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


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


(Mark One)
[X]  Quarterly report pursuant to section 13 or 15(d) of the Securities
     Exchange Act of 1934 For the quarterly period ended June 30, 1997.

                                       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: 0-8574

                          MICROWAVE POWER DEVICES, INC.
             (Exact name of registrant as specified in its charter)

            Delaware                                        13-3622306
 (State or other jurisdiction of                          (IRS Employer
 incorporation or organization)                           Identification No.)
                                            
                              49 Wireless Boulevard
                         Hauppauge, New York 11788-3935
          (Address of principal executive offices, including zip code)

                                 (516) 231-1400
              (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                               Yes _X_   No ___


As  of  August  1,  1997,  there  were  10,375,000  shares  outstanding  of  the
registrant's Common Stock, $.01 par value.

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<PAGE>


                          MICROWAVE POWER DEVICES, INC.

                                      INDEX




PART I -- FINANCIAL INFORMATION                                       Page No.
-------------------------------                                       --------

ITEM 1.   Consolidated Financial Statements
          Consolidated Balance Sheets --
          June 30, 1997 and December 31, 1996...........................    3

          Consolidated Statements of Operations --
          Three and six months ended June 30, 1997 and 1996 ............    4

          Consolidated  Statements of Cash Flows -- Six months ended
           June 30, 1997 and 1996.......................................    5

          Notes to Consolidated Financial Statements ...................    6


ITEM 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations ....................................    7


PART II -- OTHER INFORMATION

ITEM 4.   Submission of Matters to a Vote of Security Holders .........    13

ITEM 6.   Exhibits and Reports on Form 8-K ............................    13


SIGNATURES ............................................................    14


                                     Page 2


<PAGE>


PART I -- FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.


                  MICROWAVE POWER DEVICES, INC. and SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                          June 30,   December 31,
                                                                            1997        1996
                                                                        -----------  ------------
                                                                        (unaudited)
                                     ASSETS
<S>                                                                       <C>         <C>   
CURRENT ASSETS:
     Cash and cash equivalents ........................................   $    543    $  1,149
     Accounts receivable, net of allowance for doubtful accounts of $76      7,868       7,482
     Inventories, net .................................................     16,806      14,362
     Prepaid expenses and other current assets ........................        857         657
     Deferred income taxes ............................................        480         345
                                                                          --------    --------
          Total current assets ........................................     26,554      23,995
PROPERTY, PLANT AND EQUIPMENT, net ....................................      7,842       8,057
INTANGIBLE ASSETS, net ................................................        438         369
INVESTMENT IN MARKETABLE SECURITIES AND OTHER
   LONG TERM ASSETS ...................................................      1,004       1,015
DEFERRED INCOME TAXES .................................................      5,277       5,454
                                                                          --------    --------
                                                                          $ 41,115    $ 38,890
                                                                          ========    ========


                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
     Current portion of long-term debt ................................   $    650    $     45
     Accounts payable .................................................      5,573       5,103
     Accrued liabilities ..............................................      3,081       2,696
                                                                          --------    --------
          Total current liabilities ...................................      9,304       7,844
                                                                          --------    --------
 LONG-TERM DEBT .......................................................     13,394      12,744
                                                                          --------    --------
 SHAREHOLDERS' EQUITY:
     Preferred stock, $.01 par value; 5,000,000 shares authorized;
        no shares issued or outstanding ...............................       --          --
     Common stock, $.01 par value; 25,000,000 shares authorized;
        10,375,000 shares issued and outstanding ......................        104         104
     Additional paid-in capital .......................................     23,276      23,276
     Notes receivable from shareholders ...............................       (225)       (225)
     Accumulated deficit ..............................................     (4,738)     (4,853)
                                                                          --------    --------
          Total shareholders' equity ..................................     18,417      18,302
                                                                          --------    --------
                                                                          $ 41,115    $ 38,890
                                                                          ========    ========
</TABLE>


              The accompanying notes are an integral part of these
                          consolidated balance sheets.

