UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

      |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 3, 2005

                                       OR
      |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________ to ____________________

Commission file No. 0-11003

                               WEGENER CORPORATION

             (Exact name of registrant as specified in its charter)

                Delaware                                       (81)-(0371341)
        (State of incorporation)                              (I.R.S. Employer
                                                             Identification No.)

11350 Technology Circle, Duluth, Georgia                         30097-1502
(Address of principal executive offices)                         (Zip Code)

       Registrant's telephone number, including area code: (770) 623-0096

                  Registrant's web site: HTTP://WWW.WEGENER.COM

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 |_|

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the ExchangeAct).

                     YES |_|                    NO |X|

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

Common Stock, $.01 par value                             12,575,051 Shares
----------------------------                       -----------------------------
           Class                                   Outstanding at June 30, 2005

<PAGE>

                               WEGENER CORPORATION
                  Form 10-Q For the Quarter Ended June 3, 2005

                                      INDEX

PART I.  Financial Information

    Item 1.  Financial Statements

             Introduction .....................................................3

             Consolidated Statements of Operations
             (Unaudited) - Three and Nine Months Ended
             June 3, 2005 and May 28, 2004 ....................................4

             Consolidated Balance Sheets - June 3,
             2005 (Unaudited) and September 3, 2004 ...........................5

             Consolidated Statements of Shareholders' Equity
             (Unaudited) - Nine Months Ended June 3,
             2005 and May 28, 2004 ............................................6

             Consolidated Statements of Cash Flows
             (Unaudited) - Nine Months Ended June 3,
             2005 and May 28, 2004 ............................................7

             Notes to Consolidated Financial
             Statements (Unaudited) ........................................8-15

    Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations ..........................16-22

    Item 3.  Quantitative and Qualitative Disclosures About Market Risk.......22

    Item 4.  Controls and Procedures..........................................23

PART II. Other Information

    Item 1.  None
    Item 2.  None
    Item 3.  None
    Item 4.  None
    Item 5.  None
    Item 6.  Exhibits ........................................................24

             Signatures.......................................................25


                                       2
<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                INTRODUCTION - CONSOLIDATED FINANCIAL STATEMENTS

The  consolidated  financial  statements  included  herein  have  been  prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
The consolidated  balance sheet as of June 3, 2005; the consolidated  statements
of  shareholders'  equity as of June 3, 2005, and May 28, 2004; the consolidated
statements of operations  for the three and nine months ended June 3, 2005,  and
May 28, 2004; and the consolidated  statements of cash flows for the nine months
ended June 3, 2005,  and May 28, 2004;  have been prepared  without  audit.  The
consolidated  balance  sheet  as of  September  3,  2004,  has been  audited  by
independent  registered  public  accountants.  Certain  information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles  have been condensed or omitted
pursuant to such rules and  regulations,  although the Company believes that the
disclosures   herein  are  adequate  to  make  the  information   presented  not
misleading. It is suggested that these consolidated financial statements be read
in conjunction  with the financial  statements and the notes thereto included in
the Company's  Annual Report on Form 10-K for the fiscal year ended September 3,
2004, File No. 0-11003.

In the opinion of the Company,  the statements for the unaudited interim periods
presented  include all  adjustments,  which were of a normal  recurring  nature,
except those  adjustment as discussed in note 11 to the  consolidated  financial
statements, necessary to present a fair statement of the results of such interim
periods.  The results of operations  for the interim  periods  presented are not
necessarily indicative of the results of operations for the entire year.


                                       3
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                    Three months ended                    Nine months ended
                                                June 3,            May 28,            June 3,            May 28,
                                                  2005               2004               2005               2004
------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                <C>                <C>                <C>
Revenue                                      $  4,252,879       $  4,777,394       $ 16,995,507       $ 14,240,522
------------------------------------------------------------------------------------------------------------------

Operating costs and expenses
    Cost of products sold                       2,785,289          3,385,022         10,711,256         10,375,171
    Selling, general and administrative         1,595,302          1,150,988          4,443,611          3,650,451
    Research and development                      835,890            792,087          2,410,904          2,307,524
------------------------------------------------------------------------------------------------------------------

Operating costs and expenses                    5,216,481          5,328,097         17,565,771         16,333,146
------------------------------------------------------------------------------------------------------------------

Operating loss                                   (963,602)          (550,703)          (570,264)        (2,092,624)
    Interest expense                              (16,213)           (31,374)           (45,845)           (73,949)
    Interest income                                12,272             24,436             22,355             38,000
------------------------------------------------------------------------------------------------------------------

Loss before income taxes                         (967,543)          (557,641)          (593,754)        (2,128,573)

Income tax benefit                                348,000            201,000            214,000            668,000
------------------------------------------------------------------------------------------------------------------

Net loss                                     $   (619,543)      $   (356,641)      $   (379,754)      $ (1,460,573)
==================================================================================================================

Net loss per share:
    Basic                                    $       (.05)      $       (.03)      $       (.03)      $       (.12)
    Diluted                                  $       (.05)      $       (.03)      $       (.03)      $       (.12)
==================================================================================================================

Shares used in per share calculation
    Basic                                      12,574,447         12,483,348         12,557,029         12,432,246
    Diluted                                    12,574,447         12,483,348         12,557,029         12,432,246
==================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       4
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         June 3,          September 3,
                                                                          2005                2004
------------------------------------------------------------------------------------------------------
Assets                                                                 (Unaudited)
<S>                                                                    <C>                <C>
Current assets
    Cash and cash equivalents                                          $  1,670,825       $  1,520,761
    Accounts receivable                                                   2,387,867          2,479,712
    Inventories                                                           3,704,738          3,839,840
    Deferred income taxes                                                 2,135,000          2,199,000
    Other                                                                   323,367            283,291
------------------------------------------------------------------------------------------------------

         Total current assets                                            10,221,797         10,322,604

Property and equipment, net                                               2,626,925          2,699,502
Capitalized software costs, net                                           1,812,448          1,667,632
Deferred income taxes                                                     2,248,000          1,970,000
Other assets                                                                836,886            835,878
------------------------------------------------------------------------------------------------------

                                                                       $ 17,746,056       $ 17,495,616
======================================================================================================

Liabilities and Shareholders' Equity

Current liabilities
    Accounts payable                                                   $  1,186,665       $  1,293,564
    Accrued expenses                                                      2,048,533          1,719,119
    Customer deposits                                                     1,297,558            960,092
------------------------------------------------------------------------------------------------------

          Total current liabilities                                       4,532,756          3,972,775
------------------------------------------------------------------------------------------------------

Commitments and contingencies

Shareholders' equity
    Common stock, $.01 par value; 20,000,000 shares
        authorized; 12,575,051 and 12,526,051 shares
        respectively, issued and outstanding                                125,751            125,261
    Additional paid-in capital                                           19,889,272         19,819,549
    Deficit                                                              (6,801,723)        (6,421,969)
------------------------------------------------------------------------------------------------------

         Total shareholders' equity                                      13,213,300         13,522,841
------------------------------------------------------------------------------------------------------

                                                                       $ 17,746,056       $ 17,495,616
======================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                    Additional
                                                             Common Stock            Paid-in
                                                        Shares         Amount         Capital          Deficit
      ----------------------------------------------------------------------------------------------------------
<S>                                                   <C>             <C>           <C>              <C>
      Balance at August 29, 2003                      12,381,251      $123,813      $19,471,069      $(4,314,071)

          Common stock issued through
            stock options                                141,800         1,418          206,190               --
          Value of stock options granted
            for services                                      --            --          139,800               --
          Net loss for the nine months                        --            --               --       (1,460,573)
      ----------------------------------------------------------------------------------------------------------

      BALANCE at May 28, 2004                         12,523,051      $125,231      $19,817,059      $(5,774,644)
      ==========================================================================================================

      Balance at September 3, 2004                    12,526,051      $125,261      $19,819,549      $(6,421,969)

          Common stock issued through
            stock options                                 49,000           490           69,723               --
          Net loss for the nine months                        --            --               --         (379,754)
      ----------------------------------------------------------------------------------------------------------

