**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 SECURITIESEXCHANGE
                ACT OF 1934




For
      the
      Quarterly Period ended July 31, 2007





**OR**




o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIESEXCHANGE
                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.
                Employer Identification
                No.)incorporation
                or organization)**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
      filer x




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
      September 10, 2007 - 8,704,591














FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





INDEX




Page
                No.Part
                I. Financial Information:Item
                1 - Financial Statements:Condensed
                Consolidated Balance Sheets - July 31, 2007 and April 30,
                2007
            
            3Condensed
                Consolidated Statements of Operations Three Months Ended July 31,
                2007 and
                2006
            
            4Condensed
                Consolidated Statements of Cash Flows Three Months Ended July 31,
                2007 and
                2006
            
            5Notes
                to Condensed Consolidated Financial Statements
            
            6-10Item
                2 - Management's Discussion and Analysis of Financial Condition and
                Results of Operations
            
            10-16Item
                3- Quantitative and Qualitative Disclosures about Market
                Risk
            
            16Item
                4T- Controls and Procedures
            
            17Part
                II. Other Information:Items
                1, 1A, 2, 3, 4 and 5 are omitted because they are not
                applicableItem
                6 - Exhibits
            
            17Signatures
            
            18Exhibits




2




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES




Condensed
      Consolidated Balance Sheets





July
                31,
            
            April
                30,2007
            
            2007(UNAUDITED)
            
            (AUDITED)(NOTE
                A)(In
                thousands except share data)**ASSETS:**Current
                assets:Cash
                and cash equivalents
            
            $
            3,104
            
            $
            1,336Marketable
                securities
            
            
            14,297
            
            
            14,268Accounts
                  receivable, net of allowance for doubtfulaccounts of
                  $169 at July 31 and $276 at April 30, 2007
            
            
            17,543
            
            
            15,626Inventories
            
            
            32,215
            
            
            31,201Deferred
                income taxes
            
            
            3,175
            
            
            3,075Income
                tax receivable
            
            
            -
            
            
            596Prepaid
                expenses and other
            
            
            1,482
            
            
            1,501Total
                current assets
            
            
            71,816
            
            
            67,603Property,
                    plant and equipment, at cost,less
                    accumulated depreciation and amortization
            
            
            8,003
            
            
            7,839Deferred
                income taxes
            
            
            2,941
            
            
            2,945Goodwill
                and other Intangible assets, net
            
            
            440
            
            
            453Cash
                surrender value of life insurance
            
            
            6,935
            
            
            6,815Investments
                in and loans receivable from affiliates
            
            
            4,647
            
            
            7,354Other
                assets
            
            
            817
            
            
            817**Total
                assets**
            
            **$**
            **95,599**
            ****
            **$**
            **93,826****LIABILITIES
                AND STOCKHOLDERS’ EQUITY:**Current
                liabilities:Short-term
                credit obligations
            
            $
            6,511
            
            $
            5,011Accounts
                payable - trade
            
            
            2,341
            
            
            3,771Accrued
                liabilities and other
            
            
            3,855
            
            
            3,980Income
                taxes payable
            
            
            306
            
            
            -Dividend
                payable
            
            
            -
            
            
            869Total
                current liabilities
            
            
            13,013
            
            
            13,631Deferred
                compensation
            
            
            8,764
            
            
            8,669Deferred
                gain and other liabilities
            
            
            631
            
            
            642Total
                liabilities
            
            
            22,408
            
            
            22,942Stockholders’
                equity:Preferred
                stock - $1.00 par value
            
            
            -
            
            
            -Common
                stock - $1.00 par value
            
            
            9,164
            
            
            9,164Additional
                paid-in capital
            
            
            47,447
            
            
            47,138Retained
                earnings
            
            
            14,921
            
            
            13,54171,532
            
            
            69,843Common
                  stock reacquired and held in treasury -at cost, 459,349 shares
                  at July 31,
                  2007 and 474,693 shares at April 30, 2007
            
            
            (2,095
            )
            
            (2,080
            )Accumulated
                other comprehensive income
            
            
            3,754
            
            
            3,121Total
                stockholders' equity
            
            
            73,191
            
            
            70,884**Total
                liabilities and stockholders' equity**
            
            **$**
            **95,599**
            ****
            **$**
            **93,826**





See
      accompanying notes to condensed consolidated financial statements.