                                     Page 3


<PAGE>


                  MICROWAVE POWER DEVICES, INC. and SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                       For the Three Months Ended         For the Six Months Ended
                                                                       --------------------------         ------------------------
                                                                        June 30,         June 30,         June 30,         June 30,
                                                                          1997             1996             1997             1996
                                                                        --------         --------         --------         --------
<S>                                                                     <C>              <C>              <C>              <C>     
NET SALES ......................................................        $ 12,230         $ 11,019         $ 22,234         $ 22,278
COST OF SALES ..................................................           8,913            9,099           16,420           17,369
                                                                        --------         --------         --------         --------
          Gross profit .........................................           3,317            1,920            5,814            4,909
                                                                        --------         --------         --------         --------
OPERATING EXPENSES:
     General and administrative ................................             905              865            1,762            1,768
     Selling ...................................................             863              961            1,573            2,038
     Research and development ..................................           1,030            1,998            1,677            3,963
                                                                        --------         --------         --------         --------
                                                                           2,798            3,824            5,012            7,769
                                                                        --------         --------         --------         --------
          Income (loss) from operations ........................             519           (1,904)             802           (2,860)
INTEREST EXPENSE, net ..........................................             335              213              614              379
OTHER INCOME, net ..............................................              (3)              (1)              (3)              (1)
                                                                        --------         --------         --------         --------
          Income (loss) before income taxes ....................             187           (2,116)             191           (3,238)
PROVISION (BENEFIT) FOR INCOME TAXES ...........................              75             (936)              76           (1,295)
                                                                        --------         --------         --------         --------
          Net income (loss) ....................................        $    112         $ (1,180)        $    115         $ (1,943)
                                                                        ========         ========         ========         ========



PER SHARE INFORMATION:
     Net income (loss) per common share ........................        $   0.01         $  (0.11)        $   0.01         $  (0.19)
                                                                        ========         ========         ========         ========
     Weighted average common shares outstanding ................          10,423           10,375           10,400           10,375
                                                                        ========         ========         ========         ========
</TABLE>


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

                                     Page 4


<PAGE>


                  MICROWAVE POWER DEVICES, INC. and SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                         For the Six Months Ended
                                                                                                        ---------------------------
                                                                                                        June 30,          June 30,
                                                                                                          1997              1996
                                                                                                        --------          --------
<S>                                                                                                     <C>                 <C>     
OPERATING ACTIVITIES:
     Net income (loss) .....................................................................            $   115             $(1,943)
     Adjustments to reconcile net income (loss) to net cash
        used in operating activities:
          Depreciation and amortization ....................................................                584                 602
          Deferred income taxes ............................................................                 42              (1,314)
          Gain on sale of property, plant and equipment ....................................                 (3)                  0
     Changes in operating assets and liabilities:
          Accounts receivable ..............................................................               (386)              2,318
          Inventories ......................................................................             (2,443)             (4,764)
          Prepaid expenses and other assets ................................................               (200)                (24)
          Accounts payable and accrued liabilities .........................................                855               1,450
                                                                                                        -------             -------
               Net cash used in operating activities .......................................             (1,436)             (3,675)
                                                                                                        -------             -------
INVESTING ACTIVITIES:
          Purchases of property, plant and equipment .......................................               (325)               (647)
          Proceeds from sale of property, plant and equipment ..............................                  3                  15
          Investment in marketable securities ..............................................                 10                  11
                                                                                                        -------             -------
               Net cash used in investing activities .......................................               (312)               (621)
                                                                                                        -------             -------
FINANCING ACTIVITIES:
          Proceeds from long-term debt .....................................................              2,700                   0
          Principal payments of long-term debt .............................................               (195)                (40)
          Net proceeds from (repayments on) revolving line of credit .......................             (1,249)              4,255
          Deferred financing costs .........................................................               (114)                  0
                                                                                                        -------             -------
               Net cash provided by financing activities ...................................              1,142               4,215
                                                                                                        -------             -------
DECREASE IN CASH AND CASH EQUIVALENTS ......................................................               (606)                (81)
CASH AND CASH EQUIVALENTS, beginning of year ...............................................              1,149                 388
                                                                                                        -------             -------
CASH AND CASH EQUIVALENTS, end of period ...................................................            $   543             $   307
                                                                                                        =======             =======


SUPPLEMENTAL DATA:
     Cash paid for interest ................................................................            $   652             $   429
                                                                                                        =======             =======
     Cash paid for income taxes ............................................................            $    34             $    13
                                                                                                        =======             =======
</TABLE>