      BALANCE at June 3, 2005                         12,575,051      $125,751      $19,889,272      $(6,801,723)
      ==========================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       6
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     Nine months ended
                                                                  June 3,           May 28,
                                                                   2005              2004
--------------------------------------------------------------------------------------------
<S>                                                            <C>               <C>
Cash flows from operating activities
    Net loss                                                   $  (379,754)      $(1,460,573)
    Adjustments to reconcile net loss to
           cash provided by operating activities
        Depreciation and amortization                            1,567,824         1,601,187
        Value of stock options granted
           for services                                                 --           139,800
        Provision for bad debts                                     50,000            30,000
        Provision for inventory reserves                            75,000           225,000
        Benefit from change in deferred income taxes              (214,000)         (668,000)
        Provision for warranty reserves                             70,000                --
    Changes in assets and liabilities
            Accounts receivable                                     41,845           575,603
            Inventories                                             60,102          (354,086)
            Other assets                                           (40,076)            4,284
            Accounts payable and accrued expenses                  152,515           140,814
            Customer deposits                                      337,466            40,655
--------------------------------------------------------------------------------------------

                                                                 1,720,922           274,684
--------------------------------------------------------------------------------------------

Cash flows from investment activities
    Property and equipment expenditures                           (315,491)         (241,750)
    Capitalized software additions                              (1,206,124)       (1,360,239)
    License agreement, patent, and trademark expenditures         (119,456)         (199,771)
--------------------------------------------------------------------------------------------

                                                                (1,641,071)       (1,801,760)
--------------------------------------------------------------------------------------------

Cash flows from financing activities
    Repayment of long-term debt                                         --            (4,320)
    Proceeds from stock options exercised                           70,213           207,608
--------------------------------------------------------------------------------------------
                                                                    70,213           203,288
--------------------------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents                   150,064        (1,323,788)
Cash and cash equivalents, beginning of period                   1,520,761         4,213,252
--------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                       $ 1,670,825       $ 2,889,464
============================================================================================

Supplemental disclosure of cash flow information:
    Cash paid during the nine months for:
        Interest                                               $    45,845       $    73,949
============================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       7
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Description of Business

We design and  manufacture  equipment for receiving and  transmitting  of video,
audio and data  programming  over  satellite,  cable,  broadcast and terrestrial
networks. Applications for our equipment include cable and broadcast television,
high-definition  television,  business  television,  IP data delivery,  business
music,   distance   education,   radio   networks  and   financial   information
distribution.

The  equipment we provide  enables our customers to implement  complex  networks
involving  real time  switching and control to help them achieve their  business
plans.  Using our technologies,  our customers can provide targeted  programming
and advertising capabilities to their clients.

We also make a complete line of signal  processing  equipment  used by the cable
television  industry to provide off-air  digital and high definition  signals to
their  subscribers.  This equipment  receives the signals from local terrestrial
broadcasters and processes them in ways that make these signals  compatible with
existing cable plant infrastructure in wide use today.

Our primary customers are major broadcast  networks,  operators of large private
satellite broadcast networks, and major cable television systems operators.

Our principal sources of revenues are from the sales of satellite communications
equipment.  Embedded in our products is internally developed software of varying
applications. Historically, we have not sold or marketed our software separately
or  otherwise  licensed  our  software  apart  from the  related  communications
equipment.  We operate in one  business  segment,  the  manufacture  and sale of
satellite communications equipment.

Note 2 Significant Accounting Policies

The  significant  accounting  policies  followed by the Company are set forth in
Note 1 to the Company's audited  consolidated  financial  statements included in
the annual report on Form 10-K for the year ended September 3, 2004.

Revenue Recognition

Our  revenue  recognition  policies  are in  compliance  with  Staff  Accounting
Bulletin (SAB) No. 104, "Revenue Recognition", SAB No. 101, "Revenue Recognition
in Financial  Statements" and EITF Issue No. 00-21,  "Revenue  Arrangements with
Multiple  Deliverables."  Revenue is recognized when  persuasive  evidence of an
agreement  with the  customer  exists,  products  are  shipped  or title  passes
pursuant to the terms of the agreement  with the  customer,  the amount due from
the customer is fixed or determinable, collectibility is reasonably assured, and
when there are no significant future performance  obligations.  Service revenues
are  recognized  at the time of  performance.  We  recognize  revenue in certain
circumstances  before delivery has occurred  (commonly  referred to as "bill and
hold"  transactions).  In  such  circumstances,  among  other  things,  risk  of
ownership has passed to the buyer, the buyer has made a written fixed commitment
to purchase the finished  goods,  the buyer has requested the finished  goods be
held for future  delivery  as  scheduled  and  designated  by the buyer,  and no
additional performance obligations exist by the Company. For these transactions,
the finished goods are  segregated  from inventory and normal billing and credit
terms are granted. For the three and nine months ended June 3, 2005, revenues in
the amount of $534,000 and $3,412,000, respectively, were appropriately recorded
prior  to  delivery  as bill  and  hold  transactions  in  accordance  with  the
provisions of SAB 104. At June 3, 2005,  accounts  receivable for these revenues
amounted  to  $534,000.  Subsequent  to June 3, 2005,  payments in the amount of
$534,000 were received on these accounts receivable.

These policies require  management,  at the time of the  transaction,  to assess
whether the  amounts due are fixed or  determinable,  collection  is  reasonably
assured,  and if future  performance  obligations  exist.  These assessments are
based on the terms of the agreement  with the customer,  past history and credit
worthiness of the  customer.  If management  determines  that  collection is not
reasonably assured or future performance  obligations exist, revenue recognition
is deferred until these conditions are satisfied.


                                       8
<PAGE>

Our  principal  sources  of  revenues  are from the sales of  various  satellite
communications  equipment.  Embedded  in our  products is  internally  developed
software of varying applications. Historically, we have not sold or marketed our
software  separately or otherwise  licensed our software  apart from the related
communications equipment.  Should we begin to market or sell software whereby it
is more than an  incidental  component of the hardware,  then we will  recognize
software  license  revenue in accordance  with SOP No. 97-2,  "Software  Revenue
Recognition," as amended by SOP No. 98-9,  "Software Revenue  Recognition,  with
Respect to Certain Transactions."

In accordance with EITF Issue 00-10,  "Accounting for Shipping and Handling Fees
and Costs," we include all  shipping  and  handling  billings  to  customers  in
revenues,  and freight costs incurred for product shipments are included in cost
of products sold.

Earnings Per Share

Basic and diluted  net  earnings  per share were  computed  in  accordance  with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share." Basic
net earnings per share is computed by dividing net earnings  available to common
shareholders  (numerator)  by the  weighted  average  number  of  common  shares
outstanding  (denominator) during the period and excludes the dilutive effect of
stock  options.  Diluted net  earnings  per share gives  effect to all  dilutive
potential common shares  outstanding  during a period.  In computing diluted net
earnings  per  share,  the  average  stock  price  for  the  period  is  used in
determining  the number of shares  assumed to be  reacquired  under the treasury
stock method from the exercise of stock options.

Stock-Based Compensation

We have  adopted the  disclosure  only  provisions  of  Statement  of  Financial
Accounting Standard (SFAS) No 123, "Accounting for Stock-Based Compensation," as
amended by SFAS No. 148,  "Accounting for Stock-Based  Compensation - Transition
and  Disclosure,"  but apply  Accounting  Principles Board Opinion (APB) No. 25,
"Accounting  for Stock  Issued to  Employees"  and related  interpretations,  in
accounting for our stock-based  plans. Under APB No. 25, when the exercise price
of employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.

