**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 THESECURITIES EXCHANGE ACT OF
      1934**




For
      the
      quarterly period ended November 30, 2007




**OR**


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




For
      the
      transition period from
      ______________________________to_____________________________




Commission
      file No. 0-11003


**WEGENER
      CORPORATION**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            
            **81-0371341**(State
                or other jurisdiction
            
            (I.R.S.
                Employerof
                incorporation or organization)
            
            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 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 Act).  **Yes o** **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
            
            12,647,051
                SharesClass
            
            Outstanding
                at December 29, 2007








**WEGENER
      CORPORATION AND SUBSIDIARIES**


**Form
      10-Q For the Quarter Ended November 30, 2007**





**INDEX**




Page**PART
              I.**
            **Financial
              Information**Item
                1.
            Financial
                StatementsIntroduction
            3Consolidated
                Statements of Operations(Unaudited)
                - Three Months EndedNovember
                30, 2007 and December 1, 2006
            4Consolidated
                Balance Sheets - November 30,2007
                (Unaudited) and August 31, 2007 Form 10-K for the year ended August
                31,
                2007
            5Consolidated
                Statements of Shareholders' Equity(Unaudited)
                - Three Months Ended November 30,2007
                and December 1, 2006
            6Consolidated
                Statements of Cash Flows(Unaudited)
                - Three Months Ended November 30,2007
                and December 1, 2006
            7Notes
                to Consolidated FinancialStatements
                (Unaudited)
            8Item
                2.
            Management's
                Discussion and Analysis of FinancialCondition
                and Results of Operations
            16Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            21Item
                4.
            Controls
                and Procedures
            21Item
                4T.
            Controls
                and Procedures
            21**PART
              II.**
            **Other
              Information**Item
                1.
            Legal
                Proceedings
            21Item
                1A.
            Risk
                Factors
            21Item
                6.
            Exhibits
            23Signatures
            24





2





**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 November 30, 2007; the consolidated statements
      of shareholders' equity as of November 30, 2007 and December 1, 2006; the
      consolidated statements of operations for the three months ended November 30,
      2007 and December 1, 2006; and the consolidated statements of cash flows for
      the
      three months ended November 30, 2007 and December 1, 2006 have been prepared
      without audit. The consolidated balance sheet as of August 31, 2007 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 August 31,
      2007, File No. 0-11003.





In
      the
      opinion of management of the Company, the statements for the unaudited interim
      periods presented include all adjustments, which were of a normal recurring
      nature, 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


**WEGENER
        CORPORATION AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **(Unaudited)**
 
 Three months ended**November 30,**
                **2007**
              
              December 1,
                2006Revenues,
                  net
              
              **$**
              **5,025,929**
              
              $
              4,783,477Operating
                  costs and expenses
              
              
              **2,962,739**
              
              
              3,605,503Cost
                  of products sold
              
              
              **1,263,517**
              
              
              1,298,518Selling,
                  general, and administrative
              
              
              **809,037**
              
              
              820,962Research
                  and developmentOperating
                  costs and expenses
              
              
              **5,035,293**
              
              
              5,724,983Operating
                  loss
              
              
              **(9,364**
              **)**
              
              (941,506
              )Interest
                  expense
              
              
              **(41,706**
              **)**
              
              (25,764
              )Interest
                  income
              
              
              **563**
              
              
              5,320Net
                  loss
              
              **$**
              **(50,507**
              **)**
              $
              (961,950
              )Net
                  loss per share:Basic
              
              **$**
              *****
              
              $
              (0.08
              )Diluted
              
              **$**
              *****
              
              $
              (0.08
              )Shares
                  used in per share calculationBasic
              
              
              **12,647,051**
              
              
              12,579,051Diluted
              
              
              **12,647,051**
              
              
              12,579,051
 
 *
        Less
        than $ (0.01) per share
 
 See
        accompanying notes to consolidated financial statements.
 
 4
 
 **WEGENER
        CORPORATION AND SUBSIDIARIES**
 **CONSOLIDATED
        BALANCE SHEETS**
 
 **November
                  30,**
              
              August
                  31,**2007**
              
              2007**(Unaudited)****Assets**Current
                  assetsCash
                  and cash equivalents
              
              **$**
              **8,813**
              
              $
              6,728Accounts
                  receivable, net
              
              
              **3,754,768**
              
              
              5,172,348Inventories,
                  net
              
              
              **4,194,635**
              
              
              3,380,410Other
              
              
              **171,103**
              
              
              194,847Total
                  current assets
              
              
              **8,129,319**
              
              
              8,754,333Property
                  and equipment, net
              
              
              **1,710,685**
              
              
              1,777,677Capitalized
                  software costs, net
              
              
              **1,144,090**
              
              
              1,241,577Other
                  assets
              
              
              **613,047**
              
              
              684,238Land
                  held for sale
              
              
              **353,712**
              
              
              353,712Total
                  assets
              
              **$**
              **11,950,853**
              
              $
              12,811,537**Liabilities
                  and Shareholders’ Equity**Current
                  liabilitiesBank
                  line of credit
              
              **$**
              **795,659**
              
              $
              2,015,704Accounts
                  payable
              
              
              **2,214,256**
              
              
              1,145,327Accrued
                  expenses
              
              
              **2,129,204**
              
              
              2,609,222Deferred
                  revenue
              
              
              **650,669**
              
              
              774,183Customer
                  deposits
              
              
              **1,815,144**
              
              
              1,870,673Total
                  current liabilities
              
              
              **7,604,932**
              
              
              8,415,109Commitments
                  and contingenciesShareholders’
                  equityCommon
                  stock, $.01 par value; 20,000,000 shares authorized; 12,647,051
                  and
                  12,647,051 shares respectively, issued and outstanding
              
              
              **126,471**
              
              
              126,471Additional
                  paid-in capital
              
              
              **19,999,022**
              
              
              19,999,022Deficit
              
              
              **(15,779,572**
              **)**
              
              (15,729,065
              )Total
                  shareholders’ equity
              
              
              **4,345,921**
              
              
              4,396,428Total
                  liabilities and shareholders’ equity
              
              **$**
              **11,950,853**
              
              $
              12,811,537
 
 See
        accompanying notes to consolidated financial statements.
  5
  **WEGENER
        CORPORATION AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF SHAREHOLDERS’ EQUITY**
 **(Unaudited)**
 
 AdditionalCommon
                  Stock
              
              Paid-inShares
              
              Amount
              
              Capital
              
              DeficitBalance
                  at September 1, 2006
              
              
              12,579,051
              
              $
              125,791
              
              $
              19,924,915
              
              $
              (14,976,303
              )Share-based
                  compensation
              
