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 March 4, 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                           12,574,051 Shares
----------------------------                    -------------------------------
           Class                                  Outstanding March 28, 2005

<PAGE>

<TABLE>
<CAPTION>
                               WEGENER CORPORATION
                  Form 10-Q For the Quarter Ended March 4, 2005

                                      INDEX

<S>                                                                            <C>
PART I.  Financial Information

    Item 1.  Consolidated Financial Statements

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

             Consolidated Statements of Operations
             (Unaudited) - Three and Six Months Ended
             March 4, 2005 and February 27, 2004...................................4

             Consolidated Balance Sheets - March 4,
             2005 (Unaudited) and September 3, 2004................................5

             Consolidated Statements of Shareholders' Equity
             (Unaudited) - Six Months Ended March 4,
             2005 and February 27, 2004............................................6

             Consolidated Statements of Cash Flows
             (Unaudited) - Six Months Ended March 4,
             2005 and February 27, 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.  Submission of Matters to a Vote of Security Holders..................24
    Item 5.  None
    Item 6.  Exhibits.............................................................25

             Signatures...........................................................26
</TABLE>


                                       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 March 4, 2005; the consolidated  statements
of  shareholders'  equity  as of March 4,  2005,  and  February  27,  2004;  the
consolidated  statements of operations  for the three and six months ended March
4, 2005,  and February 27, 2004; and the  consolidated  statements of cash flows
for the six months  ended  March 4,  2005,  and  February  27,  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,
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>

<TABLE>
<CAPTION>
                      WEGENER CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                  Three months ended               Six months ended
                                                March 4,      February 27,      March 4,     February 27,
                                                  2005            2004            2005           2004
---------------------------------------------------------------------------------------------------------
<S>                                          <C>             <C>             <C>            <C>
Revenue                                      $  6,336,557    $  4,712,923    $ 12,742,628   $  9,463,128
---------------------------------------------------------------------------------------------------------

Operating costs and expenses
    Cost of products sold                       3,914,539       3,514,612       7,925,967      6,990,149
    Selling, general and administrative         1,442,936       1,278,832       2,848,309      2,499,463
    Research and development                      771,784         774,196       1,575,014      1,515,437
---------------------------------------------------------------------------------------------------------

Operating costs and expenses                    6,129,259       5,567,640      12,349,290     11,005,049
---------------------------------------------------------------------------------------------------------

Operating income (loss)                           207,298        (854,717)        393,338     (1,541,921)
    Interest expense                              (14,692)        (23,714)        (29,632)       (42,575)
    Interest income                                 7,298           9,167          10,083         13,564
---------------------------------------------------------------------------------------------------------

Earnings (loss) before income taxes               199,904        (869,264)        373,789     (1,570,932)

Income tax expense (benefit)                       72,000        (214,000)        134,000       (467,000)
---------------------------------------------------------------------------------------------------------

Net earnings (loss)                          $    127,904    $   (655,264)   $    239,789   $ (1,103,932)
=========================================================================================================

Net earnings (loss) per share:
    Basic                                    $        .01    $       (.05)   $        .02   $       (.09)
    Diluted                                  $        .01    $       (.05)   $        .02   $       (.09)
=========================================================================================================

Shares used in per share calculation
    Basic                                      12,560,260      12,416,820      12,548,320     12,406,695
    Diluted                                    12,887,099      12,416,820      12,805,503     12,406,695
=========================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       4
<PAGE>

<TABLE>
<CAPTION>
                      WEGENER CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                           March 4,       September 3,
                                                             2005             2004
---------------------------------------------------------------------------------------
Assets                                                    (Unaudited)
<S>                                                      <C>              <C>
Current assets
    Cash and cash equivalents                            $  1,071,282     $  1,520,761
    Accounts receivable                                     4,800,090        2,479,712
    Inventories                                             3,378,216        3,839,840
    Deferred income taxes                                   2,111,000        2,199,000
    Other                                                     147,361          283,291
---------------------------------------------------------------------------------------

         Total current assets                              11,507,949       10,322,604

Property and equipment, net                                 2,658,784        2,699,502
Capitalized software costs, net                             1,803,779        1,667,632
Deferred income taxes                                       1,924,000        1,970,000
Other assets                                                  814,120          835,878
---------------------------------------------------------------------------------------

                                                         $ 18,708,632     $ 17,495,616
=======================================================================================

Liabilities and Shareholders' Equity

Current liabilities
    Accounts payable                                     $  2,313,253     $  1,293,564
    Accrued expenses                                        1,969,014        1,719,119
    Customer deposits                                         594,362          960,092
---------------------------------------------------------------------------------------

          Total current liabilities                         4,876,629        3,972,775
---------------------------------------------------------------------------------------

