Phazar Aerocorp Inc.'s  operating  margin for 2002 was
(8.7%) compared to 8.1% in 2001.

Interest  expense for Phazar  Aerocorp Inc.  decreased  from $166,219 in 2001 to
$93,447 in 2002. The  subsidiary  experienced a pre-tax loss of $581,097 in 2002
compared to a pre-tax profit of $378,679 in 2001.

Phazar Aerocorp  Inc.'s business  started to improve in July with an increase in
customer requirements for quotes on aircraft refurbishment work. Phazar Aerocorp
Inc.'s  backlog has improved  from $128 thousand at year-end to $417 thousand in
July of this year. The subsidiary is expected to be profitable in 2003.

PHAZAR CORP's  consolidated  sales from operations were  $10,815,669 with a loss
from operations before taxes of $1,788,907 in 2002. This compares to $15,060,237
in consolidated  sales with income from  operations  before taxes of $335,766 in
2001.

PHAZAR  CORP's  loss  resulted  from the  continued  flat  market in the general
aviation  service  industry  through the end of 2002 and the inability of Phazar
Antenna Corp.  to gain market share in the  commercial  wireless  communications
markets.  To reduce  Phazar  Antenna  Corp.'s  expenses and reduce the financial
drain on the company, the facility in Ronkonkoma, New York was closed on May 31,
2002.  Phazar Antenna Corp's operations have been relocated to the facilities of
Antenna  Products  Corporation  in Mineral  Wells,  Texas.  This change plus the
overall  reduction in staff at Antenna  Products  Corporation and Phazar Antenna
Corp.  will  significantly  reduce  costs  and  position  PHAZAR  CORP to become
profitable in 2003.


                                       9
<PAGE>
Liquidity and Capital Resources
-------------------------------
Funds generated from operations are the major internal  sources of liquidity and
are  supplemented  by funds  derived  from  capital  markets,  principally  bank
facilities.  PHAZAR CORP has a $2.0 million revolving demand line of credit that
is partially guaranteed by a principal shareholder. The credit line is regulated
under a borrowing  base formula  using  inventories  and accounts  receivable as
collateral.  The interest rate is established as one percentage  point over Wall
Street prime and is subject to a loan agreement with restrictive covenants.  The
most restrictive  financial  covenant  requires Antenna Products  Corporation to
maintain $1.5 million in tangible net worth and $1.0 million of working capital.
At May 31, 2002 Antenna  Products  Corporation  had a tangible net worth of $1.7
million  and  working  capital  of $1.5  million.  As of July 31,  2002  Antenna
Products Corporation and Phazar Aerocorp Inc. had drawn $1.5 million of the $2.0
million line of credit with $500  thousand of the borrowing  base  available and
unused.  The  revolving  credit line  agreement is renewable in September  2002.
PHAZAR CORP  anticipates  renewal of this credit line and has projected that the
credit  available  is  sufficient  to  cover  the  operational  requirements  of
subsidiaries in 2003.

Net cash flow from  operations  was a negative  $479,007  in 2002  compared to a
positive $1,458,599 in 2001.  Inventory decreased $253,718 in 2002 compared to a
decrease of $555,920 in 2001. Accounts payable and accrued liabilities increased
$101,229 and accounts  receivable  decreased  $185,222 in 2002. In 2001 accounts
payable  and  accrued  liabilities  increased  $6,205  and  accounts  receivable
decreased  $386,822.  Cash flow  provided by  financing  activities  in 2002 was
$595,411  compared to net cash used in financing  activities  of  $1,359,734  in
2001.  Cash and cash  equivalents at the end of 2002 were  $213,375,  a decrease
from $341,413 at the end of the prior year.

Antenna  Products  Corporation  has a  long-term  bank  note  for  $1.2  million
collateralized  by  the  Antenna  Products  Corporation  plant,   property,  and
equipment.  The current balance is $755 thousand with payments amortized over 20
years  ending in 2011.  The  interest  is  variable at one half point over prime
interest  rate with the note  supported by an FmHA  guarantee  under the federal
guidelines  of a rural  business  industry  loan.  The note is  guaranteed  by a
principal shareholder.

Antenna  Products  Corporation  also  has an  $800,000  subordinated  note  to a
principal shareholder on which it pays interest only at the prime interest rate.
The commencement of principal  payments on the  subordinated  note is prohibited
under the terms of the bank note until the bank debt is paid in full.

Phazar  Aerocorp  Inc. has a note  payable to a bank with an initial  balance of
$1.75 million,  payable in  installments of $25,843 per month until the maturity
date of January 26, 2007, when the remaining balance is due,  including interest
at the prime rate plus 1%. The current balance of the note is $1.26 million. The
note is  collateralized  by Phazar  Aerocorp Inc.  equipment  and  guaranteed by
PHAZAR CORP, guaranteed by a principal  shareholder,  and otherwise secured by a
pledge of assets of PHAZAR CORP's subsidiaries.  PHAZAR CORP does not expect any
changes in payments or other provisions of the loan agreements now in place.

Item 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  consolidated  financial  statements  listed in Item 14 are included in this
report on pages F-1 through F-21.

                                       10
<PAGE>
Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.
                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

This information will be included in the definitive Proxy Statement dated August
30, 2002 filed with the Securities and Exchange  Commission and is  incorporated
herein by reference.

Item 11.  EXECUTIVE COMPENSATION

This  information  will be included in the Company's  definitive Proxy Statement
dated August 30, 2002 filed with the Securities  and Exchange  Commission and is
incorporated herein by reference.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

This  information  will be included in the Company's  definitive Proxy Statement
dated August 30, 2002 filed with the Securities  and Exchange  Commission and is
incorporated herein by reference.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

This  information  will be included in the Company's  definitive Proxy Statement
dated August 30, 2002 filed with the Securities  and Exchange  Commission and is
incorporated herein by reference.

