**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-Q**





**(Mark
      one)**





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES   EXCHANGE
                ACT OF 1934For
                the Quarterly Period ended January 31, 2008**OR**o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES   EXCHANGE
                ACT OF 1934




For
      the
      transition period from __________ to __________





Commission
      File No. 1-8061


**FREQUENCY
      ELECTRONICS, INC.**


(Exact
      name of Registrant as specified in its charter)





**Delaware**
            **11-1986657**(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)**55
                CHARLES LINDBERGH BLVD., MITCHEL FIELD, N.Y.**
            **11553**(Address
                of principal executive offices)
            (Zip
                Code)





Registrant's
      telephone number, including area code: **516-794-4500**





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




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):




Large
      accelerated filer o Accelerated
      filer o Non-accelerated filerxSmaller
      Reporting Companyo




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




Yes o No x





APPLICABLE
      ONLY TO CORPORATE ISSUERS:





The
      number of shares outstanding of Registrant's Common Stock, par value $1.00
      as of
      March 10, 2008 - 8,725,876













FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





INDEX





Page
                No.Part
                I. Financial Information:Item
                1 - Financial Statements:Condensed
                Consolidated Balance Sheets -January
                31, 2008 and April 30, 2007
            
            
            3Condensed
                Consolidated Statements of OperationsNine
                Months Ended January 31, 2008 and 2007
            
            
            4Condensed
                Consolidated Statements of OperationsThree
                Months Ended January 31, 2008 and 2007
            
            
            5Condensed
                Consolidated Statements of Cash FlowsNine
                Months Ended January 31, 2008 and 2007
            
            
            6Notes
                to Condensed Consolidated Financial Statements
            
            
            7-11Item
                2 - Management's Discussion and Analysis of Financial Condition and
                Results of Operations
            
            
            11-17Item
                3- Quantitative and Qualitative Disclosures about Market
                Risk
            
            
            17Item
                4T- Controls and Procedures
            
            
            18Part
                II. Other Information:Items
                1, 1A, 2, 3, 4 and 5 are omitted because they are not
                applicableItem
                6 – Exhibits
            
            
            18Signatures
            
            
            19Exhibits




Page
          2





FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES




Condensed
      Consolidated Balance Sheets





January
                31,
            
            April
                30,2008
            
            2007(UNAUDITED)
            
            (AUDITED)(In
                thousands except share data)**ASSETS:**Current
                assets:Cash
                and cash equivalents
            
            $
            6,673
            
            $
            1,336Marketable
                securities
            
            
            8,977
            
            
            14,268Accounts
                receivable, net of allowance for doubtful accounts of $169 at January
                31,
                2008and
                $276 at April 30, 2007
            
            
            19,993
            
            
            15,626Inventories
            
            
            31,360
            
            
            31,201Deferred
                income taxes
            
            
            3,144
            
            
            3,075Income
                taxes receivable
            
            
            -
            
            
            596Prepaid
                expenses and other
            
            
            1,405
            
            
            1,501Total
                current assets
            
            
            71,552
            
            
            67,603Property,
                  plant and equipment, at cost,less
                  accumulated depreciation andamortization
            
            
            9,381
            
            
            7,839Deferred
                income taxes
            
            
            2,913
            
            
            2,945Goodwill
                and other intangible assets, net
            
            
            417
            
            
            453Cash
                surrender value of life insurance and cash held in trust
            
            
            7,466
            
            
            6,815Investments
                in and loans receivable from affiliates
            
            
            4,622
            
            
            7,354Other
                assets
            
            
            817
            
            
            817**Total
                assets**
            
            **$**
            **97,168**
            
            **$**
            **93,826****LIABILITIES
                AND STOCKHOLDERS’ EQUITY:**Current
                liabilities:Short-term
                credit obligations
            
            $
            5,721
            
            $
            5,011Accounts
                payable – trade
            
            
            1,751
            
            
            3,771Accrued
                liabilities and other
            
            
            4,352
            
            
            3,980Income
                taxes payable
            
            
            274
            
            
            -Dividend
                payable
            
            
            -
            
            
            869Total
                current liabilities
            
            
            12,098
            
            
            13,631Deferred
                compensation
            
            
            8,742
            
            
            8,669Deferred
                gain and long-term credit obligations
            
            
            1,443
            
            
            642Total
                liabilities
            
            
            22,283
            
            
            22,942Stockholders’
                equity:Preferred
                stock - $1.00 par value
            
            
            -
            
            
            -Common
                stock - $1.00 par value
            
            
            9,164
            
            
            9,164Additional
                paid-in capital
            
            
            47,952
            
            
            47,138Retained
                earnings
            
            
            15,218
            
            
            13,54172,334
            
            
            69,843Common
                  stock reacquired and held in treasury-at
                  cost, 438,064 shares at January 31, 2008and
                  474,693 shares at April 30, 2007
            
            
            (2,150
            )
            
            (2,080
            )Accumulated
                other comprehensive income
            
            
            4,701
            
            
            3,121Total
                stockholders' equity
            
            
            74,885
            
            
            70,884**Total
                liabilities and stockholders' equity**
            
            **$**
            **97,168**
            
            **$**
            **93,826**




See
      accompanying notes to condensed consolidated financial statements.




Page
          3





FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Condensed
      Consolidated Statements of Operations





Nine
      Months Ended January 31,


(Unaudited)





2008
            
            2007(In
                thousands except per share data)Net
                sales
            
            $
            50,105
            
            $
            40,751Cost
                of sales
            
            
            34,710
            
            
            26,781Gross
                margin
            
            
            15,395
            
            
            13,970Selling
                and administrative expenses
            
            
            9,480
            
            
            8,344Research
                and development expense
            
            
            5,526
            
            
            6,628Operating
                profit (loss)
            
            
            389
            
            
            (1,002
            )Other
                income (expense):Investment
                income
            
            
            3,965
            
            
            785Equity
                (loss) income
            
            
            (17
            )
            
            566Interest
                expense
            
            
            (402
            )
            
            (74
            )Other
                income, net
            
            
            449
            
            
            270Income
                before provision for income taxes
            
            
            4,384
            
            
            545Provision
                for income taxes
            
            
            1,837
            
            
            213Net
                income
            
            $
            2,547
            
            $
            332Net
                income per common shareBasic
            
            $
            0.29
            
            $
            0.04Diluted
            
            $
            0.29
            
            $
            0.04Weighted
                average shares outstandingBasic
            
            
            8,702,755
            
            
            8,600,700Diluted
            
            
            8,782,763
            
            
            8,747,110




See
      accompanying notes to consolidated condensed financial statements.




