U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-QSB


(Mark One)

[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

                  For the quarterly period ended March 31, 2004

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For      the transition period from __________________ to ______________

Commission file number: 1-14219

                      Microwave Transmission Systems, Inc.
-------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

                Texas                                   75-2197372
-------------------------------------------------------------------------------
(State or other jurisdiction                  (IRS Employer Identification No.)
of incorporation or organization)


         541 Sterling Drive, Richardson, TX                       75081
-------------------------------------------------------------------------------
      (Address of principal executive offices)                  (Zip Code)

                                 (972) 669-0591
-------------------------------------------------------------------------------
                         (Registrant's telephone number)

-------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ____


                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of May 1, 2004: 11,828,880



<PAGE>




PART I - FINANCIAL INFORMATION
Item 1. Financial Statements


              Microwave Transmission Systems, Inc. and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>


                                                                                     (Unaudited)
                                                                                     March  31,       December 31,
                                                                                        2004              2003
                                                                                    -------------    --------------

CURRENT ASSETS
<S>                                                                                 <C>              <C>
   Accounts receivable - trade, net of allowance for doubtful accounts
        of $46,490 at March 31, 2004 and December 31, 2003, respectively            $   5,182,567    $    4,648,160
   Unbilled receivables                                                                   390,967           584,173
   Jobs in progress                                                                       946,790         1,065,139
   Inventories                                                                            688,092           678,125
   Prepaid expenses and other current assets                                              231,288           399,226
   Refundable income taxes                                                                  2,567             2,567
                                                                                      -----------       -----------

                  Total current assets                                                  7,442,271         7,377,390

PROPERTY AND EQUIPMENT                                                                  6,583,762         6,582,308
   Less accumulated depreciation and amortization                                      (2,687,591)       (2,534,173)
                                                                                       ----------       ----------

                  Net property and equipment                                            3,896,171         4,048,135

OTHER ASSETS
   Goodwill                                                                             5,082,183         5,082,183
   Deferred income taxes                                                                    3,509             3,509
   Other assets                                                                            34,234            34,054
                                                                                      -----------       -----------

                  Total other assets                                                    5,119,926         5,119,746
                                                                                      -----------       -----------

                  Total assets                                                      $  16,458,368    $   16,545,271
                                                                                     ============       ===========
</TABLE>





              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                        1


<PAGE>

              Microwave Transmission Systems, Inc. and Subsidiaries

                     CONSOLIDATED BALANCE SHEETS - CONTINUED

                      LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                                     (Unaudited)
                                                                                     March  31,       December 31,
                                                                                        2004              2003
                                                                                    -------------    --------------

CURRENT LIABILITIES
<S>                                                                                 <C>              <C>
   Line of credit                                                                   $   2,470,115    $    2,061,359
   Cash overdraft                                                                           6,687           295,569
   Current portion of long-term debt                                                      520,042           693,654
   Accounts payable                                                                       624,315         1,038,498
   Accrued liabilities                                                                  1,084,029           809,400
   Deferred revenue                                                                       275,206           755,468
   Income taxes payable                                                                   670,703           454,011
   Deferred income taxes                                                                  182,386           182,386
                                                                                      -----------       -----------

                  Total current liabilities                                             5,833,483         6,290,345

LONG-TERM DEBT, LESS CURRENT PORTION                                                    1,932,125         1,912,214

COMMITMENTS AND CONTINGENCIES                                                                -                 -

SHAREHOLDERS' EQUITY
   Preferred stock, $0.001 par value; 10,000,000 shares authorized; none
        issued or outstanding                                                                -                 -
   Common stock $0.001 par value; 40,000,000 shares authorized; 11,828,880
        shares issued and outstanding                                                      11,829            11,829
   Additional paid-in capital                                                           4,773,525         4,773,525
   Retained earnings                                                                    3,907,406         3,557,358
                                                                                      -----------       -----------

                  Total shareholders' equity                                            8,692,760         8,342,712
                                                                                      -----------       -----------

                  Total liabilities and shareholders' equity                        $  16,458,368    $   16,545,271
                                                                                      ===========       ===========
</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                        2



