<PAGE>

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

                                    FORM 10-Q

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

For the quarterly period ended December 31, 2001.
                               ------------------

                                       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 Number:  0-19381
                        --------


                              WESTWOOD CORPORATION
             (Exact name of registrant as specified in its charter)

             Nevada                                   87-0430944
-----------------------------------------------------------------------
(State or other jurisdiction                       (I.R.S. Employer
      of incorporation)                            Identification No.)

12402 East 60th Street, Tulsa, Oklahoma                        74146
-----------------------------------------------------------------------
(Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code:  (918) 250-4411
                                                     ------------------

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 and 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.

(x)  Yes     ( )  No

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

            Common                    Outstanding at February 7, 2002
------------------------------        -------------------------------
Common Stock, $.003 par value                        6,891,647

<PAGE>

                                      INDEX
                                      -----

                                                                        Page No.
                                                                        --------

Part I   Financial Information:

         Item 1.  Consolidated Balance Sheets as of                        1
                  December 31, 2001 and March 31, 2001

                  Consolidated Statements of Operations                    3
                  for the third quarter and nine months
                  ended December 31, 2001 and 2000

                  Consolidated Statement of Cash Flows                     4
                  for the nine months ended December 31,
                  2001 and 2000

                  Notes to Consolidated Financial                          5
                  Statements

         Item 2.  Management's Discussion and Analysis of                  10
                  Financial Condition and Results of
                  Operations

         Item 3.  Quantitative and Qualitative Disclosures                 16
                  About Market Risk


Part II  Other Information:

         Item 1.  Legal Proceedings  (None)                                17

         Item 2.  Changes in Securities  (None)                            17

         Item 3   Defaults Upon Senior Securities  (None)                  17

         Item 4   Submission of Matters to a Vote                          17
                    of Security Holders (None)

         Item 5.  Other Information  (None)                                17

         Item 6.  Exhibits and Reports on Form 8-K                         17

Signatures                                                                 18

                                      (i)

<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements
         --------------------

                              WESTWOOD CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

                                                       December 31     March 31
                                                          2001           2001
                                                       ------------------------
                                                       (Unaudited)
Assets

Current assets:
    Cash and cash equivalents                          $       163     $    545
    Accounts receivable (including retainage
       receivable of $626 at December 31,
       2001 and $733 at March 31, 2001), net
       of allowance for doubtful accounts                    5,681        6,987
    Costs and estimated earnings in excess of
       billings on uncompleted contracts                     2,669        1,153
    Inventories, primarily raw materials
       and purchased parts                                   7,618        5,831
    Prepaid expenses                                           235           92
    Note Receivable                                            234          250
                                                       -----------     --------

Total current assets                                        16,600       14,858

Plant and equipment, at cost:
    Leasehold improvements                                     406          382
    Machinery and equipment                                  3,921        4,717
    Patterns and tools                                         115          109
                                                       -----------     --------
                                                             4,442        5,208
Accumulated depreciation                                    (3,045)      (3,647)
                                                       -----------     --------
                                                             1,397        1,561

Goodwill (net)                                               4,054        4,346

Long-term accounts receivable, retainage                       326          210
Note receivable                                                 -           213
Deferred charges & other                                        38           45
                                                       -----------     --------
Total Assets                                           $    22,415      $21,233
                                                       ===========     ========

See accompanying notes.


                                       1

<PAGE>

                             WESTWOOD CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                             December 31      March 31
                                                                                 2001           2001
                                                                             -------------------------
                                                                             (Unaudited)

<S>                                                                          <C>              <C>
Liabilities and stockholders' equity

Current liabilities:
    Accounts payable                                                           $  6,298       $  5,073
    Accrued liabilities                                                             715            858
    Billings in excess of costs and estimated
       earnings on uncompleted contracts                                          3,712          4,459
    Current portion of long-term debt due to related
       parties                                                                      715            715
    Current portion of long-term debt                                             3,923          3,476
                                                                               --------       --------
Total current liabilities                                                        15,363         14,581

Long-term debt due to related parties                                               850            850
Long-term debt                                                                      970          1,285

Stockholders' equity:
    Preferred stock, 5,000,000 shares authorized,
       $.001 par value, no shares issued and
       outstanding                                                                    -              -
    Common stock, 20,000,000 shares authorized, $.003 par value, 6,891,647
       shares issued and outstanding at December 31, 2001 and
       March 31, 2001                                                                21             21
    Capital in excess of par value                                                5,978          5,978
    Accumulated deficit                                                            (672)        (1,387)
    Treasury stock, 127,000 shares                                                  (95)           (95)
Total stockholders' equity                                                     --------       --------
                                                                                  5,232          4,517
                                                                               --------       --------

Total liabilities and stockholders' equity                                     $ 22,415       $ 21,233
                                                                               ========       ========
</TABLE>

See accompanying notes.

