<SUBMISSION>
<ACCESSION-NUMBER>0000898430-01-503404
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20010930
<FILING-DATE>20011113
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>WIRELESS FACILITIES INC
<CIK>0001069258
<ASSIGNED-SIC>7380
<IRS-NUMBER>133818604
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-27231
<FILM-NUMBER>1783137
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>9805 SCRANTON RD
<STREET2>SUITE 100
<CITY>SAN DIEGO
<STATE>CA
<ZIP>92121
<PHONE>6198242929
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>9805 SCRANTON ROAD
<STREET2>SUITE 100
<CITY>SAN DIEGO
<STATE>CA
<ZIP>92121
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d10q.txt
<DESCRIPTION>FORM 10-Q
<TEXT>
<PAGE>


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

                                  UNITED STATES

                       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, 2001

|_|    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
       EXCHANGE ACT OF 1934

                         Commission file number 0-27231

                              --------------------

                            WIRELESS FACILITIES, INC.
             (Exact name of Registrant as specified in its charter)

   Delaware                                             13-3818604
(State or other jurisdiction of                      (I.R.S. Employer
 incorporation or organization)                      Identification No.)

                               4810 Eastgate Mall
                               San Diego, CA 92121
                                 (858) 228-2000
          (Address, including zip code, and telephone number, including
            area code, of Registrant's principal executive offices)

                              --------------------

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

     As of November 6, 2001 there were 46,948,177 shares of the Registrant's
$0.001 par value Common Stock outstanding.

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

<PAGE>

                            WIRELESS FACILITIES, INC.

                                    FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2001
                                      INDEX

<TABLE>
<CAPTION>
                                                                                                                         Page
                                                                                                                          No.
                                                                                                                         ----
                          PART I. FINANCIAL INFORMATION

<S>                                                                                                                      <C>

Item 1.     Financial Statements .........................................................................................  3

            Consolidated Balance Sheets as of December 31, 2000 (audited) and September 30, 2001 (unaudited) .............  3

            Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2000 and 2001
            (unaudited) ..................................................................................................  4

            Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2000 and 2001
            (unaudited) ..................................................................................................  5

            Notes to Consolidated Financial Statements (unaudited) .......................................................  6

Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations ........................ 10

Item 3.     Quantitative and Qualitative Disclosures About Market Risk ................................................... 22

                           PART II. OTHER INFORMATION

Item 1.     Legal Proceedings ............................................................................................ 23

Item 2.     Changes in Securities and Use of Proceeds .................................................................... 23

Item 6.     Exhibits and Reports on Form 8-K ............................................................................. 23

</TABLE>


                                       2

<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                            WIRELESS FACILITIES, INC.

                           CONSOLIDATED BALANCE SHEETS
                         (in millions, except par value)
<TABLE>
<CAPTION>
                                                                                               December 31,    September 30,
                                                                                                   2000            2001
                                                                                              --------------   --------------
                                                                                                 (Audited)     (Unaudited)
<S>                                                                                                 <C>             <C>

                                            ASSETS
Current assets:
     Cash and cash equivalents .........................................................           $   18.5         $   12.0
     Accounts receivable, net ..........................................................              119.1             92.1
     Contract management receivables, net ..............................................               20.8              8.0
     Income taxes receivable ...........................................................               12.7              5.1
     Deferred income tax assets, net ...................................................                 --              7.8
     Other current assets ..............................................................               14.3             13.5
                                                                                              --------------   --------------
          Total current assets .........................................................              185.4            138.5
Property and equipment, net ............................................................               20.0             20.1
Goodwill, net ..........................................................................               64.7             56.8
Other intangibles, net .................................................................               17.1              9.7
Investments in unconsolidated affiliates ...............................................                9.2              8.6
Other assets ...........................................................................                0.7              1.8
                                                                                              --------------   --------------
          Total assets .................................................................           $  297.1         $  235.5
                                                                                              ==============   ==============