Commitments and contingencies

Shareholders' equity
    Common stock, $.01 par value; 20,000,000 shares
        authorized; 12,574,051 and 12,526,051 shares
        respectively, issued and outstanding                  125,741          125,261
    Additional paid-in capital                             19,888,442       19,819,549
    Deficit                                                (6,182,180)      (6,421,969)
---------------------------------------------------------------------------------------

         Total shareholders' equity                        13,832,003       13,522,841
---------------------------------------------------------------------------------------

                                                         $ 18,708,632     $ 17,495,616
=======================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

<TABLE>
<CAPTION>
                      WEGENER CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (Unaudited)


                                                                       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                          63,800            638         97,420             --
    Value of stock options granted
      for services                               --             --        139,800             --
    Net loss for the six months                  --             --             --     (1,103,932)
-------------------------------------------------------------------------------------------------
BALANCE at February 27, 2004             12,445,051    $   124,451    $19,708,289    $(5,418,003)
=================================================================================================

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

    Common stock issued through
      stock options                          48,000            480         68,893             --
    Net earnings for the six months              --             --             --        239,789
-------------------------------------------------------------------------------------------------
BALANCE at March 4, 2005                 12,574,051    $   125,741    $19,888,442    $(6,182,180)
=================================================================================================
</TABLE>


See accompanying notes to consolidated financial statements.


                                       6
<PAGE>

<TABLE>
<CAPTION>
                      WEGENER CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                                  Six months ended
                                                              March 4,       February 27,
                                                               2005             2004
-----------------------------------------------------------------------------------------
<S>                                                         <C>             <C>
Cash flows from operating activities
    Net earnings (loss)                                     $   239,789     $(1,103,932)
    Adjustments to reconcile net earnings (loss) to
           cash provided by operating activities
        Depreciation and amortization                         1,009,826       1,042,501
        Value of stock options granted
            for services                                             --         139,800
        Provision for bad debts                                  30,000          60,000
        Provision for inventory reserves                         25,000         150,000
        Provision (benefit) for deferred income taxes           134,000        (467,000)
    Changes in assets and liabilities
            Accounts receivable                              (2,350,378)        649,255
            Inventories                                         436,624         306,339
            Other assets                                        135,930         (19,208)
            Accounts payable and accrued expenses             1,269,584         (97,813)
            Customer deposits                                  (365,730)        124,107
-----------------------------------------------------------------------------------------
                                                                564,645         784,049
-----------------------------------------------------------------------------------------
Cash flows from investment activities
    Property and equipment expenditures                        (209,057)       (185,236)
    Capitalized software additions                             (819,249)       (978,584)
    License agreement, patent, and trademark expenditures       (55,191)       (171,860)
-----------------------------------------------------------------------------------------
                                                             (1,083,497)     (1,335,680)
-----------------------------------------------------------------------------------------

Cash flows from financing activities
    Repayment of long-term debt                                      --          (3,169)
    Proceeds from stock options exercised                        69,373          98,058
-----------------------------------------------------------------------------------------
                                                                 69,373          94,889
-----------------------------------------------------------------------------------------
Decrease in cash and cash equivalents                          (449,479)       (456,742)
Cash and cash equivalents, beginning of period                1,520,761       4,213,252
-----------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                    $ 1,071,282     $ 3,756,510
=========================================================================================

Supplemental disclosure of cash flow information:
Cash paid during the six months for:
          Interest                                          $    29,632     $    42,575
          Income taxes                                      $        --     $        --
=========================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       7
<PAGE>

                      WEGENER CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 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 them, 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 six months ended March 4, 2005,  revenues in the
amount of $1,533,000 and $2,878,000,  respectively,  were appropriately recorded
prior  to  delivery  as bill  and  hold  transactions  in  accordance  with  the
provisions of SAB 104. At March 4, 2005,  accounts receivable for these revenues
amounted to $1,533,000.  Subsequent to March 4, 2005,  payments in the amount of
$1,484,000 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 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.


                                       8
<PAGE>

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 the  Company  had  applied  the fair  value  recognition
provisions of SFAS No. 123:

<TABLE>
<CAPTION>
                                  Three months ended             Six months ended
                              -----------------------------------------------------------
                               March 4,      February 27,    March 4,        February 27,
                                 2005           2004          2005             2004
-----------------------------------------------------------------------------------------
<S>                           <C>           <C>             <C>            <C>
Net earnings (loss)
  As Reported                 $  127,904    $  (655,264)    $  239,789     $  (1,103,932)
  Deduct:
      Compensation cost
  using the fair value
  method, net of tax             (20,536)       (56,455)       (59,274)          (62,311)
-----------------------------------------------------------------------------------------
  Pro Forma                   $  107,368    $  (711,719)    $  180,515     $  (1,166,243)
=========================================================================================
Net earnings (loss) per share
  As Reported
      Basic                   $      .01    $      (.05)    $      .02     $        (.09)
      Diluted                        .01           (.05)           .02              (.09)
  Pro Forma
      Basic                          .01           (.06)           .01              (.09)
      Diluted                        .01           (.06)           .01              (.09)
=========================================================================================
</TABLE>

