**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 1934For
                the Quarterly Period ended October 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.
                  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
      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
      December 10, 2007 - 8,703,219











FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





INDEX


Page
                  No.Part
                  I. Financial Information:Item
                  1 - Financial Statements:Condensed
                  Consolidated Balance Sheets -October
                  31, 2007 and April 30, 2007
              
              
              3Condensed
                  Consolidated Statements of OperationsSix
                  Months Ended October 31, 2007 and 2006
              
              
              4Condensed
                  Consolidated Statements of OperationsThree
                  Months Ended October 31, 2007 and 2006
              
              
              5Condensed
                  Consolidated Statements of Cash FlowsSix
                  Months Ended October 31, 2007 and 2006
              
              
              6Notes
                  to Condensed Consolidated Financial Statements
              
              
              7-11Item
                  2 - Management's Discussion and Analysis of Financial
                  Condition and Results of Operations
              
              
              12-18Item
                  3- Quantitative and Qualitative Disclosures about Market
                  Risk
              
              
              18Item
                  4- Controls and Procedures
              
              
              19Part
                  II. Other Information:Items
                  1, 1A, 2, 3 and 5 are omitted because they are not
                  applicableItem
                  4 - Submission of Matters to a Vote of Security Holders
              
              
              19Item
                  6 - Exhibits
              
              
              19Signatures
              
              
              20Exhibits
  Page
            2


FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES




Condensed
      Consolidated Balance Sheets


October
                  31,
              
              April
                  30,2007
              
              2007(UNAUDITED)
              
              (AUDITED)(NOTE
                  A)(In
                  thousands except share data)**ASSETS:**Current
                  assets:Cash
                  and cash equivalents
              
              $
              7,666
              
              $
              1,336Marketable
                  securities
              
              
              13,193
              
              
              14,268Accounts
                  receivable, net of allowance for doubtful accounts of $169 at October
                  31
                  and $276 at April 30, 2007
              
              
              17,003
              
              
              15,626Inventories
              
              
              31,843
              
              
              31,201Deferred
                  income taxes
              
              
              3,155
              
              
              3,075Income
                  taxes receivable
              
              
              -
              
              
              596Prepaid
                  expenses and other
              
              
              1,461
              
              
              1,501Total
                  current assets
              
              
              74,321
              
              
              67,603Property,
                  plant and equipment, at cost,less
                  accumulated depreciation andamortization
              
              
              8,409
              
              
              7,839Deferred
                  income taxes
              
              
              2,923
              
              
              2,945Goodwill
                  and other intangible assets, net
              
              
              429
              
              
              453Cash
                  surrender value of life insurance
              
              
              7,055
              
              
              6,815Investments
                  in and loans receivable from affiliates
              
              
              4,489
              
              
              7,354Other
                  assets
              
              
              817
              
              
              817**Total
                  assets**
              
              **$**
              **98,443**
              
              **$**
              **93,826****LIABILITIES
                  AND STOCKHOLDERS’ EQUITY:**Current
                  liabilities:Short-term
                  credit obligations
              
              $
              8,510
              
              $
              5,011Accounts
                  payable - trade
              
              
              1,978
              
              
              3,771Accrued
                  liabilities and other
              
              
              3,887
              
              
              3,980Income
                  taxes payable
              
              
              213
              
              
              -Dividend
                  payable
              
              
              870
              
              
              869Total
                  current liabilities
              
              
              15,458
              
              
              13,631Deferred
                  compensation
              
              
              8,753
              
              
              8,669Deferred
                  gain and other liabilities
              
              
              577
              
              
              642Total
                  liabilities
              
              
              24,788
              
              
              22,942Stockholders’
                  equity:Preferred
                  stock - $1.00 par value
              
              
              -
              
              
              -Common
                  stock - $1.00 par value
              
              
              9,164
              
              
              9,164Additional
                  paid-in capital
              
              
              47,670
              
              
              47,138Retained
                  earnings
              
              
              14,461
              
              
              13,54171,295
              
              
              69,843Common
                  stock reacquired and held in treasury-at
                  cost, 460,721 shares at October 31, 2007and
                  474,693 shares at April 30, 2007
              
              
              (2,203
              )
              
              (2,080
              )Accumulated
                  other comprehensive income
              
              
              4,563
              
              
              3,121Total
                  stockholders' equity
              
              
              73,655
              
              
              70,884**Total
                  liabilities and stockholders' equity**
              
              **$**
              **98,443**
              
              **$**
              **93,826**


See
      accompanying notes to condensed consolidated financial statements.




