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 June 30, 2002

[ ]      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 August 1, 2002: 11,828,880




<PAGE>



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements


                      MICROWAVE TRANSMISSION SYSTEMS, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS
<TABLE>
<CAPTION>

                                                                                 June 30,         December 31,
                                                                                  2002                2001
                                                                             ------------        ------------
                                                                               (Unaudited)
Current assets
<S>                                                                          <C>                 <C>
    Cash and cash equivalents                                                $    170,860        $    404,388
    Marketable securities, available for sale                                      15,023              20,702
    Accounts receivable, trade, net of allowance for doubtful accounts
    of  -0- and $35,174 in 2002 and 2001, respectively.                         3,710,016           4,376,465
    Unbilled accounts receivable                                                  554,470             201,353
    Employee advances                                                              61,888              75,053
    Jobs in progress                                                              667,333             565,952
    Inventory                                                                     613,160             349,222
    Prepaid and other current assets                                               86,737              79,656
                                                                             ------------        ------------

              Total current assets                                              5,879,487           6,072,791

PROPERTY AND EQUIPMENT                                                          5,039,608           4,535,553
    Less accumulated depreciation                                              (1,424,007)         (1,043,805)
                                                                             -------------       -------------

              Total property and equipment                                      3,615,601           3,491,748

OTHER ASSETS
Non-current notes receivable - related parties                                          -                 166
Other assets                                                                       10,010              26,771
Goodwill                                                                        5,082,183           5,082,183
                                                                             ------------        ------------
              Total other assets                                                5,092,193           5,109,120

              Total assets                                                   $ 14,587,281        $ 14,673,659
                                                                             ===========         ============
</TABLE>



See notes to accompanying interim financial statements.

<PAGE>


                      MICROWAVE TRANSMISSION SYSTEMS, INC.
                                AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (Continued)



                      LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                                 June 30,         December 31,
                                                                                  2002                2001
                                                                             ------------        ------------
                                                                               (Unaudited)
Current liabilities
<S>                                                                          <C>                 <C>
    Borrowings on line of credit                                             $          -        $    300,000
    Current portion of long-term debt                                             587,332             483,166
    Accounts payable                                                              346,943             766,090
    Accrued liabilities                                                           725,761             915,572
    Income taxes payable                                                        1,020,382             752,780
    Deferred tax liability                                                        799,197             732,438
                                                                             ------------        ------------

              Total current liabilities                                         3,479,615           3,950,046

    Long-term debt, less current portion                                        2,874,050           3,042,616
                                                                             ------------        ------------

    Total liabilities                                                           6,353,665           6,992,662

Shareholders' equity
    Preferred stock, $0.001 par value; 10,000,000 shares authorized;
      none issued and 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
    Accumulated other comprehensive income (loss)                                  (5,679)              1,430
    Retained earnings                                                           3,453,941           2,894,213
                                                                             ------------        ------------

              Total shareholders' equity                                        8,233,616           7,680,997
                                                                             ------------        ------------

              Total liabilities and shareholders' equity                     $ 14,587,281        $ 14,673,659
                                                                             ============        ============
</TABLE>




<PAGE>


                      MICROWAVE TRANSMISSION SYSTEMS, INC.
                                AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME



<TABLE>
<CAPTION>


                                          Three months ended June 30,              Six months ended June 30,
                                                  (Unaudited)                             (Unaudited)

                                              2002           2001                   2002                2001
                                          -----------     -----------           -------------      ------------

<S>                                       <C>             <C>                   <C>                <C>
Net sales                                 $ 4,527,854     $ 5,817,698           $   9,508,844      $ 10,259,008
Cost of sales                               2,479,616       3,643,880               5,345,515         6,482,712
                                          -----------     -----------           -------------      ------------

         Gross profit                       2,048,238       2,173,818               4,163,329         3,776,296

Operating expenses                          1,679,353       1,060,505               3,183,631         2,168,770
                                          -----------     -----------           -------------      ------------

         Operating income                     368,885       1,113,313                 979,698         1,607,526


Interest expense                               43,217          12,881                  85,668            25,021
                                          -----------     -----------           -------------      ------------

Income before taxes                           325,668       1,100,432                 894,030         1,582,505

Provision for income taxes                    141,873         377,465                 334,302           532,504
                                          -----------     -----------           -------------      ------------

Income before minority interest           $   183,795     $   722,967           $     559,728      $  1,050,001
                                          ===========     ===========           =============      ============

Minority interest                                   -         154,512                       -           260,240
                                          -----------     -----------           -------------      ------------