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

                                     Page 5


<PAGE>


                  MICROWAVE POWER DEVICES, INC. and SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  June 30, 1997
                 (in thousands, except share and per share data)
                                   (unaudited)


     1.  Reference  is made to the Notes to  Consolidated  Financial  Statements
contained in the  Company's  December 31, 1996  audited  consolidated  financial
statements  included in the Company's  1996 Annual Report and the Company's 1996
Annual  Report on Form 10-K filed with the SEC on March 28, 1997. In the opinion
of  Management,  the interim  unaudited  financial  statements  included  herein
reflect all adjustments  necessary,  consisting of normal recurring adjustments,
for a fair  presentation  of such  data on a basis  consistent  with that of the
audited data  presented  therein.  The  consolidated  results of operations  for
interim periods are not necessarily indicative of the results to be expected for
a full year.

     2.  Earnings  per share for the three and six months  ended  June 30,  1997
includes the dilutive effect of 47,717 and 25,205 weighted  average  outstanding
options,  respectively;  they do not  include  the  impact of other  outstanding
options as the effect of their inclusion would be anti-dilutive.

     Earnings  per share for the three and six months ended June 30, 1996 do not
include the impact of outstanding options as the effect of their inclusion would
be anti-dilutive.

     3. The following stock options were granted,  cancelled or exercised during
the second quarter of 1997 under either the 1995 or 1996 Stock Option Plans:

    Granted                   Cancelled                           Exercised
    -------                   ---------                           ---------
     None                      10,920  @  $2.875 - $10.75           None

     4. Recently Issued Accounting Standards

     In March 1997, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  ("SFAS") No. 128,  "Earnings Per Share".  This
statement  establishes standards for computing and presenting earnings per share
("EPS"),  replacing the  presentation of currently  required  primary EPS with a
presentation  of Basic EPS. For entities with complex  capital  structures,  the
statement  requires the dual  presentation  of both Basic EPS and Diluted EPS on
the face of the statement of operations.  Under this new standard,  Basic EPS is
computed based on weighted average shares outstanding and excludes any potential
dilution;   Diluted  EPS  reflects  potential  dilution  from  the  exercise  or
conversion  of  securities  into common  stock or from other  contracts to issue
common stock and is similar to the  currently  required  fully diluted EPS. SFAS
No. 128 is effective for financial  statements  issued for periods  ending after
December 15, 1997,  including  interim periods,  and earlier  application is not
permitted.  When  adopted,  the Company will be required to restate its EPS data
for all prior periods  presented.  The Company does not expect the impact of the
adoption of this statement to be material to previously reported EPS amounts.

                                     Page 6


<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS.


Overview

     Microwave Power Devices,  Inc. ("Microwave Power Devices" or the "Company")
commenced  operations  in  1967.  During  the past 30  years,  the  Company  has
designed,  manufactured  and marketed high power,  solid-state,  radio frequency
("RF") and  microwave  power  amplifiers  and related  subsystems  for military,
medical, satellite and, most recently, wireless telecommunications applications.

     The Company historically has been dependent upon the military market as its
principal source of revenue. In 1992, as the military market was declining,  the
Company  increased  the scope of its  business and entered  commercial  markets,
thereby  broadening its product  offerings.  The Company now develops  precision
high-power amplifiers for a variety of commercial uses.

Forward-Looking Statements

     Certain  information  contained  in this  Quarterly  Report  on Form  10-Q,
including,  without  limitation,  information  appearing  under  Part I, Item 2,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," are  forward-looking  statements (within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities  Exchange Act of
1934).  Factors set forth in the  Company's  Annual  Report on Form 10-K,  filed
March 28, 1997,  under Item 1,  "Business - Risk  Factors,"  together with other
factors that appear with the  forward-looking  statements,  or in the  Company's
other  Securities and Exchange  Commission  filings,  including its Registration
Statement  on Form S-1 dated  September  29, 1995,  could  affect the  Company's
actual results and could cause the Company's actual results to differ materially
from those expressed in any forward-looking statements made by, or on behalf of,
the Company in this Quarterly Report on Form 10-Q.