              
              -
              
              
              -
              
              
              1,667
              
              
              -Net
                  loss for the three months
              
              
              -
              
              
              -
              
              
              -
              
              
              (961,950
              )BALANCE
                  at December 1, 2006
              
              
              12,579,051
              
              $
              125,791
              
              $
              19,926,582
              
              $
              (15,938,253
              )Balance
                  at August 31, 2007
              
              
              12,647,051
              
              $
              126,471
              
              $
              19,999,022
              
              $
              (15,729,065
              )Net
                  loss for the three months
              
              
              -
              
              
              -
              
              
              -
              
              
              (50,507
              )BALANCE
                  at November 30, 2007
              
              
              12,647,051
              
              $
              126,471
              
              $
              19,999,022
              
              $
              (15,779,572
              )
 
 See
        accompanying notes to consolidated financial statements.
  6
  **WEGENER
        CORPORATION AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **(Unaudited)**
 Three months ended**November 30,**
                  **2007**
                
                December 1,
                  2006**Cash
                    flows from operating activities**Net
                    loss
                
                **$**
                **(50,507**
                **)**
                $
                (961,950
                )Adjustments
                    to reconcile net loss to cash provided by operating activitiesDepreciation
                    and amortization
                
                
                **465,276**
                
                
                566,632Share-based
                    compensation expense
                
                
                **-**
                
                
                1,667Provision
                    for bad debts
                
                
                **15,000**
                
                
                -Provision
                    for inventory reserves
                
                
                **-**
                
                
                75,000Provision
                    for warranty reserves
                
                
                **-**
                
                
                100,000Changes
                    in assets and liabilitiesAccounts
                    receivable
                
                
                **1,402,580**
                
                
                (71,746
                )Inventories
                
                
                **(814,225**
                **)**
                
                (251,468
                )Other
                    assets
                
                
                **23,743**
                
                
                112,695Accounts
                    payable
                
                
                **1,068,929**
                
                
                1,130,079Accrued
                    expenses
                
                
                **(480,018**
                **)**
                
                27,135Deferred
                    revenue
                
                
                **(123,514**
                **)**
                
                (165,270
                )Customer
                    deposits
                
                
                **(55,529**
                **)**
                
                507,759Net
                    cash provided by operating activities
                
                
                **1,451,735**
                
                
                1,070,533**Cash
                    flows from investment activities**Property
                    and equipment expenditures
                
                
                **(36,014**
                **)**
                
                (79,723
                )Capitalized
                    software additions
                
                
                **(193,125**
                **)**
                
                (375,727
                )License
                    agreement, patent, and trademark expenditures
                
                
                **(466**
                **)**
                
                (4,864
                )Net
                    cash used for investing activities
                
                
                **(229,605**
                **)**
                
                (460,314
                )**Cash
                    flows from financing activities**Net
                    repayments under revolving line of credit
                
                
                **(1,220,045**
                **)**
                
                -Net
                    cash used by financing activities
                
                
                **(1,220,045**
                **)**
                
                -Increase
                    in cash and cash equivalents
                
                
                **2,085**
                
                
                610,219Cash
                    and cash equivalents, beginning of period
                
                
                **6,728**
                
                
                958,784Cash
                    and cash equivalents, end of period
                
                **$**
                **8,813**
                
                $
                1,569,003Supplemental
                    disclosure of cash flow information:Cash
                    paid for:Interest
                
                **$**
                **41,706**
                
                $
                25,764
 See
        accompanying notes to consolidated financial statements.
  7




**WEGENER
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





**Note
      1**  **Significant
      Accounting Policies**


The
      significant accounting policies followed by the Company are set forth in Note
      1
      to our audited consolidated financial statements included in the annual report
      on Form 10-K for the year ended August 31, 2007.





**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. Extended service maintenance contract
      revenues are recognized ratably over the maintenance contract term, which is
      typically one year. The unrecognized revenue portion of maintenance contracts
      invoiced is recorded as deferred revenue. At November 30, 2007, deferred
      extended service maintenance revenues were $485,000 and deferred revenues
      related to future performance obligations were $166,000 and are expected to
      be
      recognized as revenue in varying amounts throughout fiscal 2008 and into fiscal
      2009.





We
      have
      recognized 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 to be held for future delivery as scheduled and
      designated by them, and no additional performance obligations by the Company
      exist. For these transactions, the finished goods are segregated from inventory
      and normal billing and credit terms are granted. For the three months ended
      November 30, 2007, no revenues were recorded as bill and hold
      transactions.





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
      no future performance obligations exist. These assessments are based on the
      terms of the agreement with the customer, past history and creditworthiness
      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 revenue are from the sales of various satellite
      communications equipment. Embedded in the Company’s products is internally
      developed software of varying applications. We
      evaluate our products to assess whether software is more than incidental to
      a
      product. When we conclude that software is more than incidental to a product,
      we
      will account for the product as a software product. Revenue on software products
      and software-related elements is recognized 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.” Significant
      judgment may be required in determining whether a product is a software or
      hardware product.





In
      accordance with EITF Issue 00-10, “Accounting for Shipping and Handling Fees and
      Costs,” we have included all shipping and handling billings to customers in
      revenues, and freight costs incurred for product shipments have been 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.


8


**Share-Based
      Compensation**


We
      account for share-based payments to employees, including grants of employee
      stock options, in
      accordance with Statement
      of Financial Accounting Standards (SFAS) No. 123 (Revised 2004), “Share-Based
      Payment” (SFAS 123R). SFAS 123R requires that these awards be recognized as
      compensation expense in the consolidated financial statements based on their
      fair values. That expense will be recognized over the period during which an
      employee is required to provide services in exchange for the award, known as
      the
      requisite service period (usually the vesting period). For the three months
      ended November 30, 2007 and December 1, 2006, stock-based compensation expense
      included in selling, general and administrative expenses amounted to $0 and
      $1,700, respectively. No options were granted during the three months ended
      November 30, 2007.