3




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Condensed
      Consolidated Statements of Operations





Three
      Months Ended July 31,


(Unaudited)





2007
            
            2006(In
                thousands except share data)Net
                sales
            
            $
            15,557
            
            $
            14,314Cost
                of sales
            
            
            11,086
            
            
            9,461Gross
                margin
            
            
            4,471
            
            
            4,853Selling
                and administrative expenses
            
            
            3,086
            
            
            2,782Research
                and development expense
            
            
            2,177
            
            
            1,380Operating
                (loss) profit
            
            
            (792
            )
            
            691Other
                income (expense):Investment
                income
            
            
            3,243
            
            
            299Equity
                (loss) income
            
            
            (80
            )
            
            203Interest
                expense
            
            
            (131
            )
            
            (36
            )Other
                income, net
            
            
            -
            
            
            81Income
                before provision for income taxes
            
            
            2,240
            
            
            1,238Provision
                for income taxes
            
            
            860
            
            
            340Net
                income
            
            $
            1,380
            
            $
            898Net
                income per common shareBasic
            
            $
            0.16
            
            $
            0.10Diluted
            
            $
            0.16
            
            $
            0.10Average
                shares outstandingBasic
            
            
            8,695,027
            
            
            8,576,705Diluted
            
            
            8,783,676
            
            
            8,719,934





See
      accompanying notes to condensed consolidated financial statements.




4




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Condensed
      Consolidated Statements of Cash Flows





Three
      Months Ended July 31,


(Unaudited)




2007
            
            2006(In
                thousands)Cash
                flows from operating activities:Net
                income
            
            $
            1,380
            
            $
            898Gain
                on sale of investments
            
            
            (3,015
            )
            
            (12
            )Other
                non-cash charges to earnings
            
            
            1,015
            
            
            760Net
                changes in other assets and liabilities
            
            
            (3,777
            )
            
            (2,518
            )Net
                cash used in operating activities
            
            
            (4,397
            )
            
            (872
            )Cash
                flows from investing activities:Proceeds
                from sale of marketable securitiesand
                investments
            
            
            5,643
            
            
            3,854Purchase
                of marketable securities
            
            
            (174
            )
            
            -Purchase
                of fixed assets
            
            
            (559
            )
            
            (396
            )Net
                cash provided by investing activities
            
            
            4,910
            
            
            3,458Cash
                flows from financing activities:Proceeds
                from short-term credit obligations
            
            
            1,500
            
            
            1,600Payment
                of cash dividend
            
            
            (869
            )
            
            (857
            )Stock
                transactions, net
            
            
            (2
            )
            
            27Net
                cash provided by financing activities
            
            
            629
            
            
            770Net
                increase in cash and cash equivalentsbefore
                effect of exchange rate changes
            
            
            1,142
            
            
            3,356Effect
                of exchange rate changeson
                cash and cash equivalents
            
            
            626
            
            
            261Net
                increase in cash and cash equivalents
            
            
            1,768
            
            
            3,617Cash
                and cash equivalents at beginning of period
            
            
            1,336
            
            
            2,639Cash
                and cash equivalents at end of period
            
            $
            3,104
            
            $
            6,256




See
      accompanying notes to condensed consolidated financial statements.




5




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 July 31, 2007 and the results of its
      operations and cash flows for the three months ended July 31, 2007 and 2006.
      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:




Three
                months ended July 31,2007
            
            2006Basic
                EPS Shares outstanding(weighted
                average)
            
            
            8,695,027
            
            
            8,576,705Effect
                of Dilutive Securities
            
            
            88,649
            
            
            143,229Diluted
                EPS Shares outstanding
            
            
            8,783,676
            
            
            8,719,934





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 for
      the
      three months ended July 31, 2007 and 2006, were 949,425 and 571,550,
      respectively.




NOTE
      C -
      ACCOUNTS RECEIVABLE




Accounts
      receivable at J uly
      31,
      2007 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 $7,533,000 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 $ 5,172,000
      and $5,028,000 at July 31, 2007 and April 30, 2007, respectively, consist of
      the
      following:




July
                31, 2007
            
            April
                30, 2007(In
                thousands)Raw
                materials and Component parts
            
            $
            18,921
            
            $
            18,380Work
                in progress
            
            
            13,294
            
            
            12,821$
            32,215
            
            $
            31,201





NOTE
      E -
      COMPREHENSIVE INCOME




For
      the
      three months ended July 31, 2007 and 2006, total comprehensive income was
      $2,013,000 and $1,385,000, 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.