                                     PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

         1.         Financial Statements.  The following  consolidated financial
                    statements of PHAZAR CORP and  subsidiaries  and independent
                    auditors' reports are presented on pages F-1 through F-21:

                    Independent Auditor's Report

                    Consolidated Balance Sheets - May 31, 2002 and 2001

                    Consolidated Statements of Operations  - Years Ended May 31,
                    2002 and 2001

 Consolidated Statement of Shareholders' Equity
                    - Years Ended May 31, 2002 and 2001

                    Consolidated  Statements of Cash Flows - Years Ended May 31,
                    2002 and 2001

                    Notes To Consolidated Financial Statements


                                       11
<PAGE>
         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.

         3.         Exhibits.
                    --------

                    Exhibit 99.1  -  Certification Pursuant to 18 U.S.C. Section
                    1350, as  adopted  pursuant  to Section 906 of the Sarbanes-
                    Oxley Act of 2002.

(b)      Reports on Form 8-K.

                    None







































                                       12
<PAGE>
                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
and  Exchange  Act of 1934,  the  Registrant  has duly  caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

DATE:  August 29, 2002


                                       PHAZAR CORP


                                       /s/ Gary W. Havener
                                       ---------------------------------
                                       BY:      Gary W. Havener
                                       Principal Executive Officer and Director


         Pursuant to the  requirements  of the  Securities  and  Exchange Act of
1934,  this report has been signed below by the  following  persons on behalf of
the Registrant and in the capacities and on the dates indicated.


Signature                            Title                     Date



_________________________________    Principal Financial       August 29, 2002
Clark D. Wraight                     Officer and Director


__________________________________   Director                  August 29, 2002
James Miles


__________________________________   Director                  August 29, 2002
James Kenney


__________________________________   Director                  August 29, 2002
R. Allen Wahl
















                                       13
<PAGE>
                                  EXHIBIT 99.1

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.

         In connection  with the Annual Report of PHAZAR CORP (the "Company") on
Form  10-KSB for the year ended May 31,  2002 as filed with the  Securities  and
Exchange  Commission on the date hereof (the "Report"),  the  undersigned  Chief
Executive Officer and Chief Financial  Officer of the Company certify,  pursuant
to  18  U.S.C.  Section  1350,  as  adopted  pursuant  to  Section  906  of  the
Sarbanes-Oxley Act of 2002 that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities  Exchange Act of 1934; and

(2) The  information  contained in the Report fairly  presents,  in all material
respects, the financial condition and results of operation of the Company.




/s/  Gary W. Havener
   -----------------------------
     Gary W. Havener
     Chief Executive Officer



/s/  Clark D. Wraight
   -----------------------------
     Clark D. Wraight
     Chief Financial Officer
























                                       14
<PAGE>



















                                   PHAZAR CORP
                          (fka Antenna Products, Inc.)

                             CONSOLIDATED FINANCIAL
                                   STATEMENTS

                                  MAY 31, 2002































                                       15
<PAGE>
                                 C O N T E N T S



                                                                        Page


INDEPENDENT AUDITOR'S REPORT.............................................F1


CONSOLIDATED FINANCIAL STATEMENTS

     Consolidated Balance Sheets.........................................F2

     Consolidated Statements of Operations...............................F4

     Consolidated Statements of Shareholders' Equity.....................F5

     Consolidated Statements of Cash Flows...............................F6

     Notes to Consolidated Financial Statements..........................F8



































                                       16
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT


To The Board of Directors and Stockholders
PHAZAR CORP and Subsidiaries

We have audited the accompanying consolidated balance sheets of PHAZAR CORP (fka
Antenna  Products,  Inc.) and  Subsidiaries as of May 31, 2002 and 2001, and the
related  consolidated  statements of operations,  shareholders'  equity and cash
flows for the years then ended. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of PHAZAR CORP and
subsidiaries  as of May 31, 2002 and 2001,  and the results of their  operations
and their cash flows for the years then ended,  in  conformity  with  accounting
principles generally accepted in the United States of America.



WEAVER AND TIDWELL, L.L.P.

Fort Worth, Texas
August 2, 2002


3860


















                                       F-1
<PAGE>
            PHAZAR CORP (fka ANTENNA PRODUCTS, INC.) AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                              MAY 31, 2002 AND 2001

                                     ASSETS

                                                2002              2001
                                           --------------    --------------
CURRENT ASSETS
  Cash and cash equivalents                 $    213,375      $    341,413
  Accounts receivable:
    Trade, net of allowance for
     doubtful accounts of $56,208
     and $45,898 in 2002 and 2001,
     respectively                                915,458         1,074,572
    United States Government                      62,512            88,620
Inventories                                    2,016,720         2,270,438
Costs and estimated earnings in excess
    of billings on refurbishing contracts
    in progress                                   19,627           370,454
  Prepaid expenses and other assets               90,423            33,340
  Income taxes receivable                        479,282                 -
  Deferred income taxes                          218,949           128,343
                                           -------------     -------------
  Total current assets                         4,016,346         4,307,180

Property and equipment, net                    2,073,682         2,165,288

Intangible Assets (Goodwill)                     461,969           498,440

Identifiable Intangible Assets                 1,258,123         1,483,241
                                           -------------     -------------
TOTAL ASSETS                                $  7,810,120      $  8,454,149
                                           =============     =============


The Notes to Consolidated Financial
Statements are an integral part of
these statements.

















                                       F-2

<PAGE>
                      LIABILITIES AND SHAREHOLDERS' EQUITY

                                                2002              2001
                                           -------------     -------------
CURRENT LIABILITIES
  Notes payable                             $ 1,145,000       $   250,000
  Current portion of long-term debt             307,594           266,856
  Accounts payable                              454,452           438,262
  Accrued expenses                              503,958           418,919
  Billings in excess of costs and
    estimated earnings on refurbishing
    contracts in progress                        42,593            52,907
  Income taxes payable                                -           108,146
                                           ------------      ------------
   Total current liabilities                  2,453,597         1,535,090
                                           ------------      ------------
Long-term debt                                1,711,058         2,051,385
Note payable to shareholder                     800,000           800,000
Deferred income taxes                           182,780           238,581
                                           ------------      ------------
   Total long-term liabilities                2,693,838         3,089,966
                                           ------------      ------------
   Total liabilities                          5,147,435         4,625,056
                                           ------------      ------------
COMMITMENTS AND CONTINGENCIES                         -                 -

MINORITY INTEREST IN SUBSIDIARY                       -            25,546

SHAREHOLDER'S EQUITY

Preferred stock, $1 par, 2,000,000
 shares authorized, none issued or
 outstanding in 2002 and 2001,
attributes to be determined when issued               -                 -

Common stock, $0.01 par,6,000,000 shares
  authorized  2,174,828 and 2,169,328
  issued and outstanding in 2002 and 2001,
  respectively                                   21,748            21,694
  Additional paid in capital                  2,753,136         2,744,526
  Retained earnings                            (112,199)        1,037,327
                                           ------------      ------------
   Total shareholders' equity                 2,662,685         3,803,547

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $ 7,810,120       $ 8,454,149
                                           ============      ============



The Notes to Consolidated Financial Statements
are an integral part of these statements.