Page
          3


FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Condensed
      Consolidated Statements of Operations





Six
      Months Ended October 31,


(Unaudited)





2007
            
            2006(In
                thousands except per share data)Net
                sales
            
            $
            33,051
            
            $
            28,634Cost
                of sales
            
            
            23,110
            
            
            18,441Gross
                margin
            
            
            9,941
            
            
            10,193Selling
                and administrative expenses
            
            
            6,371
            
            
            5,455Research
                and development expense
            
            
            3,986
            
            
            4,028Operating
                (loss) profit
            
            
            (416
            )
            
            710Other
                income (expense):Investment
                income
            
            
            3,763
            
            
            579Equity
                (loss) income
            
            
            (145
            )
            
            274Interest
                expense
            
            
            (291
            )
            
            (57
            )Other
                income, net
            
            
            82
            
            
            100Income
                before provision for income taxes
            
            
            2,993
            
            
            1,606Provision
                for income taxes
            
            
            1,204
            
            
            521Net
                income
            
            $
            1,789
            
            $
            1,085Net
                income per common shareBasic
            
            $
            0.21
            
            $
            0.13Diluted
            
            $
            0.20
            
            $
            0.12Weighted
                average shares outstandingBasic
            
            
            8,697,080
            
            
            8,584,409Diluted
            
            
            8,783,792
            
            
            8,732,393




See
      accompanying notes to consolidated condensed financial statements.




Page
          4


FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Condensed
      Consolidated Statements of Operations





Three
      Months Ended October 31,


(Unaudited)





2007
            
            2006(In
                thousands except per share data)Net
                sales
            
            $
            17,494
            
            $
            14,320Cost
                of sales
            
            
            12,024
            
            
            8,980Gross
                margin
            
            
            5,470
            
            
            5,340Selling
                and administrative expenses
            
            
            3,285
            
            
            2,674Research
                and development expense
            
            
            1,809
            
            
            2,647Operating
                profit
            
            
            376
            
            
            19Other
                income (expense):Investment
                income
            
            
            520
            
            
            280Equity
                (loss) income
            
            
            (65
            )
            
            71Interest
                expense
            
            
            (160
            )
            
            (21
            )Other
                income, net
            
            
            82
            
            
            19Income
                before provision for income taxes
            
            
            753
            
            
            368Provision
                for income taxes
            
            
            344
            
            
            181Net
                income
            
            $
            409
            
            $
            187Net
                income per common shareBasic
            
            $
            0.05
            
            $
            0.02Diluted
            
            $
            0.05
            
            $
            0.02Weighted
                average shares outstandingBasic
            
            
            8,699,133
            
            
            8,592,113Diluted
            
            
            8,783,992
            
            
            8,744,852




See
      accompanying notes to condensed consolidated financial statements.




Page
          5


FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Condensed
      Consolidated Statements of Cash Flows





Six
      Months Ended October 31,


(Unaudited)





2007
            
            2006(In
                thousands)Cash
                flows from operating activities:Net
                income
            
            $
            1,789
            
            $
            1,085Non-cash
                (income) charges to earnings, net
            
            
            (821
            )
            
            1,785Net
                changes in operating assets and liabilities
            
            
            (3,553
            )
            
            (2,163
            )Net
                cash (used in) provided by operating activities
            
            
            (2,585
            )
            
            707Cash
                flows from investing activities:Proceeds
                from sale of marketable securitiesand
                investments
            
            
            7,161
            
            
            4,104Purchase
                of marketable securities
            
            
            (174
            )
            
            (935
            )Purchase
                of fixed assets
            
            
            (1,297
            )
            
            (1,013
            )Other
                - net
            
            
            -
            
            
            45Net
                cash provided by investing activities
            
            
            5,690
            
            
            2,201Cash
                flows from financing activities:Proceeds
                from short-term credit obligations
            
            
            3,500
            
            
            -Payment
                of cash dividend
            
            
            (869
            )
            