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              Six months ended
                               ------------------------------------------------------------
                                  March 4,      February 27,     March 4,      February 27,
                                    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       3 years        2.8 years      2.8 years
Volatility                           90%            90%             90%            90%
Expected annual dividends           none            none            none           none
===========================================================================================

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

<CAPTION>
                                     Three months ended              Six months ended
                               ------------------------------------------------------------
                                  March 4,      February 27,     March 4,      February 27,
                                    2005            2004           2005            2004
-------------------------------------------------------------------------------------------
<S>                                  <C>         <C>              <C>          <C>
Per share option value               $ --        $   1.23         $  .81       $   1.23
Aggregate total                      $ --        $474,230         $8,140       $474,230
===========================================================================================
</TABLE>


                                       9
<PAGE>

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.
Examples  include   provisions  for  bad  debts,   inventory   obsolescence  and
warranties. 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 2 Accounts Receivable

Accounts receivable are summarized as follows:

                                    March 4,       September 3,
                                     2005             2004
---------------------------------------------------------------
                                 (Unaudited)

Accounts receivable - trade      $ 5,072,661       $ 2,766,528
Other receivables                     77,263            76,473
---------------------------------------------------------------
                                   5,149,924         2,843,001

Less allowance for
    doubtful accounts               (349,834)         (363,289)
---------------------------------------------------------------
                                 $ 4,800,090       $ 2,479,712
===============================================================

Note 3     Inventories

Inventories are summarized as follows:

                                    March 4,       September 3,
                                     2005             2004
---------------------------------------------------------------
                                 (Unaudited)

 Raw material                    $ 2,787,908       $ 3,004,350
 Work-in-process                     931,671         1,073,275
 Finished goods                    2,850,950         3,229,704
---------------------------------------------------------------
                                   6,570,529         7,307,329

 Less inventory reserves          (3,192,313)       (3,467,489)
---------------------------------------------------------------
                                 $ 3,378,216       $ 3,839,840
===============================================================

During the first six months of fiscal 2005,  inventory  reserves were reduced by
inventory  write-offs of $300,000 and  increased by  provisions of $25,000.  Our
inventory reserve of approximately $3,192,000 at March 4, 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 are reasonably possible should our sales efforts not
be successful.


                                       10
<PAGE>

Note 4   Other Assets

Other assets consisted of the following:

                                     March 4, 2005 (unaudited)
--------------------------------------------------------------------------------
                                      Accumulated
                          Cost        Amortization        Net
--------------------------------------------------------------------------------
License agreements    $   570,000     $  (254,826)    $   315,174
Patents                   394,065              --         394,065
Trademarks                 87,470          (1,978)         85,492
Loan facility fees         37,500         (25,000)         12,500
Other                       6,889              --           6,889
--------------------------------------------------------------------------------
                      $ 1,095,924     $  (281,804)    $   814,120
================================================================================


                                     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
================================================================================

Amortization expense of other assets for the three and six months ended March 4,
2005,  amounted to $39,000 and $77,000,  respectively.  Amortization  expense of
other assets for the three and six months ended  February 27, 2004,  amounted to
$41,000 and $84,000, respectively.

We conduct an ongoing review of our  intellectual  property rights and potential
trademarks.  As of March 4, 2005,  we  incurred  $394,000  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 patent application will not be granted, we will write-off the deferred cost
at that time. At March 4, 2005,  the cost of registered  trademarks  amounted to
$47,000.  License  agreements are amortized over their estimated  useful life of
five years. Loan facility fees are amortized over twelve months.

Note 5 Income Taxes

For the six months  ended  March 4, 2005,  income tax  expense of  $134,000  was
comprised  of  deferred  federal and state  income tax  expense of $127,000  and
$7,000, respectively.  Net deferred tax assets decreased $134,000 to $4,035,000,
principally due to utilization of net operating loss  carryforwards in the first
six months.  Realization of 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.

At  March  4,  2005,  we  had a  federal  net  operating  loss  carryforward  of
approximately  $6,222,000,  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.


                                       11
<PAGE>

Note 6 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
                                       ---------------------------------------------------------------------------------------------
                                                      March 4, 2005                                  February 27, 2004
                                       ---------------------------------------------------------------------------------------------
                                                                            Per                                              Per
                                          Earnings          Shares         share          Earnings          Shares          share
                                        (Numerator)      (Denominator)     amount        (Numerator)    (Denominator)      amount
                                       ---------------------------------------------------------------------------------------------
<S>                                    <C>               <C>              <C>           <C>             <C>             <C>
Net earnings (loss)                        $127,904                                        $(655,264)
                                           ========                                        =========

Basic earnings (loss) per share:
    Net earnings (loss) available
        to common shareholders             $127,904        12,560,260        $ .01         $(655,264)      12,416,820       $(.05)