                                       2

<PAGE>

                             WESTWOOD CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In Thousands)

<TABLE>
<CAPTION>
                                        Third Quarter Ended            Nine Months Ended
                                            December 31                   December 31
                                        2001           2000           2001           2000
                                        -------------------           -------------------
                                              (Unaudited)                 (Unaudited)

<S>                                   <C>            <C>            <C>            <C>
Sales                                 $ 12,533       $ 10,614       $ 36,462       $ 22,214

Cost of sales                           10,703          9,628         31,851         19,696
                                      --------       --------       --------       --------
Gross profit                             1,830            986          4,611          2,518

Operating expenses:
    Selling, general &
      administrative                     1,208          1,001          3,491          3,015
                                      --------       --------       --------       --------
Operating income (loss)                    622            (15)         1,120           (497)

Other income (expense):
    Interest expense                      (123)          (133)          (398)          (354)
    Other income (expense)                  50            (22)           145             43
                                      --------       --------       --------       --------
                                           (73)          (155)          (253)          (311)
                                      --------       --------       --------       --------
Income (loss) before taxes                 549           (170)           867           (808)

Provision for income taxes                  57             83            152             83
                                      --------       --------       --------       --------
Net income (loss)                     $    492       $   (253)      $    715       $   (891)
                                      ========       ========       ========       ========
Basic earnings (loss) per share       $    .07       $   (.04)      $    .11       $   (.13)

Diluted earnings (loss) per share     $    .06       $   (.04)      $    .10       $   (.13)
</TABLE>

See accompanying notes.

                                        3

<PAGE>

                             WESTWOOD CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)

                                                         Nine Months Ended
                                                            December 31
                                                         2001          2000
                                                         ------------------
                                                            (Unaudited)

Operating activities

Net income (loss)                                       $   715       $  (891)
Adjustments to reconcile net income (loss)
to cash provided (used) by operations:
    Depreciation and amortization                           725           747
    Non-cash interest income                                (21)          (50)
    Gain on sale assets                                     (22)            -

Cash flows impacted by changes in:
    Accounts receivable                                   1,244          (775)
    Costs and estimated earnings in excess
       of billings on uncompleted contracts              (1,516)          841
    Inventories                                          (1,787)       (2,234)
    Prepaid expenses                                       (143)          (45)
    Long-term accounts receivable, retainage               (116)           68
    Accounts payable                                      1,225          (551)
    Accrued liabilities                                    (143)         (519)
    Billings in excess of costs and estimated
       earnings on uncompleted contracts                   (747)        1,642
                                                        -------       -------
Net cash used by operating activities                      (586)       (1,767)

Investing activities

Purchase of plant and equipment                            (302)         (301)
Receipt of payment on note receivable                       250           250
Proceeds from sales of assets                               124             -
                                                        -------       -------

Net cash provided (used) by investing activities             72           (51)

Financing activities

Principal payments on debt                                 (315)         (542)
Borrowings on debt                                          447         2,138
                                                        -------       -------
Net cash provided by financing activities                   132         1,596
                                                        -------       -------
Net decrease in cash                                       (382)         (222)
Cash at beginning of period                                 545           293
                                                        -------       -------
Cash at end of period                                   $   163       $    71
                                                        =======       =======

See accompanying notes.

                                       4

<PAGE>

                              WESTWOOD CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

Note 1 - Basis of Presentation
------------------------------

The accompanying unaudited consolidated financial statements include Westwood's
wholly-owned subsidiaries NMP Corp. ("NMP"), TANO Corp. ("TANO"), and MCII
Electric Company, Inc. ("MCII"). These statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. Management believes that
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the fiscal
third quarter and nine months ended December 31, 2001 may not necessarily be
indicative of the results that may be expected for the year ended March 31,
2002. For further information, refer to the consolidated financial statements
and footnotes included in Westwood Corporation's annual report on Form 10-K for
the year ended March 31, 2001 and the first and second quarter fiscal 2002
reports on Form 10-Q for the three months and six months ended June 30, 2001 and
September 30, 2001, respectively.

