SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 2003

          [ ] 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 1-8191

                               PORTA SYSTEMS CORP.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                Delaware                                    11-2203988
    -------------------------------                      ------------------
    (State or other jurisdiction of                       (I.R.S. Employer
     incorporation or organization)                      Identification No.)

               6851 Jericho Turnpike, Suite 170, Syosset, New York
               ---------------------------------------------------
                    (Address of principal executive offices)

                                      11791
                                   ----------
                                   (Zip Code)

                                  516-364-9300
                -------------------------------------------------
                (Company'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 of 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 [ ]

Indicate by a check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

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

       Common stock (par value $0.01) 9,980,423 shares as of July 25, 2003

<PAGE>

PART I.- FINANCIAL INFORMATION
Item 1- Financial Statements

                      PORTA SYSTEMS CORP. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                June 30,     December 31,
                                                                                 2003           2002
                                                                              -----------   ------------
                                                                              (Unaudited)
                            Assets

Current assets:
<S>                                                                            <C>           <C>
     Cash and cash equivalents                                                 $     337     $     779
     Accounts receivable - trade, less allowance for doubtful accounts             3,611         4,654
     Inventories                                                                   2,934         3,363
     Prepaid expenses and other current assets                                       389           329
                                                                               ---------     ---------
                  Total current assets                                             7,271         9,125

      Property, plant and equipment, net                                           1,626         1,802
      Goodwill, net                                                                2,961         2,961
      Other assets                                                                   117           340
                                                                               ---------     ---------
                  Total assets                                                 $  11,975     $  14,228
                                                                               =========     =========

                            Liabilities and Stockholders' Deficit
Current liabilities:
      Senior debt                                                              $  25,222     $  25,070
      Subordinated notes                                                           6,144         6,144
      6% convertible subordinated debentures                                         385           385
      Accounts payable                                                             5,713         5,241
      Accrued expenses                                                             2,354         2,640
      Accrued interest payable                                                     3,101         2,639
      Accrued commissions                                                            287           566
      Accrued deferred compensation                                                   72           329
      Income taxes payable                                                            20           302
      Short-term loan                                                                  6             8
                                                                               ---------     ---------
                  Total current liabilities                                       43,304        43,324
                                                                               ---------     ---------
Deferred compensation                                                              1,123           839
                                                                               ---------     ---------
                  Total long-term liabilities                                      1,123           839
                                                                               ---------     ---------
                  Total liabilities                                               44,427        44,163
                                                                               ---------     ---------
Stockholders' deficit:
      Preferred stock, no par value; authorized 1,000,000 shares, none issued         --            --
      Common stock, par value $.01; authorized 20,000,000 shares, issued
      10,003,224 and 10,003,224 shares at June 30, 2003 and December 31, 2002        100           100
       Additional paid-in capital                                                 76,059        76,059
       Accumulated deficit                                                      (102,490)     (100,023)
       Accumulated other comprehensive loss:
               Foreign currency translation adjustment                            (4,183)       (4,133)
                                                                               ---------     ---------
                                                                                 (30,514)      (27,997)

        Treasury stock, at cost                                                   (1,938)       (1,938)
                                                                               ---------     ---------
                  Total stockholders' deficit                                    (32,452)      (29,935)
                                                                               ---------     ---------
                  Total liabilities and stockholders' deficit                  $  11,975     $  14,228
                                                                               =========     =========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                  Page 2 of 15

<PAGE>

                      PORTA SYSTEMS CORP. AND SUBSIDIARIES
     Unaudited Consolidated Statements of Operations and Comprehensive Loss

                      (In thousands, except per share data)

                                                             Six Months Ended
                                                           June 30,    June 30,
                                                             2003        2002
                                                           -------     --------
Sales                                                      $ 8,338     $ 11,236
Cost of sales                                                6,278        8,241
                                                           -------     --------
     Gross profit                                            2,060        2,995
                                                           -------     --------

Selling, general and administrative expenses                 3,141        3,628
Research and development expenses                            1,016        1,387
Impairment loss                                                --           800
                                                           -------     --------
         Total expenses                                      4,157        5,815
                                                           -------     --------
         Operating loss                                     (2,097)      (2,820)