            (857
            )Proceeds
                from stock option exercises
            
            
            81
            
            
            62Purchase
                of stock for treasury
            
            
            (233
            )
            
            -Net
                cash provided by (used in) financing activities
            
            
            2,479
            
            
            (795
            )Net
                increase in cash and cash equivalentsbefore
                effect of exchange rate changes
            
            
            5,584
            
            
            2,113Effect
                of exchange rate changeson
                cash and cash equivalents
            
            
            746
            
            
            42Net
                increase in cash and cash equivalents
            
            
            6,330
            
            
            2,155Cash
                and cash equivalents at beginning of period
            
            
            1,336
            
            
            2,639Cash
                and cash equivalents at end of period
            
            $
            7,666
            
            $
            4,794




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 October 31, 2007 and the results of
      its
      operations and cash flows for the six and three months ended October 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:


Six
                  months
              
              Three
                  monthsPeriods
                  ended October 31,2007
              
              2006
              
              2007
              
              2006Basic
                  EPS Shares outstanding(weighted
                  average)
              
              
              8,697,080
              
              
              8,584,409
              
              
              8,699,133
              
              
              8,592,113Effect
                  of Dilutive Securities
              
              
              86,712
              
              
              147,984
              
              
              84,859
              
              
              152,739Diluted
                  EPS Shares outstanding
              
              
              8,783,792
              
              
              8,732,393
              
              
              8,783,992
              
              
              8,744,852





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:


Six
                  months
              
              Three
                  monthsPeriods
                  ended October 31,2007
              
              2006
              
              2007
              
              2006Outstanding
                  Options excluded
              
              
              949,425
              
              
              571,550
              
              
              952,425
              
              
              571,550




NOTE
      C -
      ACCOUNTS RECEIVABLE




Accounts
      receivable at October 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 $8,484,000 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 $5,485,000 and $5,028,000 at October
      31,
      2007 and April 30, 2007, respectively, consist of the following:


October
                  31,
                2007
              
              April
                  30,
                2007(In
                  thousands)Raw
                  materials and Component parts
              
              $
              18,832
              
              $
              18,380Work
                  in progress
              
              
              13,011
              
              
              12,821$
              31,843
              
              $
              31,201




Page
          7


FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Notes
      to
      Condensed Consolidated Financial Statements


(Unaudited)





NOTE
      E -
      COMPREHENSIVE INCOME




For
      the
      six months ended October 31, 2007 and 2006, total comprehensive income was
      $3,231,000 and $1,501,000, 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 $271,000 and
      $277,000 was recognized during the six months ended October 31, 2007 and 2006,
      respectively, and $127,000 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
      October 31, 2007, unrecognized compensation cost for all the Company’s
      stock-based compensation awards was approximately $1.2 million. The unrecognized
      compensation cost for stock-based compensation awards at October 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 (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 six months ended October 31, 2007 and 2006, stock-based compensation
      expense included in cost of sales was $155,000 and $140,000, respectively and
      the amount charged to selling, general and administrative expense was $116,000
      and $137,000, respectively. During the three months ended October 31, 2007
      and
      2006, stock-based compensation expense included in cost of sales was $73,000
      and
      $87,000, respectively, and the amount charged to selling, general and
      administrative expense was $54,000 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 six months ended October 31, 2007,
      and each of the years ended April 30, 2007, and 2006: dividend yield of 1.5%,
      1.3%, and 1.4%, respectively; expected volatility of 38%, 40% and 59%,
      respectively; risk free interest rate of 4.6%, 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.




Page
          8


FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Notes
      to
      Condensed Consolidated Financial Statements


(Unaudited)





***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 October 31, 2007,
      eligible employees had been granted awards to purchase approximately 283,000
      shares of Company stock under SARs, all of which are outstanding and
      approximately 42,000 shares of which are exercisable. As of October 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 320,000 of which are exercisable. Through October
      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).