                                       F-3
<PAGE>
            PHAZAR CORP (fka ANTENNA PRODUCTS, INC.) AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        YEARS ENDED MAY 31, 2002 AND 2001



                                               2002               2001
                                           ------------      ------------
Sales and contract revenues                 10,815,669        15,060,237
Cost of sales and contracts                  8,153,167        10,889,852
                                           -----------       -----------
  Gross Profit                               2,662,502         4,170,385

Sales and administration expenses            4,248,228         3,443,836
                                           -----------       -----------
  Operating Profit (Loss)                   (1,585,726)          726,549

Other income (expense)
     Interest expense                         (236,341)         (401,723)
     Interest income                               575               333
     Gain on sale of assets                        361                 -
     Other Income                               32,224            10,607
                                           -----------       -----------
Total Other Expense                           (203,181)         (390,783)
                                           -----------       -----------
Income (loss) from operations before        (1,788,907)          335,766
 income taxes and minority interest        -----------       -----------

Income tax provision (benefit)                (613,835)          148,045
                                           -----------       -----------
     Income (loss)before minority interest  (1,175,072)          187,721

     Minority interest in Subsidiary's
      (income)loss                              25,546           (25,546)
                                           -----------       -----------
Net Income (loss)                           (1,149,526)          162,175
                                           ===========       ===========
Earnings (loss) per common share                 (0.53)             0.08
                                           ===========       ===========




The Notes to Consolidated Financial Statements
are an integral part of these statements.











                                       F-4
<PAGE>
            PHAZAR CORP (fka ANTENNA PRODUCTS, INC.) AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                        YEARS ENDED MAY 31, 2002 AND 2001
<TABLE>
<S>                           <C>        <C>         <C>         <C>          <C>
                                     Common Stock    Additional
                                Number                Paid In      Retained
                              of Shares     Amount    Capital      Earnings        Total
                             ----------- ----------- ----------- ------------ ------------
 BALANCE, MAY 31, 2000        2,135,728  $   21,358  $2,678,766  $   875,152  $ 3,575,276

     Issuance of common stock    33,600         336      65,760            -       66,096

      Net income                      -           -           -      162,175      162,175
                             ----------- ---------- -----------  -----------  -----------
  BALANCE, MAY 31, 2001       2,169,328      21,694   2,744,526    1,037,327    3,803,547

   Issuance of common stock       5,500          54       8,610            -        8,664

  Net income                          -           -           -   (1,149,526)  (1,149,526)
                             ----------- ---------- ----------- ------------  -----------
BALANCE, MAY 31, 2002         2,174,828  $   21,748 $ 2,753,136 $   (112,199) $ 2,662,685
                             =========== ========== =========== ============  ===========
</TABLE>




















The Notes to Consolidated Financial Statements
are an integral part of these statements.










                                       F-5
<PAGE>
            PHAZAR CORP (fka ANTENNA PRODUCTS, INC.) AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        YEARS ENDED MAY 31, 2002 AND 2001

                                                       2002            2001
                                                   -----------    ------------

CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                                $(1,149,526)   $    162,175

  Adjustments to reconcile net income (loss)
   to net cash provided by (used in)
   operating activities

   Depreciation                                        336,409         340,136
   Amortization                                        261,589         267,669
   Stock based compensation                              8,664           6,096
   Gain (loss) on disposal of fixed assets                (361)              -
   Deferred federal income tax                        (146,407)       (107,573)
   Changes in assets and liabilities:
   Accounts receivable                                 185,222         386,822
   Costs and estimated earnings in excess of
    billings on refurbishing contracts in progress     350,827         (77,293)
   Inventory                                           253,718         555,920
   Prepaid expenses                                    (57,083)         22,532
   Income taxes receivable                            (479,282)         30,000
   Accounts payable                                     16,190         (30,324)
   Accrued expenses                                     85,039          36,529
   Billings in excess of costs and estimated
    earnings on refurbishing contracts in progress     (10,314)       (267,782)
   Income taxes payable                               (108,146)        108,146
   Minority interest                                   (25,546)         25,546
                                                   -----------    ------------
     Net cash provided by operating activities        (479,007)      1,458,599
                                                   -----------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from disposal of fixed assets                 3,000               -
  Purchase of property and equipment                  (247,442)        (69,800)
  Purchase of intangible assets                              -         (25,000)
                                                   -----------    ------------
     Net cash used in investing activities            (244,442)        (94,800)




The Notes to Consolidated Financial Statements
are an integral part of these statements.









                                       F-6
<PAGE>
            PHAZAR CORP (fka ANTENNA PRODUCTS, INC.) AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        YEARS ENDED MAY 31, 2002 AND 2001

                                                       2002            2001
                                                   -----------    ------------
CASH FLOWS FROM FINANCING ACTIVIITES
 Net borrowings (payments) under bank
   lines of credit                                     895,000      (1,115,000)
 Principal payments on long-term debt                 (299,589)       (244,734)
                                                   -----------    ------------
 Net cash (used in)
  provided by financing activities                     595,411      (1,359,734)
                                                   -----------    ------------
 Net increase (decrease) in cash and
  cash equivalents                                    (128,038)          4,065

CASH AND CASH EQUIVALENTS, beginning of year       $   341,413    $    337,348
                                                   -----------    ------------
CASH AND CASH EQUIVALENTS, end of year             $   213,375         341,413
                                                   ===========    ============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
  Cash paid during the period for:

   Interest (none capitalized)                     $   236,341    $    401,444
                                                   ===========    ============

   Income taxes                                    $         0    $    100,000
                                                   ===========    ============
SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES

 Stock based compensation                          $     8,664    $      6,096
                                                   -----------    ------------
 Issuance of common stock in
   exchange for non-compete agreements             $         -    $     60,000
                                                   ===========    ============






The Notes to Consolidated Financial Statements
are an integral part of these statements.