Net income                                $   183,795     $   568,455           $     559,728      $    789,761
                                          ===========     ===========           ==============     ============

Net income per common share-basic         $       .02     $       .06           $         .05      $        .08
                                          ===========     ===========           =============      ============
    and diluted

Weighted average number of common
   shares outstanding

Basic                                      11,828,880       9,555,542              11,828,880         9,555,542
                                          ===========     ===========           =============      ============

Diluted                                    11,869,493       9,555,542              11,864,403         9,555,542
                                          ===========     ===========           =============      ============
</TABLE>


<PAGE>


                      MICROWAVE TRANSMISSION SYSTEMS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                              Six months          Six months
                                                                                 ended               ended
                                                                             June 30, 2002       June 30, 2001
                                                                             -------------       -------------
                                                                              (Unaudited)         (Unaudited)

Cash flows from operating activities
<S>                                                                          <C>                 <C>
    Net income                                                               $    559,728        $   789,761
    Adjustments to reconcile net income to net cash provided
      by operating activities:
      Minority interest                                                                 -            260,240
      Depreciation and amortization                                               428,809            251,958
      Loss on disposal or sale of property and equipment                           31,613              1,023
      Deferred income taxes                                                        66,759            202,963
      Gain on sale of marketable securities                                        (1,430)           ( 1,163)
      Changes in operating assets and liabilities:
        Accounts receivable - trade                                               666,449           (714,124)
        Inventory                                                                (263,938)           (31,437)
        Unbilled receivables                                                     (353,117)           149,660
        Jobs in progress                                                         (101,381)          (318,184)
        Prepaid and other current assets                                           22,845            (99,717)
        Accounts payable                                                         (419,147)           278,004
        Accrued liabilities                                                      (189,811)          (243,027)
        Income taxes payable                                                      267,602           (178,678)
                                                                             ------------        ------------

              Cash flows provided by operating activities                         714,981            347,279
                                                                             ------------        -----------

Cash flows from investing activities
    Purchases of property and equipment                                          (584,275)          (688,975)
    Payments received on notes receivable                                             166             11,640
                                                                             ------------        -----------
              Cash flows used in investing activities                            (584,109)          (677,335)
                                                                             ------------        -----------

Cash flows from financing activities
    Payments on line of credit                                                   (300,000)                 -
    Net proceeds from line of credit                                                    -             14,347
    Payment of long-term debt                                                     (64,400)                 -
    Net proceeds from long-term debt                                                    -            232,921
                                                                             ------------        -----------

              Cash flows provided by (used in) financing activities              (364,400)           247,268
                                                                             ------------        -----------

Net decrease in cash and cash equivalents                                        (233,528)           (82,788)

Cash and cash equivalents, beginning of period                                    404,388            150,862
                                                                             ------------        -----------

Cash and cash equivalents, end of period                                     $    170,860        $    68,074
                                                                             ============        ===========
</TABLE>



<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 generally accepted accounting principles
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 financial statements for the years ended
December 31, 2001 and 2000. Results of operations for interim period 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.

<TABLE>
<CAPTION>

NOTE 2.  COMPREHENSIVE INCOME                 Three months      Three months      Six months       Six months
                                                  ended             ended            ended            ended
                                              June 30, 2002     June 30, 2001    June 30, 2002     June 30, 2001
                                              -------------     -------------    -------------     -------------

<S>                                          <C>               <C>               <C>              <C>
Net income                                   $      183,795    $     568,455     $     559,728    $     789,761

Other comprehensive gain (loss):

Unrealized gain (loss) on
    marketable securities                             4,335            1,391            (7,109)           1,163
                                             --------------    -------------     -------------    -------------

Comprehensive income                         $      188,130    $     569,846     $     552,619    $     790,924
                                             --------------    -------------     -------------    -------------
</TABLE>



NOTE 3.   INCOME PER COMMON SHARE

Basic income per share is computed by dividing income 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 issued.

The company has restated its financial statements for the quarter ended June 30,
2001 to reflect the acquisition of Epic Communications, Inc., Viper
Communications, Inc. and CKS Management, Inc., acquisitions completed in August
2001.

NOTE 4.  ACQUISITIONS

On August 30, 2001, the Company closed the acquisitions via merger of CKS
Management, Inc. (CKS), Viper Communication Systems, Inc. (Viper), and Epic
Communications Inc., (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 were structured as
mergers of the Acquired Businesses into three wholly-owned subsidiaries of the
Company formed for the purpose of effecting the mergers. The Acquired Businesses
will continue to operate as separate subsidiaries.