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 $966,000 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 $226,000 which will
      be recognized over a weighted average period of 1.3 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:


Six
                  months ended October 31, 2007Wtd
                  AvgShares
              
              PriceOutstanding
                  at beginning of period
              
              
              1,265,587
              
              $
              11.53Granted
              
              
              110,875
              
              $
              10.42Exercised
              
              
              (8,312
              )
              $
              9.77Expired
                  or canceled
              
              
              (45,375
              )
              $
              10.17Outstanding
                  at end of period
              
              
              1,322,775
              
              $
              11.50Exercisable
                  at end of period
              
              
              1,013,400
              
              $
              11.51Available
                  for grant at end of period
              
              
              115,625Weighted
                  average fair valueof
                  options granted during the period
              
              $
              4.10




Page
          9


FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Notes
      to
      Condensed Consolidated Financial Statements


(Unaudited)




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


Options
                  Outstanding
              
              Options
                  ExercisableActual
                  Range of Exercise Prices
              
              Number
                  Outstanding at 10/31/07
              
              Weighted
                  Average Remaining Contractual Life
              
              Weighted
                  Average Exercise Price
              
              Number
                  Exercisable at 10/31/07
              
              Weighted
                  Average Exercise Price$6.670
                  - 9.970
              
              
              511,400
              
              
              3.8
              
              $
              7.95
              
              
              427,775
              
              $
              7.5810.41
                  - 16.625
              
              
              729,375
              
              
              5.3
              
              
              12.60
              
              
              503,625
              
              
              12.8623.75
              
              
              82,000
              
              
              2.8
              
              
              23.75
              
              
              82,000
              
              
              23.75




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.




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):


Six
                  months
              
              Three
                  monthsPeriods
                  ended October 31,2007
              
              2006
              
              2007
              
              2006Net
                  sales:FEI-NY
              
              $
              25,372
              
              $
              20,205
              
              $
              13,607
              
              $
              9,540Gillam-FEI
              
              
              4,749
              
              
              4,451
              
              
              2,461
              
              
              2,421FEI-Zyfer
              
              
              4,291
              
              
              4,738
              
              
              2,269
              
              
              2,831less
                  intersegment sales
              
              
              (1,361
              )
              
              (760
              )
              
              (843
              )
              
              (472
              )Consolidated
                  sales
              
              $
              33,051
              
              $
              28,634
              
              $
              17,494
              
              $
              14,320Operating
                  (loss) profit:FEI-NY
              
              $
              (46
              )
              $
              448
              
              $
              495
              
              $
              (413
              )Gillam-FEI
              
              
              (187
              )
              
              162
              
              
              (44
              )
              
              170FEI-Zyfer
              
              
              93
              
              
              371
              
              
              90
              
              
              429Corporate
              
              
              (276
              )
              
              (271
              )
              
              (165
              )
              
              (167
              )Consolidated
                  operating (loss) profit
              
              $
              (416
              )
              $
              710
              
              $
              376
              
              $
              19
 
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FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES





Notes
      to
      Condensed Consolidated Financial Statements


(Unaudited)


October
                  31, 2007
              
              April
                  30, 2007Identifiable
                  assets:FEI-NY
              
              $
              54,159
              
              $
              49,868Gillam-FEI
              
              
              14,470
              
              
              13,750FEI-Zyfer
              
              
              6,312
              
              
              5,366less
                  intercompany balances
              
              
              (14,515
              )
              
              (11,773
              )Corporate
              
              
              38,017
              
              
              36,615Consolidated
                  identifiable assets
              
              $
              98,443
              
              $
              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.




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.




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FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES




**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
      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.




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      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




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 $271,000 and
      $277,000 was recognized during the six months ended October 31, 2007 and 2006,
      respectively, and $127,000 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:


Six
                  months
              
              Three
                  monthsPeriods
                  ended October 31,2007
              
              2006
              
              2007
              
              2006Net
                  SalesFEI-NY
              
              
              76.8
              %
              
              70.6
              %
              
              77.8
              %
              
              66.6
              %Gillam-FEI
              
              
              14.4
              
              
              15.5
              
              
              14.0
              
              
              16.9FEI-Zyfer
              
              
              13.0
              
              
              16.5
              
              
              13.0
              
              
              19.8Less
                  intersegment sales
              
              
              (4.2
              )
              
              (2.6
              )
              
              (4.8
              )
              
