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, 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) 9,972,284 shares as of November 7, 2003

<PAGE>

PART I.- FINANCIAL INFORMATION
Item 1- Financial Statements

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

<TABLE>
<CAPTION>
                                                                                    September 30,   December 31,
                                                                                      2003            2002
                                                                                   -------------    ------------
                  Assets                                                            (Unaudited)
                  ------
<S>                                                                                  <C>            <C>
Current assets:
     Cash and cash equivalents                                                       $     184      $     779
     Accounts receivable - trade, less allowance for doubtful accounts                   4,568          4,654
     Inventories                                                                         2,707          3,363
     Prepaid expenses and other current assets                                             433            329
                                                                                     ---------      ---------
                  Total current assets                                                   7,892          9,125

      Property, plant and equipment, net                                                 1,530          1,802
      Goodwill, net                                                                      2,961          2,961
      Other assets                                                                         103            340
                                                                                     ---------      ---------
                  Total assets                                                       $  12,486      $  14,228
                                                                                     =========      =========

             Liabilities and Stockholders' Deficit
             -------------------------------------

Current liabilities:
      Senior debt                                                                    $  25,303      $  25,070
      Subordinated notes                                                                 6,144          6,144
      6% convertible subordinated debentures                                               385            385
      Accounts payable                                                                   5,773          5,241
      Accrued expenses                                                                   2,546          2,640
      Accrued interest payable                                                           3,332          2,639
      Accrued commissions                                                                  414            566
      Accrued deferred compensation                                                         72            329
      Income taxes payable                                                                  18            302
      Short-term loan                                                                        5              8
                                                                                     ---------      ---------
                  Total current liabilities                                             43,992         43,324
                                                                                     ---------      ---------

Deferred compensation                                                                    1,124            839
                                                                                     ---------      ---------
                  Total long-term liabilities                                            1,124            839
                                                                                     ---------      ---------

                  Total liabilities                                                     45,116         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 September 30, 2003 and December 31, 2002         100            100
       Additional paid-in capital                                                       76,059         76,059
       Accumulated deficit                                                            (102,704)      (100,023)
       Accumulated other comprehensive loss:
               Foreign currency translation adjustment                                  (4,147)        (4,133)
                                                                                     ---------      ---------
                                                                                       (30,692)       (27,997)
        Treasury stock, at cost                                                         (1,938)        (1,938)
                                                                                     ---------      ---------
                  Total stockholders' deficit                                          (32,630)       (29,935)
                                                                                     ---------      ---------
                  Total liabilities and stockholders' deficit                        $  12,486      $  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)

                                                         Nine Months Ended
                                                   September 30,   September 30,
                                                       2003           2002
                                                   -------------   -------------

Sales                                                $ 14,125       $ 16,329
Cost of sales                                          10,006         11,308
                                                     --------       --------
     Gross profit                                       4,119          5,021
                                                     --------       --------

Selling, general and administrative expenses            4,559          5,448
Research and development expenses                       1,553          1,998
Impairment loss                                            --            800
                                                     --------       --------
         Total expenses                                 6,112          8,246
                                                     --------       --------

         Operating loss                                (1,993)        (3,225)

Interest expense                                         (940)        (1,488)
Interest income                                             1              5
Gain on sale of investment in joint venture                --            450
Other income (expense), net                               (26)            60
                                                     --------       --------

         Loss before income taxes                      (2,958)        (4,198)

Income tax (expense) benefit                              277            (23)
                                                     --------       --------

Net loss                                             $ (2,681)      $ (4,221)
                                                     ========       ========

Other comprehensive loss:
         Foreign currency translation adjustments         (14)           (32)
                                                     --------       --------

Comprehensive loss                                   $ (2,695)      $ (4,253)
                                                     ========       ========

Per share data:

Basic per share amounts:

         Net loss per share of common stock          $  (0.27)      $  (0.42)
                                                     ========       ========

         Weighted average shares outstanding            9,972          9,961
                                                     ========       ========

