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


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


(Mark One)

[X]  Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
     Act of 1934 
     For the quarterly period ended March 31, 1998.

                                       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 May 1, 1998, there were 10,379,030 shares  outstanding of the registrant's
Common Stock, $.01 par value.

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



<PAGE>



                          MICROWAVE POWER DEVICES, INC.

                                      INDEX




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

ITEM 1.    Consolidated Financial Statements
             Consolidated Balance Sheets --
             March 31, 1998 and December 31, 1997...........................   3

             Consolidated Statements of Operations --
             Three months ended March 31, 1998 and 1997 ....................   4

             Consolidated Statements of Cash Flows --
             Three months ended March 31, 1998 and 1997 ....................   5

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


ITEM 2.    Management's Discussion and Analysis of Financial Condition
              and Results of Operations.....................................   8




PART II -- OTHER INFORMATION
----------------------------

ITEM 1.    Legal Proceedings................................................  11

ITEM 6.    Exhibits and Reports on Form 8-K.................................  11



SIGNATURES..................................................................  12




                                     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>
                                                                                March 31,  December 31,
                                                                                  1998        1997
                                                                                --------    --------
                                                                               (unaudited)  (audited)
<S>                                                                             <C>         <C>     
                                     ASSETS
CURRENT ASSETS:
     Cash and cash equivalents ..............................................   $    607    $    687
     Accounts receivable, net of allowance for doubtful accounts of $75 .....      7,598       8,329
     Inventories, net .......................................................     18,451      16,931
     Prepaid expenses and other current assets ..............................        629         706
     Deferred income taxes ..................................................      1,964       1,777
                                                                                --------    --------
          Total current assets ..............................................     29,249      28,430
PROPERTY, PLANT AND EQUIPMENT, net ..........................................      8,078       8,273
INTANGIBLE ASSETS, net ......................................................        386         389
OTHER LONG-TERM ASSETS ......................................................        852         903
DEFERRED INCOME TAXES .......................................................      3,631       3,827
                                                                                --------    --------
                                                                                $ 42,196    $ 41,822
                                                                                ========    ========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
     Current portion of long-term debt ......................................   $    838    $    650
     Accounts payable .......................................................      5,693       4,848
     Accrued liabilities ....................................................      2,868       3,186
     Customer advance payments ..............................................      1,142       1,563
                                                                                --------    --------
          Total current liabilities .........................................     10,541      10,247
                                                                                --------    --------
LONG-TERM DEBT ..............................................................     12,523      12,626
                                                                                --------    --------
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;
        10,378,890 and 10,378,750 shares issued and outstanding, respectively        104         104
     Additional paid-in capital .............................................     23,306      23,306
     Notes receivable from shareholders .....................................       (188)       (188)
     Retained earnings (accumulated deficit) ................................     (4,090)     (4,273)
                                                                                --------    --------
          Total shareholders' equity ........................................     19,132      18,949
                                                                                --------    --------
                                                                                $ 42,196    $ 41,822
                                                                                ========    ========
</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
                                                      --------------------------
                                                         March 31,    March 31,
                                                           1998        1997
                                                         -------      -------
                                                                     
<S>                                                      <C>          <C>    
NET SALES .............................................  $11,439      $10,004
COST OF SALES .........................................    7,680        7,507
                                                         -------      -------
          Gross profit ................................    3,759        2,497
                                                         -------      -------
OPERATING EXPENSES:                                                  
     General and administrative .......................      974          857
     Selling ..........................................      896          710
     Research and development .........................    1,408          647
                                                         -------      -------
                                                           3,278        2,214
                                                         -------      -------
          Income from operations ......................      481          283
INTEREST EXPENSE, net .................................      276          279
                                                         -------      -------
          Income before income taxes ..................      205            4
PROVISION FOR INCOME TAXES ............................       22            1
                                                         -------      -------
          Net income ..................................  $   183      $     3
                                                         =======      =======
                                                                     
                                                                     
                                                                     
PER SHARE INFORMATION:                                               
     Net income per common share:                                    
          Basic .......................................  $  0.02      $  0.00
                                                         =======      =======
          Diluted .....................................  $  0.02      $  0.00
                                                         =======      =======
     Common shares used in computing per share amounts:              
          Basic .......................................   10,379       10,375
                                                         =======      =======
          Diluted .....................................   10,479       10,382
                                                         =======      =======
</TABLE>