Interest expense                                              (627)      (1,178)
Interest income                                                  1            3
Gain on sale of investment in joint venture                     --          450
Other income (expense), net                                    (26)          30
                                                           -------     --------

         Loss before income taxes                           (2,749)      (3,515)

Income tax (expense) benefit                                   282           (9)
                                                           -------     --------

Net loss                                                   $(2,467)    $ (3,524)
                                                           =======     ========

Other comprehensive loss:
         Foreign currency translation adjustments              (50)          (5)
                                                           -------     --------

Comprehensive loss                                         $ 2,517)    $ (3,529)
                                                           =======     ========

Per share data:

Basic per share amounts:

         Net loss per share of common stock                $ (0.25)    $  (0.35)
                                                           =======     ========

         Weighted average shares outstanding                 9,972        9,986
                                                           =======     ========

Diluted per share amounts:

         Net loss per share of common stock                $ (0.25)    $  (0.35)
                                                           =======     ========

         Weighted average shares outstanding                 9,972        9,986
                                                           =======     ========

     See accompanying notes to unaudited consolidated financial statements.


                                  Page 3 of 15


<PAGE>


                      PORTA SYSTEMS CORP. AND SUBSIDIARIES
     Unaudited Consolidated Statements of Operations and Comprehensive Loss
                      (In thousands, except per share data)

                                                             Three Months Ended
                                                            June 30,    June 30,
                                                             2003        2002
                                                            -------     -------
Sales                                                       $ 3,964     $ 6,492
Cost of sales                                                 2,897       4,375
                                                            -------     -------
     Gross profit                                             1,067       2,117
                                                            -------     -------

Selling, general and administrative expenses                  1,586       1,761
Research and development expenses                               444         627
Impairment loss                                                --           800
                                                            -------     -------
         Total expenses                                       2,030       3,188
                                                            -------     -------

         Operating loss                                        (963)     (1,071)

Interest expense                                               (320)       (304)
Interest income                                                --             1
Gain on sale of investment in joint venture                    --           450
Other income (expense), net                                     (26)         33
                                                            -------     -------

         Loss before income taxes                            (1,309)       (891)

Income tax benefit                                              268           4
                                                            -------     -------

         Net loss                                           $(1,041)    $  (887)
                                                            =======     =======

Other comprehensive loss:
         Foreign currency translation adjustments                30         (26)
                                                            -------     -------

Comprehensive loss                                          $(1,011)    $  (913)
                                                            =======     =======

Per share data:

Basic per share amounts:

         Net loss per share of common stock                 $ (0.10)    $ (0.09)
                                                            =======     =======

         Weighted average shares outstanding                  9,972       9,999
                                                            =======     =======

Diluted per share amounts:

         Net loss per share of common stock                 $ (0.10)    $ (0.09)
                                                            =======     =======

         Weighted average shares outstanding                  9,972       9,999
                                                            =======     =======

     See accompanying notes to unaudited consolidated financial statements.


                                  Page 4 of 15


<PAGE>


                      PORTA SYSTEMS CORP. AND SUBSIDIARIES
                 Unaudited Consolidated Statements of Cash Flows
                                 (In thousands)

                                                              Six Months Ended
                                                             June 30,   June 30,
                                                               2003       2002
                                                             -------    -------
Cash flows from operating activities:
     Net loss                                                $(2,467)  $(3,524)
     Adjustments to reconcile net loss to net cash
       used in operating activities:
         Depreciation and amortization                           259       342
         Amortization of debt discounts                         --           3
         Impairment loss                                        --         800
         Gain on sale of investment in joint venture            --        (450)
         Changes in operating assets and liabilities:
         Accounts receivable                                   1,043    (2,959)
         Inventories                                             429     1,914
         Prepaid expenses                                        (60)      343
         Other assets                                            223       133
         Accounts payable, accrued expenses and
           other liabilities                                     114      (193)
                                                             -------   -------
              Net cash used in operating activities             (459)   (3,591)
                                                             -------   -------
Cash flows from investing activities:
         Capital expenditures, net                               (74)      (19)
                                                             -------   -------
              Net cash used in investing activities              (74)      (19)
                                                             -------   -------
Cash flows from financing activities:
         Proceeds from senior debt                               152     2,826
         Proceeds from exercised options and warrants           --           4
         Repayments of short term loans                           (2)       (2)
                                                             -------   -------
              Net cash provided by financing activities          150     2,828
                                                             -------   -------