Results of Operations --
Second Quarters Ended June 30, 1997 and June 30, 1996

     Net  Sales.  Net sales  increased  by 11% to $12.2  million  in the  second
quarter of 1997 from $11.0  million  in the second  quarter of 1996.  This sales
increase  was  primarily  due to higher  shipments of the  Company's  commercial
products  which  were  partially  offset  by lower  shipments  of the  Company's
military products. Sales of commercial products increased by 33% to $9.6 million
in the second  quarter of 1997 from $7.2 million in the second  quarter of 1996,
representing  79% and  65%,  respectively,  of net  sales in such  periods.  The
commercial  sales  increase  was  predominantly  due to higher  shipments to one
domestic wireless  telecommunications  original equipment  manufacturer ("OEMs")
and one  satellite  communications  OEM  which  were  partially  offset by lower
shipments  to one foreign  wireless  telecommunications  OEM.  Sales of military
products  decreased  by 31% to $2.6  million in the second  quarter of 1997 from
$3.8  million  in  the  second  quarter  of  1996,  representing  21%  and  35%,
respectively,  of net sales in such  periods.  The military  sales  decrease was
predominantly due to lower market demand for various Republic and MPD products.

     International  sales decreased by 29% to $2.6 million in the second quarter
of 1997 from $3.6  million in the second  quarter of 1997,  totaling  21% of net
sales in the second  quarter of 1997  compared  to 33% in the second  quarter of
1996. The decrease in international sales was predominantly due to lower foreign
wireless  telecommunications  OEM business. In the second quarter of 1997, sales
to two  domestic  commercial  OEMs  (Customer  B and  Customer  D) and a foreign
commercial OEM (Customer A) accounted for 34%, 16% and 17%, respectively, of the
Company's  net  sales.  In the  second  quarter  of  1996,  sales  to a  foreign
commercial OEM (Customer A) and a domestic commercial OEM (Customer B) accounted
for 30% and 19%, respectively, of the Company's net sales.

                                     Page 7


<PAGE>


     Gross Profit.  Gross profit  increased by 73% to $3.3 million in the second
quarter of 1997 from $1.9 million in the second  quarter of 1996.  This increase
was primarily due to the  non-recurrence of the second quarter 1996 $1.0 million
write-off of wireless  multi-channel  work-in-process  inventory  related to the
cancellation  of the  remainder  of the  AirNet  contract  and the gross  profit
associated with the increased net sales level in the second quarter of 1997. The
Company's  gross  profit  margin  (gross  profit as a  percentage  of net sales)
increased  to 27.1% in the  second  quarter  of 1997  from  17.4% in the  second
quarter of 1996.  This increase was primarily due to the  non-recurrence  of the
$1.0 million  AirNet  write-off  and the higher  gross  profit  margin which the
Company is experiencing on its satellite  communications  program (the result of
engineering and manufacturing efficiencies), partially offset by the lower gross
profit margins which the Company is experiencing  on its wireless  multi-channel
product line (the result of competitive  pricing  pressures).  In addition,  the
following  factors  adversely  affected the gross  profit  margin for the second
quarter of 1997:  (i) the  overall low gross  profit  margin  obtainable  on the
Company's wireless multi-channel product line (the result of competitive pricing
pressures),  (ii) low gross profits the Company is  experiencing on two military
OEM  contracts  (the  result  of  production  delays  and  software  integration
difficulties)  and  (iii)  a  lower  than  anticipated  absorption  of  overhead
expenses.

     Certain of the Company's  inventory costing techniques involve developing a
standard cost which estimates the average,  or standard,  cost per unit over the
extended life cycle of a product.  Such costs  include  labor,  material,  other
direct costs and related overheads. If the extended life cycle of a product does
not materialize or if there is no reasonable  certainty that product  maturation
will take place within the near future,  write-offs of work-in-process inventory
would be  required.  Such  write-offs  could  materially  adversely  affect  the
Company's gross profit and results of operations.

     Certain of the purchase orders or contracts  comprising backlog at June 30,
1997 set forth product specifications not yet achieved by the Company that would
require the  Company to  complete  additional  product  development.  Failure to
develop products meeting such  specifications  could lead to the cancellation of
the related purchase orders or contracts.  The reduction,  delay or cancellation
of orders or contracts from one or more  significant  customers could materially
adversely  affect the  Company's  business,  financial  condition and results of
operations.