Diluted per share amounts:

         Net loss per share of common stock          $  (0.27)      $  (0.42)
                                                     ========       ========

         Weighted average shares outstanding            9,972          9,961
                                                     ========       ========

     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
                                                    September 30,  September 30,
                                                        2003         2002
                                                    -------------  -------------

Sales                                                 $ 5,787      $ 5,093
Cost of sales                                           3,728        3,068
                                                      -------      -------
     Gross profit                                       2,059        2,025
                                                      -------      -------

Selling, general and administrative expenses            1,435        1,818
Research and development expenses                         520          611
                                                      -------      -------
         Total expenses                                 1,955        2,429
                                                      -------      -------

         Operating income (loss)                          104         (404)

Interest expense                                         (313)        (310)
Interest income                                            --            1
Other income (expense), net                                --           30
                                                      -------      -------

         Loss before income taxes                        (209)        (683)

Income tax expense                                         (5)         (13)
                                                      -------      -------

         Net loss                                     $  (214)     $  (696)
                                                      =======      =======

Other comprehensive loss:
         Foreign currency translation adjustments          36          (27)
                                                      -------      -------

Comprehensive loss                                    $  (178)     $  (723)
                                                      =======      =======

Per share data:
Basic per share amounts:

         Net loss per share of common stock           $ (0.02)     $ (0.07)
                                                      =======      =======

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

Diluted per share amounts:

         Net loss per share of common stock           $ (0.02)     $ (0.07)
                                                      =======      =======

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

     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)

<TABLE>
<CAPTION>
                                                                          Nine Months Ended
                                                                    September 30,  September 30,
                                                                        2003          2002
                                                                    -------------  -----------
<S>                                                                   <C>            <C>
Cash flows from operating activities:
     Net loss                                                         $(2,681)       $(4,221)
     Adjustments to reconcile net loss to net cash
          used in operating activities:
         Depreciation and amortization                                    402            498
         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                                               86         (1,712)
         Inventories                                                      656          1,777
         Prepaid expenses                                                (104)           207
         Other assets                                                     237           (304)
         Accounts payable, accrued expenses and other liabilities         735            316
                                                                      -------        -------
              Net cash used in operating activities                      (669)        (3,086)
                                                                      -------        -------

Cash flows from investing activities:
         Capital expenditures, net                                        (77)           (50)
                                                                      -------        -------
              Net cash used in investing activities                       (77)           (50)
                                                                      -------        -------

Cash flows from financing activities:
         Proceeds from senior debt                                        233          2,901
         Proceeds from exercised options and warrants                      --              4
         Repayments of short term loans                                    (3)            (2)
                                                                      -------        -------
              Net cash provided by financing activities                   230          2,903
                                                                      -------        -------

     Effect of exchange rate changes on cash                              (79)           (80)
                                                                      -------        -------

     Decrease in cash and cash equivalents                               (595)          (313)

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

     Cash and equivalents - end of the period                         $   184        $   891
                                                                      =======        =======

     Supplemental cash flow disclosure:

         Cash paid for interest expense                               $     4        $     9
                                                                      =======        =======

         Cash paid for income taxes                                   $     8        $    15
                                                                      =======        =======
</TABLE>

     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 third quarter
or the first nine 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:

                                   September 30, 2003      December 31, 2002
                                   ------------------      -----------------
                                                 (in thousands)
      Parts and components         $        1,224          $           1,767
      Work-in-process                         541                        208
      Finished goods                          942                      1,388
                                   --------------          -----------------
                                   $        2,707          $           3,363
                                   ==============          =================

Note 3: Senior and Subordinated Debt

      On  September  30,  2003,  the  Company's  debt to its  senior  lender was
$25,303,000.  Under a prior  amendment,  the  loan  became  due and  payable  on
December 31, 2002. On November 13, 2003,  the senior lender granted an extension
to  January  15,  2004.  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 January 15, 2004, 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.

      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.