                                       F-7
<PAGE>
NOTE 1.   BUSINESS AND NATURE OF OPERATION

  PHAZAR CORP operates as a holding company with Antenna  Products  Corporation,
  Phazar Antenna Corp. and Thirco,  Inc. as its wholly owned  subsidiaries,  and
  Phazar  Aerocorp,  Inc. (fka API  Acquisition  Corp) an 80% owned  subsidiary.
  Antenna  Products   Corporation  is  an  operating  subsidiary  that  designs,
  manufactures  and  markets  antenna   systems,   towers,   and   communication
  accessories worldwide. The U. S. government,  military and civil agencies, and
  prime   contractors   represent  Antenna  Products   Corporation's   principal
  customers.  Phazar  Antenna  Corp. is a separate  legal entity that  currently
  operates as a small division of Antenna Products Corporation. Thirco serves as
  an equipment leasing company to Antenna Products Corporation. Phazar Aerocorp,
  Inc. was formed during the year ended May 31, 2000, and its operations consist
  primarily of  contracting  to refurbish the interiors of corporate and private
  jets. The length of the contracts  varies but is typically less than one year.
  The Company's  operations are performed in Texas for customers  throughout the
  United States.

  Following is a schedule of the Company's  sales to major  customers at May 31,
  as a percentage of total sales:
                                                              2002         2001
                                                              ----         ----
     Federal Government                                        13%           8%
     Thales ATM, Inc. (fka AIRSYS ATM, Inc.)                   12%          10%
     Gulfstream Aerospace, LP                                  17%           9%

  At May 31, 2002 and 2001,  trade  receivables  from four  customers  comprised
  approximately 48% and 55%,  respectively,  of the trade receivable  balance at
  those dates.

NOTE 2.   BUSINESS SEGMENTS

  The Company's  operations are classified into two principal  business segments
  based upon the nature of products and services.

     Antennas              Design, manufacture and marketing of antenna systems,
                           towers,and communications accessories worldwide.

     Aircraft Interiors    Contracts to refurbish the interiors of corporate and
                           private jets.

     Following is a summary of segmented information for 2002:

                                                          Aircraft
                                               Antennas  Interiors     Total
                                              ---------- ---------- -----------

   Revenues from external customers-total     $6,768,258 $4,047,411 $10,815,669
   Foreign sales                                 890,418          -     890,418
   Interest revenue                                  575          -         575
   Interest expense                              142,894     93,447     236,341
   Depreciation and amortization                 380,457    217,541     597,998
   Income tax provision (benefit)               (400,187)  (196,722)   (596,909)
   Segment profit (loss)                        (771,734)  (384,375) (1,156,109)
   Segment assets                              5,096,763  1,439,779   6,536,542
   Expenditures for segment assets                19,686    227,756     247,442

                                      F-8
<PAGE>
NOTE 2. BUSINESS SEGMENTS - continued

   RECONCILIATIONS:
     REVENUES
       Total revenues for reportable segments                       $10,815,669
       Other revenue                                                          -
                                                                    -----------
       Total consolidated revenues                                  $10,815,669
                                                                    ===========
     PROFIT OR LOSS
       Total profit (loss) for reportable
        segments before income taxes                                 (1,753,017)
       Other profit (loss)                                              (35,890)
                                                                    -----------
       Profit (loss) before income taxes                            $(1,788,907)
                                                                    ===========
     ASSETS
       Total assets for reportable segments                         $ 6,536,542
       Other assets                                                   1,273,578
                                                                    -----------
       Consolidated total                                           $ 7,810,120
                                                                    ===========
  Following is a summary of segmented information for 2001:

                                                          Aircraft
                                               Antennas  Interiors     Total
                                              ---------- ---------- -----------
   Revenues from external customers           $8,302,411 $6,757,826 $15,060,237
   Foreign sales                                 938,251          -     938,251
   Interest revenue                                  333          -         333
   Interest expense                              235,504    166,219     401,723
   Depreciation and amortization                 388,171    219,633     607,804
   Income tax provision (benefit)                 48,074    104,675     152,749
   Segment profit                                 89,646    274,004     363,650
   Segment assets                              5,340,760  2,437,501   7,778,261
   Expenditures for segment assets                62,300          -      62,300

    RECONCILIATIONS:
      REVENUES
        Total revenues for reportable segments                      $15,060,237
        Other revenue                                                         -
                                                                    -----------
        Total consolidated revenues                                 $15,060,237
                                                                    ===========
    PROFIT OR LOSS
        Total profit for reportable segments                        $   363,650
        Other loss                                                      (27,884)
                                                                    -----------
        Profit before income taxes                                  $   335,766
                                                                    ===========
     ASSETS
        Total assets for reportable segments                        $ 7,778,461
        Other assets                                                    675,688
                                                                    -----------
        Consolidated total                                          $ 8,454,149
                                                                    ===========

                                      F-9
<PAGE>
NOTE 2. BUSINESS SEGMENTS - continued

         Adjustments  to reconcile  total segment to total  consolidated  profit
         (loss)  before  taxes and total  assets is  attributable  to  corporate
         headquarters,  which is not included in segment information.  Corporate
         headquarters'   activity  is  recorded  on  PHAZAR  CORP  and  consists
         primarily of non-allocated  general and  administrative  overhead costs
         and cash in bank.

NOTE 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

         The  consolidated  financial  statements  include  the  accounts of the
         Company and its subsidiaries. All significant intercompany balances and
         transactions are eliminated in consolidation.