Effect of dilutive potential
  common shares:
        Stock options                            --           326,839                             --               --
                                           --------------------------                      --------------------------

Diluted earnings (loss)  per share:
    Net earnings (loss) available
        to common shareholders             $127,904        12,887,099        $ .01         $(655,264)      12,416,820       $(.05)
                                           ==========================        =====         ==========================       =====
</TABLE>

<TABLE>
<CAPTION>
                                                                             Six months ended
                                       ---------------------------------------------------------------------------------------------
                                                        March 4, 2005                                February 27, 2004
                                       ---------------------------------------------------------------------------------------------
                                                                             Per                                             Per
                                          Earnings          Shares          share          Earnings          Shares         share
                                        (Numerator)      (Denominator)     amount        (Numerator)     (Denominator)      amount
                                       ---------------------------------------------------------------------------------------------
<S>                                    <C>               <C>              <C>           <C>             <C>             <C>
Net earnings (loss)                        $239,789                                      $(1,103,932)
                                           ========                                      ===========

Basic earnings (loss)  per share:
    Net earnings (loss) available
        to common shareholders             $239,789        12,548,320        $ .02       $(1,103,932)       12,406,695       $(.09)
                                           --------------------------                    -----------------------------

Effect of dilutive potential
    common shares:
        Stock options                            --           257,183                             --                --

Diluted earnings (loss)  per share:
    Net earnings (loss) available
        to common shareholders             $239,789        12,805,503        $ .02       $(1,103,932)       12,406,695      $(.09)
                                           ==========================        =====       =============================      =====
</TABLE>


                                       12
<PAGE>

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                         Six months ended
                                            ---------------------------------------------------------------------------
                                               March 4,           February 27,          March 4,           February 27,
                                                 2005                 2004                2005                 2004
                                            ---------------------------------------------------------------------------
<S>                                         <C>                 <C>                 <C>                  <C>
    Common stock options:
        Number of shares                       562,464            1,750,625            584,310             1,750,625
        Exercise price                      $2.08 to $2.72      $ .63 to $5.63      $1.78 to $2.72       $ .63 to $5.63
</TABLE>

Note 7 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,"  the
Company operates within a single reportable segment, the manufacture and sale of
satellite communications equipment.

In this single operating segment the Company has three sources of revenues as
follows:

<TABLE>
<CAPTION>
                                            Three months ended                Six months ended
                                     -----------------------------------------------------------------
                                       March 4,         February 27,       March 4,       February 27,
                                         2005               2004             2005             2004
                                     -----------------------------------------------------------------
<S>                                  <C>               <C>               <C>               <C>
Product Line
   Direct Broadcast Satellite        $ 6,168,552       $ 4,389,719       $12,282,239       $ 8,529,962
   Telecom and Custom Products            30,327           193,974           187,046           605,655
   Service                               137,678           129,230           273,343           327,511
                                     -----------------------------------------------------------------

                                     $ 6,336,557       $ 4,712,923       $12,742,628       $ 9,463,128
                                     =================================================================
</TABLE>

Revenues by geographic area are as follows:

<TABLE>
<CAPTION>
                             Three months ended                  Six months ended
                        -----------------------------------------------------------------
                          March 4,        February 27,        March 4,        February 27,
                            2005              2004              2005              2004
                        -----------------------------------------------------------------
<S>                     <C>              <C>               <C>               <C>
Geographic Area
    United States       $ 6,258,576       $ 4,626,996       $12,454,813       $ 9,187,226
    Latin America            38,325             1,669           123,290            57,805
    Canada                   33,531            37,912            33,531           113,117
    Europe                    1,930            45,280           103,815            63,172
    Other                     4,195             1,066            27,179            41,808
                        -----------------------------------------------------------------

                        $ 6,336,557       $ 4,712,923       $12,742,628       $ 9,463,128
                        =================================================================
</TABLE>


                                       13
<PAGE>

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

<TABLE>
<CAPTION>
                                Three months ended                      Six months ended
                        -------------------------------------------------------------------------
                           March 4,          February 27,         March 4,          February 27,
                             2005                2004               2005                2004
                        -------------------------------------------------------------------------
<S>                     <C>                  <C>                 <C>                <C>
     Customer 1              24.8%               40.1%              26.5%              38.7%
     Customer 2              19.5%                (a)               14.2%               (a)
     Customer 3              14.6%               15.5%              11.7%               (a)
     Customer 4               (a)                 (a)               11.2%               (a)
</TABLE>

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

Note 8 Commitments

We have three manufacturing and purchasing agreements for certain finished goods
inventories.  At March 4, 2005,  outstanding  purchase  commitments  under these
agreements amounted to $5,878,000. Pursuant to the above agreements, at March 4,
2005, we had outstanding letters of credit in the amount of $2,250,000.

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 March 4, 2005, the outstanding  commitment under the agreement was
$290,000.

