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 September 30, 2002

          [ ] 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.)


                   575 Underhill Boulevard, 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 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) 9,979,442 shares as of October 30, 2002


<PAGE>

PART I.- FINANCIAL INFORMATION

Item 1- Financial Statements

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

                                                    September 30,   December 31,
                                                       2002             2001
                                                    -------------   ------------
                               Assets               (Unaudited)
Current assets:
     Cash and cash equivalents                        $     891         1,204
     Accounts receivable - trade, less
       allowance for doubtful accounts                    5,996         4,284
     Inventories                                          3,429         5,206
     Prepaid expenses and other current assets              645           852
                                                      ---------       -------
                  Total current assets                   10,961        11,546

     Property, plant and equipment, net                   1,928         2,328
     Goodwill, net                                        2,961         3,761
     Other assets                                           502           198
                                                      ---------       -------
                  Total assets                        $  16,352        17,833
                                                      =========       =======

                      Liabilities and Stockholders' Deficit

Current liabilities:
      Senior debt                                     $  24,996        22,095
      Subordinated notes                                  6,144         6,144
      6% convertible subordinated debentures                385           382
      Accounts payable                                    6,199         7,023
      Accrued expenses                                    4,239         3,417
      Accrued interest payable                            2,403         1,593
      Accrued commissions                                   599         1,607
      Accrued deferred compensation                         338           196
      Income taxes payable                                  291           314
      Short-term loans                                        9            11
                                                      ---------       -------
                  Total current liabilities              45,603        42,782
                                                      ---------       -------

Deferred compensation                                       847           900
                                                      ---------       -------
                  Total long-term liabilities               847           900
                                                      ---------       -------

                  Total liabilities                      46,450        43,682
                                                      ---------       -------
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
        9,947,421 shares at September 30, 2002
        and December 31, 2001                               100            99
       Additional paid-in capital                        76,059        76,056
       Accumulated deficit                             (100,130)      (95,909)
       Accumulated other comprehensive loss:
               Foreign currency translation
               adjustment                                (4,189)       (4,157)
                                                      ---------       -------
                                                        (28,160)      (23,911)
                                                      ---------       -------
        Treasury stock, at cost                          (1,938)       (1,938)
                                                      ---------       -------
                  Total stockholders' deficit           (30,098)      (25,849)
                                                      ---------       -------
                  Total liabilities and
                    stockholders' deficit             $  16,352        17,833
                                                      =========       =======

          See accompanying notes to consolidated financial statements.


                                  Page 2 of 17
<PAGE>

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

                                                         Nine Months Ended
                                                    September 30,  September 30,
                                                        2002            2001
                                                    -------------  -------------
Sales                                                 $16,329          21,996
Cost of sales                                          11,308          16,154
                                                      -------          ------
     Gross profit                                       5,021           5,842
                                                      -------          ------
Selling, general and administrative
  expenses                                              5,448           7,452
Research and development expenses                       1,998           3,545
Impairment loss                                           800              --
                                                      -------          ------
         Total expenses                                 8,246          10,997
                                                      -------          ------
         Operating loss                                (3,225)         (5,155)

Interest expense                                       (1,488)         (3,459)
Interest income                                             5              29
Gain on sale of assets                                     --             684
Gain on sale of investment in joint
  venture                                                 450              --
Other income (expense), net                                60              62
                                                      -------          ------
         Loss before income taxes and
           minority interest                           (4,198)         (7,839)
Income tax expense                                        (23)            (28)
Minority interest                                          --             225
                                                      -------          ------
Net loss                                              $(4,221)         (7,642)
                                                      =======          ======
Other comprehensive loss:
         Foreign currency translation
           adjustments                                    (32)           (203)
                                                      -------          ------
Comprehensive loss                                    $(4,253)         (7,845)
                                                      =======          ======
Per share data:
Basic per share amounts:
         Net loss per share of common stock           $ (0.42)          (0.78)
                                                      =======          ======
         Weighted average shares outstanding            9,955           9,854
                                                      =======          ======
Diluted per share amounts:
         Net loss per share of common stock           $ (0.42)          (0.78)
                                                      =======          ======
         Weighted average shares outstanding            9,955           9,854
                                                      =======          ======

     See accompanying notes to unaudited consolidated financial statements.