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


                                      F-4

<PAGE>


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

<TABLE>
<CAPTION>
                                                                                For the Three Months Ended
                                                                                --------------------------
                                                                                    March 31,  March 31,
                                                                                      1998       1997
                                                                                     -------    -------
<S>                                                                                  <C>        <C>    
OPERATING ACTIVITIES:
     Net income ..................................................................   $   183    $     3
     Adjustments to reconcile net income to net cash used in operating activities:
          Depreciation and amortization ..........................................       331        298
          Deferred income taxes ..................................................         9        (20)
          Loss on sale of property, plant and equipment ..........................        --         --
     Changes in operating assets and liabilities:
          Accounts receivable ....................................................       731        (36)
          Inventories ............................................................    (1,519)      (848)
          Prepaid expenses and other assets ......................................       134       (198)
          Accounts payable and accrued liabilities ...............................       527     (1,993)
          Customer advance payments ..............................................      (421)        --
                                                                                     -------    -------
               Net cash used in operating activities .............................       (25)    (2,794)
                                                                                     -------    -------
INVESTING ACTIVITIES:
          Purchases of property, plant and equipment .............................      (111)       (58)
          Proceeds from sale of property, plant and equipment ....................        --         --
          Investment in marketable securities ....................................        (7)        (6)
                                                                                     -------    -------
               Net cash used in investing activities .............................      (118)       (64)
                                                                                     -------    -------
FINANCING ACTIVITIES:
          Proceeds from long-term debt ...........................................       939      2,700
          Principal payments of long-term debt ...................................      (150)        --
          Net repayments on revolving credit loans ...............................      (704)      (341)
          Deferred financing costs ...............................................       (22)       (88)
          Net proceeds from issuance of common stock .............................        --         --
                                                                                     -------    -------
               Net cash provided by financing activities .........................        63      2,271
                                                                                     -------    -------
DECREASE IN CASH AND CASH EQUIVALENTS ............................................       (80)      (587)
CASH AND CASH EQUIVALENTS, beginning of year .....................................       687      1,149
                                                                                     -------    -------
CASH AND CASH EQUIVALENTS, end of period .........................................   $   607    $   562
                                                                                     =======    =======



SUPPLEMENTAL DATA:
     Cash paid for interest ......................................................   $   290    $   301
                                                                                     =======    =======
     Cash paid for income taxes ..................................................   $    52    $    21
                                                                                     =======    =======
</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

                                 March 31, 1998
                 (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, 1997  audited  consolidated  financial
statements  included in the Company's  1997 Annual Report and the Company's 1997
Annual  Report on Form 10-K filed with the SEC on March 20, 1998. 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. Effective December 31, 1997, the Company adopted SFAS No. 128, "Earnings
Per  Share."  Basic net income per common  share  ("Basic  EPS") is  computed by
dividing net income by the weighted average number of common shares outstanding.
Diluted net income per common share  ("Diluted EPS") is computed by dividing net
income by the weighted average number of common shares and dilutive common share
equivalents  then  outstanding.  SFAS No. 128 requires the  presentation of both
Basic  EPS  and  Diluted  EPS  on the  face  of the  consolidated  statement  of
operations. The impact of the adoption of this statement was not material to all
previously  reported EPS amounts.  A  reconciliation  between the  numerator and
denominator of Basic EPS and Diluted EPS is as follows:

<TABLE>
<CAPTION>
                                                                            Net
                                                                           Income
                                                                            Per
                                                        Net      Common    Common
                                                      Income     Shares    Share
                                                      ------     ------    -----
                                                  For the quarter ended March 31, 1998
<S>                                                    <C>       <C>       <C>  
Basic EPS
Net income attributable to common stock                $  183    10,379    $0.02
Effect of dilutive securities: stock options               --       100       --
                                                       ------    ------    -----
Diluted EPS
Net income attributable to common stock and
     assumed option exercises                          $  183    10,479    $0.02
                                                       ======    ======    =====

<CAPTION>
                                                 For the quarter ended March 31, 1997
<S>                                                    <C>       <C>       <C>  
Basic EPS
Net income attributable to common stock                $    3    10,375    $0.00
Effect of dilutive securities: stock options               --         7       --
                                                       ------    ------    -----
Diluted EPS
Net income attributable to common stock and
     assumed option exercises                          $    3    10,382    $0.00
                                                       ======    ======    =====
</TABLE>

     Diluted  EPS, for the three months ended March 31, 1998 and March 31, 1997,
does not include the impact of other stock  options  then  outstanding  as their
inclusion would be anti-dilutive.