Page
          4





FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Condensed
      Consolidated Statements of Operations





Three
      Months Ended January 31,


(Unaudited)





2008
            
            2007(In
                thousands except per share data)Net
                sales
            
            $
            17,055
            
            $
            12,117Cost
                of sales
            
            
            11,600
            
            
            8,340Gross
                margin
            
            
            5,455
            
            
            3,777Selling
                and administrative expenses
            
            
            3,109
            
            
            2,889Research
                and development expense
            
            
            1,541
            
            
            2,600Operating
                profit (loss)
            
            
            805
            
            
            (1,712
            )Other
                income (expense):Investment
                income
            
            
            202
            
            
            206Equity
                income
            
            
            128
            
            
            292Interest
                expense
            
            
            (110
            )
            
            (17
            )Other
                income, net
            
            
            366
            
            
            169Income
                (loss) before provision (benefit) for income taxes
            
            
            1,391
            
            
            (1,062
            )Provision
                (benefit) for income taxes
            
            
            633
            
            
            (308
            )Net
                income (loss)
            
            $
            758
            
            $
            (754
            )Net
                income (loss) per common shareBasic
            
            $
            0.09
            
            $
            (0.09
            )Diluted
            
            $
            0.09
            
            $
            (0.09
            )Weighted
                average shares outstandingBasic
            
            
            8,714,104
            
            
            8,633,283Diluted
            
            
            8,780,308
            
            
            8,633,283




See
      accompanying notes to condensed consolidated financial statements.




Page
          5





FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Condensed
      Consolidated Statements of Cash Flows





Nine
      Months Ended January 31,


(Unaudited)





2008
            
            2007(In
                thousands)Cash
                flows from operating activities:Net
                income
            
            $
            2,547
            
            $
            332Non-cash
                (income) charges to earnings, net
            
            
            (473
            )
            
            2,507Net
                changes in operating assets and liabilities
            
            
            (6,028
            )
            
            (3,669
            )Net
                cash used in operating activities
            
            
            (3,954
            )
            
            (830
            )Cash
                flows from investing activities:Proceeds
                from sale of marketable securities and investments
            
            
            13,241
            
            
            8,053Purchase
                of marketable securities
            
            
            (2,099
            )
            
            (1,253
            )Purchase
                of fixed assets
            
            
            (1,482
            )
            
            (1,675
            )Payment
                for acquisition and loan to affiliate
            
            
            -
            
            
            (3,311
            )Net
                cash provided by investing activities
            
            
            9,660
            
            
            1,814Cash
                flows from financing activities:Proceeds
                from short-term credit obligations
            
            
            500
            
            
            -Payments
                on capital lease obligations
            
            
            (18
            )
            
            -Payment
                of cash dividend
            
            
            (1,748
            )
            
            (1,717
            )Proceeds
                from stock option exercises
            
            
            157
            
            
            158Purchase
                of stock for treasury
            
            
            (233
            )
            
            -Net
                cash used in financing activities
            
            
            (1,342
            )
            
            (1,559
            )Net
                increase (decrease) in cash and cash equivalents before effect of
                exchange
                rate changes
            
            
            4,364
            
            
            (575
            )Effect
                of exchange rate changes on cash and cash equivalents
            
            
            973
            
            
            417Net
                increase (decrease) in cash and cash equivalents
            
            
            5,337
            
            
            (158
            )Cash
                and cash equivalents at beginning of period
            
            
            1,336
            
            
            2,639Cash
                and cash equivalents at end of period
            
            $
            6,673
            
            $
            2,481




Other
      significant non-cash transaction:


During
      the nine month period ended January 31, 2008, the Company also acquired capital
      equipment with a value of $1,193,000 and financed such purchase by entering
      into
      a five-year capital lease.




See
      accompanying notes to condensed consolidated financial statements.




Page
          6





FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Notes
      to
      Condensed Consolidated Financial Statements


(Unaudited)





NOTE
      A -
      CONSOLIDATED FINANCIAL STATEMENTS




In
      the
      opinion of management of Frequency Electronics, Inc. (“the Company”), the
      accompanying unaudited condensed consolidated interim financial statements
      reflect all adjustments (which include only normal recurring adjustments)
      necessary to present fairly, in all material respects, the consolidated
      financial position of the Company as of January 31, 2008 and the results of
      its
      operations and cash flows for the nine and three months ended January 31, 2008
      and 2007. The April 30, 2007 condensed consolidated balance sheet was derived
      from audited financial statements. Certain information and footnote disclosures
      normally included in financial statements prepared in accordance with generally
      accepted accounting principles have been condensed or omitted. It is suggested
      that these condensed consolidated financial statements be read in conjunction
      with the financial statements and notes thereto included in the Company's April
      30, 2007 Annual Report to Stockholders. The results of operations for such
      interim periods are not necessarily indicative of the operating results for
      the
      full year.





NOTE
      B -
      EARNINGS PER SHARE




Reconciliation
      of the weighted average shares outstanding for basic and diluted Earnings Per
      Share are as follows:




Nine
                months
            
            Three
                monthsPeriods
                ended January 31,2008
            
            2007
            
            2008
            
            2007Basic
                EPS Shares outstanding(weighted
                average)
            
            
            8,702,755
            
            
            8,600,700
            
            
            8,714,104
            
            
            8,633,283Effect
                of Dilutive Securities
            
            
            80,008
            
            
            146,410
            
            
            66,204
            
            
            *******Diluted
                EPS Shares outstanding
            
            
            8,782,763
            
            
            8,747,110
            
            
            8,780,308
            
            
            8,633,283




***
      Dilutive securities are excluded for the three month period ended January 31,
      2007 since the inclusion of such shares would be antidilutive due to the net
      loss for the period then ended.




The
      computation of diluted earnings per share excludes those options with an
      exercise price in excess of the average market price of the Company’s common
      shares during the periods presented. The inclusion of such options in the
      computation of earnings per share would have been antidilutive. The number
      of
      excluded options were:




Nine
                months
            
            Three
                monthsPeriods
                ended January 31,2008
            
            2007
            
            2008
            
            2007Outstanding
                Options excluded
            
            
            850,675
            
            
            571,550
            
            
            1,063,175
            
            
            571,550




NOTE
      C -
      ACCOUNTS RECEIVABLE




Accounts
      receivable at January 31, 2008 and April 30, 2007 include costs and estimated
      earnings in excess of billings on uncompleted contracts accounted for on the
      percentage of completion basis of approximately $8,744,000 and $6,259,000,
      respectively. Such amounts represent revenue recognized on long-term contracts
      that had not been billed at the balance sheet dates. Such amounts are billed
      pursuant to contract terms.





NOTE
      D -
      INVENTORIES




Inventories,
      which are reported net of reserves of $5,730,000 and $5,028,000 at January
      31,
      2008 and April 30, 2007, respectively, consist of the following:


January
                31,
              2008
            
            April
                30,
              2007(In
                thousands)Raw
                materials and Component parts
            
            $
            17,349
            
            $
            18,380Work
                in progress
            
            
            14,011
            
            
            12,821$
            31,360
            
            $
            31,201





Page
          7





FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


Notes
      to
      Condensed Consolidated Financial Statements


(Unaudited)





NOTE
      E -
      COMPREHENSIVE INCOME




For
      the
      nine months ended January 31, 2008 and 2007, total comprehensive income was
      $4,128,000 and $1,296,000, respectively. Comprehensive income is composed of
      net
      income or loss for the period plus the impact of foreign currency translation
      adjustments and the change in the valuation allowance on marketable
      securities.