                                  Page 3 of 17
<PAGE>

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

                                                        Three Months Ended
                                                   September 30,   September 30,
                                                       2002             2001
                                                   -------------   -------------
Sales                                                 $ 5,093           6,039
Cost of sales                                           3,068           4,536
                                                      -------         -------
     Gross profit                                       2,025           1,503
                                                      -------         -------
Selling, general and administrative
  expenses                                              1,818           2,090
Research and development expenses                         611             924
                                                      -------         -------
         Total expenses                                 2,429           3,014
                                                      -------         -------
         Operating loss                                  (404)         (1,511)
Interest expense                                         (310)         (1,164)
Interest income                                             1               4
Gain on sale of assets                                     --             684
Other income (expense), net                                30              19
                                                      -------         -------
         Loss before income taxes
           and minority interest                         (683)         (1,968)

Income tax expense                                        (13)            (11)
Minority interest                                          --              81
                                                      -------         -------
         Net loss                                     $  (696)         (1,898)
                                                      =======         =======
Other comprehensive loss:
         Foreign currency translation
           adjustments                                    (27)           (183)
                                                      -------         -------
Comprehensive loss                                    $  (723)        $(2,081)
                                                      =======         =======
Per share data:
Basic per share amounts:
         Net loss per share of common stock           $ (0.07)        $ (0.19)
                                                      =======         =======
         Weighted average shares outstanding           10,003           9,925
                                                      =======         =======
Diluted per share amounts:
         Net loss per share of common stock           $ (0.07)        $ (0.19)
                                                      =======         =======
         Weighted average shares outstanding           10,003           9,925
                                                      =======         =======

     See accompanying notes to unaudited consolidated financial statements.


                                  Page 4 of 17
<PAGE>

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

                                                         Nine Months Ended
                                                  September 30,    September 30,
                                                      2002             2001
                                                  -------------    -------------
Cash flows from operating activities:
     Net loss                                         $(4,221)        $(7,642)
     Adjustments to reconcile net loss
       to net cash used in
       operating activities:
         Gain on sale of assets                            --            (684)
         Depreciation and amortization                    498           1,507
         Amortization of debt discounts                     3               5
         Impairment loss                                  800              --
         Minority interest                                 --            (225)
         Gain on sale of investment
           in joint venture                              (450)             --
     Changes in operating assets and
       liabilities:
         Accounts receivable                           (1,712)          1,516
         Inventories                                    1,777           1,243
         Prepaid expenses                                 207             184
         Other assets                                    (304)            444
         Accounts payable, accrued expenses
           and other liabilities                          316            (573)
                                                      -------         -------
              Net cash used in operating
                activities                             (3,086)         (4,225)
                                                      -------         -------
Cash flows from investing activities:
         Proceeds from the sale of assets                  --           1,850
         Capital expenditures, net                        (50)           (178)
                                                      -------         -------
              Net cash provided by (used in)
                investing activities                      (50)          1,672
                                                      -------         -------
Cash flows from financing activities:
         Proceeds from senior debt                      2,901           1,594
         Repayments of senior debt                         --            (874)
         Proceeds from exercised options
           and warrants                                     4              36
         Proceeds (repayments) of short
           term loans                                      (2)             88
                                                      -------         -------
              Net cash provided by
                financing activities                    2,903             844
                                                      -------         -------
     Effect of exchange rate changes on cash              (80)           (215)
                                                      -------         -------
     Decrease in cash and cash equivalents               (313)         (1,924)
     Cash and equivalents - beginning of the year       1,204           2,366
                                                      -------         -------
     Cash and equivalents - end of the period         $   891         $   442
                                                      =======         =======
     Supplemental cash flow disclosure:
         Cash paid for interest expense               $     9         $   916
                                                      =======         =======
         Cash paid for income taxes                   $    15         $   103
                                                      =======         =======

     See accompanying notes to unaudited consolidated financial statements.


                                  Page 5 of 17

<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, 2001.  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
within.  The audit  opinion  included in the  December 31, 2001 Form 10-K annual
report  contained an explanatory  paragraph  regarding the Company's  ability to
continue as a going  concern.  Results  for the third  quarter or the first nine
months of 2002 are not necessarily indicative of results for the year.

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:

                                      September 30, 2002       December 31, 2001
                                      ------------------       -----------------
                                                    (in thousands)
Parts and components                        $1,746                   $3,217
Work-in-process                                434                      192
Finished goods                               1,249                    1,797
                                            ------                   ------
                                            $3,429                   $5,206
                                            ======                   ======

Note 3: Sale of Investment in Joint Venture

      In April 2002,  the  Company  sold its 50%  interest  in Woo Shin  Electro
Systems  Co., a Korean  company,  for  $450,000  to its joint  venture  partner.
Payment was made by the forgiveness of  commissions,  totaling  $450,000,  which
were  owed to its  sales  representation  company  owned  by our  joint  venture
partner,  with respect to sales made by Woo Shin  Electro  Systems Co. in Korea.
The investment in the joint venture had previously  been written down to zero as
the Company's share of the losses of the joint venture  exceeded its investment.
Therefore,  the  transaction  was  reflected as a $450,000  reduction in accrued
commissions and a non-cash gain on sale of investment in joint venture.