     3. The following stock options were granted,  cancelled or exercised during
the first quarter of 1998 under either the 1995 or 1996 Stock Option Plans:

 Granted                      Cancelled                          Exercised
 -------                      ---------                          ---------
 202,680  @  $6.375           2,750  @  $2.875 - $6.375          140  @  $2.875



                                     Page 6
<PAGE>

     4. Recently Issued Accounting Standards

     In the first quarter of 1998, the Company adopted SFAS No. 130,  "Reporting
Comprehensive  Income," which requires companies to report all changes in equity
during  a  period,   except  those  resulting  from  investment  by  owners  and
distribution   to  owners,   for  the  period  in  which  they  are  recognized.
Comprehensive  income is the total of net income and all other nonowner  changes
in equity (or other  comprehensive  income) such as unrealized  gains/losses  on
securities  classified  as  available-for-sale,   foreign  currency  translation
adjustments and minimum pension liability  adjustments.  Comprehensive and other
comprehensive income must be reported on the face of annual financial statements
or in the case of interim reporting,  the footnote approach may be utilized. For
fiscal years 1997 and 1996,  and for the quarters ended March 31, 1998 and 1997,
the Company's  operations did not give rise to items includible in comprehensive
income which were not already included in net income. Accordingly, the Company's
comprehensive income is the same as its net income for all periods presented.


                                     Page 7
<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 31  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 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 1997 Annual Report on Form 10-K, filed
March 20, 1998,  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 --
First Quarters Ended March 31, 1998 and March 31, 1997

     Net Sales. Net sales increased by 14% to $11.4 million in the first quarter
of 1998 from $10.0 million in the first quarter of 1997. This sales increase was
primarily  due to higher  shipments  of the  Company's  commercial  and military
products.  Sales of commercial  products  increased by 8% to $6.8 million in the
first  quarter  of  1998  from  $6.3  million  in the  first  quarter  of  1997,
representing  59% and  63%,  respectively,  of net  sales in such  periods.  The
commercial  sales  increase  was  predominantly  due to higher net  shipments to
wireless telecommunications original equipment manufacturers ("OEMs") and higher
shipments  to one  satellite  communications  OEM.  Sales of  military  products
increased by 25% to $4.6 million in the first  quarter of 1998 from $3.7 million
in the first quarter of 1997,  representing  41% and 37%,  respectively,  of net
sales in such periods.  The military  sales  increase was  predominantly  due to
higher  shipments on a U. S. Government  military  program,  partially offset by
lower market demand for various MPD and Republic military products.

     International  sales  decreased by 36% to $1.7 million in the first quarter
of 1998 from $2.7  million  in the first  quarter of 1997,  totaling  15% of net
sales in the first quarter of 1998 compared to 27% in the first quarter of 1997.
The decrease in international sales was predominantly due to lower market demand
for Republic  foreign  military  business and, to a lesser extent,  lower market
demand for foreign wireless telecommunications business. In the first quarter of
1998, sales to two domestic  commercial OEMs (Customer B and Customer D) and one
domestic military OEM (Customer G) accounted for 22%, 18% and 18%, respectively,
of the Company's net sales. In the first quarter of 1997,  sales to two domestic
commercial  OEMs  (Customer  B and  Customer  D)  accounted  for  28%  and  19%,
respectively, of the Company's net sales.

     Gross  Profit.  Gross profit  increased by 51% to $3.8 million in the first
quarter of 1998 from $2.5 million in the first  quarter of 1997.  The  Company's
gross profit margin  (gross profit as a percentage of net sales) also 


                                     Page 8
<PAGE>

increased to 32.9% in the first  quarter of 1998 from 25.0% in the first quarter
of 1997. These increases were primarily due to lower commercial warranty expense
(specifically for the Company's multi-channel, cellular-CDMA product) and a more
favorable  revenue mix of higher net gross  profit  margin  business in both the
wireless and military product lines.  Despite the above,  the following  factors
adversely  affected the  Company's  gross profit margin for the first quarter of
1998: (i) low gross profits the Company is experiencing on two foreign  military
OEM  contracts  (the  result of  competitive  pricing  pressures  and  technical
problems) and (ii) 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 March 31,
1998 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 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; technical, production,  reliability or quality problems; and
price competition.