6




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Notes
      to
      Condensed Consolidated Financial Statements


(Unaudited)




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 $143,000 and
      $115,000 was recognized during the three months ended July 31, 2007 and 2006,
      respectively, and includes: (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 for prior periods have not been
      restated.




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
      July
      31, 2007, unrecognized compensation cost for all the Company’s stock-based
      compensation awards was approximately $1.1 million. The unrecognized
      compensation cost for stock-based compensation awards at July 31, 2007 is
      expected to be recognized over a weighted average period of 2.8
      years.




In
      accordance with the provisions of the Securities and Exchange Commission’s Staff
      Accounting Bulletin No. 107 (“SAB 107”), which requires that compensation be
      classified in the same expense line items as cash compensation, during the
      three
      months ended July 31, 2007 and 2006, stock-based compensation expense included
      in cost of sales was $81,000 and $53,000, respectively and the amount charged
      to
      selling, general and administrative expense was $62,000 in both
      periods.




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 three months ended July 31, 2007,
      and
      each of the years ended April 30, 2007, and 2006: dividend yield of 1.4%, 1.3%,
      and 1.4%, respectively; expected volatility of 40%, 40% and 59%, respectively;
      risk free interest rate of 4.8%, 5.0% and 4.1%, respectively, and expected
      lives
      of six and one-half years.




The
      expected life assumption was determined based on the Company’s historical
      experience. For purposes of both FAS 123 and FAS 123(R), 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.
      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 July 31, 2007,
      eligible employees had been granted awards to purchase 219,000 shares of Company
      stock under SARs, all of which are outstanding and 42,000 shares of which are
      exercisable. As of July 31, 2007, 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 303,000 of
      which
      are exercisable. Through July 31, 2007, eligible employees have been granted
      options to acquire 1,090,000 shares of Company stock under NQSO plans. Of the
      NQSO options, approximately 650,000 are both outstanding and exercisable (see
      tables below).




7


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 $815,000 which will be recognized during a
      weighted average period of 3.2 years. Unrecognized compensation charges for
      nonvested awards relating to the ISO plan is approximately $271,000 which will
      be recognized over a weighted average period of 1.6 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:




Three
                months ended July 31, 2007Wtd
                AvgShares
            
            PriceOutstanding
                at beginning of period
            
            
            1,265,587
            
            $
            11.53Granted
            
            
            46,875
            
            $
            11.12Exercised
            
            
            (8,312
            )
            $
            9.77Expired
                or canceled
            
            
            (45,375
            )
            $
            10.17Outstanding
                at end of period
            
            
            1,258,775
            
            $
            11.58Exercisable
                at end of period
            
            
            995,400
            
            $
            11.55Available
                for grant at end of period
            
            
            179,625Weighted
                average fair valueof
                options granted during theperiod
            
            $
            4.61




The
      following table summarizes information about stock-based awards outstanding
      at
      July 31, 2007:




Options
                Outstanding
            
            Options
                ExercisableWeightedAverage
            
            Weighted
            
            
            
            WeightedNumber
            
            Remaining
            
            Average
            
            Number
            
            AverageActual
                Range of
            
            Outstanding
            
            Contractual
            
            Exercise
            
            Exercisable
            
            ExerciseExercise
                Prices
            
            at
                7/31/07
            
            Life
            
            Price
            
            at
                7/31/07
            
            Price$6.670
                - 9.970
            
            
            447,400
            
            
            3.2
            
            $
            7.67
            
            
            416,775
            
            $
            7.5610.875
                - 16.625
            
            
            729,375
            
            
            5.5
            
            
            12.60
            
            
            496,625
            
            
            12.8823.75
            
            
            82,000
            
            
            3.0
            
            
            23.75
            
            
            82,000
            
            
            23.75




8




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Notes
      to
      Condensed Consolidated Financial Statements


(Unaudited)





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
      FEI-NY segment also includes the operations of the Company’s wholly-owned
      subsidiary, FEI-Asia, which functions primarily as a manufacturing facility
      for
      the FEI-NY segment.




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.