Note 4: Senior Debt

      On  September  30,  2002,  the  Company's  debt to its  senior  lender was
$24,996,000,  including  principal and accrued  interest.  The current agreement
with the senior  lender,  as amended in March and May 2002 and described  below,
expires on December 31, 2002,  at which time all of the senior debt becomes due.
Accordingly,  all senior debt is classified as a current  liability at September
30, 2002.


                                  Page 6 of 17
<PAGE>

      In March 2002,  the senior  lender  agreed to an amended and restated loan
and security  agreement  whereby a new term loan was established  with a maximum
principal  amount  of  $1,500,000  and  subsequently  increased  in May  2002 to
$2,250,000.  The  agreement  allows the  Company to draw  monies  subject to the
senior  lender's  receipt and  approval  of a weekly  disbursement  budget.  Any
advances  under  this  agreement  are  subject to the  discretion  of the senior
lender. Obligations under the new term loan bear interest at 12%, which interest
shall accrue monthly and be added to the principal  until September 1, 2002 when
interest for the month of August 2002 shall be paid and interest  shall continue
to be paid each subsequent  month. The agreement  provides that all indebtedness
prior  to March 1,  2002 is  reflected  as an old  term  loan in the  amount  of
$22,610,000,  which includes the principal balance due at December 31, 2001 plus
accrued interest though March 1, 2002. The old term loan bears no interest until
such time as the senior lender in its sole discretion  notifies the Company that
interest  shall be payable.  Both the new and old term loans are due on December
31, 2002. Additionally, the senior lender has prohibited the Company from making
any payments on indebtedness to any subordinated  creditors,  but the Company is
not prohibited from paying accounts  payable in the ordinary course of business.
Finally,  the  agreement  allows for  standby  letters of credit not to exceed a
maximum of  $573,000.  As of  September  30,  2002,  the  Company  has  borrowed
$2,250,000,  the maximum principal amount under the new term loan, and the total
principal and interest on the new term loan was $2,386,000.

Note 5: Subordinated Notes

      As of  September  30,  2002,  the Company has  outstanding  $6,144,000  of
subordinated  notes and  $2,051,000  of  accrued  interest,  which  were due and
payable,  but which the Company did not have the  resources to pay. In addition,
the senior  lender  had  precluded  the  Company  from  making  payments  on the
subordinated debt (note 4).

Note 6: Recent Accounting Pronouncements

      The Company adopted SFAS No. 142, "Goodwill and Other Intangible  Assets,"
in the first  quarter of 2002.  Effective  January 1, 2002,  the Company  ceased
amortization of goodwill resulting in a decrease of $595,000 in amortization for
the nine months ended  September  30, 2002  compared to the same period in 2001.
Instead of  amortizing  goodwill  over a fixed period of time,  the Company will
measure the fair value of the acquired  business at least  annually to determine
if goodwill has been impaired. In addition, the Company completed the first step
of the goodwill  transitional  impairment test by June 30, 2002,  which requires
determining  the fair value of the  reporting  unit, as defined by SFAS 142, and
comparing it to the carrying value of the net assets  allocated to the reporting
unit. The Company  determined  that there was no impairment  loss resulting from
the transitional impairment test.

      At December 31, 2001, the Company's goodwill was $3,761,000,  all of which
related to its Signal  division.  During the second quarter of 2002, the Company
was  engaged in  discussions  with  respect to the sale of the Signal  division.
Based on those discussions the Company determined that goodwill was impaired and
it estimated  that the amount of the  impairment  was $800,000.  This amount was
charged to  operations  in the quarter  ended June 30,  2002.  Furthermore,  the
Company cannot give assurances that further write-downs will not be necessary.

      The  following  schedule  presents  adjusted net loss,  basic net loss per
share  and  diluted  net loss per  share,  exclusive  of  goodwill  amortization
expense, for the nine months ended September 30, 2001 and the three months ended
September 30, 2001, had the standard been adopted for those periods.