              (3.3
              )100.0
              
              
              100.0
              
              
              100.0
              
              
              100.0Cost
                  of Sales
              
              
              69.9
              
              
              64.4
              
              
              68.7
              
              
              62.7Gross
                  Margin
              
              
              30.1
              
              
              35.6
              
              
              31.3
              
              
              37.3Selling
                  and administrative expenses
              
              
              19.3
              
              
              19.0
              
              
              18.8
              
              
              18.7Research
                  and development expenses
              
              
              12.1
              
              
              14.1
              
              
              10.4
              
              
              18.5Operating
                  (Loss) Profit
              
              
              (1.3
              )
              
              2.5
              
              
              2.1
              
              
              0.1Other
                  income, net
              
              
              10.3
              
              
              3.1
              
              
              2.2
              
              
              2.4Pretax
                  Income
              
              
              9.0
              
              
              5.6
              
              
              4.3
              
              
              2.5Provision
                  for income taxes
              
              
              3.6
              
              
              1.8
              
              
              2.0
              
              
              1.2Net
                  Income
              
              
              5.4
              %
              
              3.8
              %
              
              2.3
              %
              
              1.3
              %
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      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




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


**Net
                  sales**
              
              (in
                  millions)Six
                  months
              
              Three
                  monthsPeriods
                  ended October 31,Segment
              
              2007
              
              2006
              
              Change
              
              2007
              
              2006
              
              ChangeFEI-NY
              
              $
              25.4
              
              $
              20.2
              
              $
              5.2
              
              
              26
              %
              $
              13.6
              
              $
              9.5
              
              $
              4.1
              
              
              43
              %Gillam-FEI
              
              
              4.7
              
              
              4.5
              
              
              0.3
              
              
              7
              %
              
              2.5
              
              
              2.4
              
              
              0.1
              
              
              2
              %FEI-Zyfer
              
              
              4.3
              
              
              4.7
              
              
              (0.5
              )
              
              (9
              %)
              
              2.2
              
              
              2.8
              
              
              (0.6
              )
              
              (20
              %)Intersegment
                  sales
              
              
              (1.4
              )
              
              (0.8
              )
              
              (0.6
              )
              
              
              
              
              (0.8
              )
              
              (0.4
              )
              
              (0.4
              )$
              33.0
              
              $
              28.6
              
              $
              4.4
              
              
              15
              %
              $
              17.5
              
              $
              14.3
              
              $
              3.2
              
              
              22
              %


As
      illustrated in the table above, the 15% and 22% increases in revenues for the
      six and three month periods ended October 31, 2007, respectively, compared
      to
      the same periods of fiscal year 2007, were driven by the improvement in revenues
      in the FEI-NY segment by 26% 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 15% higher than the revenue rate realized in the prior year.
      Sales to wireless infrastructure equipment manufacturers were approximately
      10%
      lower from the record revenue rate recorded in fiscal year 2007. Revenues in
      the
      Gillam-FEI segment improved 7% and 2%, 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 second half fiscal year 2008 revenues for Gillam-FEI will
      increase in terms of both dollars and euros. Revenues for the FEI-Zyfer segment
      declined by 9% and 20%, respectively, for the six and three months ended October
      31, 2007 compared to the same periods of fiscal year 2007. Sequentially, first
      half fiscal year 2008 revenues exceeded revenues for the second half of fiscal
      year 2007 by more than 50%. The Company expects FEI-Zyfer revenues for fiscal
      year 2008 to be greater than 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 second half of fiscal year 2008 and should
      comprise 40% to 45% of total revenues for the fiscal year. Revenues from
      wireless equipment manufacturers are dependent on new contracts for network
      buildouts by wireless providers and the timing of such awards is uncertain.
      The
      Company expects telecommunication revenues to be between 30% and 35% of total
      revenues for fiscal year 2008.


**Gross
                  margin**Six
                  months
              
              Three
                  monthsPeriods
                  ended October 31,2007
              
              2006
              
              Change
              
              2007
              
              2006
              
              Change$
              9,941
              
              $
              10,193
              
              
              ($252
              )
              
              (2
              %)
              $
              5,470
              
              $
              5,340
              
              $
              130
              
              
              2
              %GM
                  Rate
              
              
              30.1
              %
              
              35.6
              %
              
              
              
              
              
              
              
              31.3
              %
              
              37.3
              %


Gross
      margin rates for the six and three months ended October 31, 2007, respectively,
      were lower than those realized during the same periods 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 second half of fiscal year 2007. While the rate
      of 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 six months ended October 31, 2007 and 2006, gross margin was reduced by
      $155,000 and $140,000, respectively, and for the three months then ended, was
      reduced by $73,000 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).