NOTE
      F -
      EQUITY-BASED COMPENSATION




Effective
      May 1, 2006, the Company adopted the fair value recognition provisions of
      Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment”
(“FAS 123(R)”), using the modified prospective transition method. Under the
      modified prospective transition method, compensation cost of $407,000 and
      $438,000 was recognized during the nine months ended January 31, 2008 and 2007,
      respectively, and $137,000 and $162,000, respectively, was recognized during
      the
      three month periods then ended. Such amounts include: (a) compensation cost
      for
      all share-based payments granted prior to, but not yet vested as of May 1,
      2006,
      based on the grant date fair value estimated in accordance with the original
      provisions of FAS 123, and (b) compensation cost for all share-based payments
      granted subsequent to May 1, 2006, based on the grant-date fair value estimated
      in accordance with the provisions of FAS 123(R).




Upon
      adoption of FAS 123(R), the Company elected to continue to value its share-based
      payment transactions using the Black-Scholes valuation model, which was
      previously used by the Company for purposes of preparing the pro forma
      disclosures under FAS 123. Such value is recognized as expense on a
      straight-line basis over the service period of the awards, which is generally
      the vesting period, net of estimated forfeitures. This is the same attribution
      method that was used by the Company for purposes of its pro forma disclosures
      under FAS 123.




At
      January 31, 2008, unrecognized compensation cost for all the Company’s
      stock-based compensation awards was approximately $1.3 million. The unrecognized
      compensation cost for stock-based compensation awards at January 31, 2008 is
      expected to be recognized over a weighted average period of 3.0
      years.




In
      accordance with the provisions of the Securities and Exchange Commission’s (the
“SEC”) Staff Accounting Bulletin No. 107 (“SAB 107”), which requires that
      compensation be classified in the same expense line items as cash compensation,
      during the nine months ended January 31, 2008 and 2007, stock-based compensation
      expense included in cost of sales was $236,000 and $226,000, respectively and
      the amount charged to selling, general and administrative expense was $171,000
      and $212,000, respectively. During the three months ended January 31, 2008
      and
      2007, stock-based compensation expense included in cost of sales was $82,000
      and
      $87,000, respectively, and the amount charged to selling, general and
      administrative expense was $55,000 and $75,000, respectively.




The
      weighted average fair value of each option has been estimated on the date of
      grant using the Black-Scholes options pricing model with the following weighted
      average assumptions used for grants in the nine months ended January 31, 2008
      and 2007: dividend yield of 1.6% and 1.4%, respectively; expected volatility
      of
      38% and 59%, respectively; risk free interest rate of 4.3% and 5.0%,
      respectively, and expected lives of six and one-half years.




The
      expected life assumption was determined based on the Company’s historical
      experience. The expected volatility assumption was based on the historical
      volatility of the Company’s common stock. The dividend yield assumption was
      determined based upon the Company’s past history of dividend payments and its
      intention to make future dividend payments at the time of grant. The risk-free
      interest rate assumption was determined using the implied yield currently
      available for zero-coupon U.S. government issues with a remaining term equal
      to
      the expected life of the stock options.




***Employee
      Stock Option Plans***




The
      Company has various stock option plans for key management employees, including
      officers and directors who are employees. The plans include Nonqualified Stock
      Option (“NQSO”) plans, Incentive Stock Option ("ISO”) plans, and Stock
      Appreciation Rights (“SARs”). Under these plans, options and awards are granted
      at the discretion of the Stock Option committee at an exercise price not less
      than the fair market value of the Company's common stock on the date of grant.
      Under one NQSO plan the options are exercisable one year after the date of
      grant. Under the remaining plans the options/awards are exercisable over a
      four-year period beginning one year after the date of grant. The options/awards
      expire ten years after the date of grant and are subject to certain restrictions
      on transferability of the shares obtained on exercise. As of January 31, 2008,
      eligible employees had been granted awards to purchase approximately 350,000
      shares of Company stock under SARs, all of which are outstanding and
      approximately 43,000 shares of which are exercisable. As of January 31, 2008,
      eligible employees had been granted options to purchase 1,182,500 shares of
      Company stock under ISO plans of which approximately 389,000 options are
      outstanding and approximately 354,000 of which are exercisable. Through January
      31, 2008, eligible employees have been granted options to acquire 1,090,000
      shares of Company stock under NQSO plans. Of the NQSO options, approximately
      640,000 are both outstanding and exercisable (see tables below).




Page
          8




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Notes
      to
      Condensed Consolidated Financial Statements


(Unaudited)





The
      excess of the consideration received over the par value of the common stock
      or
      cost of treasury stock issued under both types of option plans has been
      recognized as an increase in additional paid-in capital prior to the adoption
      of
      FAS 123(R). Unrecognized compensation charges for nonvested awards relating
      to
      the SARs grant is approximately $1,096,000 which will be recognized during
      a
      weighted average period of 3.1 years. Unrecognized compensation charges for
      nonvested awards relating to the ISO plan is approximately $168,000, which
      will
      be recognized over a weighted average period of 1.2 years.




Although
      the Company continues to maintain a stock repurchase program, no stock
      repurchases will be necessary to process stock exercises during the fiscal
      year.
      Shares issued to individuals as a result of stock exercises will be taken from
      available treasury stock.




Transactions
      under these stock award plans, including the weighted average exercise prices
      of
      the options, are as follows :


Nine months ended January 31, 2008Weighted
              
              Wtd Avg
              
              AggregateAverage
              
              Remaining
              
              IntrinsicShares
              
              Ex. Price
              
              Term (yrs)
              
              ValueOutstanding
                  at beginning of period
              
              
              1,265,587
              
              $
              11.53
              
              
              4.4
              
              $
              4,510,000Granted
              
              
              177,875
              
              $
              10.14Exercised
              
              
              (18,312
              )
              $
              8.60Expired
                  or canceled
              
              
              (46,375
              )
              $
              10.23Outstanding
                  at end of period
              
              
              1,378,775
              
              $
              11.43
              
              
              4.6
              
              $
              3,203,000Exercisable
                  at end of period
              
              
              1,037,650
              
              $
              11.55
              
              
              3.1
              
              $
              3,203,000Available
                  for grant at end of period
              
              
              49,625Weighted
                  average fair value of options granted during the period
              
              $
              3.89




The
      aggregate intrinsic value in the table above represents the total pretax
      intrinsic value for in-the-money options, based on the $9.00 closing stock
      price
      of the Company’s common stock on the NASDAQ Global Market at January 31, 2008,
      which would have been received by the option holders had all option holders
      exercised their options as of that date. As of January 31, 2008, the total
      number of in-the-money options outstanding was 355,900, all of which were
      exercisable.