                                  Page 7 of 17
<PAGE>

                                           Nine Months         Three Months
                                              Ended                Ended
                                        September 30, 2001   September 30, 2001
                                        -------------------  ------------------
Reported net loss .....................      $(7,642)             $(1,898)
    Add back: Goodwill amortization ...          595                  198
                                             -------              -------
Adjusted net loss .....................      $(7,047)             $(1,700)
                                             =======              =======
Basic net loss per share:
    Reported net loss .................      $ (0.78)             $ (0.19)
    Goodwill amortization .............         0.06                 0.02
                                             -------              -------
Adjusted net loss per share ...........      $ (0.72)             $ (0.17)
                                             =======              =======
Diluted net loss per share:
    Reported net loss .................      $ (0.78)             $ (0.19)
    Goodwill amortization .............         0.06                 0.02
                                             -------              -------
Adjusted diluted net loss per share ...      $ (0.72)             $ (0.17)
                                             =======              =======

      In June  2002,  the  FASB  issued  SFAS No.  146,  "Accounting  for  Costs
Associated with Exit or Disposal  Activities,"  which changes the accounting for
costs such as lease termination costs and certain employee  severance costs that
are associated with a restructuring,  discontinued operation,  plant closing, or
other exit or disposal activity  initiated after December 31, 2002. The standard
requires  companies to recognize the fair value of costs associated with exit or
disposal  activities  when  they  are  incurred  rather  than  at the  date of a
commitment  to an exit or disposal  plan.  We do not expect the adoption of this
standard to have a material effect on our results of operations.

Note 7: 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, 2001 in the basis
of measurement of segment revenues and profit or loss, and no significant change
in the Company's assets.


                                  Page 8 of 17
<PAGE>

<TABLE>
<CAPTION>
                                     Nine Months Ended                        Three Months Ended
                        September 30, 2002     September 30, 2001    September 30, 2002    September 30, 2001
                        ------------------     ------------------    ------------------    ------------------
<S>                         <C>                    <C>                    <C>                  <C>
Sales:
     Line                   $ 7,126,000            $10,501,000            $2,894,000           $ 3,184,000
     OSS                      5,240,000              7,110,000             1,004,000             1,632,000
     Signal                   3,368,000              3,914,000               956,000             1,086,000
                            -----------            -----------            ----------           -----------
                            $15,734,000            $21,525,000            $4,854,000           $ 5,902,000
                            ===========            ===========            ==========           ===========
Segment profit (loss):
     Line                   $  (524,000)           $ 1,079,000            $  213,000           $   326,000
     OSS                         (7,000)            (3,876,000)               11,000            (1,192,000)
     Signal*                   (122,000)               643,000               234,000               224,000
                            -----------            -----------            ----------           -----------
                            $  (653,000)           $(2,154,000)           $  458,000           $  (642,000)
                            ===========            ===========            ==========           ===========
</TABLE>

*Includes an impairment loss of $800,000 that was charged against the operations
of Signal in the second quarter of 2002.

The following table reconciles segment totals to consolidated totals:

<TABLE>
<CAPTION>
                                              Nine Months Ended                          Three Months Ended
                                    September 30, 2002   September 30, 2001    September 30, 2002    September 30, 2001
                                    ------------------   ------------------    ------------------    ------------------
<S>                                    <C>                   <C>                   <C>                    <C>
Sales:
   Total revenue for
     reportable segments               $15,734,000           $21,525,000           $4,854,000             $ 5,902,000
Other revenue                              595,000               471,000              239,000                 137,000
                                       -----------           -----------           ----------             -----------
Consolidated total revenue             $16,329,000           $21,996,000           $5,093,000             $ 6,039,000
                                       ===========           ===========           ==========             ===========
Operating loss:
  Total segment profit (loss)
    for reportable segments            $  (653,000)          $(2,154,000)             458,000             $  (642,000)
   Corporate and unallocated            (2,572,000)           (3,001,000)            (862,000)               (869,000)
                                       -----------           -----------           ----------             -----------
   Consolidated total
     operating loss                    $(3,225,000)          $(5,155,000)          $ (404,000)            $(1,511,000)
                                       ===========           ===========           ==========             ===========
</TABLE>


                                  Page 9 0f 17
<PAGE>

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

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

                                       Nine Months Ended    Three Months Ended
                                          September 30,         September30,
                                       -----------------    ------------------
                                       2002         2001    2002          2001
                                       ----         ----    ----          ----

Sales                                  100%         100%     100%         100%
Cost of sales                           69%          73%      60%          75%
Gross profit                            31%          27%      40%          25%
Selling, general and administrative
  expenses                              33%          34%      36%          35%
Research and development expenses       12%          16%      12%          15%
Impairment loss                          5%          --        0%          --
     Operating loss                    (20%)        (23%)     (8%)        (25%)
Interest expense - net                  (9%)        (16%)     (6%)        (19%)
Gain on sale of joint venture            3%          --        0%          --
Gain on sale of assets                  --            3%      --           12%
Other                                    0%           0%       0%           0%
Minority interest                       --            1%      --            1%
Net loss                               (26%)        (35%)    (14%)        (31%)

The Company's sales by product line for the periods ended September 30, 2002 and
2001 are as follows:

                                        Nine Months Ended September 30,
                                        -------------------------------
                                                   $(000)
                                           2002               2001
                                           ----               ----
Line connection/protection
  equipment                        $ 7,126       44%     $10,501       48%
OSS equipment                        5,240       32%       7,110       32%
Signal Processing                    3,368       20%       3,914       18%
Other                                  595        4%         471        2%
                                   -------      ---      -------      ---
                                   $16,329      100%     $21,996      100%
                                   =======      ===      =======      ===

                                       Three Months Ended September 30,
                                       --------------------------------
                                                   $(000)
                                           2002               2001
                                           ----               ----
Line connection/protection
  equipment                         $2,894       57%      $3,184       53%
OSS equipment                        1,004       20%       1,632       27%
Signal Processing                      956       19%       1,086       18%
Other                                  239        4%         137        2%
                                    ------      ---       ------      ---
                                    $5,093      100%      $6,039      100%
                                    ======      ===       ======      ===


                                 Page 10 of 17
<PAGE>

Results of Operations

      Our sales for the nine months  ended  September  30, 2002  compared to the
nine  months  ended  September  30,  2001  decreased  by  $5,667,000  (26%) from
$21,996,000  in 2001 to  $16,329,000  in  2002.  Sales  for  the  quarter  ended
September  30,  2002 of  $5,093,000  decreased  by  $946,000  (16%)  compared to
$6,039,000 for the quarter ended September 30, 2001. The sales decrease for both
the nine months and three  months  periods  reflects  declines in sales from all
three business units.

      Line  sales  for the  nine  months  ended  September  30,  decreased  from
$10,501,000 to $7,126,000,  or $3,375,000 (32%) from 2001 to 2002. Sales for the
three months ended  September 30 decreased by $290,000  (9%) from  $3,184,000 in
2001 to  $2,894,000  in 2002.  The  decrease  for both the nine months and three
months ended  September 30, 2002  reflects  reduced sales volume to customers in
the United Kingdom and the general slowdown in the telecommunications industry.

      OSS  sales for nine  months  ended  September  30,  2002  were  $5,240,000
compared to the nine months ended  September 30, 2001 of $7,110,000,  a decrease
of  $1,870,000  (26%).  OSS sales for the three months ended  September 30, 2002
were  $1,004,000  compared  to the three  months  ended  September  30,  2001 of
$1,632,000,  a decrease of $628,000  (38%).  The decreased sales during the nine
and three months ended  September 30, 2002 resulted from the inability to secure
new orders primarily from the slowdown in the telecommunication  market and from
lower levels of contract  completion compared to the similar period of the prior
year.  Additionally,  as a result of our change to the equity  method  effective
October 1, 2001 and subsequent  sale in April 2002 of our interest in our Korean
joint  venture,  we did not recognize any revenue from OSS sales in Korea during
2002, whereas during the third quarter and nine months of 2001, our share of the
revenue   generated  by  the  Korean   venture  was  $382,000  and   $1,066,000,
respectively.

      Signal sales for the nine months ended  September 30, 2002 were $3,368,000
compared to the nine months ended  September 30, 2001 of $3,914,000,  a decrease
of $546,000  (14%).  Sales for the quarter ended  September 30, 2002 compared to
2001,  decreased  $130,000  (12%) from  $1,086,000 to $956,000.  The decrease in
sales  for  the  nine  and  three  months  was  primarily  due to the  temporary
disruption  of our supply  chain and a key  customer  hold on a  shipment.  Both
situations were resolved in October of 2002.

      Gross margin for the nine months ended September 30, 2002 was 31% compared
to 27% for the nine  months  ended  September  30,  2001.  Gross  margin for the
quarter  ended  September 30, 2002 was 40% compared to 25% for the quarter ended
September  30,  2001.  The margin  improvement  for both the nine months and the
quarter  resulted  from a reduction  to the costs  associated  with  certain OSS
contracts  reflecting  our ability to replace a high cost  software  vendor with
comparable  lower cost software.  Offsetting this improvement were lower margins
associated  with our Line  business  that was  unable  to absorb  certain  fixed
expenses in relation to lower sales volume.

      Selling, general and administrative expenses decreased by $2,004,000 (27%)
from  $7,452,000  to  $5,448,000  for the nine months ended  September  30, 2002
compared to 2001. For the quarter ended  September 30, 2002 selling  general and
administrative  expenses  decreased by $271,000  (13%) from 2001.  This decrease
relates  primarily to reduced  salaries and  benefits,  consulting  services and
commissions reflecting our current level of business.