<PAGE>

              Microwave Transmission Systems, Inc. and Subsidiaries



                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>


                                                                                              (Unaudited)
                                                                                     Three months ended March 31,
                                                                                          2004            2003
                                                                                    -------------    --------------

<S>                                                                                 <C>              <C>
Net sales                                                                           $   6,863,672    $    4,181,732
Cost of sales                                                                           4,525,004         2,769,730
                                                                                      -----------       -----------

                  Gross profit                                                          2,338,668         1,412,002

Operating expenses                                                                      1,717,125         1,502,204
                                                                                      -----------       -----------

                  Operating income (loss)                                                 621,543           (90,202)

Interest expense                                                                           59,425            59,165
                                                                                      -----------       -----------

                  Income (loss) before income taxes                                       562,118          (149,367)

Income tax provision (benefit)                                                            212,070           (55,863)
                                                                                      -----------       -----------

                  NET INCOME (LOSS)                                                 $     350,048    $      (93,504)
                                                                                      ===========       ===========

Net income (loss) per common share - basic and diluted                              $        0.03    $       (0.01)
                                                                                      ===========       ==========

Weighted average number of common shares outstanding
   Basic                                                                               11,828,880        11,828,880
                                                                                       ==========        ==========

   Diluted                                                                             11,828,880        11,828,880
                                                                                       ==========        ===========
</TABLE>





              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                        3

<PAGE>

              Microwave Transmission Systems, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                              (Unaudited)
                                                                                     Three months ended March 31,
                                                                                          2004             2003
                                                                                    -------------    --------------
Cash flows from operating activities
<S>                                                                                 <C>              <C>
   Net income (loss)                                                                $     350,048    $      (93,504)
     Adjustments to reconcile net income (loss) to net cash used in
       operating activities:
         Depreciation and amortization                                                    155,433           192,327
         Loss (gain) on disposal or sale of property and equipment                         (2,015)           (7,500)
         Provision for doubtful accounts                                                     -               14,266
     Changes in operating assets and liabilities:
       Accounts receivable - trade                                                       (534,407)         (482,676)
       Unbilled receivables                                                               193,206          (162,801)
       Jobs in progress                                                                   118,349           (50,823)
       Inventories                                                                         (9,967)          (30,200)
       Prepaid expenses and other current assets                                          167,938             7,907
       Other assets                                                                          (180)            -
       Cash overdraft                                                                    (288,882)            -
       Accounts payable                                                                  (414,183)           24,129
       Accrued liabilities                                                                274,629           (28,954)
       Deferred revenue                                                                  (480,262)          (25,446)
       Income taxes payable                                                               216,692           (55,863)
                                                                                      -----------       -----------

                  Cash flows used in operating activities:                               (253,601)         (699,138)

Cash flows from investing activities

   Purchases of property and equipment                                                     (1,454)         (430,915)

Cash flows from financing activities

   Proceeds from line of credit, net                                                      408,756           506,548
   Proceeds from long-term debt                                                            56,665           304,000
   Repayment of long-term debt                                                           (186,547)         (140,492)
   Proceeds from (payments on )note payable to shareholder                                (23,819)          380,000
                                                                                      -----------       -----------

                  Cash flows provided by financing activities                             255,055         1,050,056

Net decrease in cash and cash equivalents                                                    -              (79,997)
                                                                                      -----------       -----------

Cash and cash equivalents, beginning of period                                               -               94,262
                                                                                      -----------       -----------
Cash and cash equivalents, end of period                                            $        -       $       14,265
                                                                                      ===========       ===========

Supplemental disclosures of cash flow information:

   Cash paid for interest                                                           $      59,425    $       59,165
                                                                                      ===========       ===========
   Cash paid for income taxes                                                       $        -       $         -
                                                                                      ===========       ===========
</TABLE>




              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                        4

<PAGE>

NOTE 1.  BASIS OF PRESENTATION

The interim consolidated financial statements included herein have been prepared
by Microwave Transmission Systems, Inc. ("MTSI") or ("Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations. In the opinion of the Company's management, the
accompanying interim consolidated financial statements reflect all adjustments
that are necessary for a fair presentation of the Company's financial position,
results of operations and cash flows for such periods. All such adjustments are
of a normal recurring nature. It is recommended that these interim consolidated
financial statements be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's annual report on
Form 10-KSB for the year ended December 31, 2003. Results of
operations for interim periods are not necessarily indicative of results that
may be expected for any other interim periods or the full fiscal year.