NOTE
      G -
      SEGMENT INFORMATION




The
      Company operates under three reportable segments:




(1)
            FEI-NY
                - consists principally of precision time and frequency control products
                used in three principal markets: communication satellites (both commercial
                and U.S. Government-funded); terrestrial cellular telephone or other
                ground-based telecommunication stations and other components and
                systems
                for the U.S. military.(2)
            Gillam-FEI
                - the Company’s Belgian subsidiary primarily sells wireline
                synchronization and network monitoring systems.(3)
            FEI-Zyfer
                - the products of the Company’s subsidiary incorporate Global Positioning
                System (GPS) technologies into systems and subsystems for secure
                communications, both government and commercial, and other locator
                applications.




The
      Company’s Chief Executive Officer measures segment performance based on total
      revenues and profits generated by each geographic center rather than on the
      specific types of customers or end-users or types of markets
      served.




Page
          9




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Notes
      to
      Condensed Consolidated Financial Statements


(Unaudited)





The
      table
      below presents information about reported segments with reconciliation of
      segment amounts to consolidated amounts as reported in the statement of
      operations or the balance sheet for each of the periods (in thousands):




Nine
                months
            
            Three
                monthsPeriods
                ended January 31,2008
            
            2007
            
            2008
            
            2007Net
                sales:FEI-NY
            
            $
            37,175
            
            $
            28,449
            
            $
            11,803
            
            $
            8,244Gillam-FEI
            
            
            8,058
            
            
            7,470
            
            
            3,308
            
            
            3,019FEI-Zyfer
            
            
            6,733
            
            
            6,155
            
            
            2,442
            
            
            1,417less
                intersegment sales
            
            
            (1,861
            )
            
            (1,323
            )
            
            (498
            )
            
            (563
            )Consolidated
                sales
            
            $
            50,105
            
            $
            40,751
            
            $
            17,055
            
            $
            12,117Operating
                profit (loss):FEI-NY
            
            $
            471
            
            $
            (1,063
            )
            $
            517
            
            $
            (1,511
            )Gillam-FEI
            
            
            (109
            )
            
            344
            
            
            78
            
            
            182FEI-Zyfer
            
            
            410
            
            
            53
            
            
            317
            
            
            (318
            )Corporate
            
            
            (383
            )
            
            (336
            )
            
            (107
            )
            
            (65
            )Consolidated
                operating profit (loss)
            
            $
            389
            
            $
            (1,002
            )
            $
            805
            
            $
            (1,712
            )





January
                31, 2008
            
            April
                30, 2007Identifiable
                assets:FEI-NY
            
            $
            56,246
            
            $
            49,868Gillam-FEI
            
            
            15,474
            
            
            13,750FEI-Zyfer
            
            
            7,533
            
            
            5,366less
                intercompany balances
            
            
            (15,654
            )
            
            (11,773
            )Corporate
            
            
            33,569
            
            
            36,615Consolidated
                identifiable assets
            
            $
            97,168
            
            $
            93,826





NOTE
      H -
      RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS




In
      June
      2006, the FASB issued Financial Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109” (“FIN
      48”). This interpretation clarifies the accounting for uncertainty in income
      taxes recognized in an entity’s financial statements and prescribes recognition
      thresholds and measurement attributes for tax positions taken in a tax return.
      FIN 48 is effective for the Company beginning in fiscal year 2008. The adoption
      of the provisions of FIN 48 has not had a material impact on the Company’s
      financial statements.




In
      September 2006, the FASB issued Statement No. 157, “Fair Value Measurements”
(“FAS 157”). This statement defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles (“GAAP”) and
      expands disclosures about fair value measurements. FAS 157 does not require
      any
      new fair value measurements but simplifies and codifies related guidance. The
      Company will comply with the provisions of FAS 157 when it becomes effective
      in
      fiscal year 2009. Such adoption is not expected to have a material impact on
      the
      Company’s financial statements since the Company utilizes fair value measures
      wherever required by current GAAP.




The
      SEC
      issued Staff Accounting Bulletin No. 108 (“SAB 108”) in September 2006. SAB 108
      expresses the views of the SEC staff regarding the process of quantifying the
      materiality of financial misstatements. SAB 108 requires both the balance sheet
      (iron curtain) and income statement (rollover) approaches be used when
      quantifying the materiality of misstatement amounts. In addition, SAB 108
      contains guidance on correcting errors under the dual approach and provides
      transition guidance for correcting errors existing in prior years. SAB 108
      is
      now effective for the Company and, for the fiscal year ended April 30, 2007,
      there was no impact on the Company’s consolidated financial statements from
      application of this bulletin.




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          10





FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Notes
      to
      Condensed Consolidated Financial Statements


(Unaudited)





In
      February 2007, the FASB issued Statement No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities including an amendment of SFAS No.
      115” (“FAS 159”). The new statement allows entities to choose, at specified
      election dates, to measure eligible financial assets and liabilities at fair
      value that are not otherwise required to be measured at fair value. If a company
      elects the fair value option for an eligible item, changes in that item’s fair
      value in subsequent reporting periods must be recognized in current earnings.
      FAS 159 is effective for fiscal years beginning after November 15, 2007. The
      Company is currently evaluating the potential impact of FAS 159 on its financial
      position and results of operations.




In
      December 2007, the FASB issued Statements No. 141(R), “Business Combinations”,
      and No. 160, “Noncontrolling Interests in Consolidated Financial Statements.”
Effective for fiscal years beginning after December 15, 2008, these statements
      revise and converge internationally the accounting for business combinations
      and
      the reporting of noncontrolling interests in consolidated financial statements.
      The adoption of these statements is not expected to have a material impact
      on
      the Company’s financial statements.










**Item
      2**  **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations**





*“Safe
        Harbor*” Statement under the Private Securities Litigation Reform Act of
        1995 :




The
      statements in this quarterly report on Form 10-Q regarding future earnings
      and
      operations and other statements relating to the future constitute
      "forward-looking" statements pursuant to the safe harbor provisions of the
      Private Securities Litigation Reform Act of 1995. Forward-looking statements
      inherently involve risks and uncertainties that could cause actual results
      to
      differ materially from the forward-looking statements. Factors that would cause
      or contribute to such differences include, but are not limited to, continued
      acceptance of the Company's products in the marketplace, competitive factors,
      new products and technological changes, product prices and raw material costs,
      dependence upon third-party vendors, competitive developments, changes in
      manufacturing and transportation costs, changes in contractual terms, the
      availability of capital, and other risks detailed in the Company's periodic
      report filings with the Securities and Exchange Commission. By making these
      forward-looking statements, the Company undertakes no obligation to update
      these
      statements for revisions or changes after the date of this report.




**Critical
      Accounting Policies and Estimates**




The
      Company’s significant accounting policies are described in Note 1 to the
      consolidated financial statements included in the Company’s April 30, 2007
      Annual Report to Stockholders. The Company believes its most critical accounting
      policies to be the recognition of revenue and costs on production contracts
      and
      the valuation of inventory. Each of these areas requires the Company to make
      use
      of reasoned estimates including estimating the cost to complete a contract,
      the
      realizable value of its inventory or the market value of its products. Changes
      in estimates can have a material impact on the Company’s financial position and
      results of operations.