Note 9 Guarantees and Warranty Liability

Warranty

We warrant  our  products  for a 12-14  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 March 4, 2004, amounted to $106,000.  For the six
month period ended March 4, 2005,  accrued  warranty  provisions were reduced by
$46,000 for satisfied 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 March
4, 2005, outstanding letters of credit amounted to $2,250,000.

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 March 4, 2005, no balances
were outstanding on the loan facility.

Note 10 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.


                                       14
<PAGE>

Note 11 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  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 second  quarter and six month  revenues  and  operating  results
improved  significantly  compared to the same periods in fiscal 2004. Additional
bookings  continued in the second  fiscal  quarter  which  resulted in increased
revenues for the period. We received  additional  bookings from Ascent Media for
equipment  to convert a television  distribution  network from analog to digital
and upgrade the network's  capabilities with the store and forward technology of
our iPump Media Servers, and from Roberts  Communications Network to upgrade and
replace  primarily  uplink  equipment  in their  network.  These  orders were in
addition  to first  quarter  shipments  to Ascent  Media for a separate  private
network  application using the iPump Media Server and to Roberts  Communications
Network for network  expansion.  In  addition,  the three and six month  periods
benefited  from our fiscal 2004 fourth  quarter  booking of a large order from a
new radio  broadcast  customer.  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.  However,
our review of the balance of fiscal 2005 indicates,  while significant  bookings
are  required  for the  remaining  two  quarters,  we are  still  positioned  to
substantially  increase revenues over fiscal 2004 and maintain profitability for
this  fiscal  year.  (For  further  discussion  see our  Results  of  Operations
discussion below.)

Current developments

We are continuing to work with potential  customers in  demonstrating  our iPump
product and the many  benefits of our store and  forward  technology.  We are in
discussions  with a number of  customers  who we believe are planning to upgrade
their networks by integrating our iPump technology.

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.  Any  significant  revenues
from this product line will not be realized,  if at all,  until fiscal 2006.  We
are  continuing  development  of other  products,  such as our  iPump  615 Media
Decoder  and the NAVE IIc  Nielsen  Audio  Encoder,  which  we  anticipate  will
contribute to increased revenues and profitability for fiscal 2005 and beyond.


                                       16
<PAGE>

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 March 4, 2005.

Financial Position and Liquidity

We have no long-term debt or line of credit  borrowings  outstanding at March 4,
2005.  Our cash and cash  equivalents  were  $1,071,000  at March 4,  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 March 4, 2005 amounted to
$2,250,000.  At March 4, 2005,  approximately  $2,750,000 net of the outstanding
letters of credit was available to borrow under the advance formulas.  Beginning
in the second half of fiscal 2005, we expect that we will use  borrowings on the
line of credit to support  operations.  We expect  bookings  for new products to
result in increased  revenues beginning in the second half of fiscal 2005, which
could require an increase in the credit limit primarily to support  increases in
inventory,  accounts  receivable and import letter of credit balances.  While no
assurances  may be given,  WCI believes  additional  credit limits would be made
available  under the existing line of credit to support  borrowing  requirements
resulting from increased revenues and bookings.

Should the bookings and  revenues for the new products not  materialize,  we are
committed to reducing operating costs to bring them in line with revenue levels.

(See  the  Liquidity  and  Capital  Resources  section  on page  20 for  further
discussion.)

RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED MARCH 4, 2005  COMPARED TO THREE AND SIX MONTHS ENDED
FEBRUARY 27, 2004

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

<TABLE>
<CAPTION>
                                            Three months ended              Six months ended
                                        -------------------------------------------------------
                                          March 4,    February 27,      March 4,   February 27,
                                            2005          2004            2005         2004
                                        -------------------------------------------------------
<S>                                        <C>            <C>           <C>           <C>
  Revenues                                 100.0%         100.0%        100.0%        100.0%
  Cost of products sold                     61.8           74.6          62.2          73.9
  Gross margin                              38.2           25.4          37.8          26.1
  Selling, general, and administrative      22.8           27.1          22.4          26.4
  Research & development                    12.2           16.4          12.4          16.0
  Operating income (loss)                    3.3          (18.1)          3.1         (16.3)
  Interest expense                           (.2)           (.5)          (.2)          (.5)
  Interest income                             .1             .2            .1            .1
  Earnings (loss) before income taxes        3.2          (18.4)          2.9         (16.6)
  Income tax expense (benefit)               1.1           (4.5)          1.1          (4.9)
  Net earnings (loss)                        2.0%         (13.9)%         1.9%        (11.7)%
                                        =======================================================
</TABLE>


The  operating  results for the three and six month  periods ended March 4, 2005
were net  earnings  of  $128,000  or $0.01 per share and  $240,000  or $0.02 per
share, respectively,  compared to a net loss of $(655,000) or $ (0.05) per share
and a net loss of $(1,104,000) or $(0.09) per share, respectively, for the three
and six month periods ended February 27, 2004.