The
      following table summarizes stock option transactions for the three months ended
      November 30, 2007:





**Number**
              **of
                Shares**
            
            **Range
                of**
              **Exercise**
              **Prices**
            
            **Weighted**
              **Average**
              **Exercise
                Price**Outstanding
                at
              August
                31, 2007
            
            
            971,531
            
            $
            .63
                - 2.72
            
            $
            1.55Granted
            
            
            -
            
            
            -
            
            
            -Forfeited
                or cancelled
            
            
            (9,000
            )
            
            1.41
                - 2.21
            
            
            1.50**Outstanding
                at**
              **November
                30, 2007**
            
            
            **962,531**
            
            **$**
            **.63
                - 2.72**
            
            **$**
            **1.48****Available
                for issue at**
              **November
                30, 2007**
            
            
            **785,669**
            
            
            **-**
            
            
            **-****Options
                exercisable at**
              **November
                30, 2007**
            
            
            **1,160,531**
            
            **$**
            **.63
                - 2.72**
            
            **$**
            **1.48**August
                31, 2007
            
            
            971,531
            
            $
            .63
                - 2.72
            
            $
            1.56





The
      key
      terms of the stock options granted under our stock plans are included in the
      Company's Annual Report on Form 10-K for the fiscal year ended August 31,
      2007.





**Bank
      Overdrafts**


Bank
      overdrafts consist of outstanding checks that have not cleared our bank.
      Overdrafts are offset against cash balances to the extent that cash balances
      are
      available in the account on which the checks are issued. Remaining balances
      of
      overdrafts are included in our accounts payable balances. At November 30, 2007,
      outstanding checks in the amounts of $335,000 were included in accounts payable
      balances.





**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 revenue and expenses during the reporting period.
      Examples include provisions for bad debts, inventory obsolescence and
      warranties. Actual results could vary from these estimates.





**Fiscal
      Year**


We
      use a
      fifty-two, fifty-three week year. The fiscal year ends on the Friday closest
      to
      August 31. Fiscal years 2008 and 2007 contain fifty-two weeks.


9





**Note
      2**  **Accounts
      Receivable**


Accounts
      receivable are summarized as follows:





**November
                30,**
              **2007**
            
            August
                31,
              2007**(Unaudited)**Accounts
                receivable – trade
            
            **$**
            **3,944,821**
            
            $
            5,345,196Other
                receivables
            
            
            **75,863**
            
            
            78,468**4,020,684**
            
            
            5,423,664Less
                  allowance for doubtful accounts
            
            
            **(265,916**
            **)**
            
            (251,316
            )Accounts
                  receivable, net
            
            **$**
            **3,754,768**
            
            $
            5,172,348





**Note
      3**  **Inventories**


Inventories
      are summarized as follows:





**November
                30,**
              **2007**
            
            August
                31,
              2007**(Unaudited)**Raw
                material
            
            **$**
            **3,900,779**
            
            $
            3,482,396Work-in-process
            
            
            **968,096**
            
            
            962,286Finished
                goods
            
            
            **3,418,073**
            
            
            3,028,041**8,286,948**
            
            
            7,472,723Less
                inventory reserves
            
            
            **(4,092,313**
            **)**
            
            (4,092,313
            )Inventories,
                net
            
            **$**
            **4,194,635**
            
            $
            3,380,410





Our
      inventory reserve of approximately $4,092,000 at November 30, 2007 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 are reasonably possible should our sales
      efforts not be successful.





**Note
      4**  **Land
      Held for Sale**


During
      the third quarter of fiscal 2007, the Company’s Board of Directors authorized
      and approved the listing for sale of the 4.4 acres of undeveloped land located
      adjacent to the Company’s headquarters facility in Duluth (Johns Creek),
      Georgia. The Company evaluated the criteria of SFAS No. 144 (as amended),
“Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS No. 144)
      and concluded that these assets qualified as assets held for sale.  In
      accordance with SFAS No. 144, the land was reclassified to land held for sale
      at
      its historic carrying value of $354,000 (lower of carrying amount or fair value
      less costs to sell) in the consolidated balance sheet as of November 30, 2007.
      The land was acquired in August 1989 and no impairment charges were recorded
      related to the reclassification.


10





**Note
      5**  **Other
      Assets**


Other
      assets consist of the following:





**November
                30, 2007 (unaudited)****Cost**
            
            **Accumulated**
              **Amortization**
            
            **Net**License
                agreements
            
            **$**
            **933,800**
            
            **$**
            **(900,199**
            **)**
            **$**
            **33,601**Patents
                and patent applications
            
            
            **479,935**
            
            
            **(19,278**
            **)**
            
            **460,657**Trademarks
            
            
            **82,820**
            
            
            **(29,253**
            **)**
            
            **53,567**Loan
                facility fees
            
            
            **137,500**
            
            
            **(79,167**
            **)**
            
            **58,333**Other
            
            
            **6,889**
            
            
            **-**
            
            
            **6,889****$**
            **1,640,944**
            
            **$**
            **(1,027,897**
            **)**
            **$**
            **613,047**





August
                31, 2007Cost
            
            Accumulated
              Amortization
            
            NetLicense
                agreements
            
            $
            933,800
            
            $
            (862,198
            )
            $
            71,602Patents
                and patent applications
            
            
            472,551
            
            
            (14,006
            )
            
            458,545Trademarks
            
            
            89,736
            
            
            (25,867
            )
            
            63,869Loan
                facility fees
            
            
            137,500
            
            
            (54,167
            )
            
            83,333Other
            
            
            6,889
            
            
            -
            
            
            6,889$
            1,640,476
            
            $
            (956,238
            )
            $
            684,238





Amortization
      expense of other assets for the three months ended November 30, 2007 amounted
      to
      $71,000. Amortization expense of other assets for the three months ended
      December 1, 2006 amounted to $57,000.





We
      conduct an ongoing review of our intellectual property rights and potential
      trademarks. As of November 30, 2007, we have cumulatively incurred $268,000
      of
      legal fees related to the filing of applications for various patents and $1,000
      related to the filing of trademarks. Upon issuance, these costs will be
      amortized on a straight-line basis over the lesser of the legal life or their
      estimated useful lives. If it becomes more likely than not that the patent
      application will not be granted, we will write-off the deferred cost at that
      time. At November 30, 2007, the cost of registered patents and trademarks
      amounted to $212,000 and $82,000, respectively. Patents and trademarks are
      amortized over their estimated useful life of four to ten years. License
      agreements are amortized over their estimated useful life of one to five years.
      Loan facility fees are amortized over twelve months.





**Note
      6**  **Accrued
      Expenses**


Accrued
      expenses consist of the following:





**November
                30,**
              **2007**
            
            August
                31,
              2007**(unaudited)**Vacation
            
            **$**
            **551,950**
            
            $
            541,503Payroll
                and related expenses
            
            
            **265,959**
            
            
            382,690Royalties
            
            
            **65,852**
            
            
            76,989Warranty
            
            
            **520,052**
            
            
            534,052Taxes
                and insurance
            
            
            **55,534**
            
            
            61,935Commissions
            
            
            **129,239**
            
            
            104,876Professional
                fees
            
            
            **357,161**
            
            
            425,433Other
            
            
            **183,457**
            
            
            481,744**$**
            **2,129,204**
            
            $
            2,609,222


11





Accrued
      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 liabilities
      amounted to $520,000 at November 30, 2007 and $534,000 at August 31, 2007.
      For
      the three months ended November 30, 2007, the accrual was reduced by $14,000
      for
      satisfied warranty claims.