Note 2 - Inventories
--------------------

Inventories consists of the following:

                                           December 31,    March 31,
                                              2001           2001
                                           -------------------------
                                                (In Thousands)
     Work in process, primarily
       related to unit-of-delivery
       contracts in process                 $ 3,972       $ 9,117
     Less contract billings to date          (2,170)       (6,426)
                                            ---------------------
                                              1,802         2,691

     Raw materials and purchased
       parts                                  5,816         3,140
                                            ---------------------
                                            $ 7,618       $ 5,831
                                            =====================

                                        5

<PAGE>
0

Note 3 - Long-Term Debt
-----------------------

The Company entered into a new credit facility in August 1999, which included a
$2,000,000 revolving credit line and a $2,000,000 five-year term note, which is
payable monthly and matures in August 2004. In October 2000, the revolving
credit line was increased to $2,800,000. As additional security for the $800,000
increase in the revolving credit line in October 2000, the Company's President
provided a personal guarantee and pledged 750,000 shares of the Company's common
stock owned by him. The personal guarantee and pledge of common stock are
limited to the repayment of the additional $800,000 of the revolving credit
line. On December 18, 2001, the revolving credit line was increased to
$3,800,000 with a maturity date in July 2002. At December 31, 2001, there was
$700,000 of availability on the revolving credit line.

In November 2001, the Company obtained a commitment from its bank for up to
$1,000,000 in additional short-term revolving credit lines based upon foreign
irrevocable letters of credit on outstanding purchase orders, which will expire
between January 2002 and June 2002. Proceeds from these financings will be used
to fund production on these foreign orders prior to shipment. During November
2001, the Company obtained $630,000 in two revolving credit financings using
three of its five foreign irrevocable letters of credit as collateral. At
December 31, 2001, $200,000 was outstanding on one of these financings. The note
was repaid prior to the expiration of the letter of credit in January 2002. In
January 2002, the remaining $430,000 revolving credit financing was extended to
mature on March 31, 2002 using two of the Company's three remaining foreign
irrevocable letters of credit as collateral.

In December 1999, the Company completed a $1,000,000 convertible subordinated
debenture offering. The private placement was purchased by a small group of
outside investors as well as officers and directors of the Company. The
debentures bear interest of 10% per annum and mature on December 22, 2004. The
debentures are convertible into common stock at one share for each $1.00 of
debentures exercised. In connection with the issuance of the debentures, the
Company issued warrants to purchase up to 500,000 shares of common stock of the
Company at $1.00 per share. The warrants are exercisable within five years from
the date of issuance. The amount of warrants exercisable is dependent upon the
market price of the stock. As of December 31, 2001, the warrants were
exercisable.

In February 2001, the Company completed an $880,000 convertible subordinated
debenture offering. The private placement was purchased by a small group of
outside investors, as well as officers and directors of the Company. The
debentures bear interest of 12% per annum, which is payable each June 30 and
December 31, and mature on February 13, 2002.

                                        6

<PAGE>

The debentures are convertible into common stock at one share for each $1.00 of
debentures converted. In connection with the issuance of the debentures, the
Company issued warrants to purchase up to 340,000 shares of common stock of the
Company at $1.00 per share. The warrants are exercisable within five years from
the date of issuance. The Company is in the process of extending the maturity of
these debentures to February 2003.

In connection with the December 1999 settlement of contingencies related to the
acquisition of MCII in 1997, the Company replaced the 1997 non-interest bearing
note with a new $300,000 non-interest bearing note and $100,000 cash payable to
the former owner of MCII. The note requires eight quarterly installments of
$37,500, ending January 1, 2002. The Company recorded the new note at a discount
rate of 8.25%, which was consistent with the rate obtainable from the lender of
the revolving credit facility in December 1999. The note was repaid on December
31, 2001.

Note 4 - Income Taxes
---------------------

The Company settled an Internal Revenue Service audit in the first quarter of
fiscal 2002. As part of the settlement, the Company paid $48,000. The remaining
provision for income taxes for the nine months ended December 31, 2001 is due
primarily to state income taxes as the Company utilized a portion of its federal
net operating loss carryforward, which has a 100% valuation allowance against
it. The Company generated a net operating loss carryforward in the first nine
months of fiscal 2001, whereby no deferred tax asset was established.