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FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




**Selling
      and administrative expenses**


Six
                  months
              
              Three
                  monthsPeriods
                  ended October 31,2007
              
              2006
              
              Change
              
              2007
              
              2006
              
              Change$
              6,371
              
              $
              5,455
              
              $
              916
              
              
              17
              %
              $
              3,285
              
              $
              2,674
              
              $
              611
              
              
              23
              %


For
      the
      six and three months ended October 31, 2007 and 2006, selling and administrative
      expenses were 19% of revenues which achieved the Company’s target for such
      expenses. The primary increases in expenses in the fiscal year 2008 periods
      were
      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 six months ended October 31,
      2007
      and 2006, is $116,000 and $137,000, respectively, and for the three month
      periods then ended, $54,000 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**


Six
                  months
              
              Three
                  monthsPeriods
                  ended October 31,2007
              
              2006
              
              Change
              
              2007
              
              2006
              
              Change$
              3,986
              
              $
              4,028
              
              
              ($
                  42
              )
              
              (1
              %)
              $
              1,809
              
              $
              2,647
              
              ($838
              )
              
              (32
              %)




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 October 31, 2007, spending on research and development was 10.3% 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
      (Loss) Profit**


Six
                    months
                
                Three
                    monthsPeriods
                    ended October 31,2007
                
                2006
                
                Change
                
                2007
                
                2006
                
                Change($416)
                
                $
                710
                
                
                ($1,126
                )
                
                (159
                %)
                $
                376
                
                $
                19
                
                $
                357
                
                
                1879
                %


Reduced
      engineering costs on satellite payload programs and lower research and
      development spending during the three month period ended October 31, 2007,
      resulted in significantly improved operating margins. Sequentially, the
      operating profit in the second quarter of fiscal year 2008 was almost $1.2
      million greater than the loss recorded for the first quarter of the current
      fiscal year. 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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      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




**Other
      income (expense)**


Six
                  months
              
              Three
                  monthsPeriods
                  ended October 31,2007
              
              2006
              
              Change
              
              2007
              
              2006
              
              ChangeInvestment
                  income
              
              $
              3,763
              
              $
              579
              
              $
              3,184
              
              
              550
              %
              $
              520
              
              $
              280
              
              $
              240
              
              
              86
              %Equity
                  (loss) income
              
              
              (145
              )
              
              274
              
              
              (419
              )
              
              (153
              %)
              
              (65
              )
              
              71
              
              
              (136
              )
              
              (192
              %)Interest
                  expense
              
              
              (291
              )
              
              (57
              )
              
              (234
              )
              
              (411
              %)
              
              (160
              )
              
              (21
              )
              
              (139
              )
              
              (662
              %)Other
                  income, net
              
              
              82
              
              
              100
              
              
              (18
              )
              
              (18
              %)
              
              82
              
              
              19
              
              
              63
              
              
              332
              %$
              3,409
              
              $
              896
              
              $
              2,513
              
              
              280
              %
              $
              377
              
              $
              349
              
              $
              28
              
              
              (8
              %)




During
      the six months ended October 31, 2007, the Company reduced its investment in
      Morion, Inc. from 36.6% to 8% by selling shares to a major Russian bank. 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 second quarter of fiscal year
      2008, the Company recognized net gains on marketable securities of approximately
      $281,000 while no such gains were recorded during the same period of the prior
      fiscal year. Such gains were partially offset by lower dividend and interest
      income on marketable securities during the fiscal year 2008
      periods.




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 losses in the fiscal year 2008 periods represent its
      share of the quarterly losses 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 six and three month periods ended October
      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 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 $176,000 and $88,000, respectively, for the six
      and
      three months ended October 31, 2007 and 2006. In the fiscal year 2008 periods,
      such 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**


Six
                  months
              
              Three
                  monthsPeriods
                  ended October 31,2007
              
              2006
              
              Change
              
              2007
              
              2006
              
              Change$
              1,789
              
              $
              1,085
              
              $
              704
              
              
              65
              %
              $
              409
              
              $
              187
              
              $
              222
              
              
              119
              %




Net
      income for the six months ended October 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 operating loss for the first half of the fiscal year.
      For the second quarter of fiscal year 2008, the operating profit generated
      by
      higher revenues and lower costs, generated a higher net income. The Company
      expects to realize improved gross and operating margins in the second half
      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.