     Effect of exchange rate changes on cash                     (59)      (34)
                                                             -------   -------

     Decrease in cash and cash equivalents                      (442)     (816)

     Cash and equivalents - beginning of the year                779     1,204
                                                             -------   -------

     Cash and equivalents - end of the period                $   337   $   388
                                                             =======   =======

     Supplemental cash flow disclosure:

         Cash paid for interest expense                      $     3   $     6
                                                             =======   =======

         Cash paid for income taxes                          $     6   $    27
                                                             =======   =======

     See accompanying notes to unaudited consolidated financial statements.


                                  Page 5 of 15


<PAGE>


                      PORTA SYSTEMS CORP. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1:     Management's Responsibility For Interim Financial Statements
            Including All Adjustments Necessary For Fair Presentation

      Management  acknowledges  its  responsibility  for the  preparation of the
accompanying  interim  consolidated   financial  statements  which  reflect  all
adjustments, consisting of normal recurring adjustments, considered necessary in
its opinion for a fair statement of its consolidated  financial position and the
results of its operations for the interim period presented.  These  consolidated
financial  statements  should  be  read  in  conjunction  with  the  summary  of
significant  accounting policies and notes to consolidated  financial statements
included in the Company's  Form 10-K annual  report for the year ended  December
31, 2002.  These  financial  statements  have been  prepared  assuming  that the
Company will  continue as a going concern and,  accordingly,  do not include any
adjustments that might result from the outcome of the uncertainties described in
these financial statements.  The audit opinion included in the December 31, 2002
Form 10-K  annual  report  contained  an  explanatory  paragraph  regarding  the
Company's ability to continue as a going concern. Results for the second quarter
or the first six months of 2003 are not  necessarily  indicative  of results for
the year. See Note 3.

Note 2:     Inventories

      Inventories  are stated at the lower of cost (on the average or  first-in,
first-out  method) or market.  The  composition of inventories at the end of the
respective periods is as follows:

                                             June 30, 2003    December 31, 2002
                                             -------------    -----------------
                                                      (in thousands)
         Parts and components                   $1,483             $1,767
         Work-in-process                           343                208
         Finished goods                          1,108              1,388
                                                ------             ------
                                                $2,934             $3,363
                                                ======             ======

Note 3:     Senior and Subordinated Debt

      On June 30, 2003, the Company's debt to its senior lender was $25,222,000.
Under a prior  amendment,  the loan became due and payable on December 31, 2002.
In May 2003,  the senior  lender  granted an extension to August 29, 2003.  As a
result,  the entire  balance of the Company's  obligations  to its senior lender
becomes due and payable on that date.  The Company  does not have the ability to
pay  the  senior  debt  or the  subordinated  debt  described  in the  following
paragraph.  If the maturity of the senior debt is not extended beyond August 29,
2003, and if the senior lender demands  payment of all or a significant  portion
of the loan when due,  the Company  will not be able to continue in business and
may seek protection under the Bankruptcy Code.

      As  of  June  30,  2003,  the  Company's  short-term  debt  also  included
$6,144,000 of subordinated  debt that became due on July 3, 2001 and $385,000 of
6%  debentures  which  became  due on  July 2,  2002.  Accrued  interest  on the
subordinated notes was approximately $2,743,000,  which represents interest from
July 2000 through June 30, 2003,  and accrued  interest on the 6% debentures was
$58,000.  The Company's senior lender has precluded it from paying any principal
or interest on the subordinated debt.


                                  Page 6 of 15

<PAGE>

Note 4:     Accounting for Stock Based Compensation

      The Company  applies the intrinsic value method as outlined in APB Opinion
No. 25, "Accounting for Stock Issued to Employees," and related  interpretations
in  accounting  for  stock  options.   Under  the  intrinsic  value  method,  no
compensation  expense  is  recognized  if the  exercise  price of the  Company's
employee stock options  equals the market price of the  underlying  stock on the
date of the grant. Accordingly,  no compensation cost has been recognized.  SFAS
No. 123,  "Accounting  for  Stock-based  Compensation,"  requires the Company to
provide  pro  forma  information  regarding  net loss and net loss per  share of
common stock as if compensation cost for the Company's stock option programs had
been  determined in accordance  with the fair value method  prescribed  therein.
Since there was no  stock-based  compensation  in the six months  ended June 30,
2003 and 2002, pro forma loss is the same as the reported net loss.