     General and Administrative  Expenses.  General and administrative  expenses
increased  slightly  to $1.0  million  in the  first  quarter  of 1998 from $0.9
million in the first quarter 1997, representing 8.5% and 8.6%, respectively,  of
net sales.

     Selling Expenses.  Selling expenses increased by 26% to $0.9 million in the
first  quarter  of  1998  from  $0.7  million  in the  first  quarter  of  1997,
representing 7.9% and 7.1%, respectively,  of net sales. The increase in selling
expenses resulted primarily from higher advertising and trade show expenses, and
higher  sales  representative  commissions,  the  result  of  product  sales mix
variations and higher overall sales volume.

     Research  and  Development  Expenses.  Research  and  development  expenses
increased by 118% to $1.4 million in the first quarter of 1998 from $0.6 million
in the first quarter of 1997, representing 12.3% and 6.5%, respectively,  of net
sales.    This   increase   resulted    primarily   from   increased    wireless
telecommunications  product development and, to a much lesser extent,  increased
military  research and  development.  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  viewed the low level of  wireless
telecommunications  product  development in the first quarter of 1997 as a short
term  solution to assist in reducing  costs to match reduced  wireless  revenue.
Fundamental to this effort was a planned  temporary  reallocation,  in the first
quarter of 1997, of some of the Company's  engineering and technology  resources
to either revenue producing or customer-funded product development.  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. The Company views the level of research
and  development  expenses  incurred  in the  first  quarter  of 1998 to be more
indicative  of a typical  quarterly  research  and  development  expense for the
Company.  As such,  the  Company  anticipates  experiencing  this  more  typical
quarterly level throughout the balance of 1998.

     Interest  Expense.  Interest  expense remained  relatively  stable at $0.28
million in both the first quarters of 1998 and 1997.



                                     Page 9
<PAGE>

     Provision for Income Taxes.  The Company's  effective tax rate decreased to
10.7% in the first quarter of 1998 from 40.0% in the first quarter of 1997.  The
effective tax rate for the first  quarter of 1998 was favorably  impacted by the
partial recovery of a previously  reserved deferred tax asset as a result of the
Company's  improved  profitability  position as  compared  to 1997.  Without the
benefit of this  change in the  reserve,  the  effective  tax rate for the first
quarter of 1998 would have been 40.0%.  The Company will  continue to assess its
reserved deferred tax asset each reporting quarter.

Liquidity and Capital Resources

     In the fourth quarter of 1995, the Company successfully  completed its 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 exercise of
the underwriters' over-allotment option. Since the IPO, the Company has financed
its  operations  and met its  capital  requirements  through the  following  two
sources:   (i)  a  credit  facility  and/or  (ii)  cash  provided  by  operating
activities.

     In  February  1998,  the Company  entered  into a loan  agreement  with IBJ
Schroder Business Credit Corporation ("IBJ") which provides for a $15.45 million
credit facility  consisting of a revolving line of credit in the amount of $10.3
million,  a term loan in the amount of $2.15 million and a $3.0 million  capital
equipment  ("Capex")  loan  facility.  The revolving line of credit and both the
term loan and Capex loan bear  interest at annual  rates equal to the prime rate
plus 0.5% and the prime  rate plus  0.75%,  respectively.  The  credit  facility
matures in February 2001 and  automatically  renews itself 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  principal payment of $0.05 million.  The revolver  increases each month
commensurate  with term loan repayments until a maximum revolving line of credit
of $12.0 million is reached.  The Capex loan requires monthly principal payments
that are recalculated each month based on the prior month's Capex borrowings, if
any,  amortized  over 60 months.  Capex  loans  borrowings  must occur  prior to
February 27, 1999.  At March 31, 1998,  the term loan balance was $2.1  million,
borrowings  under  the  $3.0  million  Capex  facility  were  $0.9  million  and
borrowings under the $10.35 million  revolving line of credit were $5.7 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 $0.03 million and $2.8 million in the
first three  months of 1998 and 1997,  respectively.  From  December 31, 1997 to
March 31, 1998, inventory increased by $1.5 million,  accounts payable,  accrued
liabilities and customer advance payments increased by $0.1 million and accounts
receivable  decreased by $0.7  million.  The increase in inventory was primarily
due to an increase in work-in-process inventory for wireless  telecommunications
products and an increase in net inventory on a U.S. government military program.
The increase in accounts  payable,  accrued  liabilities  and  customer  advance
payments was primarily the result of the Company's cash management  system which
created a more  favorable  float  situation  at March 31, 1998 (i.e.:  checks in
vendors hands but not yet cleared) as compared to year end 1997, almost entirely
offset by first quarter 1998  continuing use of an advance  payment  received in
the  fourth  quarter  of 1997 from a foreign  military  OEM and a smaller  first
quarter 1998 payroll and related  benefits accrual as compared to year end 1997.
The decrease in accounts receivable was primarily due to the lower sales for the
first  quarter  of 1998 as  compared  to the fourth  quarter of 1997.  Investing
activities,  which consisted primarily of equipment acquisitions,  used net cash
of $0.1  million and $0.06  million in the first three  months of 1998 and 1997,
respectively.  Financing activities,  which consisted primarily of proceeds from
long-term debt,  principal payments of long-term debt and net repayments made on
the  revolving  line of credit,  provided  net cash of $ 0.06  million  and $2.3
million in the first three months of 1998 and 1997, respectively.