                                 Page 11 of 17
<PAGE>

      Research and  development  expenses  decreased by $1,547,000  (44%) and by
$313,000  (34%) for the nine and three months ended  September 30, 2002 from the
comparable  periods in 2001. This decrease in research and development  expenses
for both nine and three  months  resulted  from our  efforts to reduce  expenses
primarily related to the OSS business.

      At December 31, 2001, our goodwill was $3,761,000, all of which related to
our Signal  division.  We determined  that this goodwill had been impaired as of
June 30,  2002.  We  engaged  in  discussions  with  respect to the sale of that
division  during the second quarter of 2002,  and 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.  Furthermore,  the
negotiations relating to the sale of the Signal division have been discontinued.
We cannot give any assurances that further write-downs will not be necessary.

      As a result of the above,  for the nine months  ended  September  30, 2002
compared  to 2001,  we had an  operating  loss of  $3,225,000  in 2002 versus an
operating  loss of $5,155,000 in 2001. We had an operating  loss of $404,000 for
the  quarter  ended  September  30, 2002 as  compared  to an  operating  loss of
$1,511,000 for the quarter ended September 30, 2001.

      Interest  expense for the nine months ended September 30, 2002 compared to
September  30, 2001  decreased by  $1,971,000  (57%) from  $3,459,000 in 2001 to
$1,488,000 in 2002. Interest expense for the three-month period ending September
30, 2002 compared to the same three months of 2001,  decreased by $854,000 (73%)
from  $1,164,000  in 2001 to  $310,000 in 2002.  The  reduced  level of interest
expense is attributable to our amended  agreement with our senior lender whereby
the old term loan  bears no  interest  during  the three and nine  months  ended
September 30, 2002. (See Note 4 of notes to unaudited financial statements).

      In April 2002, we sold our 50% interest in Woo Shin Electro  Systems Co, a
Korean company,  for $450,000 to our joint venture partner.  Payment was made by
the forgiveness of commissions,  totaling  $450,000,  which we owed to our sales
representation company owned by our joint venture partner, with respect to sales
made by Woo Shin Electro Systems Co. in Korea.

      As a result of the foregoing, we incurred a net loss of $4,221,000,  $0.42
per share (basic and  diluted),  for the nine months ended  September  30, 2002,
compared with a net loss of $7,642,000, $0.78 per share (basic and diluted), for
the nine months  ended  September  30,  2001.  The net loss for the three months
ended  September  30, 2002 was  $696,000,  $0.07 per share (basic and  diluted),
compared  with a net loss for the  three  months  ended  September  30,  2001 of
$1,898,000, $0.19 per share (basic and diluted).

Liquidity and Capital Resources

      At  September  30,  2002,  we had cash and cash  equivalents  of  $891,000
compared with  $1,204,000 at December 31, 2001. Our working  capital  deficit at
September  30, 2002 was  $34,642,000  compared to a working  capital  deficit of
$31,236,000 at December 31, 2001. The increased level of senior debt resulted in
the increase in the working capital deficiency.  During the nine months of 2002,
the net cash used by us in operations was $3,086,000.

      As of September  30, 2002,  our debt includes  $24,996,000  of senior debt
that matures on December 31, 2002,  and  $6,144,000  of  subordinated  debt that
became due on July 3, 2001.  We were unable to pay the  interest  payment on the
subordinated notes of approximately  $2,051,000,  which represents interest from
July 2000 through  September  30, 2002.  At September  30, 2002, we did not have
sufficient


                                 Page 12 of 17
<PAGE>

resources to pay either the senior lender or the subordinated  lenders and it is
unlikely  that we can  generate  such cash from our  operations,  and our senior
lender has precluded us from making payments on the subordinated debt.

      On March 1, 2002, and as amended on May 10, 2002, our senior lender and we
agreed to amend our restated loan and security agreement whereby a new term loan
was established  with a maximum  principal  amount of $2,250,000.  The agreement
allows us to draw monies subject to our senior lender's  receipt and approval of
a weekly  disbursement  budget.  Obligations  under the new term loan shall bear
interest at 12%. The agreement also establishes all indebtedness  prior to March
1, 2002 as an old term loan in the amount of  $22,610,000,  which  includes  the
balance due at December 31, 2001 plus accrued interest though March 1, 2002. The
old term loan bears no interest until such time as the senior lender in its sole
discretion notifies us that interest shall be payable. Both the new and old term
loans are due on December 31, 2002. As part of this agreement, the senior lender
continues  to  preclude  us from  making any  payments  on  indebtedness  to any
subordinated  creditors except to pay accounts payable in the ordinary course of
business.  The  $2,250,000  advance  from  our  senior  lender  was  made at the
discretion of the senior lender.  Since we have borrowed the maximum, our senior
lender has no obligation  to fund future  operations.  If we require  additional
funds and the  senior  lender  ceases  funding  our  operations,  unless we have
obtained  alternative  financing,  we will be unable to  continue  in  business.
Furthermore, unless we obtain funding from another source, including the sale of
one of more of our  divisions,  we will not be able to pay our senior  lender on
December 31, 2002, and we may not be able to continue in business.