Revenue
      Recognition




Revenues
      under larger, long-term contracts, which generally require billings based on
      achievement of milestones rather than delivery of product, are reported in
      operating results using the percentage of completion method. On fixed-price
      contracts, which are typical for commercial and U.S. Government satellite
      programs and other long-term U.S. Government projects, and which require initial
      design and development of the product, revenue is recognized on the cost-to-cost
      method. Under this method, revenue is recorded based upon the ratio that
      incurred costs bear to total estimated contract costs with related cost of
      sales
      recorded as the costs are incurred. Each month management reviews estimated
      contract costs. The effect of any change in the estimated gross margin
      percentage for a contract is reflected in revenues in the period in which the
      change is known. Provisions for anticipated losses on contracts are made in
      the
      period in which they become determinable.




On
      production-type contracts, revenue is recorded as units are delivered with
      the
      related cost of sales recognized on each shipment based upon a percentage of
      estimated final contract costs. Changes in job performance may result in
      revisions to costs and income and are recognized in the period in which
      revisions are determined to be required. Provisions for anticipated losses
      on
      contracts are made in the period in which they become determinable.




For
      customer orders in the Company’s Gillam-FEI and FEI-Zyfer segments, smaller
      contracts or orders in the FEI-NY segment, sales of products and services to
      customers are reported in operating results based upon shipment of the product
      or performance of the services pursuant to contractual terms. When payment
      is
      contingent upon customer acceptance of the installed system, revenue is deferred
      until such acceptance is received and installation completed.




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          11





FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




Costs
      and Expenses




Contract
      costs include all direct material, direct labor, manufacturing overhead and
      other direct costs related to contract performance. Selling, general and
      administrative costs are charged to expense as incurred.




Inventory




In
      accordance with industry practice, inventoried costs contain amounts relating
      to
      contracts and programs with long production cycles, a portion of which will
      not
      be realized within one year. Inventory reserves are established for slow-moving
      and obsolete items and are based upon management’s experience and expectations
      for future business. Any changes in reserves arising from revised expectations
      are reflected in cost of sales in the period the revision is made.




Stock-based
      Compensation




Effective
      May 1, 2006, the Company adopted the fair value recognition provisions of
      Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment”
(“FAS 123(R)”), using the modified prospective transition method. Under the
      modified prospective transition method, compensation cost of $407,000 and
      $438,000 was recognized during the nine months ended January 31, 2008 and 2007,
      respectively, and $137,000 and $162,000, respectively, was recognized during
      the
      three month periods then ended. Such costs include: (a) compensation cost for
      all share-based payments granted prior to, but not yet vested as of May 1,
      2006,
      based on the grant date fair value estimated in accordance with the original
      provisions of FAS 123, and (b) compensation cost for all share-based payments
      granted subsequent to May 1, 2006, based on the grant-date fair value estimated
      in accordance with the provisions of FAS 123(R).





**RESULTS
      OF OPERATIONS**





The
      table
      below sets forth for the respective periods of fiscal years 2008 and 2007 the
      percentage of consolidated net sales represented by certain items in the
      Company’s consolidated statements of operations:





Nine
                months
            
            Three
                monthsPeriods
                ended January 31,2008
            
            2007
            
            2008
            
            2007Net
                SalesFEI-NY
            
            
            74.2
            %
            
            69.8
            %
            
            69.2
            %
            
            68.0
            %Gillam-FEI
            
            
            16.1
            
            
            18.3
            
            
            19.4
            
            
            24.9FEI-Zyfer
            
            
            13.4
            
            
            15.1
            
            
            14.3
            
            
            11.7Less
                intersegment sales
            
            
            (3.7
            )
            
            (3.2
            )
            
            (2.9
            )
            
            (4.6
            )100.0
            
            
            100.0
            
            
            100.0
            
            
            100.0Cost
                of Sales
            
            
            69.3
            
            
            65.7
            
            
            68.0
            
            
            68.8Gross
                Margin
            
            
            30.7
            
            
            34.3
            
            
            32.0
            
            
            31.2Selling
                and administrative expenses
            
            
            18.9
            
            
            20.5
            
            
            18.3
            
            
            23.8Research
                and development expenses
            
            
            11.0
            
            
            16.3
            
            
            9.0
            
            
            21.5Operating
                Profit (Loss)
            
            
            0.8
            
            
            (2.5
            )
            
            4.7
            
            
            (14.1
            )Other
                income, net
            
            
            8.0
            
            
            3.8
            
            
            3.4
            
            
            5.4Pretax
                Income (Loss)
            
            
            8.8
            
            
            1.3
            
            
            8.1
            
            
            (8.7
            )Provision
                (benefit) for income taxes
            
            
            3.7
            
            
            0.5
            
            
            3.7
            
            
            (2.5
            )Net
                Income (Loss)
            
            
            5.1
            %
            
            0.8
            %
            
            4.4
            %
            
            (6.2
            )%




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          12




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




(Note:
      All dollar amounts in the following tables are in thousands, except Net Sales
      which are in millions)





**Net
                sales**
            
            (dollar
                amounts in millions)Nine
                months
            
            Three
                monthsPeriods
                ended January 31,Segment
            
            2008
            
            2007
            
            Change
            
            2008
            
            2007
            
            ChangeFEI-NY
            
            $
            37.2
            
            $
            28.4
            
            $
            8.8
            
            
            31
            %
            $
            11.8
            
            $
            8.2
            
            $
            3.6
            
            
            43
            %Gillam-FEI
            
            
            8.1
            
            
            7.5
            
            
            0.6
            
            
            8
            %
            
            3.3
            
            
            3.0
            
            
            0.3
            
            
            10
            %FEI-Zyfer
            
            
            6.7
            
            
            6.2
            
            
            0.5
            
            
            9
            %
            
            2.4
            
            
            1.4
            
            
            1.0
            
            
            72
            %Intersegment
                sales
            
            
            (1.9
            )
            
            (1.3
            )
            
            (0.6
            )
            
            
            
            
            (0.5
            )
            
            (0.5
            )
            