Sales and Contract Revenues and Related Costs - Antennas

         Antenna  Products  Corporation  manufactures  and markets  standard and
         custom antennas,  guyed and self-supported towers,  monopoles,  support
         structures,  masts and communication  accessories worldwide.  Customers
         include  the U.  S.  Government,  military  and  civil  agencies,  U.S.
         Government  prime  contractors  and  commercial  clients.  Examples  of
         Antenna  Products   Corporation's  U.S.  Government  supplied  products
         include ground to air collinear  antennas,  instrument landing antennas
         and towers,  fixed system  multi-port  antenna  arrays,  tactical quick
         erect antennas and masts, shipboard antenna tilting devices,  transport
         pallets,  surveillance  antennas,  antenna  rotators,  positioners  and
         controls,  and high power broadcast  baluns.  Examples of the Company's
         commercial  products  (Phazar  Antenna Corp.)  include  panel,  sector,
         omnidirectional  and closed loop PCS antennas,  automatic meter reading
         (AMR), cellular, paging and yagi antennas, guyed towers, self supported
         towers and monopoles.

         Antenna Products  Corporation is primarily a build to order company. As
         such,  most orders are  negotiated  firm  fixed-price  contracts.  Most
         commercial   contracts  are  single  order  and  single  delivery  firm
         fixed-price  contracts.  Some U.S. Government  contracts are multi-year
         performance  with   established   option  dates  with  a  predetermined
         escalated price for delivery in that outyear.  These types of contracts
         can be valid  from two to five  years.  Other  types of U.S  Government
         contracts are called supply contracts where the U.S.  Government buys a
         particular  product and has  estimated  the quantity  required  over an
         expected period.  Antenna Products Corporation has contracts with major
         prime  contractors who negotiate  contracts  based on large  quantities
         with set  escalation  rates for future prices.  The U.S.  Government is
         attempting  to  procure  more and more  products  that have  commercial
         equivalents   to   military   standards.   These   purchases   are  for
         off-the-shelf  products  and,  therefore,  use credit  cards and accept
         commercial terms and shipping  methods.  Antenna  Products  Corporation
         recognizes  an order or resultant  sale when official  notification  is
         received  that an option is being  exercised  and the order is shipped.



                                      F-10
<PAGE>
NOTE 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

         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 U.S. Government are recognized
         on the units of delivery method.  This method recognizes as revenue the
         contract price of units of the product 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  inventory.  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.

Accounting Basis for Revenue Recognition - Aircraft Interiors

         Revenue  on  contracts  is  recognized  on the  basis of the  Company's
         estimates of the percentage of completion of individual contracts. That
         portion of the total  contract  price that is  recognized as revenue is
         based upon net contract costs incurred as a percentage of net estimated
         costs. That method is used because  management  considers total cost to
         be the best available measure of progress on the contracts.

         Contract  costs  include all direct  material and labor costs and those
         indirect costs related to contract performance, such as indirect labor,
         supplies,  tools,  and repairs.  General and  administrative  costs are
         charged to expense as  incurred.  Provisions  for  estimated  losses on
         contracts  in progress  are made in the period in which such losses are
         determined.  Changes in job performance,  job conditions, and estimated
         profitability  may result in revisions  to costs and income,  which are
         recognized in the period in which the revisions are determined. Changes
         in estimated job  profitability  resulting  from job  performance,  job
         conditions,  contract penalty  provisions,  claims,  change orders, and
         settlements,  are  accounted for as changes in estimates in the current
         period.

Inventories

         Inventories  are  stated at the lower of  first-in,  first-out  cost or
         market, net of any applicable progress payments.

Property and Equipment

         Property  and  equipment  are recorded at cost and  depreciated  by the
         straight-line  method  over the  expected  useful  lives of the assets.
         Expenditures for normal  maintenance and repairs are charged to income,
         and significant  improvements are capitalized.  The cost of assets sold
         or abandoned and the related  accumulated  depreciation  are eliminated
         from the accounts and the net amount,  less proceeds from disposal,  is
         charged or credited to income.


                                      F-11
<PAGE>
NOTE 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Use of Estimates and Assumptions

         Management  uses  estimates  and  assumptions  in  preparing  financial
         statements in accordance with 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 revenues and expenses.  Actual results could vary from
         the estimates that were used.

Income Taxes

         The  Company  accounts  for  income  taxes  pursuant  to  Statement  of
         Financial  Accounting  Standards No. 109, "Accounting for Income Taxes"
         (SFAS 109) which  utilizes the asset and liability  method of computing
         deferred income taxes.  The objective of the asset and liability method
         is to establish  deferred tax assets and  liabilities for the temporary
         differences  between the financial reporting basis and the tax basis of
         the Company's  assets and  liabilities at enacted tax rates expected to
         be in effect when such amounts are realized or settled. The current and
         deferred  tax   provision  is  allocated   among  the  members  of  the
         consolidated group on the separate income tax return basis.

Research and Development Costs

         Research and development  costs are charged to operations when incurred
         and are included in  operating  expenses.  The amounts  charged for the
         years  ended May 31,  2002 and 2001  were  approximately  $273,000  and
         $275,000, respectively.

Cash and Cash Equivalents

         For purposes of reporting cash flows, cash and cash equivalents include
         cash and  certificates  of deposit with  original  maturities  of three
         months or less.

Stock-based Employee Compensation

         The Company accounts for stock based  compensation  arrangements  under
         the  provisions  of  Accounting   Principles   Board  Opinion  No.  25,
         "Accounting for Stock Issued to Employees", which requires compensation
         cost to be measured at the date of grant based on the  intrinsic  value
         of the options  granted.  The intrinsic  value of an option is equal to
         the difference between the market price of the common stock on the date
         of grant and the exercise price of the option.

         The  Financial  Accounting  Standards  Board has  issued  Statement  of
         Financial   Accounting   Standards  (SFAS)  No.  123,  "Accounting  for
         Stock-Based Compensation", which provides for an alternative measure of
         compensation  cost based on the fair value of the options granted.  The
         fair value of an option is based on the intrinsic  value as well as the
         time value of the  option.  The  Company  has  adopted  the  disclosure
         provisions of SFAS No. 123.