Note 5 - Comprehensive Income
-----------------------------

For the third quarter and nine month periods ended December 31, 2001 and 2000,
respectively, comprehensive income (loss) and net income (loss) are the same.

                                        7

<PAGE>

Note 6 - Earnings Per Share
---------------------------

The following table sets forth the computation of basic and diluted earnings
(loss) per share (in thousands, except per share data):

<TABLE>
<CAPTION>
                                              Third            Third             Nine               Nine
                                             Quarter          Quarter           Months             Months
                                              Ended            Ended            Ended              Ended
                                             December         December         December           December
                                             31, 2001         31, 2000         31, 2001           31, 2000
                                           --------------------------------------------------------------------
<S>                                        <C>                <C>              <C>                <C>
Numerator:
---------
Net income (loss) and numerator for          $   492           $  (253)          $   715           $  (891)
basic earnings (loss) per share
Effect of dilutive securities:
10% and 12% convertible debentures                51                 -               154                 -
                                           --------------------------------------------------------------------
Numerator for diluted earnings (loss)
per share after assumed conversions          $   543           $  (253)          $   869           $  (891)

Denominator:
-----------
Denominator for basic earnings (loss)
per share - weighted-average shares            6,765             6,765             6,765             6,765
Effect of dilutive securities:
Directors' stock options                         165                 -                 8                 -
10% and 12% convertible debentures             1,880                 -             1,880                 -
                                           --------------------------------------------------------------------
Dilutive potential common shares               2,045                 -             1,888                 -
                                           --------------------------------------------------------------------
Denominator for diluted earnings (loss)
per share - adjusted weighted-average
shares and assumed conversions                 8,810             6,765             8,653             6,765

Basic earnings (loss) per share              $   .07           $  (.04)          $   .11           $  (.13)

Diluted earnings (loss) per share            $   .06           $  (.04)          $   .10           $  (.13)
</TABLE>

                                        8

<PAGE>

Note 7 - Segment Information
----------------------------
           (In Thousands)

<TABLE>
<CAPTION>
                                       Revenues
                          ------------------------------------
                                                                   Income (Loss)
Three Months Ended                       Inter-                    Before Income     Total
December 31, 2001         External      Segment         Total          Taxes         Assets
------------------        --------      --------      ---------    -------------    ---------
<S>                       <C>           <C>           <C>             <C>           <C>
Marine Switchgear         $  3,683      $    577       $  4,260       $    114       $ 18,674
Mobile Power Systems         6,917             -          6,917             17          7,592
Marine Automation
   and Control               1,932           948          2,881            464          4,523
Other                            -             -              -            549         11,626
Eliminations                     -        (1,525)        (1,525)          (595)       (20,000)
                          --------      --------       --------       --------       --------

Total                     $ 12,533       $     -       $ 12,533       $    549       $ 22,415
                          ========      ========       ========       ========       ========

Three Months Ended
December 31, 2000
-----------------
Marine Switchgear         $  4,492      $    719       $  5,211       $    644       $ 17,738
Mobile Power Systems         5,056             -          5,056         (1,022)         4,268
Marine Automation
   and Control               1,066           479          1,545             86          4,818
Other                            -             -              -           (170)        12,356
Eliminations                     -        (1,198)        (1,198)           292        (21,826)
                          --------      --------       --------       --------       --------

Total                     $ 10,614       $     -       $ 10,614       $   (170)      $ 17,354
                          ========      ========       ========       ========       ========

Nine Months Ended
December 31, 2001
-----------------

Marine Switchgear         $ 11,804      $  3,395       $ 15,199       $    566       $ 18,674
Mobile Power Systems        19,673             -         19,673           (281)         7,592
Marine Automation
   and Control               4,985         2,224          7,209          1,007          4,523
Other                            -             -              -            867         11,626
Eliminations                     -        (5,619)        (5,619)        (1,292)       (20,000)
                          --------      --------       --------       --------       --------

Total                     $ 36,462       $     -       $ 36,462       $    867       $ 22,415
                          ========      ========       ========       ========       ========