Revenues  -  Revenues  for the  three  months  ended  March  4,  2005  increased
$1,624,000 or 34.5% to $6,337,000 from  $4,713,000.  Revenues for the six months
ended  March  4,  2005  increased   $3,280,000  or  34.7%  to  $12,743,000  from
$9,463,000.


                                       17
<PAGE>

Direct Broadcast Satellite (DBS) revenues (including service revenues) increased
$1,787,000  or 39.6% in the second  quarter of fiscal  2005 to  $6,306,000  from
$4,519,000 in the same period of fiscal 2004.  For the six months ended March 4,
2005, DBS revenues increased  $3,698,000 or 41.8% to $12,555,000 from $8,857,000
for the six months ended  February 27, 2004.  The second  quarter of fiscal 2005
included  revenues  on the new order from Ascent  Media of iPump Media  Servers,
digital  encoders  and Unity  receivers  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 in
the second quarter on additional  orders of uplink  equipment and Unity 4600 and
4650 receivers to upgrade their existing  network.  The second quarter and first
six months of fiscal 2005 included  shipments of transmission  equipment and our
Compel  network  control  system to a new radio  broadcast  customer for network
upgrades and  expansion.  In addition,  the six months  revenues  included first
quarter shipments to Roberts  Communications  Network for network expansion,  to
Ascent Media for a private network  application using the iPump Media Server and
to Microspace Communications for delivery of audio programming for the Christian
Radio Consortium.

Telecom and Custom  Products Group revenues  decreased  $164,000 or 84.4% in the
second  quarter of fiscal  2005 to $30,000  from  $194,000 in the same period of
fiscal 2004. For the six months ended March 4, 2005, Telecom and Custom Products
Group revenues decreased $419,000 or 69.1% to $187,000 from $606,000 for the six
months ended  February 27, 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 March 4, 2005,  three customers  accounted for 24.8%,
19.5% and 14.6% of revenues,  respectively.  For the three months ended February
27, 2004, two customers accounted for 40.1% and 15.5% of revenues, respectively.
For the six months  ended March 4, 2005,  four  customers  accounted  for 26.5%,
14.2%,  11.7% and 11.2% of  revenues,  respectively.  For the six  months  ended
February 27,  2004,  one customer  accounted  for 38.7% of revenues.  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.  The backlog was  approximately
$13.1 million at March 4, 2005,  compared to $12.0 million at September 3, 2004,
and $13.9  million at February 27, 2004.  Four  customers  accounted for 51.6 %,
20.8%, 10.9% and 10.6%, respectively, of the backlog at March 4, 2005. The total
multi-year backlog at March 4, 2005, was approximately $28.4 million compared to
$21.0 million at September 3, 2004 and $22.8 million at February 27, 2004.

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

Gross Profit Margins - The Company's gross profit margin  percentages were 38.2%
and 37.8% for the three and six month periods  ended March 4, 2005,  compared to
25.4% and 26.1% for the three and six month  periods  ended  February  27, 2004.
Gross profit margin  dollars  increased  $1,224,000 and $2,344,000 for the three
and six month  periods  ended March 4, 2005,  compared to the same periods ended
February 27, 2004. The increase in margin  percentages and dollars for the three
and six months ended March 4, 2005 was mainly due to 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 six month
periods of fiscal 2005 included inventory reserve charges of $25,000 and $25,000
compared to $75,000 and $150,000  for the same  periods of fiscal  2004.  Profit
margins  in the  three and six  month  periods  ended  March 4,  2005,  included
adjustments  to  reduce  cost of sales by  $86,000  and  $68,000,  respectively,
related  to  reductions  of  certain  accrued  expenses  (see  Note  10  to  the
consolidated financial statements).

Selling, General and Administrative - Selling, general and administrative (SG&A)
expenses  increased  $164,000 or 12.8% to $1,443,000  for the three months ended
March 4, 2005, from $1,279,000 for the three months ended February 27, 2004. For
the six months ended March 4, 2005, SG&A expenses increased $349,000 or 14.0% to
$2,848,000  from  $2,499,000  for the same period ended  February 27, 2004.  The
increase in SG&A expenses in the second quarter of fiscal 2005 was mainly due to
increases  in sales  salaries of $87,000 due to an  increase in  personnel,  and
increases in selling and  marketing  expenses of $78,000 due to increased  sales
activity and sales  commissions.  The increase in SG&A expenses in the first six
months of fiscal 2005 was mainly due to increases in sales  salaries of $144,000
due to an increase in personnel,  increases in selling and marketing expenses of
$138,000  due to increased  sales  activity  and sales  commissions,  and higher
consulting expenses of $99,000. These expenses were offset by lower professional
fees at WCI of $62,000.  As a percentage  of revenues,  SG&A expenses were 22.8%
and 22.4% for the three and six month periods  ended March 4, 2005,  compared to
27.1% and 26.4% for the same periods of fiscal 2004.  SG&A expenses in the three
and six month  periods  ended  March 4,  2005,  included  adjustments  to reduce
primarily   insurance   and  property  tax  expenses  by  $21,000  and  $11,000,
respectively,  related to reductions of certain accrued expenses (see Note 10 to
the consolidated financial statements).