     Capital expenditures were $0.1 million and $0.06 million in the first three
months of 1998 and 1997, respectively.  These expenditures were funded primarily
through  cash  provided by beginning  of year cash  balances  and the  Company's
credit  facility.  Principal  expenditures  for the first  three  months of 1998
included  engineering and


                                    Page 10
<PAGE>

manufacturing  test equipment and enhancements to the Company's CAE/CAD systems.
The Company anticipates making additional capital  expenditures of approximately
$1.9 million during the remainder of 1998,  including the purchase of additional
engineering and  manufacturing  test  equipment,  computer  equipment  upgrades,
continued  enhancements  to its  CAE/CAD  systems  and the  purchase of a second
automated  surface-mount  pick-n-place  machine.  It is anticipated that capital
expenditures for 1998 will be financed by the Company's  credit  facility,  cash
provided by operating activities and/or third party financing sources.

     As of March 31,  1998,  the Company had  working  capital of  approximately
$18.7 million,  compared to approximately $18.2 million as of December 31, 1997.
Working  capital as of March 31, 1998  included  approximately  $7.6 million and
$18.5 million in accounts  receivable  and inventory,  respectively  compared to
December 31, 1997 working capital which included  approximately $8.3 million and
$16.9 million in accounts receivable and inventory,  respectively. The Company's
current ratio (ratio of current assets to current  liabilities) as of both March
31, 1998 and December 31, 1997 was 2.8:1. As of both March 31, 1998 and December
31, 1997, the Company's debt to equity ratio was 0.7:1.

     The Company believes that cash generated from operations, amounts available
under its credit facility, and/or other 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.

     The  majority of any Year 2000 issues have  already  been  addressed by the
Company.  In 1997, the Company's  business and computing system was upgraded and
is now Year 2000 "friendly" (according to the Company's software providers). The
remaining efforts for the Company,  all of which are scheduled for 1998, include
certain personal  computer  applications and Windows 95 upgrades.  These efforts
are not expected to require a significant financial expense for the Company.



PART II -- OTHER INFORMATION

ITEM 1.    Legal Proceedings

     The  Chapter  7   bankruptcy   trustee   (the   "Trustee")   for   Pinpoint
Communications,  Inc. ("Pinpoint"),  a former customer of the Company, has filed
an amended  complaint  in the United  States  Bankruptcy  Court for the Northern
District of Texas,  Dallas  Division,  dated April 16,  1998,  objecting  to the
Company's claim for $0.6 million in unpaid contract  obligations and asserting a
counterclaim  for the return of $0.5 million that  Pinpoint  paid to the Company
under the terms of the purchase  agreement between the parties.  The Company has
answered the Trustee's  amended complaint and is defending against the Trustee's
claims and counterclaim.


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

     (a) Exhibit 27.1      Financial Data Schedule.

     (b) No reports on Form 8-K were filed  during the quarter  ending March 31,
1998.


                                    Page 11
<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:       May 8, 1998                        /s/ Edward J. Shubel
       -----------------------------            --------------------
                                                By: Edward J. Shubel
                                                      President and CEO


Dated:       May 12, 1998                       /s/ Paul E. Donofrio
       -----------------------------            --------------------
                                                By: Paul E. Donofrio
                                                      Vice President Finance/CFO
                                                      (Principal Financial and 
                                                       Accounting Officer)




                                    Page 12