            0.0$
            50.1
            
            $
            40.8
            
            $
            9.3
            
            
            23
            %
            $
            17.0
            
            $
            12.1
            
            $
            4.9
            
            
            41
            %




As
      illustrated in the table above, the 23% and 41% increases in revenues for the
      nine and three month periods ended January 31, 2008, respectively, compared
      to
      the same periods of fiscal year 2007, were driven by the improvement in revenues
      in the FEI-NY segment by 31% and 43%, respectively. Revenues from space programs
      increased by greater than 50% over the revenue rate realized in the prior fiscal
      year. Similarly, revenues from U.S. Government/Department of Defense (“DOD”)
      non-satellite sales, which are recorded in both the FEI-NY and FEI-Zyfer
      segments, were more than 25% higher than the revenue rate realized in the prior
      year and sales to telecommunication infrastructure equipment manufacturers
      for
      the nine months were approximately the same as the record revenue rate recorded
      in fiscal year 2008. Revenues in the Gillam-FEI segment improved 8% and 10%,
      respectively, from the same periods of fiscal year 2007 due primarily to the
      rise in the value of the euro to the dollar. Euro-denominated sales were
      relatively flat year-to-year. The Company anticipates that fourth quarter fiscal
      year 2008 revenues for Gillam-FEI will increase in terms of both dollars and
      euros. Revenues for the FEI-Zyfer segment increased by 9% and 72%, respectively,
      for the nine and three months ended January 31, 2008 compared to the same
      periods of fiscal year 2007. The Company expects FEI-Zyfer revenues for the
      fourth quarter of fiscal year 2008 to be comparable to prior quarters and full
      year revenues to exceed that realized in fiscal year 2007. The Company expects
      revenues from both U.S. Government and commercial satellite programs to show
      continued strength in the final quarter of fiscal year 2008 and should comprise
      approximately 40% of total revenues for the fiscal year. Historically, revenues
      from telecommunication infrastructure sales are subject to wide swings over
      short-term intervals. Certain of the Company’s infrastructure customers indicate
      that near term requirements have decreased substantially. The Company thus
      expects telecommunications revenues for the fourth quarter of fiscal year 2008
      to decline from current levels. Telecommunication revenues are expected to
      be
      between 30% and 35% of consolidated revenues for fiscal year 2008.


(dollar
        amounts in thousands)
 **Gross
                  margin**Nine
                  months
              
              Three
                  monthsPeriods
                  ended January 31,2008
              
              2007
              
              Change
              
              2008
              
              2007
              
              Change$
              15,395
              
              $
              13,970
              
              $
              1,425
              
              
              10
              %
              $
              5,455
              
              $
              3,777
              
              
              
              
              $
              1,678
              
              
              44
              %GM
                  Rate
              
              
              30.7
              %
              
              34.3
              %
              
              
              
              
              
              
              
              32.0
              %
              
              31.2
              %




Gross
      margin rates for the nine months ended January 31, 2008, were lower than those
      realized during the same period of fiscal year 2007 primarily reflecting the
      higher engineering costs incurred on certain of the Company’s long-term
      satellite contracts. A higher level of spending on engineering costs began
      in
      the third quarter of fiscal year 2007 and is reflected in the 31.2% rate above.
      For the three-months ended January 31, 2008, the gross margin rate improved
      to
      32% but continued to be impacted by higher costs. While the rate of engineering
      spending during fiscal year 2008 has abated from the levels incurred in fiscal
      year 2007, the current level is still higher than historical averages. As the
      Company completes the lower margin programs on which these costs are applied,
      the gross margin rate is expected to improve over the balance of fiscal year
      2008. As revenues increase and engineering costs return to more normal levels,
      the Company expects the gross margin rate to approach its target of
      40%.




Also,
      for
      the nine months ended January 31, 2008 and 2007, gross margin was reduced by
      $236,000 and $226,000, respectively, and for the three months ended January
      31,
      2008 and 2007, was reduced by $82,000 and $87,000, respectively, due to the
      inclusion in cost of sales of the charge for stock compensation expense as
      required by FAS 123(R).




Page
          13




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




**Selling
      and administrative expenses**




Nine
                months
            
            Three
                monthsPeriods
                ended January 31,2008
            
            2007
            
            Change
            
            2008
            
            2007
            
            Change$
            9,480
            
            $
            8,344
            
            $
            1,136
            
            
            14
            %
            $
            3,109
            
            $
            2,889
            
            $
            220
            
            
            8
            %




For
      the
      nine and three months ended January 31, 2008 and 2007, selling and
      administrative expenses were 19% of revenues which is the Company’s target for
      such expenses. The increases in expenses in the fiscal year 2008 periods were
      primarily related to compensation, including additional personnel, normal salary
      increases and accruals for incentive compensation, partially offset by reduced
      accruals for deferred compensation costs. In addition, during the second quarter
      of fiscal year 2008, FEI-Zyfer moved to a new facility which increased
      administrative costs at that segment.




Included
      in selling and administrative expenses for the nine months ended January 31,
      2008 and 2007, is $171,000 and $212,000, respectively, and for the three month
      periods ended January 31, 2008 and 2007, $55,000 and $75,000, respectively,
      related to stock compensation expense as described above and in the footnotes
      to
      the financial statements.




With
      fiscal year 2008 revenues at current or increasing levels, the Company expects
      selling and administrative expenses to remain at 20% or less of
      revenues.




**Research
      and development expense**




Nine
                months
            
            Three
                monthsPeriods
                ended January 31,2008
            
            2007
            
            Change
            
            2008
            
            2007
            
            Change$
            5,526
            
            $
            6,628
            
            
            ($
                1,102
            )
            
            (17)
            %
            $
            1,541
            
            $
            2,600
            
            ($1,059
            )
            
            (41)
            %




Research
      and development expenditures represent investments that keep the Company’s
      products at the leading edge of time and frequency technology and enhance
      competitiveness for future sales. An exceptional level of engineering spending
      and development work on the Company’s satellite payload products began in the
      second quarter of fiscal year 2007 and continued through the first quarter
      of
      fiscal year 2008. As of the second quarter of fiscal year 2008, the initial
      effort to increase production throughput has been largely achieved and research
      and development spending has returned to a more normal level. For the quarter
      ended January 31, 2008, spending on research and development was 9% of revenues
      which is within the Company’s normal target range. The Company will continue to
      devote significant resources to develop new products, enhance existing products
      and implement efficient manufacturing processes. Where possible, the Company
      attempts to obtain development contracts from its customers. For programs
      without such funding, internally generated cash and cash reserves are adequate
      to fund these development efforts.




**Operating
      Profit (Loss)**





Nine
                months
            
            Three
                monthsPeriods
                ended January 31,2008
            
            2007
            
            Change
            
            2008
            
            2007
            
            Change$
            389
            
            $
            (1,002
            )
            $
            1,391
            
            
            NM
            
            $
            805
            
            $
            (1,712
            )
            $
            2,517
            
            
            NM




Reduced
      engineering costs on satellite payload programs and lower research and
      development spending during the nine and three month periods ended January
      31,
      2008, resulted in significantly improved operating margins. Sequentially, the
      operating profit in the third quarter of fiscal year 2008 was more than twice
      the operating profit of the second quarter, continuing the positive trend of
      increasing profits over the preceding three fiscal quarters. The Company
      anticipates that as sales are maintained at or increase above current levels
      and
      as engineering and development costs are lowered from previous elevated levels,
      it will generate an operating profit for the full fiscal year 2008.