<PAGE>



NOTE 4.  ACQUISITIONS - Continued


Consideration for the mergers consisted of 5,378,796 shares of the Company's
common stock, valued at $7,853,043, and cash in the amount of $2,514,168. Such
cash was obtained from the proceeds of a bank loan. Of such consideration,
2,017,932 shares of common stock were issued, and $894,975 of the cash was paid
to P. David Spurlin, the Chief Executive Officer and the controlling shareholder
of the Company.

All of the Acquired Businesses were under the control of P. David Spurlin.
Therefore, the portion of Acquired Businesses that was acquired from Mr. Spurlin
has been recorded at historical cost. The cash consideration paid for Mr.
Spurlin's interest has been reflected as a dividend in the consolidated
financial statements. Financial statements for periods prior to the mergers have
been restated to combine the Company and the Acquired Businesses in a manner
similar to a pooling of interests.

The separate sales and net income of the Company and the Acquired Businesses for
periods prior to the merger are as follows:
<TABLE>
<CAPTION>

                                                        Three months            Six months
                                                            Ended                  Ended
                                                          June 30,               June 30,
                                                            2001                   2001
                                                         (Unaudited)            (Unaudited)

Sales:
<S>                                                   <C>                     <C>
         Company                                      $     3,897,531         $    6,098,134
         Acquired businesses                                2,574,694              4,993,534
         Intercompany transactions                           (654,527)              (832,660)
                                                      ---------------         --------------
         Combined                                     $     5,817,698         $   10,259,008
                                                      ===============         ==============

Net income:
         Company                                      $       361,417         $      518,898
         Acquired businesses                                  361,550                531,103
         Minority interest                                   (154,512)              (260,240)
                                                      ---------------         --------------
         Combined                                     $       568,455         $      789,761
                                                      ===============         ==============
</TABLE>



The portion of the Acquired Businesses purchased from non-controlling interests
was accounted for by the purchase method of accounting. For periods prior to
August 30, 2001, the acquisition date, the non-controlling interests have been
reflected as Minority Interests in the Company's financial statements. The
purchase of the non-controlling interests resulted in goodwill in the amount of
$5,082,183. The Company has no tax basis in the goodwill.



<PAGE>




NOTE 5.  NEW ACCOUNTING PRONOUNMENTS

In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Intangible Assets." SFAS
No. 141 is effective for all business combinations completed after June 30,
2001. SFAS No. 142 is effective for fiscal years beginning after December 15,
2001; however, certain provisions of this Statement apply to goodwill and other
intangible assets acquired between July 1, 2001 and the effective date of SFAS
No. 142.

Major provisions of these statements and their effective dates are as follows:

      o  intangible assets acquired in a business combination must be recorded
         separately from goodwill if they arise from contractual or other legal
         rights or are separable from the acquired entity;

      o  goodwill, as well as intangible assets with indefinite lives, acquired
         after June 30, 2001, will not be amortized;

      o  effective January 1, 2002, all previously recognized goodwill and
         intangible assets with indefinite lives will no longer be subject to
         amortization;

      o  effective January 1, 2002, goodwill and intangible assets with
         indefinite lives will be tested for impairment annually and whenever
         there is an impairment indicator.

The Company completed a transitional fair value based impairment test of
goodwill as of June 30, 2002, and no impairment resulted.

         The company had no amortization expense related to goodwill in 2001.

NOTE 6 SUBSEQUENT EVENT

On July 22, 2002, we were notified that one of our customers MCI/Worldcom filed
for Chapter 11 bankruptcy protection. Our total pre-petition receivable was
approximately $205,000 at June 30, 2002 and $340,000 at August 15, 2002, of
which $325,000 is for work we performed in rebuilding the communication
infrastructure in Afghanistan. This work is an on going effort, and because of
the high profile nature of the project, we believe we will continue to perform
the work and be paid in full for all work performed after the date of filing
bankruptcy. The pre-petition receivable may be subject to reduction or delay in
payment as an unsecured claim. However, we believe we are critical to the
success of the Afghanistan project and will be paid substantially all of the
pre-petition debt. Nevertheless, it is possible that we may not collect a
significant portion of our pre-petition receivable.




<PAGE>



Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


General

         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 our 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.

Item 1. Description of Business.