                             LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable ..................................................................           $   15.1         $   10.4
     Accrued expenses ..................................................................               17.6             12.0
     Contract management payables ......................................................                9.2              5.4
     Billings in excess of costs and profits ...........................................                0.9              0.9
     Line of credit payable ............................................................               24.9             23.0
     Notes payable--current portion ....................................................                1.7              0.2
     Capital lease obligations--current portion ........................................                3.5              4.4
     Common stock to be issued .........................................................                 --              7.3
     Deferred income tax liabilities, net ..............................................                8.8               --
                                                                                              --------------   --------------
          Total current liabilities ....................................................               81.7             63.6
Notes payable--net of current portion ..................................................                0.6              0.5
Capital lease obligations--net of current portion ......................................                7.0              5.1
Common stock to be issued ..............................................................                8.6               --
Other liabilities ......................................................................                0.5              4.0
                                                                                              --------------   --------------
          Total liabilities ............................................................               98.4             73.2
                                                                                              --------------   --------------
Minority interest in subsidiary ........................................................                0.1              0.1
                                                                                              --------------   --------------
Stockholders' equity:
     Common stock, $0.001 par value, 195.0 shares authorized; 43.3 and 45.3
        shares issued and outstanding at December 31, 2000 (audited) and
        September 30, 2001 (unaudited), respectively ...................................                 --               --
     Preferred Stock, $0.001 par value, 5.0 shares authorized, none outstanding ........                 --               --
     Additional paid-in capital ........................................................              156.9            169.4
     Retained earnings (accumulated deficit) ...........................................               43.0             (6.7)
     Accumulated other comprehensive loss, net .........................................               (1.3)            (0.5)
                                                                                              --------------   --------------
          Total stockholders' equity ...................................................              198.6            162.2
                                                                                              --------------   --------------
          Total liabilities and stockholders' equity ...................................           $  297.1         $  235.5
                                                                                              ==============   ==============
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       3

<PAGE>

                            WIRELESS FACILITIES, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                     (in millions, except per share amounts)
<TABLE>
<CAPTION>
                                                                                Three months ended      Nine months ended
                                                                                  September 30,           September 30,
                                                                                ------------------      -----------------
                                                                                 2000        2001        2000       2001
                                                                                ------      ------      ------     ------
<S>                                                                              <C>         <C>         <C>         <C>
Revenues ...................................................................    $ 73.1      $ 54.8      $175.9     $162.2
Cost of revenues ...........................................................      40.8        37.0        99.2      108.6
                                                                                ------      ------      ------     ------
          Gross profit .....................................................      32.3        17.8        76.7       53.6
Selling, general and administrative expenses ...............................      15.4        15.9        34.7       86.5
Depreciation and amortization ..............................................       2.8         5.6         5.8       16.5
Asset impairment charges ...................................................        --          --          --       12.9
                                                                                ------      ------      ------     ------
          Operating income (loss) ..........................................      14.1        (3.7)       36.2      (62.3)
                                                                                ------      ------      ------     ------
Other income (expense):
     Interest income (expense), net ........................................      (0.1)       (0.9)        0.7       (2.6)
     Foreign currency gain (loss) ..........................................      (0.4)        0.6        (0.3)      (1.5)
     Other, net ............................................................       0.6         0.1         0.7       (0.7)
                                                                                ------      ------      ------     ------
          Net other income (expense) .......................................       0.1        (0.2)        1.1       (4.8)
                                                                                ------      ------      ------     ------
          Income (loss) before minority interest in subsidiary and
             income taxes ..................................................      14.2        (3.9)       37.3      (67.1)
Minority interest in income (loss) of subsidiary ...........................      (0.1)         --         0.1         --
Provision (benefit) for income taxes .......................................       5.3        (1.0)       14.5      (17.4)
                                                                                ------      ------      ------     ------
          Net income (loss) ................................................    $  9.0      $ (2.9)     $ 22.7     $(49.7)
                                                                                ======      ======      ======     ======
Net income (loss) per common share:
     Basic .................................................................    $ 0.21      $(0.06)     $ 0.55     $(1.09)
     Diluted ...............................................................    $ 0.17      $(0.06)     $ 0.45     $(1.09)
Weighted average common shares outstanding:
     Basic .................................................................      42.4        46.4        41.4       45.4
     Diluted ...............................................................      51.9        46.4        50.3       45.4

</TABLE>


     See accompanying notes to unaudited consolidated financial statements.