The following table includes disclosures required by SFAS No. 123, as amended by
SFAS No. 148, and illustrates the effect on net earnings (loss) and net earnings
(loss) per share as if we had applied the fair value  recognition  provisions of
SFAS No. 123:

<TABLE>
<CAPTION>
                                     Three months ended                  Nine months ended
                             -------------------------------------------------------------------
                                  June 3,           May 28,           June 3,           May 28,
                                   2005              2004              2005              2004
------------------------------------------------------------------------------------------------
<S>                          <C>               <C>               <C>               <C>
Net loss
  As Reported                $    (619,543)    $    (356,641)    $    (379,754)    $  (1,460,573)
  Deduct:
      Compensation cost
      using the fair value
      method, net of tax           (20,536)          (39,384)          (79,810)         (101,695)
------------------------------------------------------------------------------------------------
  Pro Forma                  $    (640,079)    $    (396,025)    $    (459,564)    $  (1,562,268)
================================================================================================
Loss per share
  As Reported
      Basic                  $        (.05)    $        (.03)    $        (.03)    $        (.12)
      Diluted                         (.05)             (.03)             (.03)             (.12)
  Pro Forma
      Basic                           (.05)             (.03)             (.04)             (.13)
      Diluted                         (.05)             (.03)             (.04)             (.13)
================================================================================================
</TABLE>


                                       9
<PAGE>

The fair  value of each  option  was  estimated  on the date of grant  using the
Black-Scholes   option  pricing  model  with  the  following   weighted  average
assumptions:

<TABLE>
<CAPTION>
                                        Three months ended            Nine months ended
                                     ------------------------------------------------------
                                      June 3,        May 28,        June 3,        May 28,
                                       2005           2004           2005           2004
      -------------------------------------------------------------------------------------
<S>                                  <C>            <C>            <C>            <C>
      Risk free interest rate          4.00%          4.00%          4.00%          4.00%
      Expected term                  2.8 years      2.8 years      2.8 years      2.8 years
      Volatility                        90%            90%            90%            90%
      Expected annual dividends        none           none           none           none
      =====================================================================================
</TABLE>

The weighted average fair value of options granted was as follows:

<TABLE>
<CAPTION>
                                            Three months ended                   Nine months ended
                                       ----------------------------------------------------------------
                                         June 3,           May 28,          June 3,           May 28,
                                          2005              2004             2005              2004
      -------------------------------------------------------------------------------------------------
<S>                                    <C>               <C>             <C>             <C>
      Per share option value           $    --           $    --         $        .81    $         1.22
      Aggregate total                  $    --           $    --         $      8,140    $      458,600
      =================================================================================================
</TABLE>

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reported  amounts  of assets  and  liabilities,  the  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could vary from these estimates.

Fiscal Year

The Company uses a fifty-two, fifty-three week year. The fiscal year ends on the
Friday  closest to August 31.  Fiscal year 2005 contains  fifty-two  weeks while
fiscal 2004 contained fifty-three weeks.

Note 3 Accounts Receivable

Accounts receivable are summarized as follows:

                                                     June 3,        September 3,
                                                      2005             2004
      --------------------------------------------------------------------------
                                                  (Unaudited)

      Accounts receivable - trade                 $ 2,649,448       $ 2,766,528
      Other receivables                                75,528            76,473
      --------------------------------------------------------------------------
                                                    2,724,976         2,843,001

      Less allowance for
          doubtful accounts                          (337,109)         (363,289)
      --------------------------------------------------------------------------

                                                  $ 2,387,867       $ 2,479,712
      ==========================================================================


                                       10
<PAGE>

Note 4 Inventories

Inventories are summarized as follows:

                                                 June 3             September 3,
                                                  2005                  2004
                                              (Unaudited)
      --------------------------------------------------------------------------
      Raw material                            $ 3,049,893           $ 3,004,350
      Work-in-process                           1,093,815             1,073,275
      Finished goods                            2,803,343             3,229,704
      --------------------------------------------------------------------------
                                                6,947,051             7,307,329

      Less inventory reserves                  (3,242,313)           (3,467,489)
      --------------------------------------------------------------------------
                                              $ 3,704,738           $ 3,839,840
      ==========================================================================

During the first nine months of fiscal 2005  inventory  reserves were reduced by
inventory  write-offs of $300,000 and  increased by  provisions of $75,000.  Our
inventory reserve of approximately  $3,242,000 at June 3, 2005 is to provide for
items that are potentially  slow-moving,  excess or obsolete.  Changes in market
conditions,  lower than expected customer demand and rapidly changing technology
could result in additional obsolete and slow-moving inventory that is unsaleable
or saleable at reduced prices.  No estimate can be made of a range of amounts of
loss from obsolescence that is reasonably  possible should our sales efforts not
be successful.

Note 5 Other Assets

Other assets consisted of the following:

                                             June 3, 2005 (unaudited)
      --------------------------------------------------------------------------
                                                   Accumulated
                                   Cost           Amortization            Net
      --------------------------------------------------------------------------
      License agreements        $   620,000       $  (284,714)       $   335,286
      Patent applications           406,064                --            406,064
      Trademarks                     89,735            (4,213)            85,522
      Loan facility fees             37,500           (34,375)             3,125
      Other                           6,889                --              6,889
      --------------------------------------------------------------------------
                                $ 1,160,188       $  (323,302)       $   836,886
      ==========================================================================

                                               September 3, 2004
      --------------------------------------------------------------------------
                                                   Accumulated
                                   Cost           Amortization            Net
      --------------------------------------------------------------------------
      License agreements        $   570,000       $  (197,828)       $   372,172
      Patent applications           352,406                --            352,406
      Trademarks                     73,937              (776)            73,161
      Loan facility fees             37,500            (6,250)            31,250
      Other                           6,889                --              6,889
      --------------------------------------------------------------------------
                                $ 1,040,732       $  (204,854)       $   835,878
      ==========================================================================


                                       11
<PAGE>

Amortization expense of other assets for the three and nine months ended June 3,
2005, amounted to $41,000 and $118,000,  respectively.  Amortization  expense of
other  assets for the three and nine  months  ended May 28,  2004,  amounted  to
$41,000 and $125,000, respectively.

We conduct an ongoing review of our  intellectual  property rights and potential
trademarks.  As of June 3,  2005,  we  incurred  $406,000  and  $40,000 of legal
expenses  related  to  the  filing  of  applications  for  various  patents  and
trademarks,  respectively.  Upon  issuance,  these costs will be  amortized on a
straight-line  basis  over the  lesser  of the  legal  life of the  patents  and
trademarks or their  estimated  useful lives. If it becomes more likely than not
that a patent  application  will not be granted,  we will write-off the deferred
cost at that time. At June 3, 2005, the cost of registered  trademarks  amounted
to $49,000. License agreements are amortized over their estimated useful life of
five years. Loan facility fees are amortized over twelve months.

Note 6 Income Taxes

For the nine months  ended June 3, 2005,  the income tax benefit of $214,000 was
comprised  of deferred  federal and state  income tax  benefits of $202,000  and
$12,000, respectively. Net deferred tax assets increased $214,000 to $4,383,000,
principally due to an increase in net operating loss  carryforwards in the first
nine months.  Realization  of deferred  tax assets is  dependent  on  generating
sufficient  future taxable income prior to the expiration of the loss and credit
carryforwards. Although realization is not assured, we believe it is more likely
than not that all of the  deferred  tax  assets  will be  realized  based on the
backlog and our  financial  projections.  The amount of the  deferred tax assets
considered  realizable,  however, could be reduced in the near term if estimates
of future taxable income during the carryforward period are reduced.

At  June  3,  2005,  we  had  a  federal  net  operating  loss  carryforward  of
approximately  $6,303,000,  which expires  beginning  fiscal 2020 through fiscal
2025.  Additionally,  we had an  alternative  minimum tax credit of $138,000 and
state income tax credits of $199,000 expiring in fiscal 2009.

Note 7 Earnings Per Share (Unaudited)

The following tables represent required  disclosure of the reconciliation of the
numerators  and  denominators  of the basic and diluted net  earnings  per share
computations.