                                       18
<PAGE>

Research  and  Development  -  Research  and  development  (R&D)   expenditures,
including  capitalized software development costs, were $1,185,000,  or 18.7% of
revenues,  and  $2,394,000,  or 18.8% of  revenues,  for the three and six month
periods ended March 4, 2005, compared to $1,206,000,  or 25.6% of revenues,  and
$2,494,000,  or  26.4%  of  revenues,  for the  same  periods  of  fiscal  2004.
Capitalized software development costs amounted to $414,000 and $819,000 for the
second  quarter  and first six months of fiscal 2005  compared  to $431,000  and
$979,000  for the same  periods of fiscal 2004.  The  decreases  in  capitalized
software  costs 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.  R&D  expenses,  excluding  capitalized
software expenditures,  were $772,000, or 12.2% of revenues, and $1,575,000,  or
12.4% of revenues, for the three and six months ended March 4, 2005, compared to
$774,000, or 16.4% of revenues,  and $1,515,000,  or 16.0% of revenues,  for the
same  periods of fiscal 2004.  R&D  expenses in the three and six month  periods
ended March 4, 2005,  included  adjustments  to reduce  primarily  insurance and
property  tax  expenses  by  $19,000  and  $10,000,  respectively,   related  to
reductions  of  certain  accrued  expenses  (see  Note  10 to  the  consolidated
financial  statements).  R&D expenditures for the second half of fiscal 2005 are
expected to continue at a rate similar to that of the first half of fiscal 2005.

Interest  Expense - Interest  expense  decreased $9,000 to $15,000 for the three
months ended March 4, 2005, from $24,000 for the three months ended February 27,
2004. For the six months ended March 4, 2005, interest expense decreased $13,000
to $30,000  from  $43,000 for the same  period  ended  February  27,  2004.  The
decreases for the three and six month periods in fiscal 2005 were  primarily due
to decreases in the average outstanding letter of credit commitment balances.

Interest  Income - Interest  income was $7,000 and $10,000 for the three and six
month periods  ended March 4, 2005,  compared to $9,000 and $14,000 for the same
periods  ended  February 27, 2004.  The  decreases  for the three and six months
ended March 4, 2005 were mainly due to lower  average  balances of cash and cash
equivalents.

Income Tax Expenses - For the six months ended March 4, 2005, income tax expense
of $134,000 was  comprised  of deferred  federal and state income tax expense of
$127,000 and $7,000, respectively. Net deferred tax assets decreased $134,000 to
$4,035,000,  principally due to utilization of net operating loss  carryforwards
in the first six 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,  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
scheduled and  designated by them,  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 six
months ended March 4, 2005,  revenues in the amount of $1,533,000 and $2,878,000
respectively,  were  appropriately  recorded  prior to delivery as bill and hold
transactions  in  accordance  with the  provisions of SAB 104. At March 4, 2005,
accounts  receivable  for these revenues  amounted to $1,533,000.  Subsequent to
March 4, 2005,  payments  in the amount of $1,484,000  were  received on these
accounts receivable.


                                       19
<PAGE>

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 March 4, 2005, inventories,  net of reserve provisions,  amounted
to $3,378,000.

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 March 4, 2005,  capitalized  software
costs, net of accumulated amortization, amounted to $1,803,000.

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 March 4, 2005.  At March 4, 2005,  deferred tax
assets,  net  of  valuation  allowances,   amounted  to  $4,035,000,   of  which
approximately  $2,260,000  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 March 4, 2005,  accounts  receivable,  net of
allowances for doubtful accounts, amounted to $4,800,000.

LIQUIDITY AND CAPITAL RESOURCES
SIX MONTHS ENDED MARCH 4, 2005

At  March  4,  2005,  our  primary  sources  of  liquidity  were  cash  and cash
equivalents of $1,071,000 and a $5,000,000 bank loan facility,  which is subject
to availability advance formulas based on eligible accounts  receivable,  import
letter of commitment balances and inventories.  At March 4, 2005,  approximately
$2,750,000,  net of  outstanding  letters of credit in the amount of $2,250,000,
was available to borrow under the advance  formulas.  Cash and cash  equivalents
decreased $449,000 during the first six months of fiscal 2005.