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          16


FREQUENCY
      ELECTRONICS, INC. and SUBSIDIARIES


(Continued)




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.




LIQUIDITY
      AND CAPITAL RESOURCES




The
      Company’s balance sheet continues to reflect a strong working capital position
      of $59 million at October 31, 2007, which is comparable to working capital
      at
      April 30, 2007. Included in working capital at October 31, 2007 is $20.8 million
      of cash, cash equivalents and marketable securities which are offset by $8.5
      million in borrowings under its bank line of credit. The Company’s current ratio
      at October 31, 2007 is 4.8 to 1.




For
      the
      six months ended October 31, 2007, the Company used approximately $2.6 million
      in cash from operations compared to positive cash flow of $707,000 in the same
      period of fiscal year 2007. However, for the second quarter of fiscal year
      2008,
      the Company generated positive cash flow from operations of approximately $1.8
      million. 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 full 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 six months ended October  31,
      2007,
      was $5.7 million compared to $2.2 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 $1.3 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 $3.2 million. During the six months ended
      October  31,
      2007
      and 2006, the Company also acquired capital equipment for approximately $1.3
      million and $1.0 million, respectively. 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 although the Company may also enter into long-term capital
      leases at favorable interest rates.




Net
      cash
      provided by financing activities for the six months ended October 31, 2007,
      was
      $2.5 million compared to a use of cash of $795,000 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 six months ended October 31, 2007, the Company borrowed $3.5 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 October
      31, 2007, 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 will be adequate to fund these
      development efforts.




At
      October 31, 2007, the Company’s backlog amounted to approximately $39 million
      compared to $44 million at April 30, 2007. Of this backlog, approximately 80%
      is
      realizable in the next twelve months.




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          17


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
      October 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
            
            $
            6,934
            
            $
            744
            
            $
            2,766
            
            $
            2,390
            
            $
            1,034Deferred
                Compensation
            
            
            8,753
            *
            
            330
            
            
            419
            
            
            160
            
            
            7,844Total
            
            $
            15,687
            
            $
            1,074
            
            $
            3,185
            
            $
            2,550
            
            $
            8,878




*Deferred
      Compensation liability reflects payments due to current retirees receiving
      benefits. The amount of $7,844 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 $13.2 million and $42,000, respectively,
      at
      October 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
      October 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 October 31, 2007, the amount
      related to foreign currency exchange rates is a $4,745,000 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.




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          18


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 and 5 are omitted because they are not applicable.





ITEM
      4 Submission
      of Matters to a Vote of Security Holders




On
      September 26, 2007, at the Annual Meeting of Stockholders, the following matters
      were approved by the shareholders of the Company:




1.
            Election
                of the following six directors:


DIRECTOR
              
              FOR
              
              WITHHELD
              
              BROKER
                  NON-VOTESJoseph
                  P. Franklin
              
              
              2,866,189
              
              
              2,545,610
              
              
              0Martin
                  B. Bloch
              
              
              2,874,027
              
              
              2,537,772
              
              
              0Joel
                  Girsky
              
              
              5,149,647
              
              
              262,152
              
              
              0E.
                  Donald Shapiro
              
              
              5,150,731
              
              
              261,068
              
              
              0S.
                  Robert Foley, Jr.
              
              
              5,150,434
              
              
              261,365
              
              
              0Richard
                  Schwartz
              
              
              5,050,860
              
              
              360,939
              
              
              0





2.
            Ratification
                of the appointment of Holtz Rubenstein Reminick LLP as independent
                auditors for fiscal year 2008. The results of the voting were as
                follows:


FOR
              
              AGAINST
              
              ABSTAIN
              
              BROKER
                  NON-VOTES5,359,928
              
              
              50,192
              
              
              1,675
              
              
              0




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
          19





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:
              December 17, 2007
            BY
            /s/
              Alan
              MillerAlan
                Miller
              Treasurer
                and
              Chief
                Financial Officer
              (principal
                financial officer and
              duly
                authorized officer)


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          20