<TABLE>
<CAPTION>
                                                                            Three months ended
                                               ------------------------------------------------------------------------------
                                                            June 3, 2005                            May 28, 2004
                                               ------------------------------------     -------------------------------------
                                                                              Per                                       Per
                                                Earnings         Shares      share       Earnings         Shares       share
                                               (Numerator)   (Denominator)   amount     (Numerator)   (Denominator)    amount
                                               -----------   -------------   ------     -----------   -------------    ------
<S>                                             <C>            <C>            <C>        <C>            <C>            <C>
Net loss                                        $(619,543)                               $(356,641)
                                                =========                                =========

Basic earnings (loss) per share:
    Net loss available
        to common shareholders                  $(619,543)     12,574,447     $(.05)     $(356,641)     12,483,348     $(.03)

Effect of dilutive potential common shares:
        Stock options                                  --              --                       --              --
                                                -------------------------                -------------------------

Diluted earnings (loss)  per share:
    Net loss available                          $(619,543)     12,574,447     $(.05)     $(356,641)     12,483,348     $(.03)
        to common shareholders                  =========================     =====      =========================     =====
</TABLE>


                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                                        Nine months ended
                                       ------------------------------------------------------------------------------------
                                                       June 3, 2005                              May 28, 2004
                                       ---------------------------------------     ----------------------------------------
                                                                         Per                                          Per
                                          Earnings          Shares      share       Earnings          Shares         share
                                       (Numerator)     (Denominator)    amount     (Numerator)     (Denominator)     amount
                                       -----------     -------------    ------     -----------     -------------     ------
<S>                                     <C>             <C>             <C>        <C>               <C>             <C>
Net loss                                $(379,754)                                 $(1,460,573)
                                        =========                                  ===========

Basic earnings (loss) per share:
    Net loss available
        to common shareholders          $(379,754)      12,557,029      $(.03)     $(1,460,573)      12,432,246      $(.12)

Effect of dilutive potential
    common shares:
        Stock options                          --               --                          --               --
                                        --------------------------                 ----------------------------

Diluted earnings (loss) per share:
    Net loss available
        to common shareholders          $(379,754)      12,557,029      $(.03)     $(1,460,573)      12,432,246      $(.12)
                                        ==========================      =====      ============================      =====
</TABLE>

Stock options excluded from the diluted net earnings (loss) per share
calculation due to their anti-dilutive effect are as follows:

<TABLE>
<CAPTION>
                                       Three months ended                       Nine months ended
                               -----------------------------------------------------------------------------
                                    June 3,             May 28,            June 3,                May 28,
                                     2005                 2004               2005                  2004
                               -----------------------------------------------------------------------------
<S>                            <C>                   <C>                 <C>                  <C>
Common stock options:
    Number of shares               1,195,531           1,640,781           1,195,531            1,640,781
    Exercise price             $ .63 to $2.72        $ .63 to $5.63      $ .63 to $2.72       $ .63 to $5.63
                               =============================================================================
</TABLE>

Note 8 Segment Information and Significant Customers (Unaudited)

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  131,
"Disclosure about Segments of an Enterprise and Related Information," we operate
within  a single  reportable  segment,  the  manufacture  and sale of  satellite
communications equipment.

In this single operating segment we have three sources of revenues as follows:

<TABLE>
<CAPTION>
                                          Three months ended               Nine months ended
                                     ------------------------------------------------------------
                                        June 3,         May 28,         June 3,          May 28,
                                         2005            2004            2005             2004
                                     ------------------------------------------------------------
<S>                                  <C>             <C>             <C>              <C>
Product Line
    Direct Broadcast Satellite       $ 4,027,104     $ 4,348,494     $16,309,343      $12,878,456
    Telecom and Custom Products           50,875         301,535         237,922          907,190
    Service                              174,900         127,365         448,242          454,876
                                     ------------------------------------------------------------

                                     $ 4,252,879     $ 4,777,394     $16,995,507      $14,240,522
                                     ============================================================
</TABLE>


                                       13
<PAGE>

Revenues by geographic area are as follows:

<TABLE>
<CAPTION>
                            Three months ended                Nine months ended
                       -------------------------------------------------------------
                          June 3,         May 28,         June 3,           May 28,
                            2005           2004             2005             2004
                       -------------------------------------------------------------
<S>                    <C>             <C>              <C>              <C>
Geographic Area
    United States      $ 4,139,116     $ 4,627,143      $16,593,929      $13,814,369
    Latin America           12,813           3,407          136,103           61,212
    Canada                  27,977         117,341           61,508          230,459
    Europe                  62,948           9,864          166,763           73,035
    Other                   10,025          19,639           37,204           61,447
                       -------------------------------------------------------------

                       $ 4,252,879     $ 4,777,394      $16,995,507      $14,240,522
                       =============================================================
</TABLE>

All of our long-lived assets are located in the United States. Customers
representing 10% or more of the respective periods' revenues are as follows:

                                        Three months ended    Nine months ended
                                        ---------------------------------------
                                        June 3,     May 28,   June 3,    May 28,
                                         2005        2004      2005       2004
                                        ---------------------------------------

            Customer 1                   24.0%      11.3%      16.7%        (a)
            Customer 2                   19.0%      37.0%      24.6%      38.1%
            Customer 3                   17.6%      11.9%      13.2%      10.2%
            Customer 4                     (a)        (a)      10.0%        (a)

            (a) Revenues for the period were less than 10% of total revenues.

Note 9 Commitments

We have three manufacturing and purchasing agreements for certain finished goods
inventories.  At June 3, 2005,  outstanding  purchase  commitments  under  these
agreements amounted to $5,507,000.  Pursuant to the above agreements, at June 3,
2005, we had outstanding letters of credit in the amount of $1,345,000.

During the first  quarter of fiscal  2004,  the Company  entered into a two-year
agreement  aggregating  $870,000 for engineering design and software development
services.  At June 3, 2005, the outstanding  commitment  under the agreement was
$181,000.

Note 10 Guarantees and Warranty Liability

Warranty

We warrant our  products  for a 12 to 14 month  period  beginning at the date of
shipment.  The warranty provides for repair or replacement of defective products
returned during the warranty period at no cost to the customer. We expense costs
for routine  warranty  repairs as incurred.  Additional  provisions are made for
non-routine  warranty repairs based on estimated costs to repair at the point in
time in which the warranty  claim is  identified.  Accrued  warranty  provisions
which remained  outstanding  at June 3, 2005 amounted to $175,000.  For the nine
month period ended June 3, 2005,  accrued  warranty  provisions  were reduced by
$47,000 for satisfied  warranty  claims and increased by $70,000 for  additional
estimated warranty claims.

Letters of Credit

We provide  standby  letters of credit in the  ordinary  course of  business  to
certain suppliers pursuant to manufacturing and purchasing  agreements.  At June
3, 2005, outstanding letters of credit amounted to $1,345,000.


                                       14
<PAGE>

Financing Agreements

The Company guarantees the bank loan facility of WCI. The bank facility provides
a maximum  available  credit limit of  $5,000,000.  At June 3, 2005, no balances
were outstanding on the loan facility.

Note 11 Quarterly Adjustments

During the second quarter of fiscal 2005,  based on a review of accrued  expense
liability  balances,  we made  adjustments to reduce  certain  accruals to bring
estimates in line with historical  experience and expected payout amounts.  As a
result of these adjustments,  cost of sales was reduced by $86,000, research and
development expenses by $19,000 and selling, general and administrative expenses
by $21,000.  Approximately  $37,000 (after taxes,  $24,000)  relates to accruals
made in the first  quarter of fiscal 2005 and  $89,000  (after  taxes,  $57,000)
relates to  accruals  made prior to fiscal  2005.  For the three and nine months
ended June 3, 2005, gross margin dollars and percentages were favorably impacted
by a one-time adjustment of accrued expenses of $218,000.

Note 12 Recent Accounting Pronouncements

In November  2004,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial Accounting Standards (SFAS) No. 151, "Inventory Costs -an
amendment of ARB No.43,  Chapter 4", which clarifies the accounting for abnormal
amounts of idle facility expense,  freight, handling costs, and wasted material.
SFAS No. 151 will be effective for inventory  costs incurred during fiscal years
beginning  after June 15,  2005.  We do not believe the adoption of SFAS No. 151
will have a material impact on our financial statements.

In December 2004, the FASB issued  Statement of Financial  Accounting  Standards
No. 123  (Revised  2004),  "Share-Based  Payment."  SFAS No. 123R  requires  all
share-based  payments to employees,  including grants of employee stock options,
to  be  recognized  as  compensation  expense  in  the  consolidated   financial
statements  based on their fair values.  This  standard is effective  for public
companies at the beginning of the first interim or annual period beginning after
June 15, 2005 and companies may elect to use either the  modified-prospective or
modified-retrospective   transition  method.  Under  the  modified-  prospective
method, awards that are granted, modified, or settled after the date of adoption
should be measured and accounted for in accordance with SFAS No. 123R.  Unvested
equity-classified  awards that were granted prior to the  effective  date should
continue to be accounted for in accordance with SFAS No. 123 except that amounts
must be recognized  in the income  statement.  Under the  modified-retrospective
approach,  the previously reported amounts are restated (either to the beginning
of the year of adoption or for all  periods  presented)  to reflect the SFAS No.
123 amounts in the income statement.  We are currently  evaluating the impact of
this standard and its transition  alternatives,  which may materially impact our
results of operations in the first quarter of fiscal 2006 and thereafter.