      As of September  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.


                                  Page 6 of 15

<PAGE>

Accrued interest on the subordinated notes was approximately  $2,974,000,  which
represents  interest  from July 2000 through  September  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.

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 nine months ended September
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>
                                   Nine Months Ended                          Three Months Ended
                        September 30, 2003   September 30, 2002    September  30, 2003   September 30, 2002
                        ------------------   ------------------    -------------------   ------------------
<S>                        <C>                 <C>                    <C>                   <C>
Sales:
     Line                  $  7,944,000        $  7,126,000           $  3,712,000          $  2,894,000
     OSS                      2,450,000           5,240,000                860,000             1,004,000
     Signal                   3,023,000           3,368,000                952,000               956,000
                           ------------        ------------           ------------          ------------
                           $ 13,417,000        $ 15,734,000           $  5,524,000          $  4,854,000
                           ============        ============           ============          ============

Segment profit (loss):
     Line                  $    806,000        $   (524,000)          $    821,000          $    213,000
     OSS                     (1,648,000)             (7,000)              (315,000)               11,000
     Signal                     814,000            (122,000)               255,000               234,000
                           ------------        ------------           ------------          ------------
                           $    (28,000)       $   (653,000)          $    761,000          $    458,000
                           ============        ============           ============          ============
</TABLE>


                                  Page 7 of 15

<PAGE>

The following table reconciles segment totals to consolidated totals:

<TABLE>
<CAPTION>
                                               Nine Months Ended                       Three Months Ended
                                    September 30, 2003  September 30, 2002  September 30, 2003  September 30, 2002
                                    ------------------  ------------------  ------------------  ------------------

<S>                                    <C>                 <C>                 <C>                 <C>
Sales:
   Total revenue for reportable
       segments                        $ 13,417,000        $ 15,734,000        $  5,524,000        $  4,854,000
Other revenue                               708,000             595,000             263,000             239,000
                                       ------------        ------------        ------------        ------------
Consolidated total revenue             $ 14,125,000        $ 16,329,000        $  5,787,000        $  5,093,000
                                       ============        ============        ============        ============

Operating loss:
    Total segment profit (loss)
           for reportable segments     $    (28,000)       $   (653,000)       $    761,000        $    458,000
       Corporate and unallocated         (1,965,000)         (2,572,000)           (657,000)           (862,000)
                                       ------------        ------------        ------------        ------------
   Consolidated total

          Operating income (loss)      $ (1,993,000)       $ (3,225,000)       $    104,000        $   (404,000)
                                       ============        ============        ============        ============
</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.
Although our orders and sales for Line equipment  increased in the third quarter
of 2003, our business continues to be impaired by our financial position, and we
cannot  assure you that the  increase in orders and sales will  continue for any
significant  period. We are continuing to encounter delays in shipping a portion
of backlog in a timely manner, as key suppliers are reluctant to provide us with
credit.  In addition,  there have been periods  during the three and nine months
ended  September  30,  2003  that we did not have the  funds  either  to  prepay
suppliers or to make purchases on a COD basis. Our business will be impaired if,
and to the extent that, we are not able to make purchases  necessary to fill our
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 January 15, 2004.

      Our  senior  lender  has not  required  us to pay or  accrue  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 were engaged in negotiations  with respect to the potential sale
of  certain  assets of one of our  divisions.  In the past,  we have  engaged in
negotiations  with  respect  to  sales  of  our  divisions,  and  none  of  such
negotiations resulted in an agreement. In the event that we are not able to sell
any of our divisions,  we will evaluate alternatives  available to us, which may
include the  discontinuation of unprofitable  operations and it may be necessary
for us to seek protection under the Bankruptcy Code.