Note 5:     Segment Data

      The Company has three reportable segments:  Line Connection and Protection
Equipment  ("Line")  whose  products  interconnect  copper  telephone  lines  to
switching  equipment and provide fuse elements that protect telephone  equipment
and personnel from electrical  surges;  Operating  Support Systems ("OSS") whose
products automate the testing,  provisioning,  maintenance and administration of
communication  networks and the  management of support  personnel and equipment;
and Signal Processing  ("Signal") whose products are used in data  communication
devices that employ high frequency transformer technology.

      The factors used to determine the above segments focused  primarily on the
types of products and services provided,  and the type of customer served.  Each
of these  segments  is  managed  separately  from  the  others,  and  management
evaluates segment performance based on operating income.

      There has been no  significant  change from December 31, 2002 in the basis
of measurement of segment revenues and profit or loss, and no significant change
in the Company's assets.

<TABLE>
<CAPTION>
                        Six Months Ended                     Three Months Ended
                June 30, 2003      June 30, 2002      June 30, 2003      June 30, 2002
                --------------     -------------      -------------      -------------
Sales:
<S>              <C>                <C>                 <C>                <C>
     Line        $ 4,232,000        $ 4,232,000         $2,071,000         $2,762,000
     OSS           1,590,000          4,236,000            677,000          2,191,000
     Signal        2,071,000          2,412,000          1,006,000          1,336,000
                 -----------        -----------         ----------         ----------
                 $ 7,893,000        $10,880,000         $3,754,000         $6,289,000
                 ===========        ===========         ==========         ==========

Segment profit (loss):
     Line        $   (15,000)       $  (706,000)        $  (18,000)        $  (46,000)
     OSS          (1,333,000)           (48,000)          (480,000)           231,000
     Signal          559,000            444,000            210,000            337,000
                 -----------        -----------         ----------         ----------
                 $  (789,000)       $  (310,000)        $ (288,000)        $  522,000
                 ===========        ===========         ==========         ==========
</TABLE>


                                  Page 7 of 15

<PAGE>

The following table reconciles segment totals to consolidated totals:

<TABLE>
<CAPTION>
                                               Six Months Ended                  Three Months Ended
                                       June 30, 2003      June 30, 2002    June 30, 2003      June 30, 2002
                                       -------------      -------------    -------------      -------------
Sales:
<S>                                     <C>               <C>               <C>                <C>
   Total revenue for reportable
       segments                         $ 7,893,000       $ 10,880,000      $ 3,754,000        $ 6,289,000
Other revenue                               445,000            356,000          210,000            203,000
                                        -----------       ------------      -----------        -----------
Consolidated total revenue              $ 8,338,000       $ 11,236,000      $ 3,964,000        $ 6,492,000
                                        ===========       ============      ===========        ===========

Operating loss:
    Total segment profit (loss)
       for reportable segments          $  (789,000)      $  (310,000)      $ (288,000)        $  522,000
    Impairment loss                              --          (800,000)              --           (800,000)
    Corporate and unallocated            (1,308,000)       (1,710,000)        (675,000)          (793,000)
                                        -----------        -----------      -----------        -----------
   Consolidated total
       operating loss                   $(2,097,000)      $(2,820,000)      $ (963,000)        $(1,071,000)
                                        ===========       ===========       ==========         ===========
</TABLE>


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

Introduction

      Reference is made to the information  provided under "Critical  Accounting
Policies and  Estimates" in our Form 10-K for the year ended  December 31, 2002.
Our business has continued to be impaired by our financial position.  We are not
able to ship a portion  of  backlog  in a timely  manner,  as several of our key
suppliers are reluctant to provide us with credit. In addition,  there have been
periods during the three and six months ended June 30, 2003 that we did not have
the funds either to prepay suppliers or to make purchases on a COD basis, and if
we are unable to increase our sales, it may become increasingly difficult for us
to make  purchases  necessary  for  filling  orders.  Our  senior  lender is not
providing  us with any  additional  funds,  and our  obligations  to the  senior
lender, which are described below and in Note 3, become due on August 29, 2003.