     There can be no assurances  that gross profit will continue to improve.  If
the  Company  is  not  able  to  reduce  its  production  costs  to  the  extent
anticipated,  or to introduce new products with greater margins,  and if average
selling prices decline beyond current  expectations,  the Company's gross profit
and results of operations could be materially adversely affected.  The Company's
gross profit may also be affected by a variety of other  factors,  including the
mix of systems and equipment sold; production,  reliability or quality problems;
and price competition.

     General and Administrative  Expenses.  General and administrative  expenses
remained  relatively  stable at $0.9 million in both the second quarters of 1997
and 1996, representing 7.4% and 7.9%, respectively, of net sales.

     Selling Expenses.  Selling expenses decreased by 10% to $0.9 million in the
second  quarter  of 1997  from  $1.0  million  in the  second  quarter  of 1996,
representing 7.1% and 8.7%, respectively,  of net sales. The decrease in selling
expenses  resulted  primarily from lower sales  representative  commissions (the
result of  domestic  versus  foreign  sales  mix  variations)  and lower  travel
expenses, partially offset by higher bid and proposal expenses.

     Research  and  Development  Expenses.  Research  and  development  expenses
decreased by 48% to $1.0 million in the second quarter of 1997 from $2.0 million
in the second quarter of 1996, representing 8.4% and 18.1%, respectively, of net
sales. The decrease in research and development expenses resulted primarily from
reduced military product  development  efforts and, to a lesser extent,  reduced
wireless  telecommunications  product development efforts. Military research and
development expenses decreased predominantly as a result of the Company shipping
initial  hardware to a foreign  military OEM, late in 1996,  for a Republic MRES
2000 simulator product. In the military environment, customer funding of product
development  costs is typical.  The Republic MRES 2000 program was an exception,
however,  as the Company  funded a large  majority of this  product  development
effort throughout 1996. The Company believes that the continued  introduction of
new products is essential to its  competitiveness  and is committed to continued
investment in research and development.

                                     Page 8


<PAGE>


     Interest Expense.  Interest expense increased by 57% to $0.3 million in the
second  quarter  of 1997  from  $0.2  million  in the  second  quarter  of 1996,
primarily  reflecting  increased  average  borrowings under the Company's credit
facility.

     Provision for Income Taxes.  The Company's  effective tax rate decreased to
40.0% in the second  quarter  of 1997 from 44.2% in the second  quarter of 1996.
The higher  rate in the second  quarter  of 1996 was due to the  Company's  then
anticipated full year 1996 net loss which required a year-to-date  effective tax
rate  adjustment in the second quarter of 1996 for the lower  effective tax rate
used in the first quarter of 1996.

                                     Page 9


<PAGE>


Six Months Ended June 30, 1997 and June 30, 1996

     Net Sales.  Net sales decreased  slightly to $22.2 million in the first six
months of 1997 from $22.3  million  in the first six months of 1996.  This sales
decrease  was  primarily  due to lower  shipments  of the  Company's  commercial
products  which were almost  fully offset by higher  shipments of the  Company's
military products. Sales of commercial products decreased by 6% to $15.9 million
in the first six  months of 1997 from  $16.9  million in the first six months of
1996, representing 72% and 76%, respectively,  of net sales in such periods. The
commercial  sales  decrease  was  predominantly  due to lower  shipments  to one
foreign wireless telecommunications OEM, partially offset by higher shipments to
one domestic wireless  telecommunications  OEM and one satellite  communications
OEM.  Sales of military  products  increased by 18% to $6.3 million in the first
six  months  of 1997  from  $5.4  million  in the  first  six  months  of  1996,
representing  28% and  24%,  respectively,  of net  sales in such  periods.  The
military  sales  increase was  predominantly  due to greater  market  demand for
various MPD and Republic products.