                                  Page 8 of 15

<PAGE>

      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,          September 30,
                                       -----------------     ------------------
                                        2003       2002       2003       2002
                                        ----       ----       ----       ----
Sales                                   100%       100%       100%       100%
Cost of sales                            71%        69%        64%        60%
Gross profit                             29%        31%        36%        40%
Selling, general and administrative
  expenses                               32%        33%        25%        36%
Research and development expenses        11%        12%         9%        12%
Impairment loss                           0%         5%         0%         0%
     Operating Income/(loss)            (14%)      (20%)        2%        (8%)
Interest expense - net                   (7%)       (9%)       (6%)       (6%)
Gain on sale of joint venture             0%         3%         0%         0%
Other                                     2%         0%         0%         0%
Net loss                                (19%)      (26%)       (4%)      (14%)

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

                                            Nine Months Ended September 30,
                                            -------------------------------
                                                        $(000)
                                                2003               2002
                                                ----               ----

Line connection/protection equipment     $ 7,944    56%     $ 7,126    44%
OSS equipment                              2,450    17%       5,240    32%
Signal Processing                          3,023    22%       3,368    20%
Other                                        708     5%         595     4%
                                         -------   ---      -------   ---
                                         $14,125   100%     $16,329   100%
                                         =======   ===      =======   ===

                                            Three Months Ended September 30,
                                            --------------------------------
                                                        $(000)
                                               2003             2002
                                               ----             ----

Line connection/protection equipment     $3,712    64%     $2,894    57%
OSS equipment                               860    15%      1,004    20%
Signal Processing                           952    16%        956    19%
Other                                       263     5%        239     4%
                                         ------   ---      ------   ---
                                         $5,787   100%     $5,093   100%
                                         ======   ===      ======   ===


                                  Page 9 of 15

<PAGE>

Results of Operations

      Our sales for the nine months  ended  September  30, 2003  compared to the
nine  months  ended  September  30,  2002  decreased  by  $2,204,000  (13%) from
$16,329,000  in 2002 to  $14,125,000  in  2003.  Sales  for  the  quarter  ended
September  30,  2003 of  $5,787,000  increased  by  $694,000  (14%)  compared to
$5,093,000  for the quarter ended  September 30, 2002. The decrease in sales for
the nine months is primarily  attributed  to a 53% decline in sales from our OSS
business.  The increase in sales for the three month  period  results from a 28%
increase  in the Line  equipment  offset by a 14%  decline in sales from our OSS
business unit and no material change in the Signal revenue.

      Line  equipment  sales  for the  nine  months  ended  September  30,  were
$7,944,000  compared to  $7,126,000  in the same period of 2002,  an increase of
$818,000  (11%).  Sales for the three  months  ended  September  30 increased by
$818,000  (28%) from  $2,894,000 in 2002 to $3,712,000 in 2003. The increase for
the three months ended September 30, 2003 reflects  significant  increased sales
primarily to customers in the United Kingdom.

      OSS sales for the nine months  ended  September  30, 2003 were  $2,450,000
compared  to  $5,240,000  in the same period of 2002,  a decrease of  $2,790,000
(53%).  OSS sales for the three months ended  September  30, 2003 were  $860,000
compared to $1,004,000 in the same period of 2002, a decrease of $144,000 (14%).
The decrease in sales for the nine and three months  resulted from our 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.

      Signal sales for the nine months ended  September 30, 2003 were $3,023,000
compared to $3,368,000 in the same period of 2002, a decrease of $345,000 (10%).
Sales for the three months ended September 30, 2003 compared to 2002,  decreased
$4,000 from $956,000 to $952,000. These decreases in sales were primarily due to
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 nine months ended September 30, 2003 was 29% compared
to 31% for the nine  months  ended  September  30,  2002.  Gross  margin for the
quarter  ended  September 30, 2003 was 36% compared to 40% for the quarter ended
September  30,  2002.  Line  equipment  margins rose during the quarter and nine
months ended September 30, 2003, as compared to 2002, due to increased  revenue,
as noted above, which enabled us to better absorb manufacturing overhead.  These
gains were offset by lower  margins from the OSS business  unit during the three
and nine months ended September 30, 2003 as compared to 2002,  resulting in part
from the  underabsorption of fixed expenses of this business unit due to the low
revenue  levels.  The Signal margins also  increased,  primarily from the better
absorption of overhead.