                                      F-12
<PAGE>
NOTE 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Shares, Per Share Data, Earnings Per Share,
and Stock Split, and Common Stock Par Value

         Earnings per share are computed by dividing  net income  available  for
         common  stock  by  the  weighted   average   number  of  common  shares
         outstanding  during the year.  Weighted average shares outstanding were
         2,171,836  and  2,153,028  for the years  ended May 31,  2002 and 2001,
         respectively.  Stock options  outstanding at May 31, 2002 and 2001 were
         not  included in  earnings  per share  because  their  effect  would be
         anti-dilutive.

  New Accounting Pronouncements

         In June 2001 the  Financial  Accounting  Standards  Board (FASB) issued
         Financial Accounting Standards (SFAS) No. 141 "Business  Combinations".
         This statement will require all business combinations,  under the scope
         of this  Statement,  to be accounted for using only the purchase method
         of accounting.  This pronouncement applies to all business combinations
         initiated  after June 30, 2001 and will have no effect on the Company's
         current financial statement presentation.

         In addition,  FASB issued SFAS No. 142 "Goodwill  and Other  Intangible
         Assets".  This Statement addresses  financial  accounting and reporting
         for acquired  goodwill and other  intangible  assets and also addresses
         how goodwill and other intangible  assets should be accounted for after
         they have been initially  recognized.  Goodwill and  intangible  assets
         that have  indefinite  useful  lives  will no longer be  amortized  but
         rather will be tested at least  annually for impairment by comparing to
         fair value.  Goodwill  amortization expense for each of the years ended
         May 31, 2002 and 2001 was $36,471. The provisions of the statement will
         be required for the fiscal year beginning June 1, 2002.  Implementation
         of these  provisions  may have an impact on the  carrying  value of the
         Company's goodwill and intangible assets upon adoption.  However, it is
         not practicable to determine those effects at this time.

NOTE 4.   AIRCRAFT INTERIORS CONTRACTS RECEIVABLE

     Included  in  accounts  receivable  at May 31,  2002 and 2001 are  aircraft
     interior contracts  receivable of $204,482 and $222,357,  respectively.  At
     May 31, 2002 $180,731 of the balance pertains to contracts in progress.  At
     May 31, 2001 $144,040 of the balance pertains to contracts in progress.

NOTE 5.   AIRCRAFT INTERIORS CONTRACTS IN PROGRESS

     Information with respect to aircraft interior  contracts in progress at May
31 follows:








                                      F-13

<PAGE>
NOTE 5.   AIRCRAFT INTERIORS CONTRACTS IN PROGRESS-continued

                                                          2002             2001
                                              ----------------  ---------------
   Cost incurred on contracts in progress         $  4,715,558     $  6,291,703
   Estimated earnings thereon                          734,090        1,504,170
                                                 -------------     ------------
                                                     5,449,648        7,795,873

   Less billings applicable thereto                  5,472,614        7,478,326
                                                 -------------     ------------

   Net unbilled (overbilled) costs                $    (22,966)    $    317,547
                                                  ============     ============

      These  amounts are included in the  accompanying  balance  sheet under the
following captions:
                                                          2002             2001
                                              ----------------  ---------------
   Costs and estimated earnings in excess
    of billings on contracts in progress          $     19,627     $    370,454
   Billings in excess of costs and estimated
    earnings on contracts in progress                  (42,593)         (52,907)
                                                  ------------     ------------
   Net unbilled (overbilled) costs                $    (22,966)    $    317,547
                                                  ============     ============

NOTE 6.   INVENTORIES

     The major components of inventories are as follows:
                                                          2002             2001
                                              ----------------  ---------------
         Raw materials                            $    810,611     $    360,284
         Work in process                               718,448        1,297,008
         Finished goods                                487,661          613,146
                                                  ------------     ------------
                                                  $  2,016,720     $  2,270,438
                                                  ============     ============

     Certain allocable overhead costs such as depreciation,  insurance, property
     taxes and  utilities  are  included  in  inventory  based upon  percentages
     developed by the Company.  The aggregate  amount of these costs included in
     inventory  during the years ended May 31, 2002 and 2001 were  $644,891  and
     $864,001, respectively.

     All of the above stated  inventories are that of the operating  subsidiary,
     Antenna Products Corporation. No other subsidiaries carry inventory.

NOTE 7.   PROPERTY AND EQUIPMENT

     The following is a summary of the  Company's  property and equipment at May
     31:




                                      F-14
<PAGE>
NOTE 7.   PROPERTY AND EQUIPMENT-Continued

                                       Estimated
                                     Useful Life            2002            2001
                                     ----------- --------------- ---------------
      Land                                           $   375,136     $   375,136
      Buildings and improvements     15-30 years       1,931,829       1,873,217
      Machinery and equipment           10 years       3,457,706       3,280,719
      Automobiles and trucks             3 years         149,217         158,718
      Office furniture and fixtures     10 years         602,281         590,438
                                                     -----------     -----------
                                                       6,516,169       6,278,228
      Less accumulated depreciation                    4,442,487       4,112,940
                                                     -----------     -----------
      Net property and equipment                     $ 2,073,682     $ 2,165,288
                                                     ===========     ===========

NOTE 8.   INTANGIBLE ASSETS

  Included in intangible assets at
         May 31 are the following:                         2002            2001
                                                  -------------  --------------
     Goodwill (Phazar Aerocorp Inc.)               $    547,069   $     547,069
     Drawings, wiring diagrams, test procedures,
     production records, etc. (Phazar
     Aerocorp Inc.)                                   1,222,000       1,222,000
     Non-compete agreement (Phazar Aerocorp Inc.)        75,000          75,000
     Non-compete agreements (Phazar Antenna Corp.)       60,000          60,000
     Patents, copyrights and other intellectual
     property (Phazar Antenna Corp.)                    389,593         389,593
                                                   ------------   -------------

                                                      2.293,662       2,293,662
         Accumulated amortization                      (573,570)       (311,981)
                                                   ------------   -------------
                                                   $  1,720,092   $   1,981,681
                                                   ============   =============

     Goodwill is being amortized on the straight-line  basis over a fifteen-year
     period through May 31, 2002.  Intangible assets including drawings,  wiring
     diagrams, test procedures,  production records, etc. are being amortized on
     the  straight-line  basis  over a ten-year  period  through  May 31,  2002.
     Patents,  copyrights and other  intellectual  property and the  non-compete
     agreements are being  amortized on the  straight-line  basis over a five to
     six year period.