                                       4

<PAGE>

                            WIRELESS FACILITIES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                  (in millions)
<TABLE>
<CAPTION>
                                                                                                     Nine months ended
                                                                                                       September 30,
                                                                                              -------------------------------
                                                                                                    2000            2001
                                                                                              --------------   --------------
<S>                                                                                                 <C>             <C>
Net cash provided by (used in) operating activities .....................................       $    (37.7)      $      0.4
                                                                                              --------------   --------------
Investing activities:
     Capital expenditures ...............................................................             (3.0)            (4.3)
     Cash paid for acquisitions, net of cash received ...................................            (28.2)              --
     Cash paid for investments ..........................................................             (8.9)              --
     Proceeds from sales of investments .................................................             34.7               --
                                                                                              --------------   --------------
          Net cash used in investing activities .........................................             (5.4)            (4.3)
                                                                                              --------------   --------------
Financing activities:
     Proceeds from issuance of common stock .............................................              9.5              5.2
     Repayment of notes payable .........................................................             (0.3)            (1.6)
     Net borrowings from officers .......................................................              0.6               --
     Net borrowing (repayment) under line of credit .....................................             23.9             (1.9)
     Repayment of capital lease obligations .............................................             (0.7)            (3.8)
                                                                                              --------------   --------------
          Net cash provided by (used in) financing activities ...........................             33.0             (2.1)
                                                                                              --------------   --------------
Effect of exchange rate on cash and cash equivalents ....................................              0.1             (0.5)
                                                                                              --------------   --------------
Net decrease in cash and cash equivalents ...............................................            (10.0)            (6.5)
Cash and cash equivalents at beginning of period ........................................             34.3             18.5
                                                                                              --------------   --------------
Cash and cash equivalents at end of period ..............................................       $     24.3       $     12.0
                                                                                              ==============   ==============
Supplemental disclosures of non-cash transactions:
     Fair value of assets acquired in acquisitions ......................................       $     85.2       $       --
     Cash paid for acquisitions .........................................................            (37.5)              --
     Issuance of common stock for acquisitions ..........................................            (36.8)              --
     Issuance of notes payable for acquisitions .........................................             (1.5)              --
     Common stock to be issued ..........................................................             (8.6)            (7.3)
                                                                                              --------------   --------------
     Liabilities assumed in acquisitions ................................................       $      0.8       $       --
                                                                                              ==============   ==============

     Common stock issued for earn-out provision in acquisition ..........................       $      0.9       $      8.6
     Common stock issued under a cashless exercise of warrants ..........................       $      0.2       $       --
     Note receivable issued for stock option exercise ...................................       $      0.1       $       --
     Note receivable issued for sale of equipment .......................................       $       --       $      1.0
     Property and equipment acquired under capital leases ...............................       $      9.3       $      2.8
     Reduction of accounts receivable in exchange for notes receivable ..................       $       --       $      1.4
     Reduction of note payable in lieu of consideration for exercise of warrants ........       $      0.5       $       --

Supplemental disclosure of cash flow information:

     Cash paid during the period for interest ...........................................       $      1.0       $      3.4
     Net cash paid (received) during the period for income taxes ........................       $     10.6       $     (9.3)

</TABLE>


     See accompanying notes to unaudited consolidated financial statements.

                                       5

<PAGE>

                            WIRELESS FACILITIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(1) Organization and Summary of Significant Accounting Policies

(a) Description of Business

     Wireless Facilities, Inc. ("WFI") was formed under the laws of the state of
New York on December 19, 1994, began operations in March 1995 and was
reincorporated in Delaware in 1998. WFI provides a full suite of outsourcing
services to wireless carriers and equipment vendors, including the design,
deployment and management of client networks. WFI's customers include both
early-stage and mature providers of cellular, PCS and broadband data services
and equipment. WFI's engagements range from small contracts for the deployment
of a single cell site, to large multi-year turnkey contracts. These services are
billed either on a time and materials basis or on a fixed price (turnkey), time
certain basis.

(b) Basis of Presentation

     The information as of September 30, 2001, and for the three and nine month
periods ended September 30, 2000 and 2001 is unaudited. In the opinion of
management, these consolidated financial statements include all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
the results of operations for the interim periods presented. Interim operating
results are not necessarily indicative of operating results expected in
subsequent periods or for the year as a whole. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements and the related notes included in WFI's annual consolidated financial
statements for the fiscal year ended December 31, 2000, filed on Form 10-K with
the Securities and Exchange Commission.