      Selling,  general and administrative  expenses decreased by $889,000 (16%)
from  $5,448,000  to  $4,559,000  for the nine months ended  September  30, 2003
compared to 2002. For the quarter ended  September 30, 2003 selling  general and
administrative  expenses  decreased by $383,000  (21%) from 2002.  This decrease
relates  primarily to our ongoing  efforts to reduce  personnel  and  consulting
services,  and reduced OSS sales commissions reflecting our current OSS level of
business.

      Research  and  development  expenses  decreased  by $445,000  (22%) and by
$91,000  (15%) for the nine and three months ended  September  30, 2003 from the
comparable  periods in 2002. These decreases


                                 Page 10 of 15

<PAGE>

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  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 nine months ended September 30, 2003 vs.
the  nine  months  of 2002 our  operating  loss  decreased  from  $3,225,000  to
$1,993,000  (38%).  We recorded an operating  income of $104,000 for the quarter
ended  September  30, 2003 as compared to an operating  loss of $404,000 for the
quarter ended September 30, 2002, a 126% improvement.

      Interest  expense for the nine months ended September 30, 2003 compared to
September  30, 2002  decreased  by  $548,000  (37%) from  $1,488,000  in 2002 to
$940,000 in 2003.  Interest expense for the three-month  period ending September
30, 2003  compared to the same three  months of 2002,  increased  by $3,000 (1%)
from $310,000 in 2002 to $313,000 in 2003.  This increase 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 nine months  ended  September  30, 2003  resulted
principally  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 $2,681,000,  $0.27
per share (basic and  diluted),  for the nine months ended  September  30, 2003,
compared with a net loss of $4,221,000, $0.42 per share (basic and diluted), for
the nine months  ended  September  30,  2002.  The net loss for the three months
ended  September  30, 2003 was  $214,000,  $0.02 per share (basic and  diluted),
compared  with a net loss for the  three  months  ended  September  30,  2002 of
$696,000, $0.07 per share (basic and diluted).

Liquidity and Capital Resources

      At  September  30,  2003,  we had cash and cash  equivalents  of  $184,000
compared  with  $779,000 at December 31, 2002.  Our working  capital  deficit at
September  30, 2003 was  $36,100,000  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 nine  months  of 2003,  the net cash  used by us in  operations  was
$669,000 and we are continuing to operate with a negative cash flow.

      As of September  30, 2003,  our debt includes  $25,303,000  of senior debt
which matures on January 15, 2004,  $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


                                 Page 11 of 15

<PAGE>

of the  maturity  of our senior  debt.  On August 29,  2003,  the senior  lender
granted an extension to November 15, 2003,  and on November 13, 2003, the senior
lender  granted a  further  extension  to  January  15,  2004.  Interest  on the
subordinated notes was approximately $2,974,000,  which represents interest from
July 2000 through  September  30, 2003,  and interest on the 6%  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 we 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
beyond January 15, 2004 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 OSS  contracts,  which  could  result in the
            cancellation  of  contracts  or the  loss  of  future  business  and
            penalties for non-performance;

      o     we are continuing to have  difficulty in obtaining new business from
            either  existing  customers  or new  customers,  although,  as noted
            above,  our orders and sales for Line products  increased during the
            three months ended September 30, 2003; 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. Even
if a 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 nine months ended  September 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 August 14, 2003,  the Company  reported its results of operations
            for the quarter ended June 30, 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 November 14, 2003                     By /s/William V. Carney
                                                     ---------------------------
                                                     William V. Carney
                                                     Chairman of the Board
                                                     and Chief Executive Officer

      Dated November 14, 2003                     By /s/Edward B. Kornfeld
                                                     ---------------------------
                                                     Edward B. Kornfeld
                                                     Senior Vice President
                                                     and Chief Financial Officer


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