Nine Months Ended
December 31, 2000
-----------------

Marine Switchgear         $ 10,204      $  1,826       $ 12,030       $    803       $ 17,738
Mobile Power Systems         8,162             -          8,162         (1,670)         4,268
Marine Automation
   and Control               3,848         1,016          4,864            225          4,818
Other                            -             -              -           (808)        12,356
Eliminations                     -        (2,842)        (2,842)           642        (21,826)
                          --------      --------       --------       --------       --------

Total                     $ 22,214       $     -       $ 22,214       $   (808)      $ 17,354
                          ========      ========       ========       ========       ========
</TABLE>

                                        9

<PAGE>

Note 8 - New Accounting Standard
--------------------------------

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets." This standard requires that goodwill and certain other intangible
assets no longer be amortized, but be evaluated on at least an annual basis for
impairment based on the fair value of the reporting segment in which the
goodwill and other intangible assets are associated. The standard also requires
additional disclosures about goodwill and other intangible assets subsequent to
their acquisition. SFAS No. 142 is not required to be adopted by the Company
until the first quarter of fiscal year 2003. The Company has not determined the
impact of adopting this standard on its financial position or results of
operations.

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

Results of Operations - Third Quarter Ended December 31, 2001 and 2000
----------------------------------------------------------------------

For the third quarter ended December 31, 2001, the Company had a net profit of
$492,000 compared to a net loss of $253,000 for the same quarter of the previous
year. The diluted net income per share was $.06 compared to a net loss of $.04
for the same quarter of the previous year.

Consolidated sales for the third quarter increased 18.1%, to $12,533,000, as
compared to $10,614,000 for the same quarter of the previous year.

A breakdown of sales by the Company's major product groups is as follows:

 .  Mobile power system sales by MCII for the third quarter of fiscal year
   2002 were $6,917,000, as compared to $5,056,000 for the same period of
   the previous year. Primarily, the 36.8% increase in revenue was due to
   increased sales to the U.S. government against its long-term contract.

 .  Marine automation and control system sales by TANO for the third quarter
   of fiscal year 2002 totaled $1,932,000, as compared to $1,066,000 for the
   same period of the previous year. The 81.2% increase in sales is due to
   increases in spare parts and multi-function monitor ("MFM") sales and
   repair and field service revenues as a result of scheduled deliveries
   against long-term contracts and higher demand.

                                       10

<PAGE>

 .   Marine electrical switchgear sales by NMP for the third quarter of fiscal
    year 2002 totaled $3,683,000, as compared to $4,492,000 for the same period
    of the previous year. The 18.0% decrease in sales is primarily due to
    changes in estimates to complete the final non-recurring test procedures on
    the first shipset of the DDG long-term contract. The actual non-recurring
    test procedures were performed in the third quarter of fiscal year 2002 and
    January 2002. The change in estimated total contract cost had the effect of
    reducing the percent complete of the contract, which resulted in the
    recognition of decreased revenues.

Gross profit, as a percentage of sales, was 14.6% for the third quarter of
fiscal year 2002, compared to 9.3% for the same period in the previous year. The
higher gross margin percentage is primarily a result of improved production
efficiencies at MCII and TANO. These efficiencies were offset somewhat by
production delays due to temporary shortages of certain vendor parts and final
non-recurring test procedures on the lead ship of the DDG long-term contract.

Operating expenses for the quarter-to-quarter comparison increased from
$1,001,000 in fiscal year 2001 to $1,208,000 for the third quarter of fiscal
year 2002. This increase of 20.7% in operating expenses is primarily due to
increased commission expenses to foreign sales brokers of $52,000, increased
medical self-insurance costs of $25,000, and increased salaries of $71,000. The
remaining increase is due to the overall increase in production at the Company's
subsidiaries.

Interest expense for the third quarter of fiscal year 2002 was $123,000 compared
to $133,000 for the same period in the previous year. The 7.5% decrease is due
to a decrease in the Company's term note and revolving lines of credit
weighted-average interest rate by approximately 350 basis points when comparing
the periods, offset by a $1,018,000 increase in borrowings over the past 12
months.

The effective income tax rate for the third quarter of fiscal year 2002 is
10.4%. This provision is due to state income taxes associated with TANO's
operations, as was the provision for the third quarter of fiscal year 2001. No
other income taxes were accrued in the third quarters of fiscal years 2002 or
2001 due to the utilization and increase, respectively, of 100% valuation
allowances for federal and Oklahoma net operating loss carryforwards.