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

NOTE 2.   INCOME (LOSS) PER COMMON SHARE

Basic net income (loss) per share is computed by dividing net income (loss)
available to common shareholders by the weighted-average number of common shares
outstanding during the year. Diluted earnings per common share is computed by
dividing income available to common shareholders by the weighted-average number
of common shares outstanding plus the number of additional shares that would
have been outstanding if potentially dilutive securities had been converted.

At March 31, 2004 and 2003, outstanding options to acquire 349,375 and 289,688,
respectively, common shares have been excluded from the diluted computation
because the effect would have been anti-dilutive.

NOTE 3.  STOCK BASED COMPENSATION

The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," in its primary financial statements
and has provided supplemental disclosures required by Statement of Financial
Accounting Standards No. 148 (SFAS 148), "Accounting for Stock-Based
Compensation - Transition and Disclosure an amendment of FASB Statement No.
123."

Option exercise prices are equal to the market price on the date of grant. In
general, a portion of the shares under grant become exercisable after one year
and remaining shares vest monthly thereafter on a straight line basis over the
vesting term of the option (typically five years). Options expire after ten
years.

SFAS 123 requires the disclosure of pro forma net income and earnings per share
information computed as if the Company had accounted for its employee stock
options granted under the fair value method set forth in SFAS 123. The fair
value for these options was estimated at the date of the grant using the
Black-Scholes option pricing model.

                                       5

<PAGE>
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized as expense over the options's vesting periods. Pro forma
information for the three months ended March 31, 2004 and 2003 is as follows:
<TABLE>
<CAPTION>


                                                                                  March 31,
                                                                           2004              2003
                                                                       -------------    -------------

   Net income (loss) applicable to common stockholders:
<S>                                                                    <C>              <C>
     As reported                                                       $     350,048    $     (93,504)
       Deduct: total stock-based compensation under
         fair value based method for all awards, net of
         related tax expense                                                 (20,654)         (27,617)
                                                                         -----------      -----------
     Pro forma                                                         $     329,394    $    (121,121)
                                                                         -----------      -----------

Net income (loss) loss per share:
     As reported - basic and diluted                                   $         0.03   $      (0.01)
                                                                         ============     ==========
     Pro forma - basic and diluted                                     $         0.03   $      (0.01)
                                                                         ============     ==========
</TABLE>


NOTE 4. RELATED PARTY TRANSACTION

In the first quarter of 2003, the Company purchased from the Company's
President, P. David Spurlin, its corporate headquarters. The purchase price,
$380,000, was determined pursuant to an appraisal by the lender which financied
the purchase to the Company. Upon closing, Mr. Spurlin loaned the entire amount
to the Company. The loan to Mr. Spurlin may be prepaid but matures on December
31, 2004 and bears interest, commencing April 1, 2003 at a rate equal to the
prime interest rate published in the Wall Street Journal at the beginning of
each calendar quarter. Interest accrues quarterly and is due at maturity.

The Company leases one of its office facilities from the president and majority
shareholder of the Company. The facility is leased on a month-to-month basis,
and has been classified as an operating lease. Total rent expense associated
with this lease was $56,400 for the years ended December 31, 2003 and 2002.

The Company also leased a house from the president and majority shareholder. The
house provides lodging for out-of-town employees and contractors in lieu of the
Company incurring hotel and other travel related charges. The lease began in
April 1999 and continued on a month-to-month basis through May 2002. Total rent
expense associated with this lease was $3,500 for the year ended December 31,
2002.

NOTE 5. SUBSEQUENT EVENT

In the second quarter of 2004 the Company closed its California operations
because competitive pressures did not permit the Company to price its services
to provide sufficient margin. Further, the Company closed its fabrication
facility purchased in 2002 because the Company could obtain these services more
cheaply through contracting with external vendors. The Company has entered into
an agreement to sell the property which is anticipated to close in July 2004.
The sales price on the property is $750,000 and is expected to result in a gain.


                                       6


<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation.