                                       15
<PAGE>

WEGENER CORPORATION AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

This information  should be read in conjunction with the consolidated  financial
statements and the notes thereto included in Item 1 of this Quarterly Report and
the audited consolidated financial statements and notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations for the
year ended  September 3, 2004,  contained in the Company's 2004 Annual Report on
Form 10-K.

Certain  statements  contained in this filing are  "forward-looking  statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, such
as  statements  relating  to  financial  results,  future  business  or  product
development  plans,  research  and  development  activities,  capital  spending,
financing  sources  or  capital   structure,   the  effects  of  regulation  and
competition,  and are thus  prospective.  Such  forward-looking  statements  are
subject to risks,  uncertainties  and other  factors,  which could cause  actual
results to differ  materially  from future results  expressed or implied by such
forward-looking  statements.  Potential risks and uncertainties include, but are
not limited to, economic  conditions,  customer plans and  commitments,  product
demand,  governmental regulation,  rapid technological developments and changes,
performance  issues with key  suppliers  and  subcontractors,  delays in product
development   and  testing,   availability   of  materials,   new  and  existing
well-capitalized  competitors, and other uncertainties detailed in the Company's
Form 10-K for the year ended  September  3,  2004,  and from time to time in the
Company's periodic Securities and Exchange Commission filings.

The Company,  through  Wegener(TM)  Communications,  Inc.  (WCI), a wholly-owned
subsidiary,  designs and manufactures  communications transmission and receiving
equipment for the business broadcast,  data communications,  cable and broadcast
radio and television industries.

OVERVIEW

We design and manufacture  satellite  communications  equipment  through Wegener
Communications, Inc. (WCI), a wholly-owned subsidiary. WCI is a leading provider
of  digital  solutions  for video,  audio and IP data  networks,  primarily  via
satellite  delivery.   Applications  include  broadcast  and  cable  television,
business television,  IP data delivery,  distance education,  business music and
radio networks.  COMPEL,  our patented network control system,  provides network
flexibility to regionalize programming, commercials and file transfers.

Our fiscal 2005 nine month revenues and operating results improved significantly
compared  to the same  period in fiscal  2004.  However,  our fiscal  2005 third
quarter revenues and operating results were below our internal  forecasts due to
lower than expected shippable  bookings for the period.  (For further discussion
see Current  Developments section below.) During the first nine months of fiscal
2005,  we received  bookings from Ascent Media for iPump Media Servers and Unity
receivers  for a private  network  application,  and for  equipment to convert a
television distribution network from analog to digital and upgrade the network's
capabilities with our iPump store and forward  technology.  Orders were received
and shipments made to Roberts  Communications Network for upgrades and expansion
of its network.  In addition,  the nine month period  benefited  from our fiscal
2004 fourth quarter booking of a large order from a new radio broadcast customer
and  from  shipments  to  Microspace   Communications   for  delivery  of  audio
programming for the Christian Radio Consortium. As we have previously indicated,
there may be fluctuations in operating  performance  from quarter to quarter due
to limited order visibility and the timing of significant orders from customers.
Due to the lower than  expected  bookings in the third  quarter  and  additional
shippable  bookings in the fourth  quarter that are required to meet our revenue
goals,  we do not believe  that  adequate  revenue will be generated in the near
term to result in a  profitable  fourth  quarter  or fiscal  2005 as  previously
planned.  Should the bookings and revenues not materialize,  we are committed to
reducing operating costs to bring them in line with revenue levels. In addition,
the  carrying  values of  deferred  tax assets and  long-lived  assets  could be
reduced if the current carrying values became impaired.  (For further discussion
see Results of Operations and Critical Accounting Policies sections below.)

Current Developments

Sales into the private  network market have been  unexpectedly  slow.  Customers
that we  expected  to place  orders in the second  half of fiscal 2005 had their
projects slip into our next fiscal year.  The slow sales in the private  network
market have caused us to reevaluate our  organization and product focus. We have
made major changes in our sales force and have expanded our development  efforts
toward iPump  applications for additional  markets.  We expect to book orders in
the fourth  quarter  that will start  driving  higher  revenues in fiscal  2006.
However,  as  indicated  above,  we do not believe  that these new markets  will
generate  adequate  revenue  in the near term to result in a  profitable  fourth
quarter or fiscal 2005.


                                       16
<PAGE>

We continue to invest in and develop our SMD 515 Streaming  Media Decoder Settop
for the telecom  market.  The SMD 515 Settop  enables  phone  companies to offer
television services,  including high definition, to existing DSL consumers. This
is a very large  market  opportunity  and we believe we are well  positioned  to
capture market share in this new and growing  sector.  Our first  generation SMD
515,  utilizing MPEG-2 streams,  was used by key technology  partners to display
high definition  video at the June Supercomm 2005  exhibition.  We are currently
working on the MPEG-4 / h.264 version of the SMD 515.  MPEG-4 is a key focus for
next generation video distribution network  architectures in satellite,  telecom
and cable markets.  However, due to industry delays in development of the latest
generation  chips,  we do not  anticipate  being  able to have  settop  products
available  for  shipment in this fiscal  year.  We believe we are well poised to
begin product  acceptance with strategic  partners and potential  customers when
production chips are available. We are continuing development of other products,
such as our iPump 615 Media Decoder,  iPump 622 Enterprise  Media Server and the
NAVE IIc Nielsen Audio Encoder, which we anticipate will contribute to increased
revenues in fiscal 2006.

During the first quarter of fiscal 2005, we booked an order for $9,600,000  from
a  business  music  network  customer.  This new order  extends  and  amends our
existing  multi-year  contract into fiscal year 2009. This order is reflected in
the total multi-year backlog as of June 3, 2005.

Financial Position and Liquidity

We have no long-term  debt or line of credit  borrowings  outstanding at June 3,
2005.  Our  cash and cash  equivalents  were  $1,671,000  at June 3,  2005.  Our
$5,000,000 bank loan facility, which is subject to availability advance formulas
based on  eligible  accounts  receivable,  import  letter of  credit  commitment
balances and  inventories,  is currently being used to support import letters of
credit issued to our offshore  manufacturers,  which at June 3, 2005 amounted to
$1,345,000.  At June 3, 2005,  approximately  $2,386,000 net of the  outstanding
letters of credit was available to borrow under the advance formulas.

(See the Liquidity and Capital Resources section for further discussion.)

RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED JUNE 3, 2005 COMPARED TO THREE AND NINE MONTHS ENDED
MAY 28, 2004

The following table sets forth, for the periods indicated, the components of the
results of operations as a percentage of sales:

<TABLE>
<CAPTION>
                                                      Three months ended         Nine months ended
                                                    ------------------------------------------------
                                                    June 3,        May 28,     June 3,       May 28,
                                                      2005          2004         2005         2004
                                                    ------------------------------------------------
<S>                                                   <C>          <C>          <C>          <C>
            Revenues                                  100.0%       100.0%       100.0%       100.0%
            Cost of products sold                      65.5         70.9         63.0         72.9
            Gross margin                               34.5         29.1         37.0         27.1
            Selling, general, and administrative       37.5         24.1         26.1         25.6
            Research & development                     19.7         16.6         14.2         16.2
            Operating income (loss)                   (22.7)       (11.5)        (3.4)       (14.7)
            Interest expense                           (0.4)        (0.7)        (0.3)        (0.5)
            Interest income                             0.3          0.5          0.1          0.3
            Earnings (loss) before income taxes       (22.8)       (11.7)        (3.5)       (14.9)
            Income tax expense (benefit)               (8.2)        (4.2)        (1.3)        (4.7)
            Net earnings (loss)                       (14.6)        (7.5)%       (2.2)       (10.3)%
                                                    ================================================
</TABLE>

The  operating  results for the three and nine month periods ended June 3, 2005,
were net losses of $(620,000)  or $(.05) per share and  $(380,000) or $(.03) per
share,  respectively,  compared to net losses of  $(357,000) or $(.03) per share
and $(1,461,000) or $(.12) per share for the same periods ended May 28, 2004.