Nine Months Ended December 31, 2001 and 2000
--------------------------------------------

For the nine months ended December 31, 2001, the Company earned a net profit of
$715,000 compared to a net loss of $891,000 for the same period of the previous
year. Diluted net income per share was $.10

                                       11

<PAGE>

compared to a net loss of $.13 per share for the same period of the previous
year.

Consolidated sales for the nine months ended December 31, 2001, were $36,462,000
compared to $22,214,000 for the same period of the previous year, an increase of
$14,248,000, or 64.1%.

A breakdown of sales by the Company's major product groups is as follows:

     . Mobile power systems sales by MCII for the nine months ended December 31,
       2001 were $19,673,000, as compared to $8,162,000 for the same period in
       the previous year. The 141% increase in sales over the same period in the
       previous year is due primarily to increased sales under a long-term
       contract to the U.S. government. Sales under this long-term contract with
       the U.S. government did not begin until September 2000. This increase in
       sales was offset by a $1,107,000 one-time sale to a prime contractor in
       the same period of the previous year.

     . Marine automation and control system sales by TANO for the nine months
       ended December 31, 2001 were $4,985,000, as compared to $3,848,000 for
       the same period in the previous year. The 29.5% increase in sales was due
       to increases in spare parts and MFM sales and repair and field service
       revenues as a result of scheduled deliveries against long-term contracts
       and higher demand.

     . Marine electrical switchgear sales by NMP for the nine months ended
       December 31, 2001 were $11,804,000, as compared to $10,204,000 for the
       same period in the previous year. The 15.7% increase in sales was due to
       increased production on the DDG and LPD contracts for the U.S. Navy,
       partially offset by third quarter changes in estimates to complete the
       final non-recurring test procedures on the first shipset of the DDG
       long-term contract. The actual non-recurring test procedures were
       performed in the third quarter of fiscal year 2002 and January 2002. The
       change in estimated total contract cost had the effect of reducing the
       increase in the percent complete of the contract, which resulted in a
       smaller increase in revenues.

For the nine months ended December 31, 2001, gross profit was 12.6% compared to
11.3% for the same period last year. Gross margins have improved during the nine
months ended December 31, 2001 due to production efficiencies being realized.
Gross margins for the nine months ended December 31, 2000 were impacted by
start-up costs incurred due to initial production against a long-term contract
with the U.S.

                                       12

<PAGE>

government beginning at MCII in September 2000. These efficiencies were offset
somewhat by production delays due to temporary shortages of certain vendor parts
and final non-recurring test procedures on the lead ship of the DDG long-term
contract during the nine months ended December 31, 2001.

Operating expenses for the nine months ended December 31, 2001 were $3,491,000,
a 15.8% increase from the same period of the previous year. The $476,000
increase is primarily due to the accrual of $94,000 in severance in the nine
months ended December 31, 2001 in conjunction with the resignation of the
Company's previous chief financial officer on April 2, 2001; increased
commission expenses to foreign sales brokers of $52,000; increased medical
self-insurance costs of $42,000; and increased salaries of $133,000. The
remaining increase is due to the overall increase in production at the Company's
subsidiaries.

Interest expense for the nine months ended December 31, 2001 was $398,000,
compared to $354,000 for the same period in the prior year. The 12.4% increase
is due to $1,018,000 in additional borrowings in the nine months ended December
31, 2001 as compared to the same period in the previous year, partially offset
by declining interest rates throughout the nine months ended December 31, 2001
versus increasing rates during the nine months ended December 31, 2000.

The effective income tax rate for the nine months ended December 31, 2001 was
17.5%. This provision is due to state income taxes associated with TANO's
operations, as was the provision for the nine months ended December 31, 2000.
The Company also settled an Internal Revenue Service audit in the first quarter
of fiscal year 2002. As part of the settlement, the Company paid $48,000. No
other income taxes were accrued in the nine months ended December 31, 2001 or
2000 due to the utilization and increase, respectively, of 100% valuation
allowances for federal and Oklahoma net operating loss carryforwards.