     International  sales  decreased  by 43% to $5.3  million  in the  first six
months of 1997 from $9.3  million in the first six months of 1996,  totaling 24%
of net sales in the first six  months of 1997  compared  to 42% in the first six
months of 1996. The decrease in  international  sales was  predominantly  due to
lower foreign  wireless  telecommunications  OEM business,  partially  offset by
higher Republic military business. In the first six months of 1997, sales to two
domestic  commercial  OEMs (Customer B and Customer D) and a foreign  commercial
OEM (Customer A) accounted for 31%, 17% and 13%, respectively,  of the Company's
net sales.  In the first six months of 1996,  sales to a foreign  commercial OEM
(Customer A) and a domestic  commercial  OEM  (Customer B) accounted for 39% and
17%, respectively, of the Company's net sales.

     Gross  Profit.  Gross profit  increased by 18% to $5.8 million in the first
six  months of 1997  from $4.9  million  in the first six  months of 1996.  This
increase was  primarily due to the  non-recurrence  of the first six months 1996
$1.0  million  write-off  of wireless  multi-channel  work-in-process  inventory
related to the  cancellation  of the  remainder  of the AirNet  contract  in the
second  quarter of 1996.  The  Company's  gross profit margin (gross profit as a
percentage of net sales) increased to 26.1% in the first six months of 1997 from
22.0% in the first six months of 1996.  This  increase was  primarily due to the
non-recurrence  of the $1.0 million AirNet write-off and the higher gross profit
margin which the Company is experiencing on its satellite communications program
(the result of engineering and manufacturing efficiencies),  partially offset by
the lower gross profit margins which the Company is experiencing on its wireless
multi-channel  product line (the result of competitive  pricing  pressures).  In
addition,  the following factors adversely  affected the gross profit margin for
the first six months of 1997: (i) the overall low gross profit margin obtainable
on the Company's  multi-channel  product line (the result of competitive pricing
pressures),  (ii) low gross profits the Company is  experiencing on two military
OEM  contracts  (the  result  of  production  delays  and  software  integration
difficulties) and (iii) a higher commercial  warranty expense  (specifically for
the Company's multi-channel,  Cellular-CDMA product). However, by the end of the
first quarter of 1997, the majority of the technical  problems  encountered with
the Company's multi-channel,  Cellular-CDMA product had been addressed,  product
returns seem to be diminishing, product reliability appears to be improving and,
accordingly, commercial warranty expense seems to be leveling.

     Certain of the Company's  inventory costing techniques involve developing a
standard cost which estimates the average,  or standard,  cost per unit over the
extended life cycle of a product.  Such costs  include  labor,  material,  other
direct costs and related overheads. If the extended life cycle of a product does
not materialize or if there is no reasonable  certainty that product  maturation
will take place within the near future,  write-offs of work-in-process inventory
would be  required.  Such  write-offs  could  materially  adversely  affect  the
Company's gross profit and results of operations.

     Certain of the purchase orders or contracts  comprising backlog at June 30,
1997 set forth product specifications not yet achieved by the Company that would
require the  Company to  complete  additional  product  development.  Failure to
develop products meeting such  specifications  could lead to the cancellation of
the related purchase orders or contracts.  The reduction,  delay or cancellation
of orders or contracts from one or more  significant  customers could materially
adversely  affect the  Company's  business,  financial  condition and results of
operations.

                                    Page 10


<PAGE>


     There can be no assurances  that gross profit will continue to improve.  If
the  Company  is  not  able  to  reduce  its  production  costs  to  the  extent
anticipated,  or to introduce new products with greater margins,  and if average
selling prices decline beyond current  expectations,  the Company's gross profit
and results of operations could be materially adversely affected.  The Company's
gross profit may also be affected by a variety of other  factors,  including the
mix of systems and equipment sold; production,  reliability or quality problems;
and price competition.

     General and Administrative  Expenses.  General and administrative  expenses
remained  relatively stable at $1.8 million in both the first six months of 1997
and 1996, representing 7.9% of net sales for both periods.

     Selling Expenses.  Selling expenses decreased by 23% to $1.6 million in the
first six  months of 1997 from  $2.0  million  in the first six  months of 1996,
representing 7.1% and 9.1%, respectively,  of net sales. The decrease in selling
expenses  resulted  primarily from lower sales  representative  commissions (the
result of domestic versus foreign sales mix variations) and, to a lesser extent,
lower travel,  advertising and trade show expenses,  partially  offset by higher
bid and proposal expenses.