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):




Three
                months ended July 31,2007
            
            2006Net
                sales:FEI-NY
            
            $
            11,765
            
            $
            10,666Gillam-FEI
            
            
            2,288
            
            
            2,030FEI-Zyfer
            
            
            2,022
            
            
            1,907less
                intercompany sales
            
            
            (518
            )
            
            (289
            )Consolidated
                Sales
            
            $
            15,557
            
            $
            14,314Operating
                profit (loss):FEI-NY
            
            $
            (540
            )
            $
            861Gillam-FEI
            
            
            (143
            )
            
            (8
            )FEI-Zyfer
            
            
            3
            
            
            (58
            )Corporate
            
            
            (112
            )
            
            (104
            )Consolidated
                Operating (Loss) Profit
            
            $
            (792
            )
            $
            691July
                31, 2007
            
            
            April
                30, 2007Identifiable
                assets:FEI-NY
            
            $
            53,773
            
            $
            49,868Gillam-FEI
            
            
            13,075
            
            
            13,750FEI-Zyfer
            
            
            6,370
            
            
            5,366less
                intercompany balances
            
            
            (12,483
            )
            
            (11,773
            )Corporate
            
            
            34,864
            
            
            36,615Consolidated
                Identifiable Assets
            
            $
            95,599
            
            $
            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 Company will comply with the provisions of FIN
      48but the
      impact of such adoption is not expected to have a material impact on the
      Company’s financial statements.




9




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Notes
      to
      Condensed Consolidated Financial Statements


(Unaudited)




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.




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.







**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.




10




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




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
      contracts in the Company’s Gillam-FEI and FEI-Zyfer segments, smaller contracts
      or orders in the FEI-NY segment and 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.




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 $143,000 and
      $115,000, respectively, was recognized during the three months ended July 31,
      2007 and 2006, and includes: (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).




11


FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




**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:




Three
                months ended July 31,2007
            
            2006Net
                SalesFEI-NY
            
            
            75.6
            %
            
            74.5
            %Gillam-FEI
            
            
            14.7
            
            
            14.2FEI-Zyfer
            
            
            13.0
            
            
            13.3Less
                Intersegment Sales
            
            
            (3.3
            )
            
            (2.0
            )100.0
            
            
            100.0Cost
                of Sales
            
            
            71.3
            
            
            66.1Gross
                Margin
            
            
            28.7
            
            
            33.9Selling
                and administrative expenses
            
            
            19.8
            
            
            19.4Research
                and development expenses
            
            
            14.0
            
            
            9.7Operating
                (Loss) Profit
            
            
            (5.1
            )
            
            4.8Other
                income, net
            
            
            19.5
            
            
            3.8Pretax
                Income
            
            
            14.4
            
            
            8.6Provision
                for income taxes
            
            
            5.5
            
            
            2.3Net
                Income
            
            
            8.9
            %
            
            6.3
            %




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




**Net
      sales**





**(in
                millions)**Three
                months ended July 31,2007
            
            2006
            
            ChangeFEI-NY
            
            $
            11.8
            
            $
            10.7
            
            $
            1.1
            
            
            10
            %Gillam-FEI
            
            
            2.3
            
            
            2.0
            
            
            0.3
            
            
            13
            %FEI-Zyfer
            
            
            2.0
            
            
            1.9
            
            
            0.1
            
            
            6
            %Intersegment
                sales
            
            
            (0.5
            )
            
            (0.3
            )
            
            (0.2
            )$
            15.6
            
            $
            14.3
            
            $
            1.3
            
            
            9
            %




The
      growth in revenues for the three month period ended July 31, 2007, was led
      by a
      nearly 60% increase in revenues from satellite payload programs recorded in
      the
      FEI-NY segment. These gains were partially offset by weaker revenues from
      telecommunication customers which impacted revenues in each of the Company’s
      operating segments. Revenues from non-space U.S. Government programs also
      increased over fiscal year 2007, which benefited both the FEI-NY and FEI-Zyfer
      segments. During fiscal year 2008, the Company expects to realize continued
      growth in revenues from both
      U.S. Government and commercial satellite programs. Telecommunication
      infrastructure revenues and sales to non-space U.S. Government programs are
      also
      expected to increase over the balance of the fiscal year.