Liquidity and Capital Resources
-------------------------------

Operating activities for the nine months ended December 31, 2001, resulted in
net cash used of $586,000. Cash from net income of $715,000, depreciation and
goodwill amortization of $725,000, accounts receivable collections of $1,244,000
and an increase in accounts payable of $1,225,000 were used to purchase
inventory of $1,787,000 and prepaid expenses of $143,000, further completion of
long-term contracts by increasing costs and estimated earnings in excess of
billings on uncompleted contracts by $1,516,000 and reducing billings in excess
of costs and estimated earnings on uncompleted contracts by $747,000, pay down
accrued liabilities by $143,000 and increase long-term retainage by $116,000.
Accounts receivable decreased due to the receipt of the $1,080,000 patent
infringement settlement receivable outstanding at March 31, 2001. Inventory and
accounts payable increased due to

                                       13

<PAGE>

increased production. Costs and estimated earnings exceeding progress billings
was due to costs being incurred to complete portions of long-term contracts that
had been progress billed in accordance with the milestones of the contracts and
not when the actual costs were incurred.

Operating activities for the nine months ended December 31, 2000, resulted in
net cash use of $1,767,000. During this period, major items providing cash were
depreciation and amortization of $747,000, an increase in billings in excess of
costs and estimated earnings on uncompleted contracts of $1,642,000, and a
decrease in costs and estimated earnings in excess of billings on uncompleted
contracts of $841,000. Major uses of cash included increased inventories of
$2,234,000, increased accounts receivable of $775,000, decreased accounts
payable of $551,000, decreased accrued liabilities of $519,000 and the net loss
for the nine months ending December 31, 2000 of $891,000. The reason for the
increases and decreases was due to production and sales beginning on long-term
contracts at NMP and MCII during the nine months ended December 31, 2000.

Investing activities for the nine months ended December 31, 2001 and 2000
consisted of equipment purchases of $302,000 and $301,000, respectively. These
purchases were made to improve production and test efficiencies on long-term
contracts. The cash used for the equipment purchases was offset by the receipt
of the first and second $250,000 annual installments on the note receivable from
the purchaser of the marine hardware business sold in July 1999 as well as the
sale of equipment no longer required for production under the Company's current
long-term contracts.

Financing activities for the nine months ended December 31, 2001 provided
$132,000 of cash as the $447,000 increase in borrowings against the Company's
revolving lines of credit in the third quarter of fiscal year 2002 more than
offset the required term loan payments of $315,000. Financing activities for the
nine months ended December 31, 2000 provided $1,596,000 of cash. Borrowings
against the Company's revolving credit line of $2,138,000 were used to fund
increased production against long-term contracts and term loan payments of
$542,000. On December 18, 2001, the revolving credit line was increased to
$3,800,000 with a maturity date in July 2002. At December 31, 2001, there was
$700,000 of availability on the revolving credit line. While the Company
believes the current revolving credit line is sufficient to maintain current
production levels, the Company is having ongoing discussions with its current
lender and other lenders to increase and extend, prior to the July 2002 maturity
date, the current revolving credit facility in order to fund increased
production plans in fiscal year 2003.

                                       14

<PAGE>

In November 2001, the Company obtained a commitment from its bank for up to
$1,000,000 in additional short-term revolving credit lines based upon foreign
irrevocable letters of credit on outstanding purchase orders, which will expire
between January 2002 and June 2002. Proceeds from these financings will be used
to fund production on these foreign orders prior to shipment. During November
2001, the Company obtained $630,000 in two revolving credit financings using
three of its five foreign irrevocable letters of credit as collateral. At
December 31, 2001, $200,000 was outstanding on one of these financings. The note
was repaid prior to the expiration of the letter of credit in January 2002. In
January 2002, the remaining $430,000 revolving credit financing was extended to
mature on March 31, 2002 using two of the Company's three remaining foreign
irrevocable letters of credit as collateral.

On October 3, 2001, the Company filed a current report on Form 8-K to report the
September 27, 2001 award of a new long-term contract to MCII with an estimated
value over six years of $156,000,000. On January 31, 2002, the Company filed a
current report on Form 8-K to report that the award of the long-term contract to
MCII as announced on October 3, 2001 had been protested by a competing concern
and an amendment to the solicitation was issued on January 29, 2002, which
required the resubmittal of certain pricing criteria and subsequent
reevaluation. The Company will respond to the amendment on February 11, 2002 as
required. The January 31, 2002 Form 8-K also reports that the Company filed on
January 31, 2002 a lawsuit in the United States Court of Federal Claims for
declaratory and injunctive relief of the United States Army's decision to take
corrective action in response to the filed protest. The lawsuit also seeks
preliminary and permanent injunctive relief to enjoin the United States Army
from conducting an unnecessary and improper reopening of competition with
respect to the contract properly awarded to MCII. The Company cannot determine
as of this date whether the September 27, 2001 award will be upheld. If MCII is
unsuccessful in its efforts to uphold the award of the new long-term contract,
an impairment of MCII's goodwill and other long-term assets may result. MCII's
goodwill and other long-term assets at December 31, 2001 were $3,150,000.