     Research  and  Development  Expenses.  Research  and  development  expenses
decreased  by 58% to $1.7  million  in the  first  six  months of 1997 from $4.0
million  in  the  first  six  months  of  1996,  representing  7.5%  and  17.8%,
respectively,  of net sales.  The decrease in research and development  expenses
resulted primarily from reduced military product  development  efforts and, to a
lesser extent, reduced wireless  telecommunications product development efforts.
Military research and development  expenses decreased  predominantly as a result
of the Company  shipping  initial  hardware to a foreign  military  OEM, late in
1996, for a Republic MRES 2000 simulator product.  In the military  environment,
customer funding of product development costs is typical. The Republic MRES 2000
program was an exception,  however,  as the Company  funded a large  majority of
this product  development  effort throughout 1996. The Company believes that the
continued  introduction  of new products is  essential  to its  competitiveness,
especially  in the  wireless  telecommunications  market,  and is  committed  to
continued investment in research and development. The Company views the decrease
in wireless  telecommunications  research and development expenses (the majority
of which occurred in the first quarter of 1997) as a short term solution used to
assist  in  reducing  costs to match  corresponding  reduced  wireless  revenue.
Fundamental to this effort was a temporary reallocation of some of the Company's
engineering   and   technology   resources  to  either   revenue   producing  or
customer-funded  product  development  during the first  quarter  of 1997.  This
action enabled the Company to leverage its other commercial and military product
lines while  insuring a  continued  and  focused  emphasis on critical  wireless
telecommunications development projects.

     Interest Expense.  Interest expense increased by 62% to $0.6 million in the
first six  months of 1997 from  $0.4  million  in the first six  months of 1996,
primarily  reflecting  increased  average  borrowings under the Company's credit
facility.

     Provision for Income Taxes.  The Company's  effective tax rate for both the
first  six  months  of 1997 and 1996 was 40%.  The 1996 rate was due to the then
anticipated full year 1996 net loss, the benefit of which the Company expects to
utilize to offset 1997 and future taxable income, as prescribed by SFAS No. 109.
There can be no  assurances  that the Company will  continue to achieve  taxable
income in the future.

Liquidity and Capital Resources

     In the fourth  quarter of 1995,  the  Company  successfully  completed  its
initial  public  offering  ("IPO")  raising  net  proceeds  to  the  Company  of
approximately  $20.4  million from the  Company's  sale of  2,875,000  shares of
Common Stock, including the underwriters'  over-allotment option. Since the IPO,
the Company had financed its operations and met its capital requirements through
the  following  two sources:  (i) a credit  facility  and (ii) cash  provided by
operating activities.

     On February 13, 1997,  the Company and IBJ Schroder  Bank and Trust Company
("IBJ") entered into a $13.0 million credit  facility  consisting of a revolving
line of credit in the amount of $10.3  million  and a term loan in the amount of
$2.7 million. The revolving line of credit and term loan bear interest at annual
rates  equal  to the  prime 

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<PAGE>


rate plus 1.0% and the prime rate plus 1.25%, respectively.  The credit facility
matures  in  February  2000  and  automatically   renews  for  one-year  periods
thereafter, unless terminated by either the Company or IBJ. Aggregate borrowings
under the  revolving  line of credit are limited by a borrowing  base,  which is
calculated as the sum of 85% of eligible accounts receivable and 40% of eligible
raw  materials  and  work-in-process   inventories  (with  borrowings  based  on
aggregate eligible inventory limited to $6.0 million).  The term loan requires a
monthly  paydown of $0.05  million.  Therefore,  at June 30,  1997 the term loan
balance  was  $2.55  million.  The  credit  facility  is  subject  to  customary
covenants,  including, among other things, limitations with respect to incurring
indebtedness,  payment of dividends and affiliate advances,  and a provision for
maintaining a certain fixed charge coverage ratio.