**Gross
      margin**




Three
                months ended July 31,2007
            
            2006
            
            Change$
            4,471
            
            $
            4,853
            
            
            ($382
            )
            
            (8
            %)GM
                Rate
            
            
            28.7
            %
            
            33.9
            %




The
      8%
      decrease in gross margin for the three months ended July 31, 2007, is due to
      the
      higher level of engineering costs on certain satellite payload programs that
      the
      Company began to experience in fiscal year 2007. The current quarter’s gross
      margin rate of 28.7% reflects a sequential improvement from the 20% rate
      recorded in the fourth quarter of fiscal year 2007. As the level of engineering
      effort decreases during fiscal
      year 2008, the Company anticipates that its gross margin rate will improve.
      As
      revenues increase, the Company expects the gross margin rate to approach and
      exceed its target of 40%.




12




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




Also,
      for
      the three months ended July 31, 2007 and 2006, gross margin was reduced by
      $81,000 and $53,000, respectively, due to the inclusion in cost of sales of
      the
      charge for stock compensation expense as required by Financial Accounting
      Standard No. 123(R), *Accounting
      for Stock-Based Compensation* .




**Selling
      and administrative expenses**




Three
                months ended July 31,2007
            
            2006
            
            Change$
            3,086
            
            $
            2,782
            
            $
            304
            
            
            11
            %




For
      the
      three months ended July 31, 2007 and 2006, selling and administrative expenses
      were 19.8% and 19.4%, respectively, of consolidated revenues which achieved
      the
      Company’s target for such expenses. The increases in expenses in the fiscal year
      2008 period were primarily related to marketing expenses, additional property
      rent expense and compensation expense related to incentive compensation, normal
      salary increases and additional personnel.




Included
      in selling and administrative expenses in each of the three month periods ended
      July 31, 2007 and 2006, is $62,000 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 be incurred at 20% or less of
      revenues.




**Research
      and development expense**




Three
                months ended July 31,2007
            
            2006
            
            Change$
            2,177
            
            $
            1,380
            
            $
            797
            
            
            58
            %




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. The exceptional level of engineering spending
      and development work on the Company’s satellite payload products, which began in
      the second quarter of fiscal 2007, continued into fiscal year 2008. Research
      and
      development spending for the quarter ended July 31, 2007, was 14% of revenues
      compared to 10% of revenues for the same period of fiscal year 2007. The Company
      targets research and development spending at approximately 10% of sales, but
      the
      rate of spending can increase or decrease from quarter to quarter as new
      projects are identified and others are concluded. 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** **(Loss) Profit**




Three
                months ended July 31,2007
            
            2006
            
            Change($792
            )
            $
            691
            
            
            ($1,483
            )
            
            NM




The
      continuing level of engineering effort related to satellite payload programs
      and
      increased research and development resulted in an operating loss for the three
      months ended July 31, 2007, compared to the same period of fiscal year 2007.
      Sequentially, the operating loss was reduced from that realized in the fourth
      quarter of fiscal year 2007 by $1.9 million on a comparable level of sales.
      The
      Company anticipates that as engineering and development costs moderate and
      as
      sales increase from current levels, that it will generate an operating profit
      for the full fiscal year 2008.




13




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




**Other
      income (expense)**




Three
                months ended July 31,2007
            
            2006
            
            ChangeInvestment
                income
            
            $
            3,243
            
            $
            299
            
            $
            2,944
            
            
            985
            %Equity
                (loss) income
            
            
            (80
            )
            
            203
            
            
            (283
            )
            
            NMInterest
                expense
            
            
            (131
            )
            
            (36
            )
            
            (95
            )
            
            (264
            %)Other
                income, net
            
            
            -
            
            
            81
            
            
            (81
            )
            
            (100
            %)$
            3,032
            
            $
            547
            
            $
            2,485
            
            
            454
            %




During
      the three months ended July 31, 2007, the Company reduced its investment in
      Morion, Inc. from 36.6% to 8% by selling shares to a Russian government
      majority-owned bank. The Company received proceeds of approximately $5.8 million
      and realized a book gain of approximately $3.0 million. Such gain is included
      in
      investment income for the first quarter of fiscal year 2008.




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 fiscal year 2007.
      The equity loss in the fiscal year 2008 period represents its share of the
      quarterly loss 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 three month period ended July 31, 2007
      resulted primarily from an increase in borrowings under the Company’s line of
      credit during the fiscal year 2008 period compared to the three month period
      ended July 31, 2006.