                                       20
<PAGE>

During  the first  six  months of fiscal  2005,  operating  activities  provided
$564,000 of cash. Net earnings adjusted for noncash expenses provided $1,438,000
of cash, while changes in accounts receivable and customer deposit balances used
$2,716,000  of cash.  Changes  in  inventories,  accounts  payable  and  accrued
expenses,  and other assets provided  $1,842,000 of cash. Cash used by investing
activities  was $209,000 for property and equipment  expenditures,  $819,000 for
capitalized  software  additions and $55,000 for legal  expenses  related to the
filing of applications for various patents and trademarks.  Financing activities
provided $69,000 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 (5.50% at March 4, 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
guaranteed  by  Wegener  Corporation.   At  March  4,  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 March 4,
2005 amounted to $2,250,000. At March 4, 2005, approximately $2,750,000,  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 March  4,  2005,  we were in  compliance  with all loan  facility
covenants.

In addition, at March 4, 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.

Beginning  in the  second  half of  fiscal  2005,  we  expect  that we will  use
borrowings on the line of credit to support  operations.  We expect bookings for
new  products to result in  increased  revenues  beginning in the second half of
fiscal 2005,  which could  require an increase in the credit limit  primarily to
support increases in inventory,  accounts receivable and import letter of credit
balances.  While no  assurances  may be given,  WCI believes  additional  credit
limits  would be made  available  under the  existing  line of credit to support
borrowing  requirements  resulting from increased revenues and bookings.  Should
the bookings and revenues for the new products not materialize, we are committed
to reducing operating costs to bring them in line with revenue levels.

We have three manufacturing and purchasing agreements for certain finished goods
inventories.  At March 4, 2005,  outstanding  purchase  commitments  under these
agreements amounted to $5,878,000. Pursuant to the above agreements, at March 4,
2005, we had outstanding letters of credit in the amount of $2,250,000.

During the first  quarter of fiscal 2004,  we entered into a two-year  agreement
aggregating $870,000 for engineering design and software  development  services.
At March 4, 2005, the remaining  outstanding  commitment under the agreement was
$290,000.

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 March 4, 2005 consisted
of:

                                           Payments Due by Period
                           -----------------------------------------------------
                                           Fiscal          Fiscal       Fiscal
Contractual Obligations     Total           2005          2006-2007   2008-2009
-----------------------    -----------------------------------------------------
Operating leases            $  316,000    $   93,000    $  219,000     $ 4,000

Purchase commitments         6,168,000     4,567,000     1,601,000          --
                           -----------------------------------------------------
Total                       $6,484,000    $4,660,000    $1,820,000     $ 4,000
                           =====================================================


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 March 4, 2005
subject to variable interest rate fluctuations.

At March 4, 2005, our cash equivalents consisted of bank commercial paper in the
amount of $980,000.  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 defined in
Rules  13a-15(e)  and  15d-15(e)  of the  Securities  Exchange  Act of 1934,  as
amended)  as of the end of the period  covered by this  report.  Based upon that
evaluation,  the  Company's  CEO and  CFO  have  concluded  that  the  Company's
disclosure controls and procedures are effective.

During the second quarter of fiscal 2005, we reviewed certain accounting matters
and practices in connection with our  Sarbanes-Oxley  compliance  program.  As a
result of this review, we have modified our procedures to review more frequently
the estimates and assumptions used in determining our accrued expense  liability
balances. We also 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.

We intend to continue to diligently  review our system of internal  control over
financial   reporting,   and  to  revise  and  improve  our  controls  as  other
deficiencies may be identified.

There  have  been no  other  changes  in the  Company's  internal  control  over
financial  reporting during its most recently  completed fiscal quarter 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On January 25, 2005, the Annual Meeting of Shareholders  was held and the shares
present voted on the following matters:

                  (1.)  The shareholders  approved the election of the following
                        nominees to the Board of Directors:

                                    Phylis A. Eagle-Oldson  (Class I Director)
                                    11,987,194 votes FOR
                                         186,124 votes WITHHELD

                                    C. Troy Woodbury (Class I Director)
                                    11,943,025 votes FOR
                                         230,293 votes WITHHELD

                                    Joe K. Parks  (Class I Director)
                                    11,943,005 votes FOR
                                         230,293 votes WITHHELD

                        The terms of office  of  Thomas  G.  Elliott  and Ned L.
                        Mountain as Class III directors and Robert A. Placek and
                        Wendell  H.  Bailey  as  Class II  directors,  continued
                        subsequent to the Annual Meeting.

                  (2.)  The appointment of BDO Seidman,  LLP as auditors for the
                        Company  for the  fiscal  year  2005 was  approved  with
                        12,052,294 votes FOR, 106,439 votes AGAINST,  and 14,585
                        votes ABSTAINING.


                                       24
<PAGE>

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.


                             25
<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:  April 18, 2005              By:   /s/ Robert A. Placek
                                     ------------------------------------------
                                         Robert A. Placek
                                         Chairman of the Board, President and
                                         Chief Executive Officer
                                         (Principal Executive Officer)


Date:  April 18, 2005              By:   /s/ C. Troy Woodbury, Jr.
                                     ------------------------------------------
                                         C. Troy Woodbury, Jr.
                                         Treasurer and Chief
                                         Financial Officer
                                         (Principal Financial and Accounting
                                         Officer)


                                       26