      As of September  30, 2002,  we had  remaining  outstanding  $385,000 of 6%
Debentures  which  became due on July 2, 2002.  The  interest  accrued on the 6%
Debentures is payable on July 1 of each year. Due to the restriction  imposed by
our senior lender  precluding us from making any payments on indebtedness to any
subordinated  debt  holder,  we were unable to pay the  interest  due of $23,000
which was due on each of July 1, 2001 and  2002,  and we were  unable to pay the
principal of $385,000 which was due on July 2, 2002. Additionally,  we have been
notified by the trustee that the non-payment caused an event of default.

      As of September 30, 2002, we had  outstanding  $6,144,000 of  subordinated
notes,  all of which  became due during 2001.  We did not have the  resources to
pay, and we did not pay,  either the  principal or interest on the  subordinated
notes and are  restricted  by our senior lender from making such  payments.  The
holder of a subordinated  note in the principal amount of $500,000 has commenced
an action  seeking  payment of the principal and interest on his note.  However,
the court has denied the holder's motion for a summary judgment.

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;

      o     we may have difficulty selling one or more of our divisions on terms
            which we consider reasonable;


                                 Page 13 of 17
<PAGE>

      o     our significant  decrease in research and development may affect the
            price  that a  potential  buyer of one or more of our  divisions  is
            willing to pay; and

      o     a number of  creditors,  including  one  holder of our  subordinated
            notes,  as discussed  above,  have engaged  attorneys or  collection
            agencies or  commenced  legal  actions  against us, and some of them
            have obtained judgments against us.

      The  creditors  include five former  senior  executives  who have deferred
compensation  agreements with us. The total payments due under these  agreements
are approximately $1.9 million, of which $133,000 was due at September 30, 2002,
and an additional  $69,000 will become due during the  remainder of 2002.  Other
claimants  who have already  either  commenced  litigation  or otherwise  sought
collection  or who have  obtained  judgments  against  us are due  approximately
$600,000. If we are unable to reach a settlement with these creditors and others
who have not yet brought claims, and these claimants obtain judgments against us
or,  in the  case of  creditors  who have  already  obtained  judgments,  if the
creditors  seek to enforce  the  judgment,  it may be  necessary  for us, or our
senior lender may require us, to seek protection under the Bankruptcy Code.

      We  are  seeking  to  address  our  need  for   liquidity   by   exploring
alternatives,  including  the  possible  sale of one or  more of our  divisions.
Although we are engaged in  discussions  with  respect to the sale of one of our
divisions, we have not signed any agreements with respect to such a sale, and we
cannot  give  any  assurance  that we will be  able  to sell  any  divisions  on
reasonable terms, if at all.  Furthermore,  if we sell a division, we anticipate
that a substantial portion of the net proceeds will be made to our senior lender
and we will not receive a significant  amount,  if any, of working  capital from
such a sale.

      During 2001 and 2002, we took steps to reduce  overhead and headcount.  We
will continue to look to reduce costs while we seek additional business from new
and  existing  customers.  Our senior  lender has  precluded  us from making any
payments on indebtedness to any subordinated  creditors.  Because of our present
stock price,  it is highly  unlikely that we will be able to raise funds through
the sales of our equity securities, and our financial condition prevents us from
issuing  debt  securities.  In the event  that we are  unable to extend our debt
obligations and sell one or more of our divisions,  we cannot assure you that we
will be able to continue in operations.  Furthermore, we believe that our losses
and our  financial  position  are  having and will  continue  to have an adverse
effect upon our ability to develop new  business as  competitors  and  potential
customers  question  our  ability  both to  perform  our  obligations  under any
agreements  we may enter and to continue in  business.  We have been  informally
advised by British  Telecommunications,  which was one of our largest  customers
that,  because of our financial  position,  it will not place orders with us for
OSS products until we can demonstrate that we are financially  viable.  However,
this customer  continues to place orders for OSS  maintenance  and modest orders
for line test  products.  The  substantially  reduced level of purchases by this
customer has had an adverse effect upon our operations.  In addition,  the audit
opinion  included in the December 31, 2001 Form 10-K annual report  contained an
explanatory  paragraph  regarding the  Company's  ability to continue as a going
concern.