                                       17
<PAGE>

Revenues - Revenues for the three months ended June 3, 2005  decreased  $524,000
or 11.0% to $4,253,000  from $4,777,000 for the three months ended May 28, 2004.
Revenues for the nine months ended June 3, 2005 increased $2,755,000 or 19.3% to
$16,996,000 from $14,241,000 for the nine months ended May 28, 2004.

Direct Broadcast Satellite (DBS) revenues (including service revenues) decreased
$274,000  or 6.1% in the  third  quarter  of  fiscal  2005  to  $4,202,000  from
$4,476,000 in the same period of fiscal 2004.  For the nine months ended June 3,
2005, DBS revenues increased $3,424,000 or 25.7% to $16,757,000 from $13,333,000
for the nine  months  ended May 28,  2004.  The  decrease  in fiscal  2005 third
quarter  revenues  was mainly due to a decrease in revenues to a business  music
network  customer as a result of the first  quarter  amendment  and extension of
their multi-year contract.  The fiscal 2005 nine month revenues included two new
orders from Ascent  Media of iPump Media  Servers,  digital  encoders  and Unity
receivers  for a  private  network  application  and  to  convert  a  television
distribution   network  from  analog  to  digital  and  upgrade  the   network's
capabilities with store and forward  technology.  Shipments continued to Roberts
Communications  Network  on  additional  orders  of uplink  equipment  and Unity
receivers to upgrade its existing network.  The first nine months of fiscal 2005
included shipments of transmission  equipment,  receivers and our Compel network
control  system to a new radio  broadcast  customer  for  network  upgrades  and
expansion and to Microspace Communications for delivery of audio programming for
the Christian Radio Consortium.

Telecom and Custom  Products Group revenues  decreased  $251,000 or 83.1% in the
third quarter of fiscal 2005 to $51,000 from $302,000 for the comparable  period
of fiscal  2004.  For the nine  months  ended June 3, 2005,  Telecom  and Custom
Products  Group revenues  decreased  $669,000 or 73.8% to $238,000 from $907,000
for the nine months ended May 28,  2004.  The decrease in revenues for the three
and six month periods reflected a decline in orders for older analog and cue and
control equipment.

For the three months ended June 3, 2005,  three  customers  accounted for 24.0%,
19.0%, and 17.6% of revenues,  respectively.  For the three months ended May 28,
2004,  three  customers  accounted  for  37.0%,  11.9%,  and 11.3% of  revenues,
respectively.  For the nine months ended June 3, 2005, four customers  accounted
for 24.6%, 16.7%,13.2% and 10.0% of revenues,  respectively. For the nine months
ended May 28, 2004,  two  customers  accounted  for 38.1% and 10.2% of revenues,
respectively.  Sales  to a  relatively  small  number  of major  customers  have
typically  comprised  a majority of our  revenues  and that trend is expected to
continue  throughout  fiscal  2005 and  beyond.  Our  backlog  is  comprised  of
undelivered,  firm customer orders,  which are scheduled to ship within eighteen
months.  WCI's backlog was approximately $12.8 million at June 3, 2005, compared
to $12.0 million at September 3, 2004, and $12.9 million at May 28, 2004.  Three
customers accounted for 58.6%, 12.9% and 11.3%, respectively,  of the backlog at
June 3, 2005. The total  multi-year  backlog at June 3, 2005, was  approximately
$26.4  million  compared to $21.0 million at September 3, 2004 and $20.3 million
at May 28, 2004.

Revenues and order backlog are subject to the timing of significant  orders from
customers, and as a result revenue levels may fluctuate from quarter to quarter.

Gross Profit Margins - The Company's gross profit margin  percentages were 34.5%
and 37.0% for the three and nine month periods  ended June 3, 2005,  compared to
29.1% and 27.1% for the three and nine month periods  ended May 28, 2004.  Gross
profit margin dollars  increased $75,000 or 5.4% and $2,419,000 or 62.6% for the
three and nine month  periods  ended June 3, 2005,  respectively,  from the same
periods  ended May 28,  2004.  For the three and nine months ended June 3, 2005,
gross  margin  dollars and  percentages  were  favorably  impacted by a one-time
adjustment of accrued expenses of $218,000.  Additionally, the first nine months
of fiscal 2005 benefited from increased  revenues,  which resulted in lower unit
fixed overhead costs and a favorable  product sales mix with lower variable cost
components.  Profit  margins in the three and nine month  periods of fiscal 2005
included  inventory  reserve charges of $50,000 and $75,000  compared to $75,000
and $225,000 for the same  periods of fiscal  2004.  Profit  margins in the nine
month period ended June 3, 2005, included adjustments to reduce cost of sales by
$68,000  related to reductions of certain  accrued  expenses (see Note 11 to the
consolidated financial statements).

Selling, General and Administrative - Selling, general and administrative (SG&A)
expenses  increased  $444,000 or 38.6% to $1,595,000  for the three months ended
June 3, 2005,  from  $1,151,000 for the same period of fiscal 2004. For the nine
months  ended  June 3,  2005,  SG&A  expenses  increased  $794,000  or  21.7% to
$4,444,000  from  $3,650,000 for the same period of fiscal 2004.  Corporate SG&A
expenses in the third  quarter  and first nine  months of fiscal 2005  increased
$197,000  and  $192,000,  respectively.  Corporate  SG&A  expenses  in the third
quarter and first nine months of fiscal 2004 included an insurance reimbursement
of  $191,000  for a portion of  corporate  legal  costs  expensed in fiscal 2003
related to  defending  the  Company  against an  unsolicited,  hostile  takeover
attempt by Radyne ComStream,  Inc. Sarbanes-Oxley compliance costs for the three
and nine  months  ended June 3, 2005 were  $42,000 and  $192,000,  respectively,
compared to none in fiscal 2004. WCI's SG&A expense increases in the third


                                       18
<PAGE>

quarter of fiscal  2005  included  higher  sales  salaries  of $87,000 due to an
increase in personnel,  increases in selling and  marketing  expenses of $95,000
due to increased  sales  activity and sales  commissions,  increases in bad debt
provisions of $50,000 and increases in relocation expenses and placement fees of
$43,000.  The increase in WCI's SG&A expenses in the first nine months of fiscal
2005 was mainly due to higher  sales  salaries of $262,000 due to an increase in
personnel,  increases  in selling and  marketing  expenses  of  $156,000  due to
increased sales activity and sales  commissions,  higher consulting  expenses of
$164,000 and  increases in relocation  expenses and  placement  fees of $36,000.
These expenses were offset by lower  professional  fees at WCI of $60,000.  As a
percentage  of revenues,  SG&A  expenses  were 37.5% and 26.1% for the three and
nine month periods ended June 3, 2005, respectively, compared to 24.1% and 25.6%
for the same  periods of fiscal  2004.  SG&A  expenses in the nine month  period
ended June 3, 2005,  included  adjustments  to reduce  primarily  insurance  and
property  tax  expenses  by $11,000  related to  reductions  of certain  accrued
expenses (see Note 11 to the consolidated financial statements).

Research  and  Development  -  Research  and  development  (R&D)   expenditures,
including  capitalized  software  development costs, were $1,223,000 or 28.8% of
revenues,  and  $3,617,000  or 21.3% of  revenues,  for the three and nine month
periods ended June 3, 2005,  compared to  $1,174,000  or 24.6% of revenues,  and
$3,668,000  or  25.8%  of  revenues,  for  the  same  periods  of  fiscal  2004.
Capitalized  software  development costs amounted to $387,000 and $1,206,000 for
the third  quarter and first nine months of fiscal 2005 compared to $382,000 and
$1,360,000  for the same periods of fiscal 2004.  The  decreases in  capitalized
software  costs in the first  nine  months of fiscal  2005 are due to  decreased
expenditures  on the iPump Media  Server,  UNITY4600 and DTV series 700 products
which were partially  offset by increased  expenditures  on the SMD 515 product.
Research and development expenses,  excluding capitalized software expenditures,
were $836,000 or 19.7% of revenues, and $2,411,000 or 14.2% of revenues, for the
three and nine months ended June 3, 2005, respectively,  compared to $792,000 or
16.6% of revenues,  and $2,308,000 or 16.2% of revenues, for the same periods of
fiscal 2004, respectively.  The increases in R&D expenses for the three and nine
months  ended June 3,  2005,  are mainly  due to  increased  placement  fees and
prototype part costs.  R&D expenses in the nine month period ended June 3, 2005,
included  adjustments to reduce primarily insurance and property tax expenses by
$10,000  related to reductions of certain  accrued  expenses (see Note 11 to the
consolidated   financial   statements).   The   expenditures  for  research  and
development  for the fourth quarter of fiscal 2005 are expected to be comparable
to those of the third quarter.