      Our senior  lender has not  required us to pay  interest on  approximately
$23,000,000  of senior  debt since  March 1, 2002.  Accordingly,  the  financial
statements  do not reflect any interest  charges on that amount which would have
been payable but for the senior lender's waiver of interest.

      We have been  seeking  to raise  funds from the sale of one or more of our
divisions,  and we are  currently  engaged in  negotiations  with respect to the
potential sale of certain  overseas  assets of one of our  divisions.  We expect
that,  if such a sale is completed,  only a nominal  portion of the net proceeds
from  such a sale  will  be  available  to us for  our  operations,  and  that a
significant  portion will be paid to our senior lender.  However,  we anticipate
that,  if we are  successful in both  consummating  the sale of these assets and
eliminating the ongoing  expenses  associated with the operations being sold, we
will be able to reduce the losses which have been generated by the division.  In
the  past,  we have  engaged  in  negotiations  with  respect  to  sales  of our
divisions, and none of such negotiations resulted in an agreement, and we cannot
give any assurance that the current negotiations will result in an agreement.


                                  Page 8 of 15

<PAGE>

      Even if we are successful in selling the assets we are negotiating to sell
and eliminating the ongoing expenses  associated with those assets, we may still
be  unable  to  operate  profitably,  and  it may be  necessary  for us to  seek
protection under the Bankruptcy Code.

      The  Company's  consolidated  statements  of  operations  for the  periods
indicated below, shown as a percentage of sales, are as follows:

                                           Six Months Ended   Three Months Ended
                                               June 30,           June 30,
                                           ----------------   ------------------
                                             2003    2002        2003    2002
                                             ----    ----        ----    ----
Sales                                        100%    100%        100%    100%
Cost of sales                                  75%     73%         73%     67%
Gross profit                                  25%     27%         27%     33%
Selling, general and administrative
  expenses                                    38%     32%         40%     27%
Research and development expenses             12%     12%         11%     10%
Impairment loss                                0%      7%          0%     12%
     Operating loss                          (25%)   (25%)       (24%)   (16%)
Interest expense - net                        (8%)   (10%)        (8%)    (5%)
Gain on sale of joint venture                  0%      4%          0%      7%
Other                                          3%      0%          6%      0%
Net loss                                     (30%)   (31%)       (26%)   (14%)

      The  Company's  sales by product line for the periods  ended June 30, 2003
and 2002 are as follows:

                                                  Six Months Ended June 30,
                                                  -------------------------
                                                           $(000)
                                                     2003             2002
                                                     ----             ----

Line connection/protection equipment         $  4,232    51%   $  4,232    38%
OSS equipment                                   1,590    19%      4,236    38%
Signal Processing                               2,071    25%      2,412    21%
Other                                             445     5%        356     3%
                                             --------------    --------------
                                             $  8,338   100%   $ 11,236   100%
                                             ==============    ==============

                                                 Three Months Ended June 30,
                                                           $(000)

                                                     2003             2002
                                                     ----             ----

Line connection/protection equipment         $  2,071    52%   $  2,762    42%
OSS equipment                                     677    17%      2,191    34%
Signal Processing                               1,006    26%      1,336    21%
Other                                             210     5%        203     3%
                                             --------------    --------------
                                             $  3,964   100%   $  6,492   100%
                                             ==============    ==============

                                  Page 9 of 15

<PAGE>

Results of Operations

      Our sales for the six  months  ended  June 30,  2003  compared  to the six
months ended June 30, 2002  decreased by $2,898,000  (26%) from  $11,236,000  in
2002 to  $8,338,000  in 2003.  Sales  for the  quarter  ended  June 30,  2003 of
$3,964,000  decreased by $2,528,000 (39%) compared to $6,492,000 for the quarter
ended June 30,  2002.  The  decrease  in sales for the six  months is  primarily
attributed  to a 62%  decline in sales from our OSS  business.  The  decrease in
sales for the three  month  period  reflects a 69% decline in sales from our OSS
business  unit as well as lower  percentage  declines  from our Line and  Signal
business units.