      On October 22, 2002, the American Stock Exchange  suspended trading of our
common stock and made application with the Securities and Exchange Commission to
strike our common stock from listing and  registration  effective at the opening
of trading on  November  12,  2002.  The action by the  Exchange is based on our
failure to meet the Exchange's minimum  requirements for continued listing. As a
result,  our stock is subject to the Securities and Exchange  Commission's penny
stock rules, which may increase our difficulty in seeking to raise funds.


                                 Page 14 of 17
<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,  2001 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 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 in other factors
that could  significantly  affect these controls subsequent to the date of their
evaluation.

PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

      (a)   Exhibits
            None

      (b)   Reports on Form 8-K
            None


                                 Page 15 of 17
<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 November 13, 2002              By /s/William V. Carney
                                              --------------------
                                              William V. Carney
                                              Chairman of the Board
                                              and Chief Executive Officer

      Dated November 13, 2002              By /s/Edward B. Kornfeld
                                              ---------------------
                                              Edward B. Kornfeld
                                              Senior Vice President
                                              and Chief Financial Officer

             CERTIFICATION OF CHIEF EXECUTIVE AND FINANCIAL OFFICERS

      The undersigned chief executive officer and chief financial officer of the
Registrant  do hereby  certify  that this  Quarterly  Report on Form 10-Q  fully
complies with the  requirements  of Section 13(a) or 15(d) of the Securities Act
of 1934, as amended,  and that the  information  contained in this report fairly
presents,  in all material  respects,  the  financial  condition  and results of
operations  of the  Registrant  at the dates and for the  periods  shown in such
report.

      Dated November 13, 2002              By /s/William V. Carney
                                              --------------------
                                              William V. Carney
                                              Chairman of the Board
                                              and Chief Executive Officer

      Dated November 13, 2002              By /s/Edward B. Kornfeld
                                              ---------------------
                                              Edward B. Kornfeld
                                              Senior Vice President
                                              and Chief Financial Officer

William V. Carney does hereby  certify that he is the duly elected and incumbent
chief  executive  officer and Edward B. Kornfeld does hereby  certify that he is
the duly elected and incumbent  chief  financial  officer of Porta Systems Corp.
(the  "issuer")  and each of them  does  hereby  certify,  with  respect  to the
issuer's  Form 10-Q for the quarter ended  September 30, 2002 (the  "report") as
follows:

1.    He has reviewed the report;

2.    Based on his knowledge,  the report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary in order to
      make the statements made, in light of the  circumstances  under which such
      statements were made, not misleading with respect to the period covered by
      the report;


                                 Page 16 of 17
<PAGE>

3.    Based on his  knowledge,  the financial  statements,  and other  financial
      information  included  in the  report,  fairly  present  in  all  material
      respects the financial condition,  results of operations and cash flows of
      the issuer as of, and for, the periods presented in the report;

4.    He and the other  certifying  officer are responsible for establishing and
      maintaining  disclosure  controls  and  procedures,  as  defined  in  Rule
      13a-14(c)  of the  Securities  Exchange Act of 1934,  as amended,  for the
      issuer and have:

      i.    Designed  such  disclosure  controls and  procedures  to ensure that
            material   information   relating  to  the  issuer,   including  its
            consolidated  subsidiaries,  is made known to them by others  within
            those entities, particularly during the period in which the periodic
            reports are being prepared;

      ii.   Evaluated the effectiveness of the issuer's  disclosure controls and
            procedures  as of a date  within 90 days prior to the filing date of
            the report (the "Evaluation Date"); and

      iii.  Presented in the report their conclusions about the effectiveness of
            the  disclosure  controls  and  procedures  based  on  the  required
            evaluation as of the Evaluation Date

5.    He and  the  other  certifying  officer  have  disclosed  to the  issuer's
      auditors and to the audit  committee of the board of directors (or persons
      fulfilling the equivalent function):

      i.    All significant  deficiencies in the design or operation of internal
            controls  which  could  adversely  affect  the  issuer's  ability to
            record,  process,  summarize  and  report  financial  data  and have
            identified  for the issuer's  auditors any  material  weaknesses  in
            internal controls; and

      ii.   Any fraud,  whether or not  material,  that  involves  management or
            other employees who have a significant role in the issuer's internal
            controls; and

6.    He and the other  certifying  officer have indicated in the report whether
      or not there were  significant  changes in  internal  controls or in other
      factors that could  significantly  affect internal controls  subsequent to
      the date of their most recent evaluation, including any corrective actions
      with regard to significant deficiencies and material weaknesses.


      ----------------------------                  ---------------------------
      William V. Carney                             Edward B. Kornfeld
      Chief Executive Officer                       Chief Financial Officer


                                 Page 17 of 17