     Operating  activities used net cash of $1.4 million and $3.7 million in the
first six months of 1997 and 1996, respectively.  From December 31, 1996 to June
30, 1997,  inventory,  and accounts payable and accrued liabilities increased by
$2.4 million and $0.9  million,  respectively.  The  increase in  inventory  was
primarily  due  to  an  increase  in  work-in-process   inventory  for  wireless
telecommunications  products (particularly  multi-channel) and Republic military
contracts  (particularly  a long-term  RES  program).  The  increase in accounts
payable and accrued  liabilities was primarily the result of the  implementation
of a new cash  management  system which created a favorable  float  situation at
June 30, 1997 (i.e.:  checks in vendors  hands but not yet cleared) and mid-year
payroll related accruals.  Investing  activities,  which consisted  primarily of
equipment  acquisitions,  used net cash of $0.3  million and $0.6 million in the
first six  months of 1997 and 1996,  respectively.  Financing  activities  which
consisted  primarily  of proceeds  from long term debt and net  proceeds  from a
revolving line of credit,  provided net cash of $1.1 million and $4.2 million in
the first six months of 1997 and 1996, respectively.

     Capital  expenditures  were $0.3  million and $0.6 million in the first six
months of 1997 and 1996, respectively.  These expenditures were funded primarily
through  cash  provided  by  beginning  of year cash  on-hand  balances  and the
Company's  credit facility.  Principal  expenditures for the first six months of
1997 included  upgrades to the Company's  business  system  software and CAE/CAD
systems,  and purchases of computer  equipment and engineering and manufacturing
test equipment.  The Company anticipates making additional capital  expenditures
of $1.2 million during the remainder of 1997,  including purchases of additional
engineering and  manufacturing  assembly and test equipment as well as continued
upgrades to its CAE/CAD systems and computer equipment.

     As of June 30, 1997, the Company had working capital of approximately $17.3
million,  compared  to  approximately  $16.2  million as of December  31,  1996.
Working  capital as of June 30, 1997  included  approximately  $7.9  million and
$16.8 million in accounts  receivable and inventory,  respectively,  compared to
December 31, 1996 working capital which included  approximately $7.5 million and
$14.4 million in accounts receivable and inventory,  respectively. The Company's
current ratio (ratio of current  assets to current  liabilities)  as of June 30,
1997 was 2.9:1, compared with a current ratio of 3.1.:1 as of December 31, 1996.
As of June 30, 1997, the Company's debt to equity ratio was 0.8:1, compared with
a debt to equity ratio of 0.7:1 as of December 31, 1996.

     The Company believes that cash generated from operations, amounts available
under its credit  facility,  and/or third party  financing will be sufficient to
fund necessary capital  expenditures and to provide adequate working capital for
at least  the next 12  months.  There  can be no  assurance,  however,  that the
Company  will not require  additional  financing  prior to such date to fund its
operations,  and,  if  required,  that  such  financing  will  be  available  on
commercially  reasonable terms. In addition,  the Company may require additional
financing after such date to fund its operations.

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<PAGE>


PART II -- OTHER INFORMATION


ITEM 4. Submission of Matters to a Vote of Security Holders.

     At the Company's Annual Meeting of Stockholders held Thursday, May 8, 1997,
at 11:00 A.M.,  local time, at the offices of Proskauer Rose LLP, 1585 Broadway,
26th Floor, New York, New York 10036, the following items were voted upon:


                                        For             Against        Abstain
                                        ---             -------        -------
  1. Election of Directors:
         George J. Sbordone          9,884,314              0           22,780
         Edward J. Shubel            9,884,314              0           22,780
         Merril M. Halpern           9,886,064              0           21,030
         A. Lawrence Fagan           9,886,064              0           21,030
         Alfred Weber                9,882,064              0           25,030
         David J. Aldrich            9,886,064              0           21,030
         Warren A. Law               9,886,064              0           21,030
         James Silver                9,882,064              0           25,030

  2. Ratify the appointment of
  Arthur Andersen LLP                9,889,517         11,845            5,732


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

     (a) Exhibit 27.1 Financial Data Schedule.

     (b) No  reports on Form 8-K have been filed  during the  quarter  for which
this report is filed.

                                    Page 13

<PAGE>


SIGNATURES

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



                                MICROWAVE POWER DEVICES, INC.
                                      (Registrant)


Dated: August 4, 1997           /s/ Edward J. Shubel
                                ---------------------------
                                By: Edward J. Shubel
                                    President and CEO


Dated: August 4, 1997           /s/ Paul E. Donofrio
                                ---------------------------
                                By: Paul E. Donofrio
                                    Vice President Finance/CFO
                                    (Principal Financial and Accounting Officer)


                                     Page 14