      Line  equipment  sales for the six months ended June 30, were unchanged at
$4,232,000  for each period.  Sales for the three months ended June 30 decreased
by $691,000  (25%) from  $2,762,000 in 2002 to $2,071,000 in 2003.  The decrease
for the three months ended June 30, 2003 primarily reflects reduced sales volume
to  customers  in the United  States and the United  Kingdom  and  shortages  of
materials  resulting  from the refusal of several of our suppliers to ship us on
credit due to our financial condition.

      OSS sales for the six months ended June 30, 2003 were $1,590,000  compared
to $4,236,000 in the same period of 2002, a decrease of  $2,646,000  (62%).  OSS
sales  for the three  months  ended  June 30,  2003 were  $677,000  compared  to
$2,191,000  in the same period of 2002,  a decrease  of  $1,514,000  (69%).  The
decrease in sales for the six and three months  resulted  from the  inability to
secure new orders attributable to the slowdown in the telecommunications  market
and the effects of our  financial  condition,  and from lower levels of contract
completion  compared to the similar period of the prior year  reflecting a lower
backlog at December 31, 2002 from the prior year.

      Signal  sales for the six  months  ended  June 30,  2003  were  $2,071,000
compared to $2,412,000 in the same period of 2002, a decrease of $341,000 (14%).
Sales for the three  months  ended June 30,  2003  compared  to 2002,  decreased
$330,000 (25%) from $1,336,000 to $1,006,000.  The decrease in sales for the six
and three months was primarily due to a sluggish new order rate and shortages of
materials  resulting  from the refusal of several of our suppliers to ship us on
credit due to our financial condition.

      Gross  margin for the six months  ended June 30, 2003 was 25%  compared to
27% for the six months ended June 30, 2002.  Gross margin for the quarter  ended
June 30, 2003 was 27% compared to 33% for the quarter  ended June 30, 2002.  The
decline in the gross  margin  reflects our  inability  to absorb fixed  overhead
expenses on our reduced  sales base for both the six and three  months  periods.
Although we have implemented  cost  reductions,  we are unable to effect further
reductions  in our fixed  overhead  without  compromising  our  ability  to fill
orders.

      Selling,  general and administrative  expenses decreased by $487,000 (13%)
from $3,628,000 to $3,141,000 for the six months ended June 30, 2003 compared to
2002.  For the quarter  ended June 30, 2003 selling  general and  administrative
expenses  decreased by $175,000 (10%) from 2002. This decrease relates primarily
to our ongoing efforts to reduce salaries, benefits and consulting services, and
reduced commissions levels reflecting our current level of business.

      Research  and  development  expenses  decreased  by $371,000  (27%) and by
$183,000  (29%)  for the six and  three  months  ended  June 30,  2003  from the
comparable  periods in 2002. These decreases resulted from our efforts to reduce
expenses primarily related to the OSS business. Our failure to fund research and
development  could  adversely  affect our  capability to offer products based on
developing


                                 Page 10 of 15

<PAGE>

technologies,  which could  affect  both our  efforts to sell  product in future
years and our attractiveness to potential buyers.

      At June 30,  2002,  we  determined  that  goodwill  related  to our Signal
division was impaired based upon  attaining a fair market value estimate  during
discussions with respect to the proposed sale of the Signal  division.  Based on
those  discussions,  we estimated  that the  impairment  loss was  approximately
$800,000.  This amount was charged to  operations  in the quarter ended June 30,
2002 reducing the carrying value of the goodwill to $2,961,000.  Furthermore, we
cannot give  assurance  that  further  write-downs  will not be  necessary.  The
goodwill for our Line and OSS divisions had previously been written off.

      As a result of the above,  for the six months ended June 30, 2003,  we had
an operating  loss of $2,097,000  versus an operating loss of $2,820,000 for the
comparable  period of 2002. We had an operating loss of $963,000 for the quarter
ended June 30, 2003 as  compared  to an  operating  loss of  $1,071,000  for the
quarter ended June 30, 2002.