Interest Expense - Interest expense  decreased  $15,000 to $16,000 for the three
months ended June 3, 2005 as compared to fiscal 2004.  For the nine months ended
June 3, 2005,  interest expense  decreased $28,000 to $46,000 as compared to the
same period in fiscal 2004.  The  decreases for the three and nine month periods
in fiscal  2005 were  primarily  due to a decrease  in the  average  outstanding
letter of credit commitment balances.

Interest Income - Interest income was $12,000 and $22,000 for the three and nine
month periods  ended June 3, 2005,  compared to $24,000 and $38,000 for the same
periods  ended May 28, 2004.  The  decreases for the three and nine months ended
June 3,  2005  were  mainly  due to  lower  average  balances  of cash  and cash
equivalents.

Income Tax Expenses - For the nine months ended June 3, 2005, income tax benefit
of  $214,000  was  comprised  of a  deferred  federal  and state tax  benefit of
$202,000 and $12,000,  respectively.  Net deferred tax assets increased $214,000
in the first  nine  months  of fiscal  2005 to  $4,383,000,  principally  due to
increases in net operating loss carryforwards during the period.  Realization of
deferred tax assets is dependent on generating  sufficient future taxable income
prior  to  the  expiration  of  the  loss  and  credit  carryforwards.  Although
realization is not assured,  management believes it is more likely than not that
all of the  deferred  tax assets will be  realized  based on the backlog and our
financial  projections.  The  amount of the tax  assets  considered  realizable,
however, could be reduced in the near term if estimates of future taxable income
during the carryforward period are reduced.

CRITICAL ACCOUNTING POLICIES

Certain accounting policies are very important to the portrayal of our financial
condition and results of operations and require  management's most subjective or
difficult judgements. These policies are as follows:

Revenue  Recognition - Our revenue  recognition  policies are in compliance with
Staff Accounting  Bulletin (SAB) No. 104,  "Revenue  Recognition",  SAB No. 101,
"Revenue Recognition in Financial Statements" and EITF Issue No. 00-21, "Revenue
Arrangements with Multiple  Deliverables." Revenue is recognized when persuasive
evidence of an agreement with the customer exists, products are shipped or title
passes pursuant to the terms of the agreement with the customer,  the amount due
from the  customer  is  fixed  or  determinable,  collectibility  is  reasonably
assured,  and there are no significant future performance  obligations.  Service
revenues are  recognized  at the time of  performance.  Revenues  from  separate
service  maintenance  agreements  are  recognized  ratably  over the term of the
agreements.  We recognize revenue in certain  circumstances  before delivery has
occurred  (commonly  referred  to as  "bill  and  hold"  transactions).  In such
circumstances,  among other  things,  risk of ownership has passed to the buyer,
the buyer has made a written fixed  commitment  to purchase the finished  goods,
the buyer has requested the finished goods be held for future delivery as


                                       19
<PAGE>

scheduled and designated by the buyer, and no additional performance obligations
exist by us. For these  transactions,  the finished  goods are  segregated  from
inventory  and normal  billing and credit terms are  granted.  For the three and
nine  months  ended  June 3,  2005,  revenues  in the  amount  of  $534,000  and
$3,412,000,  respectively, were appropriately recorded prior to delivery as bill
and hold  transactions  in accordance with the provisions of SAB 104. At June 3,
2005, accounts receivable for these revenues amounted to $534,000. Subsequent to
June 3, 2005, payments in the amount of $534,000 were received on these accounts
receivable.

These policies require  management,  at the time of the  transaction,  to assess
whether the  amounts due are fixed or  determinable,  collection  is  reasonably
assured,  and if future  performance  obligations  exist.  These assessments are
based on the terms of the agreement  with the customer,  past history and credit
worthiness of the  customer.  If management  determines  that  collection is not
reasonably assured or future performance  obligations exist, revenue recognition
is deferred until these conditions are satisfied.

Our  principal  sources  of  revenues  are from the sales of  various  satellite
communications  equipment.  Embedded  in our  products is  internally  developed
software of varying applications. Historically, we have not sold or marketed our
software  separately or otherwise  licensed our software  apart from the related
communications equipment.  Should we begin to market or sell software whereby it
is more than an incidental  component of the hardware,  then we would  recognize
software  license  revenue in accordance  with SOP No. 97-2,  "Software  Revenue
Recognition" as amended by SOP No. 98-9,  "Software  Revenue  Recognition,  with
Respect to Certain Transactions."

Inventory  Reserves - Inventories  are valued at the lower of cost (at standard,
which  approximates  actual  cost on a  first-in,  first-out  basis) or  market.
Inventories include the cost of raw materials, labor and manufacturing overhead.
We make inventory reserve provisions for obsolete or slow-moving  inventories as
necessary to properly reflect inventory value. These reserves are to provide for
items that are potentially  slow-moving,  excess or obsolete.  Changes in market
conditions,  lower than expected customer demand and rapidly changing technology
could result in additional obsolete and slow-moving inventory that is unsaleable
or saleable at reduced prices,  which could require additional inventory reserve
provisions. At June 3, 2005, inventories, net of reserve provisions, amounted to
$3,242,000.

Capitalized   Software  Costs  -  Software  development  costs  are  capitalized
subsequent to  establishing  technological  feasibility.  Capitalized  costs are
amortized  based on the larger of the amounts  computed using (a) the ratio that
current  gross  revenues  for each  product  bears to the total of  current  and
anticipated  future gross  revenues for that product,  or (b) the  straight-line
method over the  remaining  estimated  economic  life of the  product.  Expected
future  revenues and  estimated  economic  lives are subject to revisions due to
market conditions,  technology changes and other factors resulting in shortfalls
of expected revenues or reduced economic lives, which could result in additional
amortization expense or write-offs. At June 3, 2005, capitalized software costs,
net of accumulated amortization, amounted to $1,812,000.

Deferred Tax Asset Valuation  Allowance - Deferred tax assets are recognized for
deductible temporary differences,  net operating loss carryforwards,  and credit
carryforwards  if it is more  likely  than  not that  the tax  benefits  will be
realized. Realization of the Company's deferred tax assets depends on generating
sufficient  future taxable income prior to the expiration of the loss and credit
carryforwards. Although realization is not assured, we believe it is more likely
than not that all of the  deferred  tax  assets  will be  realized  based on the
backlog and our  financial  projections.  The amount of the  deferred tax assets
considered  realizable,  however, could be reduced in the near term if estimates
of future  taxable  income  during  the  carryforward  period are  reduced.  Any
reduction  in the  realizable  value of deferred  tax assets  would  result in a
charge to income tax  expense  in the period  such  determination  was made.  In
addition,  any  reductions  in  corporate  federal  tax rates  would  reduce the
carrying  value of deferred tax assets.  Each 1% reduction in corporate  federal
tax rates would reduce deferred tax assets by approximately $35,000 based on the
deferred  tax asset  balances  at June 3, 2005.  At June 3, 2005,  deferred  tax
assets,  net  of  valuation  allowances,   amounted  to  $4,383,000,   of  which
approximately  $2,588,000  relates to net  operating  loss  carryforwards  which
expire  beginning in fiscal 2020  through  2025,  and $199,000  relates to state
income tax credits expiring in fiscal 2009.

Accounts Receivable Valuation - We maintain allowances for doubtful accounts for
estimated  losses resulting from the inability of our customers to make required
payments.  If the  financial  condition of our  customers  were to  deteriorate,
resulting  in an  impairment  of  their  ability  to make  payments,  additional
allowances  would be  required.  At June 3, 2005,  accounts  receivable,  net of
allowances for doubtful accounts, amounted to $2,388,000.