      We make forward-looking statements in this document. Our forward-looking
statements are subject to risks and uncertainties. You should note that many
factors, some of which are described in this section or discussed elsewhere in
this document, could affect the company in the future and could cause our
results to differ materially from those expressed in our forward-looking
statements. Forward-looking statements include those regarding our goals,
beliefs, plans or current expectations and other statements regarding matters
that are not historical facts. For example, when we use the words "believe,"
"expect," "anticipate" or similar expressions, we are making forward-looking
statements. Factors that could affect our forward-looking statements include:

      the outcome of our growth strategy;

      future results of operations;

      liquidity and capital expenditures;

      construction and acquisition activities;

      the availability of capital to finance construction of towers that we may
      own;

      regulatory developments and competitive conditions in the communications
      site and wireless carrier industries;

      projected growth of the wireless communications and wireless carrier
      industries;

      the implementation of new wireless technologies and the adoption of
      applications that use wireless technologies; and

      general economic conditions.

      We are not required to release publicly the results of any revisions to
these forward-looking statements we may make to reflect future events or
circumstances.

General

      We are a holding company and the sole shareholder of MTSI, Inc., ("MTSI"),
CKS Management, Inc., ("CKS"), EPIC Communications, Inc. ("EPIC"), Viper
Communications Systems Inc. ("Viper"), Site Communications, ("Site"), MTSI
Westcoast Division Incorporated ("Westcoast"), and MTSI, Northeast, Incorporated
("Northeast"), which collectively are our only assets and the entities through
which we conduct our operations. MTSI, CKS, EPIC, Viper, and Site are Texas
corporations. Westcoast is a California corporation and Northeast is an Ohio
corporation. All references herein to the Company or to "we," "us" or "our" with
respect to our business operations refer to the combined business operations of
Microwave Transmission Systems, Inc., MTSI, CKS, Epic, Viper, Site, Westcoast
and Northeast unless specifically stated otherwise.

      Our principal business is the construction and maintenance of wireless
communications transmitting and receiving facilities for providers of wireless
communication services. MTSI commenced operations in 1987 and was principally
engaged in the construction of microwave towers. As part of this original
effort, MTSI developed the skill to calibrate the antennae and instruments used
in these towers and thereby assure the tower's robust operation, a value added
skill that is used in implementing the construction and maintenance work on
technologies utilized in later years. In the early 1990's MTSI began work on a
variety of other wireless technologies lead by the sharp increase in use of
cellular telephone systems, an analog technology. These other technologies
included paging technologies as well as Specialized Mobile Radio and Enhanced
Specialized Mobile Radio technologies. In the late 1990's we began working on
Personal Communications Systems or PCS technologies, a technology that utilizes
efficiencies of digital technology for the transmission of voice and data.

      On August 30, 2001, the Company closed the acquisition via merger of CKS,
Viper and Epic, three Texas corporations engaged in the same business as the
company of constructing and maintaining wireless communications transmitting and
receiving facilities for providers of wireless communication services (the
"Acquired Businesses"). The transactions are structured as mergers of the
Acquired Businesses into three wholly owned subsidiaries of the Company formed

                                       7

<PAGE>

for the purpose of effecting the mergers. The Acquired Businesses continue to
operate as separate subsidiaries under their same names before the transactions.

      Beginning in November 2001 we began to expand our operations into areas of
the United States where we did not have significant prior operations. This
strategy was based upon the successful models of Viper and Epic. Site, which
began the expansion in November 2001, is headquartered in Gallatin,
Tennessee. Westcoast, formed in the summer of 2002 but with operations
commencing in January 2003, is headquartered in Santa Ana California. Northeast,
formed in August 2003 with operations commencing at approximately the same time,
is headquartered in Mechanicstown, Ohio.

         In May 2004 we determined to close our California operations.

Results of operations

      Most of our revenues, 60% in fiscal 2003, are derived from the
construction of wireless transmission and receiving facilities used by cellular
and PCS telephones. Generally, fifteen percent of our revenues are derived from
maintenance of those and similar facilities and another fifteen percent are
derived from fabricating, grounding, painting facilities and antenna testing.
Ten percent of our revenues are derived from the erection of microwave towers.