      Interest  expense for the six months ended June 30, 2003  compared to June
30, 2002  decreased  by $552,000  (47%) from  $1,178,000  in 2002 to $627,000 in
2003.  Interest expense for the three-month period ending June 30, 2003 compared
to the same three months of 2002,  increased  by $16,000  (5%) from  $304,000 in
2002 to $320,000 in 2003. This decrease is attributable to our amended agreement
with our senior lender,  which provides that the old term loan, in the principal
amount of approximately $23,000,000,  bears no interest commencing March 1, 2002
until such time as the lender, in its sole discretion, resumes interest charges.
The senior lender has not resumed interest charges.

      The tax benefit for the three and six months ended June 30, 2003  resulted
from the settlement of an  outstanding  tax obligation of $274,000 of one of our
subsidiaries for $30,000.

      As a result of the foregoing, we incurred a net loss of $2,467,000,  $0.25
per share (basic and diluted),  for the six months ended June 30, 2003, compared
with a net loss of $3,524,000,  $0.35 per share (basic and diluted), for the six
months  ended June 30,  2002.  The net loss for the three  months ended June 30,
2003 was  $1,041,000,  $0.10 per share (basic and diluted),  compared with a net
loss for the three  months  ended  June 30,  2002 of  $887,000,  $0.09 per share
(basic and diluted).

Liquidity and Capital Resources

      At June 30, 2003, we had cash and cash  equivalents  of $337,000  compared
with $779,000 at December 31, 2002. Our working capital deficit at June 30, 2003
was $36,033,000 compared to a working capital deficit of $34,199,000 at December
31, 2002. Our outstanding senior and subordinated debt with the reduced level of
cash on hand  and  inventory,  and the  increased  level  of  accounts  payable,
resulted  in the  increase  in the working  capital  deficiency.  During the six
months of 2003,  the net cash used by us in  operations  was $459,000 and we are
continuing to operate with a negative cash flow from operations.

      As of June 30, 2003,  our debt includes  $25,222,000  of senior debt which
matures on August 29, 2003,  $6,144,000 of subordinated  debt that became due on
July 3, 2001,  and $385,000 of 6%  debentures  which became due on July 2, 2002.
The  maturity  date of the senior debt  reflects an extension of the maturity of
our senior  debt to August 29,  2003.  Interest  on the  subordinated  notes was
approximately $2,743,000,  which represents interest from July 2000 through June
30,  2003,  and  interest  on the 6%


                                 Page 11 of 15

<PAGE>

debentures was $58,000.  We do not have  sufficient  resources to pay either the
senior lender or the subordinated  lenders,  we are unable to generate such cash
from our operations, and our senior lender is not making any further advances to
us and has  precluded us from making any payments on the  subordinated  debt. We
also do not have any  prospects  of  obtaining  an  alternate  senior  lender to
replace our present lender.

      Our  financial  condition  and stock  price  effectively  preclude us from
raising  funds  through the  issuance of debt or equity  securities,  we have no
other source of funds other than operations, and our operations are generating a
negative  cash flow.  We have in the past sought to raise funds through the sale
of one or more of our divisions, but our efforts to date have been unsuccessful.
Even if we were able to sell all of our divisions,  it is unlikely that we would
generate sufficient cash to pay our senior lender in full.

      If the senior lender does not extend the maturity date of our obligations,
which mature on August 29,  2003,  and demands  payment of all or a  significant
portion of our obligations to the senior lender, we will not be able to continue
in business and we may seek  protection  under the  Bankruptcy  Code.  We cannot
assure  you  that  our  senior  lender  will  not  demand  payment  of  all or a
significant portion of our obligations.  Furthermore,  even if our senior lender
grants us additional extensions,  it may nonetheless be necessary for us to seek
protection under the Bankruptcy Code.

      As a result of our continuing financial difficulties:

      o     we are having and we may continue to have difficulty  performing our
            obligations   under  our  contracts,   which  could  result  in  the
            cancellation  of  contracts  or the  loss  of  future  business  and
            penalties for non-performance;

      o     we are having and we may  continue to have  difficulty  in obtaining
            new business from either existing customers or new customers; and

      o     a number of our  suppliers  have  refused to ship to us until we pay
            all or a portion of the  outstanding  balance due to them, and other
            suppliers ship to us only on a prepaid or COD basis: and

      o     a number of creditors have engaged attorneys or collection agencies,
            or commenced legal actions against us.