     The consolidated financial statements include the accounts of WFI and its
wholly owned and majority-owned subsidiaries. WFI and its subsidiaries are
collectively referred to herein as the "Company." All intercompany transactions
have been eliminated in consolidation. Investments accounted for using the cost
method include companies in which the Company owns less than 20% and for which
the Company has no significant influence. Investments accounted for using the
equity method include companies in which the Company owns more than 20% but less
than 50%, or for which the Company is considered to have significant influence.

(c) Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America require management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

(d) Reclassifications

     Certain prior period amounts have been reclassified to conform with the
current period presentation.

(e) New Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141 (SFAS No. 141), "Business
Combinations", and Statement No. 142 (SFAS No. 142), "Goodwill and Other
Intangible Assets". SFAS No. 141 supersedes APB Opinion No. 16, "Business
Combinations" and SFAS No. 38, "Accounting for Preacquisition Contingencies of
Purchases Enterprises" and eliminates pooling-of-interests accounting
prospectively. SFAS No. 141 was adopted on July 1, 2001. SFAS No. 142 supersedes
APB Opinion No. 17, "Intangible Assets" and changes the accounting for goodwill
from an amortization method to an impairment-only approach. Under SFAS No. 142,
goodwill will be tested annually and whenever events or circumstances occur
indicating that goodwill might be impaired. The provisions of SFAS No. 142 are
required to be applied starting with fiscal years beginning after December 15,
2001. Upon adoption of SFAS No. 142, amortization of goodwill recorded for
business combinations consummated prior to July 1, 2001 will cease, and
intangible assets acquired prior to July 1, 2001 that do not meet the criteria
for recognition under SFAS No. 141 will be reclassified to goodwill. The
adoption of SFAS No. 141 did not have an impact on the Company's financial
position or results of operations. The Company


                                       6

<PAGE>

will adopt SFAS No. 142 on January 1, 2002, upon which time the Company will
cease amortizing goodwill and separately identifiable intangibles in
accordance with the guidelines set forth in the standard. As of the date of
adoption, the Company expects remaining unamortized goodwill and unamortized
other intangible assets to be approximately $54.6 million and $8.6 million,
respectively, all of which will be subject to the transition guidelines of SFAS
No. 142. The Company is currently evaluating the impact that the adoption of
SFAS No. 142 will have on its results of operations and financial position.

     In August 2001, the FASB issued Statement of Financial Accounting Standards
No. 143 (SFAS No. 143), "Accounting for Asset Retirement Obligations," which
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and for the associated asset retirement
costs. The standard applies to tangible long-lived assets that have a legal
obligation associated with their retirement that results from the acquisition,
construction or development or normal use of the asset. SFAS No. 143 requires
that the fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made. The fair value of the liability is added to the carrying
amount of the associated asset and this additional carrying amount is
depreciated over the remaining life of the asset. The liability is accreted at
the end of each period through charges to operating expense. The provisions of
SFAS No. 143 are required to be applied during the quarter ending March 31,
2003. To accomplish this, the Company must identify all legal obligations for
asset retirement obligations, if any, and determine the fair value of these
obligations on the date of adoption. The determination of fair value is complex
and will require the Company to gather market information and develop cash flow
models. Additionally, the Company will be required to develop processes to track
and monitor these obligations. It is not anticipated that the financial impact
of this statement will have a material effect on our consolidated financial
statements.

     In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144 (SFAS No. 144), "Accounting for the Impairment or Disposal of
Long-Lived Assets," which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets. While SFAS No. 144 supersedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," it retains many of the fundamental provisions of SFAS
No. 121, including the recognition and measurement of the impairment of
long-lived assets to be held and used, and the measurement of long-lived assets
to be disposed of by sale. SFAS No. 144 also supersedes the accounting and
reporting provisions of Accounting Principles Board Opinion No. 30 (APB No. 30),
"Reporting the Results of Operations--Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions," for the disposal of a segment of a business. However,
it retains the requirement in APB No. 30 to report separately discontinued
operations and extends that reporting to a component of an entity that either
has been disposed of (by sale, abandonment, or in a distribution to owners) or
is classified as held for sale. SFAS No. 144 is effective for fiscal years
beginning after December 15, 2001. At this time, the Company does not anticipate
that the adoption of SFAS No. 144 will have a material effect on the Company's
consolidated financial statements.