**Note
      7**  **Deferred
      Revenue**


Deferred
      revenue consists of the unrecognized revenue portion of extended service
      maintenance contracts and estimates of revenue related to future performance
      obligations. Extended service maintenance contract revenues are recognized
      ratably over the maintenance contract term, which is typically one year. At
      November 30, 2007, deferred extended service maintenance revenues were $485,000
      and deferred revenues related to future performance obligations were $166,000
      and are expected to be recognized as revenue in varying amounts throughout
      fiscal 2008 and into fiscal 2009.





**Note
      8**  **Liquidity**


Revolving
      Line of Credit and Term Loan Facility





WCI’s
      bank loan facility provides a maximum available credit limit of $5,000,000
      subject to availability advance formulas. The loan facility matures on September
      30, 2008, or upon demand, and requires an annual facility fee of 2% 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 (7.5% at November 30, 2007). The bank retained the
      right to adjust the interest rate, subject to the financial performance of
      the
      Company.





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
      60 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. In addition,
      the facility provides for advances in excess of the availability formulas of
      up
      to $1,000,000 during the term of the facility. The loan is secured by a first
      lien on substantially all of WCI’s assets, including land and buildings, and is
      guaranteed by Wegener Corporation. At November 30, 2007, balances outstanding
      on
      the revolving line of credit amounted to $796,000. No borrowings were
      outstanding under the equipment term loan portions of the loan facility. The
      loan facility is also used to support import letters of credit issued to
      offshore manufacturers, which at November 30, 2007 amounted to
      $534,000.





At
      November 30, 2007, approximately $3,299,000, net of outstanding letters of
      credit, was available to borrow under the advance formulas. During the first
      quarter of fiscal 2008, the average daily balance outstanding was $1,877,000
      and
      the highest outstanding balance was $3,274,000. During fiscal 2008 we expect
      the
      average daily balance to increase. We believe the loan facility will be
      sufficient to support operations over the next 12 months.





At
      November 30, 2007, we had land and buildings with a cost basis of $4,457,000
      (including land held for sale of $354,000). Although land and buildings are
      subject to a lien under the loan facility, they are not currently used in the
      existing loan facility’s availability advance formulas and have no mortgage
      balances outstanding. While no assurances may be given, we believe these assets
      could be used to support additional overall borrowing capacities either with
      our
      existing bank or from other sources. During the third quarter of fiscal 2007,
      the Company’s Board of Directors authorized and approved the listing for sale of
      the 4.4 acres of undeveloped land located adjacent to the Company’s headquarters
      facility in Duluth (Johns Creek), Georgia (see note 4 to the consolidated
      financial statements). Proceeds from the sale of the land would be used to
      pay
      any balances outstanding on the revolving line of credit.





Under
      the
      loan facility, at the end of fiscal 2008 we are required to maintain a minimum
      tangible net worth. In addition, we are required to retain certain executive
      officers, maintain certain financial ratios, and are precluded from paying
      dividends.





12


**Note
      9**  **Income
      Taxes**


For
      the
      three months ended November 30, 2007, no income tax benefit was recorded due
      to
      an increase in the deferred tax asset valuation allowance. The valuation
      allowance increased $18,000 in the first quarter of fiscal 2008. At November
      30,
      2007, net deferred tax assets of $6,037,000 were fully reserved by a valuation
      allowance.




At
      November 30, 2007, we had a federal net operating loss carryforward of
      approximately $9,753,000, which expires beginning fiscal 2020 through fiscal
      2028. Additionally, we had an alternative minimum tax credit of $138,000 and
      state income tax credits of $199,000 expiring in fiscal 2009, both of which
      were
      fully offset by the valuation allowance.




We
      adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income
      Taxes, an Interpretation of FASB Statement No. 109” (FIN 48) as of
      September 1, 2007, the first day of the first quarter of fiscal 2008. The
      adoption of FIN 48 had no impact on our financial position or results of
      operations. We are subject to U.S. federal income tax as well as income tax
      of
      numerous state jurisdictions. We are subject to U.S. federal tax examinations
      by
      tax authorities for fiscal years 2004 through 2007. Income tax examinations
      that
      we may be subject to from the various state taxing authorities vary by
      jurisdiction. Our policy under FIN 48 for penalties and interest is to include
      such amounts, if any, in income tax expense.





**Note
      10**  **Earnings
      Per Share**


The
      following table presents required disclosure of the reconciliation of the
      numerators and denominators of the basic and diluted net (loss) earnings per
      share computations. The calculation of earnings per share is subject to rounding
      differences.


Three
                    months ended**November
                    30, 2007**
                
                December
                    1, 2006**Earnings**
                  **(Numerator)**
                
                **Shares**
                  **(Denominator)**
                
                **Per**
                  **share**
                  **amount**
                
                Earnings
                    (Numerator)
                
                Shares
                    (Denominator)
                
                Per
                  share
                  amountNet
                    (loss) earnings
                
                **$**
                **(50,507**
                **)**
                
                
                
                
                
                
                $
                (961,950
                )Basic
                    (loss) earnings per share:Net
                    (loss) earnings availableto
                    common shareholders
                
                **$**
                **(50,507**
                **)**
                
                **12,647,051**
                
                **$**
                *****
                
                $
                (961,950
                )
                
                12,579,051
                
                $
                (0.08
                )Effect
                    of dilutive potentialcommon
                    shares:Stock
                    options
                
                
                **-**
                
                
                **-**
                
                
                
                
                
                -
                
                
                -Diluted
                    (loss) earnings per share:Net
                    (loss) earnings availableto
                    common shareholders
                
                **$**
                **(50,507**
                **)**
                
                **12,647,051**
                
                **$**
                *****
                
                $
                (961,950
                )
                
                12,579,051
                
                $
                (0.08
                )





*
      Less
      than $(0.01) per share





Stock
      options which were excluded from the diluted net (loss) earnings per share
      calculation due to their antidilutive effect are as follows:





Three
                  months ended**November
                  30,**
                **2007**
              
              December
                  1,
                2006Common
                  stock options:Number
                  of shares
              