Under
      the
      provisions of sale and leaseback accounting, a portion of the capital 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 $88,000 for each of the
      three months ended July 31, 2007 and 2006. In the fiscal year 2008 period,
      such
      income was 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**




Three
                months ended July 31,2007
            
            2006
            
            Change$
            1,380
            
            $
            898
            
            $
            482
            
            
            54
            %




Net
      income for the three months ended July 31, 2007, was positively impacted by
      the
      investment gain recorded on the sale of a portion of the Company’s investment in
      Morion which offset the quarter’s operating loss. The Company expects to realize
      improved gross and operating margins in the subsequent quarters 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.




14




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 July 31, 2007, which is comparable to working capital at April 30,
      2007. Included in working capital at July 31, 2007 is $17.4 million of cash,
      cash equivalents and marketable securities which are offset by $6.5 million
      in
      borrowings under its bank line of credit. The Company’s current ratio at July
      31, 2007 is 5.5 to 1.




For
      the three
      months ended July 31, 2007, the Company used $4.4 million in cash from operating
      activities compared to $872,000 used by operations in the comparable fiscal
      year
      2007 period. The primary uses of cash in the fiscal year 2008 period were due
      to
      the growth in unbilled accounts receivable, acquisition of additional parts
      inventory to support current and anticipated programs and payments against
      accounts payable. In the three month period ended July 31, 2006, the decrease
      in
      operating cash flow was due primarily to increases in the value of the Company’s
      accounts receivable and inventory. For the balance 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.




Net
      cash
      provided by investing activities for the three months ended July 31, 2007,
      was
      $4.9 million compared to $3.5 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. The principal
      source of cash in the fiscal year 2007 period was the sale or redemption of
      certain marketable securities aggregating $3.9 million. During the three months
      ended July 31, 2007, the Company also acquired capital equipment for
      approximately $559,000 compared to $396,000 during the same period of the prior
      year. 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. Internally generated
      cash is adequate to acquire this level of capital equipment.




Net
      cash provided
      by financing activities for the three months ended July 31, 2007, was $629,000
      compared to $770,000 during the comparable fiscal year 2007 period. Included
      in
      both fiscal periods is payment of the Company’s semiannual dividend in the
      amount of $869,000 and $857,000, respectively. During the three months ended
      July 31, 2007, the Company borrowed $1.5 million under its line of credit to
      fund current operations rather than liquidating additional marketable
      securities. 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 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 quarter ended July
      31,
      2007, the Company acquired 7,312 shares of its stock under this authorization
      when it repurchased shares for treasury from certain employees upon their
      exercise of stock options for a like amount.




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 will be adequate to fund these
      development efforts.




At
      July
      31, 2007, the Company’s backlog amounted to approximately $43 million compared
      to $44 million at April 30, 2007. Of this backlog, approximately 80% is
      realizable in the next twelve months.




15




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
      July 31, 2007


**Contractual
                Obligations**
            
            **Total**
              **(in
                thousands)**
            
            **Less
                than**
              **1
                Year**
            
            **1
                to 3 Years**
            
            **3
                to 5 Years**
            
            **More
                than**
              **5
                Years**Operating
                Lease Obligations
            
            $
            6,916
            
            $
            515
            
            $
            2,682
            
            $
            2,528
            
            $
            1,191Deferred
                Compensation
            
            
            8,764
            *
            
            340
            
            
            282
            
            
            153
            
            
            7,989Total
            
            $
            15,680
            
            $
            855
            
            $
            2,964
            
            $
            2,681
            
            $
            9,180




*Deferred
      Compensation liability reflects payments due to current retirees receiving
      benefits. The amount of $7,989 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 $13.8 million and $469,000, respectively,
      at July 31, 2007. 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
      July 31, 2007, 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 July 31, 2007, the amount
      related to foreign currency exchange rates is a $3,954,000 unrealized gain.




The
      results of operations of foreign subsidiaries, when translated into US 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 US dollars if exchange rates fluctuate
      significantly from one period to the next.




16




FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




**Item
      4** **T.**




**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 200232.1
            -
            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.




17




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)Date:
              September 14, 2007
            BY
            /s/
              Alan
              MillerAlan
              MillerChief
              Financial Officer and Treasurer




18