                                       20
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
NINE MONTHS ENDED JUNE 3, 2005

At June 3, 2005, our primary sources of liquidity were cash and cash equivalents
of  $1,671,000  and a  $5,000,000  bank  loan  facility,  which  is  subject  to
availability  advance  formulas based on eligible  accounts  receivable,  import
letter  of  credit  commitment  balances  and  inventories.  At  June  3,  2005,
approximately $2,386,000,  net of outstanding letters of credit in the amount of
$1,345,000,  was available to borrow under the advance  formulas.  Cash and cash
equivalents increased $150,000 during the first nine months of fiscal 2005.

During the first  nine  months of fiscal  2005,  operating  activities  provided
$1,721,000  of  cash.  Net  earnings  adjusted  for  noncash  expenses  provided
$1,170,000 of cash. Changes in accounts receivable and customer deposit balances
provided  $379,000  of cash and  changes in  inventories,  accounts  payable and
accrued  expenses,  and other  assets  provided  $172,000 of cash.  Cash used by
investing  activities  was $315,000 for  property  and  equipment  expenditures,
$1,206,000 for  capitalized  software  additions and $119,000 for legal expenses
related  to the filing of  applications  for  various  patents  and  trademarks.
Financing  activities  provided  $70,000  of cash  from  the  exercise  of stock
options.

WCI's bank loan facility provides a maximum available credit limit of $5,000,000
with sublimits as defined.  The loan facility  matures on June 30, 2006, or upon
demand and requires an annual  facility fee of .75% of the maximum credit limit.
The loan facility  consists of a term loan and a revolving line of credit with a
combined  borrowing  limit of $5,000,000,  bearing  interest at the bank's prime
rate (6.00% at June 3, 2005).

The term loan facility  provides for a maximum of $1,000,000  for advances of up
to 80% of the cost of  equipment  acquisitions.  Principal  advances are payable
monthly over sixty months with a balloon payment due at maturity.  The revolving
line of credit is  subject  to  availability  advance  formulas  of 80%  against
eligible accounts receivable; 20% of eligible raw materials inventories;  20% of
eligible  work-in-process  kit inventories;  and 40% to 50% of eligible finished
goods  inventories and 50% of import letter of credit commitment  balances.  The
loan is  secured  by a first lien on  substantially  all of WCI's  assets and is
guaranteed by Wegener Corporation. At June 3, 2005, no balances were outstanding
on the revolving  line of credit or the equipment term loan portions of the loan
facility. The loan facility is currently being used to support import letters of
credit  issued to  offshore  manufacturers,  which at June 3, 2005  amounted  to
$1,345,000.  At June  3,  2005,  approximately  $2,386,000,  net of  outstanding
letters of credit, was available to borrow under the advance formulas.

We are required to maintain a minimum  tangible net worth with annual  increases
at each fiscal year end  commencing  with fiscal year 2005,  retain  certain key
employees,  maintain  certain  financial  ratios,  and are precluded from paying
dividends.  At June 3,  2005,  we were in  compliance  with  all  loan  facility
covenants.

In addition,  at June 3, 2005, we had land and buildings and  improvements
with a cost basis of $4,454,000 which had no mortgage balances outstanding. Land
and  buildings  are  not  currently   used  in  the  existing  loan   facility's
availability advance formulas; however, we believe these assets could be used to
support  additional  borrowing  capacities either with our existing bank or from
other sources.

We have three manufacturing and purchasing agreements for certain finished goods
inventories.  At June 3, 2005,  outstanding  purchase  commitments  under  these
agreements amounted to $5,507,000.  Pursuant to the above agreements, at June 3,
2005, we had outstanding letters of credit in the amount of $1,345,000.

During the first  quarter of fiscal  2004,  the Company  entered into a two-year
agreement  aggregating  $870,000 for engineering design and software development
services.  At June 3, 2005, the outstanding  commitment  under the agreement was
$181,000.

The  Company  has never paid cash  dividends  on its  common  stock and does not
intend to pay cash dividends in the foreseeable future.


                                       21
<PAGE>

A summary of our long-term contractual obligations as of June 3, 2005 consisted
of:

<TABLE>
<CAPTION>
                                                              Payments Due by Period
                                        ----------------------------------------------------------------
                                                             Fiscal            Fiscal            Fiscal
            Contractual Obligations        Total              2005           2006-2007         2008-2009
            -----------------------     ----------------------------------------------------------------
<S>                                     <C>               <C>               <C>               <C>
            Operating leases            $  261,000        $   38,000        $  219,000        $    4,000

            Purchase commitments         5,688,000         3,144,000         2,544,000                --
                                        ----------------------------------------------------------------

            Total                       $5,949,000        $3,182,000        $2,763,000        $    4,000
                                        ================================================================
</TABLE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market rate risk for changes in interest rates relates primarily
to our  revolving  line of credit and cash  equivalents.  The  interest  rate on
certain advances under the line of credit and term loan facility fluctuates with
the bank's  prime rate.  There were no  borrowings  outstanding  at June 3, 2005
subject to variable interest rate fluctuations.

At June 3, 2005, our cash equivalents  consisted of bank commercial paper in the
amount of $1,625,000.  The cash  equivalents  have maturities of less than three
months and therefore are subject to minimal market risk.

We do not enter into derivative financial  instruments.  All sales and purchases
are denominated in U.S. dollars.


                                       22
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

The  Company  carried  out an  evaluation,  under the  supervision  and with the
participation of the Company's management, including the Chief Executive Officer
(CEO) and the Chief Financial  Officer (CFO), of the effectiveness of the design
and operation of the Company's  disclosure controls and procedures as of the end
of the period covered by this report (June 3, 2005). Based upon that evaluation,
the Company's CEO and CFO have concluded that the Company's  disclosure controls
and  procedures  (as defined in Rules  13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, as amended) are effective. There has been no change in the
Company's  internal  control  over  financial   reporting  that  has  materially
affected,  or is reasonably likely to materially  affect, the Company's internal
control over financial reporting.


                                       23
<PAGE>

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS

The  following  documents  are filed as  exhibits  to this  report.  An asterisk
identifies those exhibits  previously filed and incorporated herein by reference
below.  For each such  exhibit  there is shown  the  description  of the  actual
filing. Exhibits which are not required for this report are omitted.

       Exhibit Number    Description of Document
       --------------    -----------------------

            *3.1  Certificate of  Incorporation  as amended through May 4, 1989,
                  (1989 10-K,  filed  November 30, 1989,  SEC file No.  0-11003,
                  Exhibit 3.2).

            *3.2  Amendment to Certificate of  Incorporation  (1997 10-Q,  filed
                  June 27, 1997, SEC file No. 0-11003, Exhibit 3.1).

            *3.3  Amended and  Restated  By-laws  (Form 8-K,  dated as of May 1,
                  2003 and  filed May 6,  2003,  SEC file No.  0-11003,  Exhibit
                  3.1).

            31.1  Certification of Chief Executive  Officer  Regarding  Periodic
                  Report Containing Financial Statements Pursuant to Section 302
                  of the Sarbanes-Oxley Act of 2002.

            31.2  Certification of Chief Financial  Officer  Regarding  Periodic
                  Report Containing Financial Statements Pursuant to Section 302
                  of the Sarbanes-Oxley Act of 2002.

            32.1  Certification of Chief Executive  Officer  Regarding  Periodic
                  Report Containing Financial Statements Pursuant to Section 906
                  of the Sarbanes-Oxley Act of 2002.

            32.2  Certification of Chief Financial  Officer  Regarding  Periodic
                  Report Containing Financial Statements Pursuant to Section 906
                  of the Sarbanes-Oxley Act of 2002.


                                       24
<PAGE>

                                   SIGNATURES

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

                                WEGENER CORPORATION
                                ------------------------
                                (Registrant)


Date: July 15, 2005             By: /s/ Robert A. Placek
                                    --------------------------------------------
                                    Robert A. Placek
                                    President
                                    (Principal Executive Officer)


Date: July 15, 2005             By: /s/ C. Troy Woodbury, Jr.
                                    --------------------------------------------
                                    C. Troy Woodbury, Jr.
                                    Treasurer and Chief
                                    Financial Officer
                                    (Principal Financial and Accounting Officer)


                                       25