              
              **962,531**
              
              
              1,160,531Range
                  of exercise prices
              
              
              **$.63
                    to $2.72**
              
              
              $.63
                    to $2.72




13




**Note
      11**  **Segment
      Information and Concentrations**


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 revenue as
      follows:


Three
                  months ended**November
                  30,**
                **2007**
              
              December
                  1,
                2006Product
                  LineDirect
                  Broadcast Satellite
              
              **$**
              **4,850,211**
              
              $
              4,632,221Telecom
                  and Custom Products
              
              
              **11,673**
              
              
              5,269Service
              
              
              **164,045**
              
              
              145,987Revenues,
                  net
              
              **$**
              **5,025,929**
              
              $
              4,783,477





Concentration
      of products representing 10% or more of the respective period’s revenues are as
      follows:


Three
                  months ended**November
                  30,**
                **2007**
              
              December
                  1,
                2006ProductiPump
                  Media Server
              
              
              **11.7**%****
              
              
              31.6%Unity
                  4600 and 4650
              
              
              **35.7**%****
              
              
              26.6%Unity
                  201 audio receiver
              
              
              **(a)**
              
              
              10.1%




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




Products
      representing 10% or more of annual revenues are subject to fluctuations from
      quarter to quarter as new products and technologies are introduced, new product
      features and enhancements are added and as customers upgrade or expand their
      network operations.




Revenues
      by geographic areas are as follows:


Three
                  months ended**November
                  30,**
                **2007**
              
              December
                  1,
                2006Geographic
                  AreaUnited
                  States
              
              **$**
              **3,848,686**
              
              $
              4,430,637Latin
                  America
              
              
              **826,996**
              
              
              36,520Canada
              
              
              **267,521**
              
              
              25,004Europe
              
              
              **57,680**
              
              
              287,036Other
              
              
              **25,046**
              
              
              4,280Revenues,
                  net
              
              **$**
              **5,025,929**
              
              $
              4,783,477




14




Customers
      representing 10% or more of the respective periods’ revenues are as
      follows:


Three
                  months ended**November
                  30,**
                **2007**
              
              December
                  1,
                2006Customer
                  1
              
              
              **19.6**%****
              
              
              (a)Customer
                  2
              
              
              **19.2**%****
              
              
              (a)Customer
                  3
              
              
              **13.8**%****
              
              
              (a)Customer
                  4
              
              
              **(a**)****
              
              
              30.4%Customer
                  5
              
              
              **(a**)****
              
              
              12.3%Customer
                  4
              
              
              **(a**)****
              
              
              10.3%





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




**Note
      12 Commitments**





We
      have
      three manufacturing and purchasing agreements for certain finished goods
      inventories. At November 30, 2007, outstanding purchase commitments under these
      agreements amounted to $2,357,000. Pursuant to the above agreements, at November
      30, 2007, we had outstanding letters of credit in the amount of $534,000.





**Note
      13 Guarantees and Indemnifications**





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 November
      30,
      2007, outstanding letters of credit amounted to $534,000.





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 November 30, 2007, $796,000
      was
      outstanding on the loan facility.





Indemnification
      Obligations


We
      are
      obligated to indemnify our officers and the members of our Board of Directors
      pursuant to our bylaws and contractual indemnity agreements. We routinely sell
      products with a limited intellectual property indemnification included in the
      terms of sale or in certain contractual arrangements. The scope of these
      indemnities varies, but in some instances includes indemnification for damages
      and expenses (including reasonable attorneys’ fees). Certain requests for
      indemnification have been received by us pursuant to these arrangements (see
      Part II, Item 1. Legal Proceedings, for further discussion).


15


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 August 31, 2007 contained in the Company’s 2007 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, and the Company
      intends that such forward-looking statements are subject to the safe harbors
      created thereby.  Forward-looking statements may be identified by words
      such as "believes," "expects," "projects," "plans," "anticipates," and similar
      expressions, and include, for example, statements relating to expectations
      regarding  future sales, income and cash flows. Forward-looking statements
      are based upon the Company’s current expectations and assumptions, which are
      subject to a number of risks and uncertainties including, but not limited
      to:  customer acceptance and effectiveness of recently introduced products;
      development of additional business for the Company’s digital video and audio
      transmission product lines; effectiveness of the sales organization; the
      successful development and introduction of new products in the future; delays
      in
      the conversion by private and broadcast networks to next generation digital
      broadcast equipment; acceptance by various networks of standards for digital
      broadcasting; the Company’s liquidity position and capital resources; general
      market conditions which may not improve during fiscal year 2008  and
      beyond; and success of the Company’s research and development efforts aimed at
      developing new products. Additional potential risks and uncertainties include,
      but are not limited to, economic conditions, customer plans and commitments,
      product demand, government regulation, rapid technological developments and
      changes, intellectual property disputes, performance issues with key suppliers
      and subcontractors, delays in product development and testing, availability
      of
      raw materials, new and existing well-capitalized competitors, and other
      uncertainties detailed from time to time in the Company’s periodic Securities
      and Exchange Commission filings, including the Company’s most recent Form 10-K.
      Such forward-looking statements are subject to risks, uncertainties and other
      factors and are subject to change at any time, which could cause actual results
      to differ materially from future results expressed or implied by such
      forward-looking statements. Forward-looking statements speak only as of the
      date
      the statement was made. The Company does not undertake any obligation to update
      any forward-looking statements.





**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 Internet Protocol (IP) data networks.
      Applications include IP
      data
      delivery, broadcast television, cable television, radio networks, business
      television, distance education, business music and financial information
      distribution.




During
      the first quarter of fiscal 2008, bookings, consisting primarily of add-on
      orders from existing customers, were approximately $3.6 million. Subsequent
      to
      November 30, 2007, approximately $1.4 million of additional orders were received
      from one of our larger private network customers for our  new
      Unity ® 552
      Enterprise Media Receiver (Unity ® 552).
      The Unity ® 552 has
      bandwidth-efficient MPEG-4/h.264 video coding for both standard definition
      and
      high definition video, digital and analog outputs, as well as advanced DVB-S2
      demodulation. With these new features, network operators can reduce their
      bandwidth utilization by approximately half, resulting in considerably lower
      operational costs. The orders are expected to be the first of a series of orders
      from the customer for a complete network upgrade to the Unity ® 552.





**Financial
      Position and Liquidity**





At
      November 30, 2007, we had line of credit borrowings outstanding of $796,000.
      Our
      $5,000,000 bank loan facility is subject to availability advance formulas based
      on eligible accounts receivable, import letter of credit commitment balances
      and
      inventories. The loan facility matures on September 30, 2008, or upon demand.
      At
      November 30, 2007, **** approximately
      $3,299,000, net of outstanding letters of credit in the amount of $534,000,
      remained available to borrow under the advance formulas.