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          14




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




**Other
      income (expense)**


Nine
                months
            
            Three
                monthsPeriods
                ended January 31,2008
            
            2007
            
            Change
            
            2008
            
            2007
            
            ChangeInvestment
                income
            
            $
            3,965
            
            $
            785
            
            $
            3,180
            
            
            405
            %
            $
            202
            
            $
            206
            
            $
            (4
            )
            
            (2
            %)Equity
                (loss) income
            
            
            (17
            )
            
            566
            
            
            (583
            )
            
            (103
            %)
            
            128
            
            
            292
            
            
            (164
            )
            
            (56
            %)Interest
                expense
            
            
            (402
            )
            
            (74
            )
            
            (328
            )
            
            443
            %
            
            (110
            )
            
            (17
            )
            
            (93
            )
            
            (547
            %)Other
                income, net
            
            
            449
            
            
            270
            
            
            179
            
            
            66
            %
            
            366
            
            
            169
            
            
            197
            
            
            117
            %$
            3,995
            
            $
            1,547
            
            $
            2,448
            
            
            158
            %
            $
            586
            
            $
            650
            
            $
            (64
            )
            
            (10
            %)




During
      the nine months ended January 31, 2008, the Company reduced its investment
      in
      Morion, Inc. (“Morion”) from 36.6% to 8% by selling its shares to a third party.
      The Company received proceeds of approximately $5.8 million and realized a
      gain
      of approximately $3.0 million. Such gain was included in investment income
      for
      the first quarter of fiscal year 2008. During the third quarter of fiscal year
      2008, the Company recognized net loss on marketable securities of approximately
      $5,000 compared to a loss of $56,000 during the same period of the prior fiscal
      year. In addition to these gains and losses, additional income is derived from
      dividend and interest income on invested cash. The rates of return in the fiscal
      year 2008 periods were generally lower than fiscal year 2007.




As
      a
      result of the reduced investment in Morion, the Company no longer records its
      share of Morion’s earnings on the equity method, as it did in the fiscal year
      2007 periods. The equity loss for the nine months ended January 31, 2008 and
      the
      equity income for the three months then ended, represent its share of the
      quarterly loss or profit recorded by Elcom Technologies in which the Company
      acquired a 25% interest during the third quarter of fiscal year
      2007.




The
      increase in interest expense for the nine and three month periods ended January
      31, 2008 resulted primarily from an increase in borrowings under the Company’s
      line of credit during the fiscal year 2008 periods compared to the same periods
      of fiscal year 2007.




Under
      the
      provisions of sale and leaseback accounting, a portion of the gain realized
      on a
      fiscal year 2005 real estate transaction is deferred and recognized in income
      over the initial lease term. Under the caption “Other income, net” the Company
      recognized deferred gain of $265,000 and $88,000, respectively, for the nine
      and
      three months ended January 31, 2008 and 2007. In addition, for the nine and
      three month periods ended January 31, 2008, other income includes a realized
      gain of approximately $290,000 derived from the excess of proceeds over the
      cash
      values of life insurance policies on the lives of two former employees. In
      the
      fiscal year 2008 periods, other income was partially offset by certain
      nonrecurring expenses at the FEI-NY and Gillam-FEI segments, including certain
      business interruption costs and foreign currency exchange losses. Other
      insignificant income and expense items are also recorded under this
      caption.




**Net
      income (loss)**





Nine
                months
            
            Three
                monthsPeriods
                ended January 31,2008
            
            2007
            
            Change
            
            2008
            
            2007
            
            Change$
            2,547
            
            $
            332
            
            $
            2,215
            
            
            667
            %
            $
            758
            
            $
            (754)
            
            $
            1,512
            
            
            NM




Net
      income for the nine months ended January 31, 2008, was positively impacted
      by
      the investment gain recorded on the sale of a portion of the Company’s
      investment in Morion which is in addition to the operating profit recorded
      during this period. For the third quarter of fiscal year 2008, an operating
      profit was generated by higher revenues and lower costs and, coupled with other
      income as detailed above, resulted in increased profitability. The Company
      expects to realize improved gross and operating margins in the fourth quarter
      of
      fiscal year 2008 and anticipates that it will report a profit for the full
      year.




**Income
      Taxes**




The
      Company is subject to taxation in several countries as well as the states of
      New
      York and California. The statutory federal rates vary from 34% in the United
      States to 35% in Europe. The effective rate is impacted by the income or loss
      of
      certain of the Company’s European and Asian subsidiaries which are currently not
      taxed. In addition, the Company utilizes the availability of research and
      development tax credits in the United States to lower its tax rate. As of April
      30, 2007, the Company’s European subsidiaries had available net operating loss
      carryforwards of approximately $1.3 million and the Company’s U.S. subsidiaries
      had operating loss carryforwards of approximately $700,000, which will offset
      future taxable income. During fiscal year 2008, the Company’s effective tax rate
      is expected to be higher than in prior years as a result of the gain recognized
      on the Morion transaction. The Company’s tax basis in its Morion investment was
      less than its book basis resulting in greater taxable income than that recorded
      for financial reporting purposes.




Page
          15




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




LIQUIDITY
      AND CAPITAL RESOURCES




The
      Company’s balance sheet continues to reflect a strong working capital position
      of $59 million at January 31, 2008, which is comparable to working capital
      at
      April 30, 2007. Included in working capital at January 31, 2008 is $15.7 million
      of cash, cash equivalents and marketable securities which were offset by $5.5
      million in borrowings under its bank line of credit. The Company’s current ratio
      at January 31, 2008 is 5.9 to 1.




For
      the
      nine months ended January 31, 2008, the Company used approximately $4.0 million
      in cash from operations compared to $830,000 used in operations in the same
      period of fiscal year 2007. The most significant uses of cash in the fiscal
      year
      2008 periods was the growth in unbilled accounts receivable and the payment
      of
      trade accounts payable. For the fourth quarter of fiscal year 2008, the Company
      expects to generate positive cash flow from operating activities, particularly
      as billing milestones are achieved on certain of its large production contracts.
      Such cash flow may not be sufficient to generate positive operating cash flow
      for the full fiscal year.




Net
      cash
      provided by investing activities for the nine months ended January 31, 2008,
      was
      $9.7 million compared to $1.8 million for the same period of fiscal year 2007.
      During the fiscal year 2008 period, the Company received net proceeds of $5.6
      million from the sale of a portion of its investment in Morion and an additional
      $5.5 million on the sale or redemption of other marketable securities, net
      of
      purchases. The principal source of cash in the fiscal year 2007 period was
      the
      sale or redemption of certain marketable securities, net of purchases,
      aggregating $6.8 million. During the nine months ended January 31, 2008 and
      2007, the Company also acquired capital equipment for approximately $1.5 million
      and $1.7 million, respectively. In the 2007 period, the Company also made an
      investment in Elcom Technologies and provided Elcom with a long-term note for
      an
      aggregate cash investment of $2.3 million. The Company may continue to acquire
      or sell marketable securities as dictated by its investment strategies as well
      as by the cash requirements for its development activities. Capital equipment
      purchases for all of fiscal year 2008 are expected to aggregate approximately
      $3.0 million, including approximately $1.2 million of equipment obtained under
      a
      long-term capital lease during the 2008 period.