      We continue to be open to owning and operating towers used in cellular and
PCS communications, but will not engage in this activity unless the financial
return is attractive. We will not dedicate resources to seek actively these
opportunities and will require that any investment not jeopardize operations or
strategic expansion plans.

Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003

      With net income of $350,048 in the first quarter of 2004, we recovered
from a loss of $93,504 in the first quarter of 2003. This return to
profitability was principally driven by a 64% increase in revenue, an increase
that we attribute to the general recovery of the wireless telecommunications
industry that began in the late second quarter of 2003. Although our gross
profit margin was essentially unchanged, approximately 34% in each quarter, our
operating expenses, as a percentage of revenue was approximately 25% in 2004
compared to approximately 36% in 2003. Operating expenses continued to increase
despite the decline in these expenses as a percentage of revenue largely due to
inefficiencies in our start up activity in California, operations that we closed
in May 2004.

Liquidity and Capital Resources

      Our operations, including vehicles required for operations, are funded
through internally generated funds, borrowings for vehicles and a line of
credit. Consistent with the seasonality between the fourth quarter of a calendar
year and the following quarter of the ensuing year, our revenues in the first
quarter of 2004 decreased $1,462,343 from the fourth quarter of 2003.
Accordingly, we reduced significant portions of our current liabilities,
particularly deferred revenues and accounts payable. Nonetheless, our
receivables increased by $534,407 from the fourth quarter of 2003 and the first
quarter of 2004 with collections slowing in the first quarter, receivables being
approximately 56% of revenues in the fourth quarter of 2003 and approximately
76% of revenues in the first quarter of 2004. While our cash collected reduced
payables, accrued liabilities, which often do not have to be paid for several
months after they are accrued, increased $274,629 and, tax accruals increased
$216,692.

      We continue to invest in property and equipment, $102,458 in the first
quarter of 2004, mostly the normal replacement of existing equipment,
particularly vehicles, but also some investing in equipment for new operations
in California. Subsequent to the first quarter, we determined to close our
California operations.

      We believe that cash flows expected to be provided by operations and
availability of the line of credit will be adequate to meet and sustain moderate
growth for the next twelve months. Management believes that any growth that
cannot be met through internal operations and existing credit facilities can be
met through increasing the line of credit and additional borrowings for
equipment. However, there is no assurance that financing would be available
when and if needed, or that it would be available on suitable terms.


                                       8


<PAGE>

Line of Credit

      We maintain a line of credit to manage fluctuations in cash flows. At
March 31, 2004 the total borrowing capacity under our line of credit was
$2,550,000, and the Company had $2,470,115 outstanding under the line of credit
as of that date. We believe that cash flows provided by operations and
availability of the line of credit will be adequate to meet and sustain moderate
growth. Management believes that any growth that cannot be met through internal
operations and existing credit facilities can be met through increasing the line
of credit and additional borrowings for equipment. However, there is no
assurance that financing would be available when and if needed, or that it would
be available on suitable terms.

Item 3. CONTROLS AND PROCEDURES

      The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's Securities
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms, and that such information is accumulated and communicated to the
Company's management, including its Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure. During the 90-day period prior to the date of this report, an
evaluation was performed under the supervision and with the participation of the
Company's management, including the Chief Executive Officer and the Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based upon that evaluation, the
Chief Executive Officer and the Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect these controls, and no corrective actions taken with
regard to significant deficiencies or material weaknesses in such controls,
subsequent to the date of our most recent evaluation of internal controls.





                                       9
<PAGE>


<PAGE>

PART II - OTHER INFORMATION

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

(a)      Exhibit 31 - Certification required pursuant to Section 302 of the
         Sarbanes Oxley Act.
         Exhibit 32 - Certification required pursuant to Section 602 of the
         Sarbanes Oxely Act

(b)      None

                                       10


<PAGE>

                                   SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                       Microwave Transmission Systems, Inc.


Dated: - June 29, 2004                 By: /s/ P. David Spurlin
                                       ---------------------------------------
                                       P. David Spurlin,
                                       President

Dated: - June 29, 2004                 By: /s/ D. Susan King
                                       ---------------------------------------
                                       D. Susan King
                                       Chief Financial Officer