NOTE 9.   NOTES PAYABLE

     At May 31, 2002 and 2001, notes payable consist of a revolving note payable
     to a bank, with a maximum amount not to exceed the lesser of $2,000,000 and
     $3,000,000,  respectively,  or a calculated  borrowing base determined by a
     formula  based  upon  the  amount  of  certain  qualified  receivables  and
     inventories as defined in the loan agreement.



                                      F-15
<PAGE>
NOTE 9.   NOTES PAYABLE-Continued

     Interest is payable monthly at the prime rate (4.75% and 7% at May 31, 2002
     and 2001,  respectively)  plus 1% until September 30, 2002, when any unpaid
     principal and interest  shall be due.  Borrowings  under the revolving note
     payable are  collateralized by accounts  receivable and inventories and are
     guaranteed by a principal  shareholder.  Under the  agreement,  the Company
     must  maintain  minimum  net worth of  $1,500,000  and  working  capital of
     $1,000,000.

NOTE 10.   LONG-TERM DEBT

     At May 31, 2002 and 2001, long-term debt consists of the following:

                                                             2002          2001
                                                   -------------- -------------
         Mortgage note to a bank,  guaranteed  80%
         by  a  U.S.  Government  agency,  payable
         $10,050 per month,  including interest at
         the prime  rate  (4.75% and 7% at May 31,
         2002 and  2001,  respectively)  plus 0.5%
         (matures     September     11,     2011);
         collateralized  by certain  real  estate,
         fixtures and assignment of life insurance
         policy with a principal shareholder.  The
         note is also  guaranteed  by a  principal
         shareholder  and the  Company is required
         to maintain certain  covenants  including
         $1,000,000 in working capital and a ratio
         of maximum  debt to net worth of seven to
         one. The Company was in  compliance  with
         these covenants at May 31, 2002 and 2001.

                                                    $     755,028  $    809,848

         Note  payable  to  a  bank,   payable  in
         installments  of $25,843  per month until
         maturity  date of January 26, 2007,  when
         remaining   balance  is  due,   including
         interest  at the prime rate (4.75% and 7%
         at May 31,  2002 and 2001,  respectively)
         plus  1%,   secured   by   property   and
         equipment. The note is also guaranteed by
         a principal shareholder.

                                                    $   1,263,623  $  1,508,393

         Less current portion of long-term debt           307,594       266,856
                                                    -------------  ------------
                                                    $   1,711,057  $  2,051,385
                                                    =============  ============





                                      F-16
<PAGE>
NOTE 10.   LONG-TERM DEBT-continued

         Note  payable  to a  shareholder  of  the
         Company, interest only Payments due until
         June 2005 at the prime  rate,  (4.75% and
         7%   at   May   31,    2002   and   2001,
         respectively).    Beginning   June   2005
         interest   and   principal   payments  of
         $14,946 per month are due until  maturity
         in  May   2010.   Interest   charged   to
         operations  for the  years  ended May 31,
         2002 and 2001 was  $43,956  and  $71,627,
         respectively.                              $     800,000  $    800,000
                                                    -------------  ------------

     Maturities of long-term  debt for each of the five years  subsequent to May
     31, 2002 are as follows (including $160,000 per year beginning in June 2005
     for the shareholder  note,  although it is subordinated to the note payable
     to a bank):

         2003                                                      $  307,593
         2004                                                         326,542
         2005                                                         346,666
         2006                                                         505,402
         2007                                                         406,380
         Thereafter                                                   926,068
                                                                 ------------
                                                                 $  2,818,651
                                                                 ============
NOTE 11.   INCOME TAXES

  Components of the income tax provision (benefit) are as follows:

                                                            2002           2001
                                                  -------------- --------------
    Federal income taxes (benefit) at
     statutory rate on income before income taxes  $   (608,228)  $    114,161

    State income taxes statutory rate                         -         17,471

    Non-deductible expenses and other                    (5,607)        16,413
                                                   ------------   ------------

    Total provision (benefit)                      $   (613,835)  $    148,045
                                                   ============   ============

    Deferred portion (benefit) of provision        $   (146,407)  $   (107,573)
    Current portion (benefit) of provision             (467,428)       255,618
                                                   ------------   ------------
    Total provision (benefit)                      $   (613,835)  $    148,045
                                                   ============   ============





                                      F-17
<PAGE>
NOTE 11.   INCOME TAXES-continued

  The  tax  effects  of  temporary  differences  that  give  rise to significant
  portions  of  the  deferred  tax  assets  and  deferred  tax  liabilities  are
  presented below:
                                                           2002            2001
                                                 --------------  --------------
  Deferred tax assets:
    Accounts receivable due to allowance for
    doubtful accounts                              $     29,366    $     15,605
    Inventories, due to estimated losses
      on contracts                                            -          34,000
    Accrued expenses, due to warranty accrual            23,961          48,456
    Accrued expenses, due to vacation accrual            46,014          30,282
    Accrued expenses due to bonus accrual                16,784               -
    Intangible assets, due to difference
      in amortization                                    77,376          40,425
    Net operating loss carryforward                     102,823               -
                                                   ------------    ------------
  Total deferred tax assets                             296,324         168,768

     Deferred tax liabilities:

     Property and equipment, principally due to
      difference in depreciation                       (260,155)       (279,006)
                                                   ------------    ------------
     Total deferred tax liability                      (260,155)       (279,006)

     Net deferred tax asset (liability)            $     36,169       ($110,238)
                                                   ============    ============
  The net deferred tax liabilities are
  classified on the balance sheet as follows:

     Current deferred tax assets                   $    218,949    $    128,343
     Long-term deferred tax liabilities                (182,780)       (238,581)
                                                   ------------    ------------
                                                   $     36,169    $   (110,238)
                                                   ============    ============
The Company has a net operating loss carryforward of
approximately $302,000 that expires in 2022.