         We are a holding company and the sole shareholder of MTSI, Inc., a
Texas corporation ("MTSI"), CKS Management, Inc., ("CKS"), a Texas corporation,
EPIC Communications, Inc., a Texas corporation ("Epic"), Viper Communications
Systems Inc., a Texas corporation ("Viper") and Site Communications, ("Site"),
MTSI/Central Asia, Ltd., and MTSI/West Coast Division, Inc., which collectively
are our only assets and the entities through which we conduct our operations.
All references herein 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, MTSI/Central Asia and MTSI West
Coast 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. Approximately 49% of our revenues are derived from
operations in Texas,14% Florida, 7% N. Carolina, 6% Oklahoma, with the other 24%
derived from operations in other regions of the United States and
internationally. We have participated in the development of more than 4000
antenna sites in the United States. 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

<PAGE>

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 MTSI
began working Personal Communications Systems or PCS technologies, a technology
that utilizes efficiencies of digital technology for the transmission of voice
and data.

         Immediately prior to acquiring MTSI in August 1999, our name was RBSC
Acquisition Corp, we had more than 1000 stockholders, and we had no operations.
RBSC Acquisition Corp., a Texas corporation, was formed by the merger in
December 1997 of RBSC, Inc., a California corporation, into RBSC Acquisition
Corp. In March 1997, RBSC, Inc. had filed a petition in bankruptcy and, as a
result of that proceeding, canceled all of the issued and outstanding stock of
the stockholders who were such on the date of the filing of the petition in
bankruptcy. As part of the bankruptcy proceeding, we issued 500,084 shares of
Common Stock to creditors of RBSC, Inc. and Halter Financial Group, Inc. RBSC,
Inc. was formed in California in 1962 as West Covina Auto Parts, Inc. and in
1993 Reddi Brake Supply Company, Inc. merged into West Covina Auto Parts, Inc.
At that time the corporation's name was changed to RBSC, Inc.

         We issued 5,750,000 shares of Common Stock to P. David Spurlin, which
constituted 92% of our then issued and outstanding stock to acquire MTSI in
August 1999. In January 2000, we changed our name to Microwave Transmission
Systems, Inc.

         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
for the purpose of effecting the mergers. The Acquired Businesses will continue
to operate as separate subsidiaries under their same names before the
transactions. Consideration for the mergers consisted of 5,378,796 shares of the
Company's Common Stock and cash in the amount of $2,514,168. Of such
consideration, 2,017,932 shares of common stock were issued, and $894,975 of the
cash was paid to P. David Spurlin, the Chief Executive Officer of the Company
and the controlling shareholder of the Acquired Businesses.

         In continuation of our organic growth business model, in November 2001,
we formed a corporation named Site Communications, Inc. This corporation was
modeled after our successful Viper and Epic corporations who provide the same
type of services. Site is located in Gallatin, Tennessee. May 2002, we formed
MTSI/Central Asia, LTD., a Bahamas corporation. July 2002, we formed MTSI/West
Coast Division, Inc., a California corporation, which will start up the end of
this year or in 2003.

Item 2 - General

         Most of our revenues, 60% in fiscal 2001, 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.

         In fiscal 2001 we saw two new trends that affected the results of our
operations. An increased portion of our operations came from the build out of
systems of towers in a single geographical location rather than the construction
of one or a few towers in many locations. Where we can concentrate construction
of several towers in a single location, our employees work more efficiently and
our travel expenses are reduced.

         In addition, some of our clients began to have us purchase materials
and equipment used in construction of their projects, materials and equipment
that they previously provided to us. The effect of these purchases increased our
revenues but offset the gains in margins that we would have otherwise achieved
from our personnel's greater efficiency.
<PAGE>


         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.

         On July 21, 2002, we were notified that one of our customers,
MCI/Worldcom, filed for Chapter 11 bankruptcy protection. Our total pre-petition
exposure is $339,982 of which $325,000 is for work we performed in rebuilding
the communication infrastructure in Afghanistan. This work is an on going
effort, and because of the high profile nature of the project, we believe we
will continue to perform the work and be paid in full for all work performed
after the date of filing bankruptcy. The pre-petition receivable may be subject
to reduction and delay in payment as an unsecured claim. However, we believe we
are critical to the success of the Afghanistan project and will be paid
substantially all of the pre-petition debt.


Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001

         Our net earnings decreased to $183,795 in the second quarter of 2002
compared to $568,455 in the second quarter of 2001. Our income before taxes
reflected a similar decline with income before taxes of $325,668 in the 2002
period versus $1,100,432 in the same period in fiscal 2001, a decrease of 70%.

         Our revenues in the second quarter of 2002 decreased 22% to $4,527,854
from $5,817,698. Most of this decrease is a direct result of material sales
dropping by $830,342 in this quarter. Excluding revenue from materials and
equipment, our revenues for construction services, our most profitable revenue
stream, increased 12.1% in the second quarter of 2002 to $3,894,299 when
compared to the second quarter of 2001, which was $3,495,595. This allowed us to
increase our gross margins to 45.2% from 37.4% when compared to the same period
in 2001. The dollar amount of our actual gross profit for this period decreased
1% to $2,048,238 from $2,173,818.