      We  are  seeking  to  address  our  need  for   liquidity   by   exploring
alternatives,  including the possible sale of one or more of our  divisions.  We
are  currently  engaged in  negotiations  with  respect to the sale of  overseas
assets of one of our  divisions.  If we complete the sale, we anticipate  that a
substantial portion of the net proceeds will be paid to our senior lender and we
will not receive any significant  amount of working capital from such sale. Even
if the sale is completed,  we may still be unable to operate  profitably  and it
may be necessary for us to seek protection under the Bankruptcy Code.


                                 Page 12 of 15

<PAGE>

Forward Looking Statements

      Statements contained in this Form 10-Q include forward-looking  statements
that are subject to risks and uncertainties.  In particular,  statements in this
Form  10-Q  that  state  the  Company's   intentions,   beliefs,   expectations,
strategies,   predictions  or  any  other  statements  relating  to  our  future
activities   or  other  future  events  or   conditions   are   "forward-looking
statements."  Forward-looking statements are subject to risks, uncertainties and
other  factors,  including,  but not limited to,  those  identified  under "Risk
Factors,"  in our Form  10-K for the year  ended  December  31,  2002 and  those
described in  Management's  Discussion and Analysis of Financial  Conditions and
Results of Operations" in our Form 10-K and this Form 10-Q, and those  described
in any other filings by us with the Securities and Exchange Commission,  as well
as  general   economic   conditions  and  economic   conditions   affecting  the
telecommunications industry, any one or more of which could cause actual results
to differ materially from those stated in such statements.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

      Although we conduct operations  outside of the United States,  most of our
contracts  and sales are dollar  denominated.  A portion of the revenue from our
United Kingdom  operations  and the majority of our United Kingdom  expenses are
denominated  in  Sterling.  Any   Sterling-denominated   receipts  are  promptly
converted into United States  dollars.  We do not engage in any hedging or other
currency  transactions.  For the six months  ended June 30,  2003 and 2002,  the
currency  translation  adjustment  was not  significant in relation to our total
revenue.

Item 4. Controls and Procedures

      Our chief executive  officer and chief  financial  officer have supervised
and  participated  in an  evaluation  of the  effectiveness  of  our  disclosure
controls and  procedures as of a date within 90 days of the date of this report,
and based on their  evaluations,  they believe that our disclosure  controls and
procedures (as defined in Rule 13a-14(c) of the Securities Exchange Act of 1934,
as amended) are designed to ensure that information  required to be disclosed by
us in the reports  that we file or submit under the  Securities  Exchange Act of
1934 is recorded,  processed,  summarized and reported,  within the time periods
specified in the  Commission's  rules and forms.  As a result of the evaluation,
there were no significant changes in our internal controls or other factors that
could  significantly  affect  these  controls  subsequent  to the  date of their
evaluation.

PART II - OTHER INFORMATION

Item 3. Defaults Upon Senior Securities.

      See Note 3 of Notes to Unaudited  Consolidated  Financial  Statements  and
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations  -  Liquidity  and  Capital  Resources"  for  information  concerning
defaults on our subordinated debt.


                                 Page 13 of 15

<PAGE>

Item 6. Exhibits and Reports on Form 8-K

      (a) Exhibits
            31.1 Certificate of Chief Executive  Officer pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.
            31.2 Certificate of Chief Financial  Officer pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.
            32.1 Certificate of Chief Executive  Officer pursuant to Section 906
            of the Sarbanes-Oxley Act of 2002.
            32.2 Certificate of Chief Financial  Officer pursuant to Section 906
            of the Sarbanes-Oxley Act of 2002.

      (b) Reports on Form 8-K
            On May 15, 2003, the Company  reported its results of operations for
            the quarter ended March 31, 2003 under Item 9.


                                 Page 14 of 15

<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.

                                                 PORTA SYSTEMS CORP.

         Dated August 13, 2003                   By /s/William V. Carney
                                                    ----------------------------
                                                     William V. Carney
                                                     Chairman of the Board
                                                     and Chief Executive Officer

         Dated August 13, 2003                   By /s/Edward B. Kornfeld
                                                    ----------------------------
                                                    Edward B. Kornfeld
                                                    Senior Vice President
                                                    and Chief Financial Officer


                                 Page 15 of 15