During
      the first three months of fiscal 2008, our line of credit net outstanding
      borrowings decreased $1,220,000 from $2,016,000 at August 31, 2007 to $796,000
      at November 30, 2007. Operating activities  provided
      $1,452,000 of cash and investing activities used $230,000 of cash, which
      consisted of capitalized software additions of $193,000 and equipment additions
      of $36,000.




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





16




**RESULTS
      OF OPERATIONS**


**THREE
      MONTHS ENDED NOVEMBER 30, 2007 COMPARED TO THREE MONTHS ENDED DECEMBER 1,
      2006**





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




Three
                months ended (unaudited)**November
                  30,**
                **2007**
            
            December
                1,
              2006Revenue
            
            
            **100.0**%****
            
            
            100.0%Cost
                of products sold
            
            
            **58.9**
            
            
            75.4Gross
                margin
            
            
            **41.1**
            
            
            24.6Selling,
                general, and administrative
            
            
            **25.1**
            
            
            27.1Research
                & development
            
            
            **16.1**
            
            
            17.2Operating
                loss
            
            
            **(.2**)****
            
            
            (19.7)Interest
                expense
            
            
            **(
                .8**)****
            
            
            (
                .5)Interest
                income
            
            
            **-**
            
            
            .1Loss
                before income taxes
            
            
            **(1.0**)****
            
            
            (20.1)Income
                tax expense
            
            
            **-**
            
            
            -Net
                loss
            
            
            **(1.0**)%****
            
            
            (20.1)%





The
      operating results for the three month period ended November 30, 2007, were
      a net
      loss of $(51,000) or less than $(0.01) per share, compared to a net loss of
      $(962,000) or $(0.08) per share for the three month period ended December 1,
      2006.





**Revenues** -
      Revenues for the first quarter of fiscal 2008 increased $243,000 or 5.1% to
      $5,026,000 from $4,783,000 for the same period in fiscal 2007.





Direct
      Broadcast Satellite (DBS) revenues (including service revenues) increased
      $236,000 or 4.9% in the first quarter of fiscal 2008 to $5,014,000 from
      $4,778,000 for the same period in fiscal 2007. First quarter revenues included
      an add-on order from SSL
      (Satellite Store Link), for iPump ® Media
      Servers, IP-based peripheral decoders for their digital signage network
      applications in Mexico, continued shipments to the Big
      Ten
      Network (BTN) for the new
      cable network being distributed by Fox Cable Networks, and shipments of our
      new
      Encompass LE2, our next generation business music audio receiver, to business
      music provider, Muzak LLC. In addition, volume shipments continued under our
      fiscal 2007 $1.8 million blanket agreement with distributor MegaHertz for
      distribution of our products to the U.S. cable market.




Revenues
      and order backlog are subject to the timing of significant orders from customers
      and new product introductions, and as a result revenue levels may fluctuate
      from
      quarter to quarter. For the three months ended November 30, 2007, three
      customers accounted for 19.6%, 19.2% and 13.8% of revenues, respectively. For
      the three months ended December 1, 2006, three customers accounted for 30.4%,
      12.3% and 10.3% 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 2008.





Our
      backlog is comprised of undelivered, firm customer orders, which are scheduled
      to ship within eighteen months. WCI’s backlog scheduled to ship within eighteen
      months was approximately $9.9 million at November 30, 2007, compared to $10.2
      million at August 31, 2007, and $11.2 million at December 1, 2006. Three
      customers accounted for approximately 30.0%, 21.7% and 14.6%, respectively,
      of
      the backlog at November 30, 2007. The total multi-year backlog at November
      30,
      2007 was approximately $16.5 million, compared to $17.1 million at August 31,
      2007 and $19.9 million at December 1, 2006.





17




**Gross
      Profit Margins** –
      The Company’s
      gross profit margin percentages were 41.1% for the three month period
      ended  November
      30, 2007, compared to 24.6% for the three month period ended December 1, 2006.
      Gross profit margin dollars increased $885,000 for the three month period ended
      November 30, 2007 compared to the same period ended December 1, 2006. The
      increase in margin percentages and dollars was mainly due to increased revenues,
      which resulted in lower unit fixed overhead costs and a favorable product mix
      with lower variable unit costs. The margin percentages and dollars in the first
      quarter of fiscal 2007 were adversely impacted by higher than expected new
      product production costs associated with the iPump ® 6420.
      Additionally, profit margins in the first quarter of fiscal 2007 were adversely
      affected by inventory reserve charges of $75,000 and warranty provisions of
      $100,000 compared to none in the first quarter of fiscal 2008.





**Selling,
      General and Administrative** -
      Selling, general and administrative (SG&A) expenses decreased $35,000, or
      2.7%, to $1,264,000 in the first quarter of fiscal 2008 from $1,299,000 in
      the
      first quarter of fiscal 2007. Corporate SG&A expenses in the first quarter
      of fiscal 2008 decreased $40,000, or 15.9%, to $212,000 from $252,000 in same
      period of fiscal 2007, mainly due to a reduction in professional fees. WCI’s
      SG&A expenses increased $6,000, or 0.5%, to $1,052,000 in the first quarter
      of fiscal 2008 from $1,046,000 in same period of fiscal 2007. WCI’s SG&A
      expenses had no stock-based compensation in the first quarter of fiscal 2008
      compared to $2,000 in the same period of fiscal 2007. As a percentage of
      revenues, SG&A expenses were 25.1% for the three month period ended November
      30, 2007, compared to 27.1% for the same period ended December 1,
      2006.





**Research
      and Development** -
      Research and development expenditures, including capitalized software
      development costs, were $1,002,000 or 19.9% of revenues in the first quarter
      of
      fiscal 2008 compared to $1,197,000 or 25.2% of revenues for the same period
      of
      fiscal 2007. The decrease in expenditures in the first quarter of fiscal 2008
      compared to the same period of fiscal 2007 was mainly due to lower consulting
      costs, which were partially offset by increased salaries related to increases
      in
      compensation and headcount and increased recruiting costs related to new hires.
      Capitalized software development costs amounted to $193,000 in the first quarter
      of fiscal 2008 compared to $376,000 in the first quarter of fiscal 2007. The
      decrease in capitalized software costs was related to completed projects.
      Research and development expenses, excluding capitalized software development
      costs, were $809,000 or 16.1% of revenues in the first quarter of fiscal 2008
      compared to $821,000 or 17.2% of revenues in the same period of fiscal 2007.