         Operating expenses increased approximately 58% between the two periods,
largely reflecting the costs of being a public company and the start up of new
subsidiaries. Operating expense was $1,679,353 for quarter ending June 30, 2002
versus $1,060,505 for the same period in 2001. This increase was generated by
the opening of two more offices, Site Communications, Gallatin, Tennessee and
our welding and fabrication shop in Melissa, Texas. The initial startup costs
associated with these types of ventures has in the past put pressure on our
operating expenses; we feel in the long term the revenue generated by these new
offices will offset the added operating expense.



Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001

         Our net earnings decreased 29.1% to $559,728 for the first six months
of 2002 from $789,761 for the same period in 2001. Our income before taxes
decreased 43.5% to $894,030 in the first six months of 2002 from $1,582,505 in
the same period in fiscal 2001.

         Our revenues in the first six months of 2002 decreased $750,164 to
$9,508,844 from $10,259,008 for the corresponding period in 2001. Sales of
materials for the six month period ending June 2002 was $595,393 versus
$2,280,911. This decrease is attributed to our larger customers deciding to
order the bulk of the installation materials direct from the manufacturer
decreasing their costs. We expect this trend to continue in the foreseeable
future. Our construction services revenue for the six months increased 20% to
$8,455,729 from $6,828,230 for the same period in 2001. This factor helped
increase our gross profit in the first six months of 2002 to $4,163,329 from
$3,779,893. This increased our gross profit margin in 2002 to 43.8% versus 36.8%
for the same period in 2001.

         Operating expenses increased approximately 47% between the second
quarter of 2002 and the same period in 2001, largely reflecting increased
general and administrative expenses of a larger organization and increased
insurance costs post September 11, 2001. We believe we can continue to grow our
revenue base without a corresponding percentage increase in operating expenses,
resulting in improved operating leverage and profit margin. For the six months
ended June 30, 2002, our operating expenses to net sales were 33.5% compared to
21.1% for the comparable period in 2001.
<PAGE>


         Beginning in fiscal 2000, we converted from a cash basis taxpayer to an
accrual basis taxpayer which resulted in a tax liability for previous years that
is payable over four years.


LIQUIDITY AND CAPITAL RESOURCES

         Our operations are funded through internally generated funds,
borrowings for vehicles and a line of credit.

         Our receivables for a given quarter as a percentage of that quarter's
revenues increased throughout fiscal 2001 and decreased into fiscal 2002. We
attribute our decline in receivables to our more concerted effort to collect
them.

         We maintain a line of credit to manage fluctuations in cash flows. At
June, 2002 the total borrowing capacity under our line of credit was $2,550,000
based on the eligible accounts receivables as defined. The Company had
$1,910,624 and $1,603,254 outstanding under the line of credit as of June 30,
2002, and December 31, 2001 respectively. We believe that cash flows provided by
operations and availability of the line of credit, supplemented by our cash
position, 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.

         We do not anticipate becoming significantly involved in a build to suit
program whereby we would construct wireless communications facilities for our
own account. Consequently, we do not presently anticipate incurring the large
capital expenditures such a program would entail.

         We are reviewing the possibility of acquiring other wireless
enterprises and such acquisitions may entail additional capital resources.


______________________________________________________________________________
FORWARD-LOOKING STATEMENTS


         The Management's Discussion and Analysis of Financial Condition and
Results of Operations, the Other Developments and Outlook and other sections of
this report on Form 10-QSB contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995.
You should note that many factors, some of which are described in this section
or discussed elsewhere in this document, could affect our 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. These statements are not guarantees of future
performance and involve a number of risks and uncertainties. Actual results and
outcomes may differ materially from what is expressed or forecast in such
forward-looking statements. The principal risks and uncertainties that may
affect the Company's actual performance and results of operations include the
following: general economic conditions; the cyclical and seasonal nature of the
Company's business; adverse weather; governmental regulation; changes in
governmental and public policy; competition; the availability of capital to
finance our growth; 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 unexpected
operational difficulties. Other risks and uncertainties may also affect the
outcome of the Company's actual performance and results of operations.






<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: - August 16, 2002             By: /s/ P. David Spurlin
                                     ---------------------------------------
                                     P. David Spurlin,
                                     President and Chief Executive Officer

                                     By: /s/ D. Susan King
                                     ---------------------------------------
                                     D. Susan King,
                                     Controller and
                                     Principal Accounting Officer