NOTE 12.   COMMITMENTS AND CONTINGENCIES

     The  Company  has adopted an employee  profit  sharing  plan under  Section
     401(k) of the Internal  Revenue Code.  All employees  with a minimum of one
     year of  employment  are  eligible to  participate.  The Company will match
     employee  contributions for an amount up to 3% of each employee's salary if
     certain earnings  requirements are met.  Contributions  are invested at the
     direction of the employee in one or more funds. Company  contributions vest
     after three years of service.  Company  contributions  amounted to $-0- for
     both years ended May 31, 2002 and 2001.

     Concentration of Credit Risk

              The Company  deposits its cash primarily in deposit  accounts with
              major banks.  Certain cash deposits may  occasionally be in excess

                                      F-18
<PAGE>
NOTE 12.   COMMITMENTS AND CONTINGENCIES - continued

              of federally  insured limits.  The Company has not incurred losses
              related to its cash.

              The Company  sells many of its  products  to the U.S.  Government,
              both military and civil agencies, and prime contractors.  Although
              the Company  might be  directly  affected by the well being of the
              defense industry,  management does not believe  significant credit
              risk exists at May 31, 2002.

              Ongoing credit evaluations of customer's  financial  condition are
              performed and, generally,  no collateral is required.  The Company
              maintains  reserves for  potential  credit  losses and such losses
              have not exceeded management's expectations.

     Fair Value of Financial Instruments

              The  following  disclosure of the estimate fair value of financial
              instruments is made in accordance  with the  requirements  of SFAS
              No. 107,  Disclosures  about Fair Value of Financial  Instruments.
              The  estimated  fair value  amounts  have been  determined  by the
              Company,   using  available  market  information  and  appropriate
              valuation methodologies.

              The fair  value of  financial  instruments  classified  as current
              assets  or  liabilities   including  cash  and  cash  equivalents,
              receivables and accounts payable approximate carrying value due to
              the  short-term  maturity  of the  instruments.  The fair value of
              short-term and long-term debt approximate  carrying value based on
              their effective interest rates compared to current market rates.

     Operating Leases

              The Company leases a building and software under two noncancelable
              operating  lease  arrangements.  Rent  expense  under  these lease
              agreements  during  the  years  ended  May 31,  2002  and 2001 was
              $75,605  and   $45,505,   respectively.   Future   minimum   lease
              obligations under the lease agreement are as follows:

                  2003                                              $   77,265
                  2004                                                  67,537
                  2005                                                  29,264
                                                                    ----------
                                                                      $174,066
                                                                    ==========
              The building lease agreement for property in Ronkonkoma,  New York
              will expire in 2004 and will not be renewed.  The  software  lease
              agreement will be paid in full in 2005.

     Facility Leases

               During the fiscal  year 2001 and a portion of 2002,  the  Company
               leased  facilities  under a  cancelable  operating  lease  with a


                                      F-19
<PAGE>
NOTE 12.   COMMITMENTS AND CONTINGENCIES - continued

               related  party.  Rent expense  under this  agreement for 2002 and
               2001 was $43,680 and $35,819, respectively.

               In October  2001,  the Company  moved and began  leasing land and
               hangar  space under a  cancelable  operating  lease with  another
               related  entity.  Monthly  rental  payments  under this lease are
               $17,842.  Rent expense charged to operations under this lease for
               the year ended May 31, 2002 was $142,736.

NOTE 13.   STOCK OPTIONS

     In 1999, the Board of Directors  approved a stock option plan that provided
     the option to purchase 60,000 shares at $2.00 to an officer of the Company.
     The plan has an  expiration  date of March 31,  2006 or the  earlier of the
     officer's last day of employment.

     During the year ended May 31, 2001 the Board of Directors  granted  428,000
     stock options to six  employees.  The options  become  exercisable in equal
     increments on the anniversary of the grant date over each of the next three
     years. None of these options were exercisable  during the year. The Company
     recognized  no  compensation  cost  related  to the grant of these  options
     during the year ended May 31, 2001. Had compensation cost for the Company's
     stock-based  compensation  been determined based on fair value at the grant
     date  consistent  with the method of FASB  Statement 123, the Company would
     have  recognized  compensation  expense  of  $194,662  for the  stock-based
     employee compensation awards during the year ended May 31, 2001.

     During the year ended May 31, 2002,  the Board of  Directors  did not grant
     any stock options.

     The Company's  net income and earnings per share as of May 31, 2001,  would
     have been reduced to the pro forma amounts indicated below:
                                                                         2001
                                                                 ------------
         Net income (loss)            As reported                   $ 162,175
                                      Pro forma                     $ (32,487)
         Primary earnings (loss)
           per share                  As reported                        0.08
                                      Pro forma                         (0.02)

     The compensation cost was estimated using the Black-Scholes  model with the
     following  assumptions for 2001:  $2.50 to $1.88 stock price at grant date;
     life of 4 years;  expected volatility of 93 percent; and risk free interest
     rates of 6.6 and 7.8 percent.

     The assumptions used under the 2000 plan were as follows: $1.19 stock price
     at grant date; lives of 13 and 125 days; expected volatility of 98 percent;
     and risk free interest rate of 4.45 and 4.84 percent.

     A summary of the status of the  Company's  stock option plans as of May 31,
     2002 and 2001 and changes for the years then ended are as follows:



                                      F-20
<PAGE>
NOTE 13.   STOCK OPTIONS-continued
                                                                     Weighted
                                                                     Average
                                                                    Exercise
                                                 Shares               Price
                                               ---------          ------------

         Outstanding at May 31, 2000              60,000                  2.00
                  Granted                        428,000                  2.18
                  Exercised                            -                     -
                  Forfeited                            -                     -
                                                --------              --------

         Outstanding at May 31, 2001             488,000                  2.16
                                                --------              --------
                  Granted                              -                     -
                  Exercised                            -                     -
                  Forfeited                        8,000                  2.47
                                                --------              --------
         Outstanding at May 31, 2002             480,000                  2.15


                                                    2002                  2001
                                               ---------              --------
         Exercisable at May 31                   198,600                60,000
                                               =========              ========

         Weighted average fair value of
            options granted during the year    $       0              $   1.38
                                               =========              ========

         Weighted averaged remaining
             contractual life (in years) 2001        5.2                   3.8
             and 2000 plans respectively






















                                      F-21