**Interest
      Expense** **** -
      Interest expense increased $16,000 to $42,000 in the first quarter of fiscal
      2008 from $26,000 in the same period in fiscal 2007. The increase was primarily
      due to an increase in average outstanding line of credit balances.





**Interest
      Income** **** -
      Interest income was $1,000 for the three months ended November 30, 2007 compared
      to $5,000 for the same period ended December 1, 2006.





**Income
      Tax Expense** - For
      the three months ended November 30, 2007, no income tax benefit was recorded
      due
      to an increase in the deferred tax asset valuation allowance. The valuation
      allowance increased $18,000 in the first quarter of fiscal 2008. At November
      30,
      2007, net deferred tax assets of $6,037,000 were fully reserved by a valuation
      allowance. At November 30, 2007, we had a federal net operating loss
      carryforward of approximately $9,753,000, which expires beginning fiscal 2020
      through fiscal 2028. Additionally, we had an alternative minimum tax credit
      of
      $138,000 and state income tax credits of $199,000 expiring in fiscal 2009,
      both
      of which were fully offset by the valuation allowance.





**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
      when there are no significant future performance obligations. Service revenues
      are recognized at the time of performance. Extended service maintenance contract
      revenues are recognized ratably over the maintenance contract term, which is
      typically one year. The unrecognized revenue portion of maintenance contracts
      invoiced is recorded as deferred revenue. At November 30, 2007, deferred
      extended service maintenance revenues were $485,000 and deferred revenues
      related to future performance obligations were $166,000 and are expected to
      be
      recognized as revenue in varying amounts throughout fiscal 2008 and into fiscal
      2009.




18




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.” Significant
      judgment may be required in determining whether a product is a software or
      hardware product.





**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 **** November
      30, 2007, inventories, net of reserve provisions, amounted to $4,195,000.





**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 **** November
      30, 2007, capitalized software costs, net of accumulated amortization, amounted
      to $1,144,000.





**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 our deferred tax
      assets depends on generating sufficient future taxable income prior to the
      expiration of the loss and credit carryforwards. At November 30, 2007, deferred
      tax assets in the amount of $6,037,000 were fully reserved by a valuation
      allowance. For the three months ended November 30, 2007, the valuation allowance
      was increased by $18,000.





**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
      November 30, 2007, accounts receivable, net of allowances for doubtful accounts,
      amounted to $3,755,000.





**LIQUIDITY
      AND CAPITAL RESOURCES**


**THREE
      MONTHS ENDED NOVEMBER 30, 2007**





At
      November 30, 2007, our primary source of liquidity was 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. 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 (7.5% at November 30, 2007). The bank retained the right to
      adjust the interest rate, subject to the financial performance of the Company.
      The loan facility matures on September 30, 2008, or upon demand, and requires
      an
      annual facility fee of 2% of the maximum credit limit. During the first three
      months of fiscal 2008, our line of credit net outstanding borrowings decreased
      $1,220,000 from $2,016,000 at August 31, 2007 to $796,000 at November 30, 2007.
      At November 30, 2007, **** approximately
      $3,299,000, net of outstanding letters of credit in the amount of $534,000,
      remained available to borrow under the advance formulas.




19




During
      the first quarter of fiscal 2008, operating activities provided $1,452,000
      of
      cash. Net loss adjusted for expense provisions and depreciation and amortization
      (before working capital changes) provided cash of $430,000, while changes in
      accounts receivable and customer deposit balances provided $1,347,000 of cash.
      Changes in accounts payable and accrued expenses, inventories, deferred revenue
      and other assets used $325,000 of cash. Cash used by investing activities was
      $36,000 for property and equipment expenditures, $193,000 for capitalized
      software additions and less than $1,000 for legal fees related to the filing
      of
      applications for various patents and trademarks.





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
      60 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. In addition,
      the facility provides for advances in excess of the availability formulas of
      up
      to $1,000,000 during the term of the facility. The loan is secured by a first
      lien on substantially all of WCI’s assets, including land and buildings, and is
      guaranteed by Wegener Corporation. At November 30, 2007, balances outstanding
      on
      the revolving line of credit amounted to $796,000. No borrowings were
      outstanding under the equipment term loan portions of the loan facility. The
      loan facility is also used to support import letters of credit issued to
      offshore manufacturers, which at November 30, 2007, amounted to
      $534,000.





At
      November 30, 2007, approximately $3,299,000, net of outstanding letters of
      credit, was available to borrow under the advance formulas. During the first
      quarter of fiscal 2008, the average daily balance outstanding was $1,877,000
      and
      the highest outstanding balance was $3,274,000. During fiscal 2008 we expect
      the
      average daily balance to increase. We believe the loan facility will be
      sufficient to support operations over the next 12 months.





At
      November 30, 2007, we had land and buildings with a cost basis of $4,457,000
      (including land held for sale of $354,000). Although land and buildings are
      subject to a lien under the loan facility, they are not currently used in the
      existing loan facility’s availability advance formulas and have no mortgage
      balances outstanding. While no assurances may be given, we believe these assets
      could be used to support additional overall borrowing capacities either with
      our
      existing bank or from other sources. During the third quarter of fiscal 2007,
      the Company’s Board of Directors authorized and approved the listing for sale of
      the 4.4 acres of undeveloped land located adjacent to the Company’s headquarters
      facility in Duluth (Johns Creek), Georgia (see note 4 to the consolidated
      financial statements). Proceeds from the sale of the land would be used to
      pay
      any balances outstanding on the revolving line of credit.





Under
      the
      loan facility, at the end of fiscal 2008 we are required to maintain a minimum
      tangible net worth. In addition, we are required to retain certain executive
      officers, maintain certain financial ratios, and are precluded from paying
      dividends.





We
      have
      two manufacturing and purchasing agreements for certain finished goods
      inventories. At  November
      30, 2007, outstanding purchase commitments under these agreements amounted
      to
      $3,270,000. Pursuant to the above agreements, at November 30, 2007, we had
      outstanding letters of credit in the amount of $534,000.




A
      summary
      of the Company’s long-term contractual obligations as of November
      30, 2007 consisted of:


Payments
                  Due by PeriodContractual
                  Obligations
              
              Total
              
              Fiscal
                2008
              
              Fiscal
                2009-2010
              
              Fiscal
                2011-2012Operating
                  leases
              
              $
              61,000
              
              $
              51,000
              
              $
              10,000
              
              $
              -Bank
                  line of credit
              
              
              796,000
              
              
              -
              
              
              796,000
              
              
              -Purchase
                  commitments
              
              
              2,357,000
              
              
              2,357,000
              
              
              -
              
              
              -Total
              
              $
              3,214,000
              
              $
              2,408,000
              
              $
              806,000
              
              $
              -




20




**ITEM
      3.**  **QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**





The
      Company’s exposure to market rate risk for changes in interest rates relates
      primarily to its 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 (7.5% at November 30, 2007). At November
      30, 2007, line of credit outstanding borrowings amounted to  $796,000.