Net
      cash
      used in financing activities for the nine months ended January 31, 2008, was
      $1.3 million compared to a use of cash of $1.6 million during the comparable
      fiscal year 2007 period. Included in both fiscal periods is payment of the
      Company’s semiannual dividend in the amount of approximately $1.7 million.
      During the nine months ended January 31, 2008, the Company borrowed $3.5 million
      and repaid $3.0 million under its line of credit. In the same period of the
      prior fiscal year, the Company borrowed $1.6 million under the line of credit
      and repaid such borrowing early in the second quarter of fiscal year 2007.
      The
      Company received an aggregate of $157,000 in fiscal year 2008 and $158,000
      in
      fiscal year 2007 from the exercise of stock options.




The
      Company has been authorized by its Board of Directors to repurchase up to $5
      million worth of shares of its common stock for treasury whenever appropriate
      opportunities arise but it has neither a formal repurchase plan nor commitments
      to purchase additional shares in the future. During the nine months ended
      January 31, 2008, the Company acquired 22,312 shares of its stock under this
      authorization at an aggregate cost of $233,000.




The
      Company will continue to expend resources to develop and improve products for
      space applications, guidance and targeting systems, wireless networks and
      wireline communication systems which management believes will result in future
      growth and continued profitability. During fiscal year 2008, the Company intends
      to make a substantial investment of capital and technical resources to develop
      new products to meet the needs of the U.S. Government, commercial space and
      telecommunications infrastructure marketplaces and to invest in more efficient
      product designs and manufacturing procedures. Where possible, the Company will
      secure partial customer funding for such development efforts but is targeting
      to
      spend its own funds at a rate of at least 10% of revenues to achieve its
      development goals. Internally generated cash is expected to be adequate to
      fund
      these development efforts.




At
      January 31, 2008, the Company’s backlog amounted to approximately $40 million
      compared to $44 million at April 30, 2007. Of this backlog, approximately 80%
      is
      realizable in the next twelve months. Included in the backlog at January 31,
      2008 is approximately $8 million under cost plus contracts which the Company
      believes represent firm commitments from its customers for which the Company
      has
      not received full funding to date.




Page
          16




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




**Off-Balance
      Sheet Arrangements**




The
      Company does not have any off-balance sheet arrangements that have or are
      reasonably likely to have a current or future effect on the Company’s financial
      condition, changes in financial condition, revenues or expenses, results of
      operations, liquidity, capital expenditures or capital resources that is
      material to investors.




**Contractual
      obligations**




As
      of
      January 31, 2008


**Contractual
                  Obligations**
              
              **Total**
                **(in thousands)**
              
              **Less
                  than**
                **1
                  Year**
              
              **1
                  to 3 Years**
              
              **3
                  to 5 Years**
              
              **More
                  than**
                **5
                  Years**Operating
                  Lease Obligations
              
              $
              6,736
              
              $
              763
              
              $
              2,807
              
              $
              2,220
              
              $
              946Capital
                  Lease Obligation
              
              
              1,175
              
              
              280
              
              
              842
              
              
              53
              
              
              0Deferred
                  Compensation
              
              
              8,742
              *
              
              331
              
              
              402
              
              
              146
              
              
              7,863Total
              
              $
              16,653
              
              $
              1,374
              
              $
              4,051
              
              $
              2,419
              
              $
              8,809




*Deferred
      Compensation liability reflects payments due to current retirees receiving
      benefits. The amount of $7,863 in the more than 5 years column includes benefits
      due to participants in the plan who are not yet receiving benefits although
      some
      participants may opt to retire and begin receiving benefits within the next
      5
      years.









**Item
      3.**  **Quantitative
      and Qualitative Disclosures about Market Risk**




**Interest
      Rate Risk**




The
      Company is exposed to market risk related to changes in interest rates and
      market values of securities. The Company's investments in fixed income and
      equity securities were approximately $8.6 million and $395,000, respectively,
      at
      January 31, 2008. The investments are carried at fair value with changes in
      unrealized gains and losses recorded as adjustments to stockholders' equity.
      The
      fair value of investments in marketable securities is generally based on quoted
      market prices. Typically, the fair market value of investments in fixed interest
      rate debt securities will increase as interest rates fall and decrease as
      interest rates rise. Based on the Company's overall interest rate exposure
      at
      January 31, 2008, a 10% change in market interest rates would not have a
      material effect on the fair value of the Company's fixed income securities
      or
      results of operations.




**Foreign
      Currency Risk**




The
      Company is subject to foreign currency translation risk. The Company does not
      have any near-term intentions to repatriate invested cash in any of its
      foreign-based subsidiaries. For this reason, the Company does not intend to
      initiate any exchange rate hedging strategies which could be used to mitigate
      the effects of foreign currency fluctuations. The effects of foreign currency
      rate fluctuations will be recorded in the equity section of the balance sheet
      as
      a component of other comprehensive income. As of January 31, 2008, the amount
      related to foreign currency exchange rates is a $4,929,000 unrealized
      gain.




The
      results of operations of foreign subsidiaries, when translated into U.S.
      dollars, will reflect the average rates of exchange for the periods presented.
      As a result, similar results of operations measured in local currencies can
      vary
      significantly upon translation into U.S. dollars if exchange rates fluctuate
      significantly from one period to the next.




Page
          17





FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)





**Item
      4.**  **Controls
      and Procedures**




Disclosure
      Controls and Procedures . The
      Company’s management, with the participation of the Company’s chief executive
      officer and chief financial officer, has evaluated the effectiveness of the
      Company’s disclosure controls and procedures (as such term is defined in Rules
      13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
      (the “ Exchange Act ”)) as of the end of the period covered by this report.
      Based on such evaluation, the Company’s chief executive officer and chief
      financial officer have concluded that, as of the end of such period, the
      Company’s disclosure controls and procedures are effective (i) to ensure that
      information required to be disclosed by the Company in the reports that it
      files
      or submits under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the SEC’s rules and forms and
      (ii) to ensure that information required to be disclosed by the Company in
      the
      reports that it submits under the Exchange Act is accumulated and communicated
      to its management, including the Company’s principal executive and principal
      financial officers, or persons performing similar functions, as appropriate,
      to
      allow timely decisions regarding required disclosure.




Internal
      Control Over Financial Reporting . There
      have not been any changes in the Company’s internal control over financial
      reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
      Exchange Act) during the period to which this report relates that have
      materially affected, or are reasonably likely to materially affect, the
      Company’s internal control over financial reporting.





PART
      II





ITEMS
      1,
      1A, 2, 3, 4 and 5 are omitted because they are not applicable.




ITEM
      6 -
      Exhibits




31.1-
            Certification
                by the Chief Executive Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.





31.2-
            Certification
                by the Chief Financial Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002





32.1-
            Certification
                by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
                Adopted
                Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.





32.2-
            Certification
                by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
                Adopted
                Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.





Page
          18




SIGNATURES





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




FREQUENCY
                ELECTRONICS, INC.(Registrant)/s/
                Alan MillerAlan
                MillerTreasurer
                and Chief Financial Officer(principal
                financial officer andduly
                authorized officer




Page
          19