Forward Looking Information
---------------------------

Certain matters discussed in this report, excluding historical information,
include forward-looking statements. Although the Company believes such
forward-looking statements are based on reasonable assumptions, no assurance can
be given that every objective will be reached. Such statements are made in
reliance on the safe harbor protections provided under the Private Securities
Litigation Reform Act of 1995.


                                       15

<PAGE>

As required by such Act, the Company hereby identifies the following important
factors that could cause actual results to differ materially from any results
projected, forecasted, estimated or budgeted by the Company in forward-looking
statements: (i) risks and uncertainties impacting the Company as a whole related
to changes in general economic conditions in the United States; the availability
and cost of capital; changes in laws and regulations to which the Company is
subject, including tax, environmental and employment laws and regulations; the
cost and effects of legal and administrative claims and proceedings against the
Company or its subsidiaries or which may be brought against the Company or its
subsidiaries; conditions of the capital markets utilized by the Company to
access capital to finance operations; and, to the extent the Company increases
its investments and activities abroad, such investments and activities will be
subject to foreign economies, laws, and regulations; and (ii) for the Company's
defense-related business, business conditions in the military and commercial
industries served by the Company; federal government defense budgeting process;
compliance with government contract and inspection programs; and other risk
factors listed from time-to-time in the Company's reports with the Securities
and Exchange Commission.

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

The Company is exposed to the impact of interest rate fluctuations as a result
of current borrowings under revolving lines of credit and a term loan that bears
interest at prime plus 1.5% and .5%, respectively. The Company has no exposure
with foreign currency contracts.


                                       16

<PAGE>

                            PART II OTHER INFORMATION

Item 1.  Legal Proceedings.
         ------------------

         Not applicable.

Item 2.  Changes in Securities and Use of Proceeds.
         ------------------------------------------

         Not applicable.

Item 3.  Defaults Upon Senior Securities.
         --------------------------------

         Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders.
         ----------------------------------------------------

         Not applicable.

Item 5.  Other Information.
         ------------------

         Not applicable.

Item 6.  Exhibits and Reports on Form 8-K.
         ---------------------------------

(a)    The following document is filed as an exhibit to this Form 10-Q:

       None.

       (b) On October 3, 2001, the Company filed a current report on Form 8-K
           to report the September 27, 2001 award of a new long-term contract
           at MCII with an estimated value over six years of $156,000,000 and
           the exercise of options on an existing contract at NMP.

           On January 31, 2002, the Company filed a current report on Form
           8-K to report that the award of the long-term contract to MCII as
           announced on October 3, 2001 had been protested by a competing
           concern and an amendment to the solicitation was issued on January
           29, 2002, which required the resubmittal of certain pricing
           criteria and subsequent reevaluation. The Company cannot determine
           as of this date whether the September 27, 2001 award will be
           upheld. The Company will respond to the amendment on February 11,
           2002 as required. The January 31, 2002 Form 8-K also reports that
           the Company filed on January 31, 2002 a lawsuit in the United
           States Court of Federal Claims for declaratory and injunctive
           relief of the United States Army's decision to take corrective
           action in response to the filed protest. The lawsuit also seeks
           preliminary and permanent injunctive relief to enjoin

                                       17

<PAGE>

              United States Army from conducting an unnecessary and improper
              reopening of competition with respect to the contract properly
              awarded to MCII.

                                   SIGNATURES

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

DATE:  February 7, 2002                    WESTWOOD CORPORATION




                                           By:     /s/ Ernest H. McKee
                                                 ------------------------------
                                                    Ernest H. McKee, Director
                                                    President and Chief
                                                    Executive Officer



                                           By:     /s/ David L. Shepherd
                                                 ------------------------------
                                                    David L. Shepherd,
                                                    Secretary/Treasurer and
                                                    Chief Financial Officer




                                       18