The
      Company does not enter into derivative financial instruments. All sales and
      purchases are denominated in U.S. dollars.




**ITEM
      4. CONTROLS AND PROCEDURES**




Not
      applicable





**ITEM
      4T.**  **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 (November 30, 2007). 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 during
      our most recent fiscal quarter that has materially affected, or is reasonably
      likely to materially affect, the Company’s internal control over financial
      reporting.





**PART
      II. OTHER INFORMATION**





**ITEM** **1.
      LEGAL PROCEEDINGS**





On
      June 1, 2006, a complaint was filed by Rembrandt Technologies, LP
      (Rembrandt) against Charter Communications, Inc. (Charter), Cox Communications
      Inc. (Cox), CSC Holdings, Inc. (CSC) and Cablevisions Systems Corp.
      (Cablevision) in the United States District Court for the Eastern District
      of
      Texas alleging patent infringement. The complaint alleges that products and
      services sold by Charter infringe certain Rembrandt patents related to cable
      modem, voice-over internet, and video technology and applications. The case
      may
      be expensive to defend and there may be substantial monetary exposure if
      Rembrandt is successful in its claim against Charter and then elects to pursue
      other cable operators that use the allegedly infringing products. Wegener has
      not been named a party in the suit. However, subsequent to December 1, 2006,
      Charter has requested us to defend and indemnify Charter to the extent that
      the
      Rembrandt allegations are premised upon Charter’s use of products that we have
      sold to Charter. To date, we have not agreed to Charter’s request. Trial date of
      this matter is not known at this time. At this point, the outcome is uncertain
      and we are presently unable to assess the impact, if any, of this litigation
      on
      Wegener.





On
      June 1, 2006, a complaint substantially similar to the above described suit
      was filed by Rembrandt against Time
      Warner Cable (TWC) in the
      United States District Court for the Eastern District of Texas. Wegener
      has not been named a party in the suit, but TWC has requested us (as well as
      other equipment vendors) to contribute 2% of the defense costs related to this
      matter as a result of the products that we and others have sold to TWC. To
      date,
      we have not agreed to contribute to the payment of legal costs related to this
      case. Trial date of this matter is not known at this time. At this point, the
      outcome is uncertain and we are presently unable to assess the impact, if any,
      of this litigation on Wegener.





**ITEM
      1A. RISK FACTORS**





Our
      operations and financial results are subject to various risks and uncertainties
      that could adversely affect our business, financial condition, results of
      operations, and the market price for our Common Stock. Part I,
      Item 1A, “Risk Factors” of our Annual Report on Form
      10-K
      for the year ended August 31, 2007 ,
      includes a detailed discussion of these factors which have not changed
      materially from those included in the Form 10-K, other than as set forth
      below.




**The
      Nasdaq Stock Market may delist our securities, which could limit investors’
ability to trade in our securities.**




21




On
      December 26, 2007, we received a notice from The Nasdaq Stock Market (“Nasdaq”)
      indicating that for the last 30 consecutive business days, the bid price of
      our
      common stock has closed below the minimum $1.00 per share requirement for
      continued inclusion under Marketplace Rule 4310(c)(4) (the “Rule”). The notice
      also stated that we have been provided with 180 calendar days, or until June
      23,
      2008, to regain compliance in accordance with Marketplace Rule 4310(c)(8)(D).
      If, at anytime before June 23, 2008, the bid price of our common stock closes
      at
      $1.00 per share or more for a minimum of 10 consecutive business days, the
      Nasdaq staff will provide written notification that we comply with the
      Rule.





If
      we
      cannot regain compliance by June 23, 2008, the Nasdaq staff will determine
      whether we meet The Nasdaq Capital Market initial listing criteria set forth
      in
      Marketplace Rule 4310(c), except for the bid price requirement. If we meet
      the
      initial listing criteria, the Nasdaq staff will notify us that we have been
      granted an additional 180 calendar day compliance period. If we are not eligible
      for an additional compliance period, the Nasdaq staff will provide written
      notification that our securities will be delisted. At that time, we may appeal
      the Nasdaq staff’s determination to delist our securities to a Listing
      Qualifications Panel.





If
      our
      common stock is delisted by Nasdaq, the trading market for our common stock
      would likely be adversely affected, as price quotations may not be as readily
      obtainable, which would likely have a material adverse effect on the market
      price of our common stock.





22




**I** **TEM** **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 asterisked exhibit there is shown below the description of the
      previous filing. Exhibits which are not required for this report are
      omitted.





**Exhibit
                No.**
            
            
            **Description
                of Exhibit**3.1
            *
            
            Certificate
                of Incorporation as amended through May 4, 1989. (1)3.1.1
            *
            
            Amendment
                to Certificate of Incorporation. (2)3.2
            *
            
            By-laws
                of the Company, as Amended and Restated May 17, 2006.
                (3)31.1
            
            
            Certification
                of the Chief Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.31.2
            
            
            Certification
                of the Chief Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.32.1
            
            
            Certification
                of the Chief Executive Officer pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.32.2
            
            
            Certification
                of the Chief Financial Officer pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.




(1)
              
              Incorporated
                  by reference to the Company's Annual Report on Form 10-K for the
                  fiscal
                  year ended September 1, 1989, as filed with the Commission on November
                  30,
                  1989.+(2)
              
              Incorporated
                  by reference to the Company's Quarterly Report on Form 10-Q for
                  the
                  quarter ended May 30, 1997, as filed with the Commission on June
                  30,
                  1997.+(3)
              
              Incorporated
                  by reference to the Company's Current Report on Form 8-K, dated
                  May 17,
                  2006, as filed with the Commission on May 22, 2006.++
              
              SEC
                  file No. 0-11003




23





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:
                  January 14, 2008
              By:
              /s/
                  Robert A. PlacekRobert
                  A. PlacekPresident(Principal
                  Executive Officer)Date:
                  January 14, 2008
              By:
              /s/
                  C. Troy Woodbury, Jr.C.
                  Troy Woodbury, Jr.Treasurer
                  and ChiefFinancial
                  Officer(Principal
                  Financial and Accounting
                  Officer)




24