(2) Asset Impairment Charges

     As required by SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," the Company reviews
long-lived assets and intangibles for impairment when events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The recent slowdown in the economy, current economic conditions and
visible trends in the telecommunications industry, triggered an impairment
evaluation by the Company of its goodwill and other intangible assets in the
second quarter of fiscal 2001. Based on the Company's analyses of the results of
operations and projected future cash flows associated with certain goodwill and
other intangible assets, the Company determined that impairment existed.
Accordingly, the Company recorded a $12.9 million impairment charge in the
second quarter of fiscal 2001 determined as the amount by which the carrying
amount of the assets exceeded the present value of the estimated future cash
flows. Assets determined to be impaired included goodwill and contract and
workforce intangibles approximating $8.2 million in the Company's design and
deployment segment and $4.7 million in its network management segment. There
were no impairment charges recorded during the third quarter of fiscal 2001. The
Company does not believe these write-downs will impair or affect the Company's
ongoing operations.

(3) Earn-out Provision for Davis Bay, LLC Acquisition

     In June 2000, the Company acquired the assets of Davis Bay, LLC, a
Washington State limited liability company, for $3.0 million in cash and stock.
Of the total purchase price, $2.4 million was paid through the issuance of
approximately 49,000 shares of the Company's common stock. Included in the asset
purchase agreement was an earn-out provision whereby the Company agreed to pay
Davis Bay additional consideration contingent on certain quarterly earnings
results from existing and potential future contracts secured by Davis Bay for
the Company. These earn-out payments were capped at $20.0 million. During the
six months ended June 30, 2001, $10.5 million in additional goodwill was
recorded under the earn-out provision, bringing the total earn-out up to the
$20.0 million maximum allowed under the contract. Effective September 27, 2001,
Davis Bay and the

                                       7

<PAGE>

Company executed a second amendment to the original asset purchase agreement
that replaced the remaining, unpaid earn-out with a final earn-out settlement
equal to 1,638,838 shares of the Company's common stock to be issued at the then
current market value. Accordingly, the estimated liability of common stock to be
issued to Davis Bay related to the earn-out agreement decreased from $10.5
million as of June 30, 2001 to $7.3 million as of September 30, 2001, and
goodwill was reduced by $3.2 million. On October 17, 2001, 1,638,838 shares of
the Company's common stock were issued to Davis Bay.

(4) Other Events

     As a result of Metricom, Inc.'s filing for bankruptcy protection on July 2,
2001, the Company recorded an allowance for the entire receivable balance of
$13.9 million due from Metricom, Inc., in the quarter ended June 30, 2001. The
Company announced in February 2001 that Metricom, which abandoned plans for a
national rollout of its "Ricochet" wireless modem service, had suspended its
contract with the Company for engineering services.

      On July 19, 2001, the Company executed an amendment to its credit facility
which, among other items, changed the minimum EBITDA covenant to exclude unusual
charges up to a specified amount with respect to first and second quarters of
the Company's fiscal 2001 financial results.

      On August 29, 2001, one of our customers, US Wireless, filed for
bankruptcy protection. The Company had recorded an allowance of $1.3 million for
its receivable balances in the second quarter of fiscal 2001.

(5) Net Income (Loss) Per Common Share

     The Company calculates net income (loss) per share in accordance with SFAS
No. 128, "Earnings Per Share." Under SFAS No. 128, basic net income (loss) per
common share is calculated by dividing net income (loss) by the weighted-average
number of common shares outstanding during the reporting period. Diluted net
income (loss) per common share reflects the effects of potentially dilutive
securities. Weighted average shares used to compute net income (loss) per share
are presented below (in millions):
<TABLE>
<CAPTION>
                                                     Three months ended         Nine months ended
                                                        September 30,              September 30,
                                                     ------------------         -------------------
                                                      2000        2001           2000         2001
                                                     ------      ------         ------       ------
<S>                                                   <C>         <C>            <C>           <C>

Weighted-average shares, basic ....................    42.4        46.4           41.4         45.4
Dilutive effect of stock options ..................     8.6          --            7.9           --
Dilutive effect of warrants .......................     0.9          --            1.0           --
                                                     ------      ------         ------       ------
Weighted-average shares, diluted ..................    51.9        46.4           50.3         45.4
                                                     ======      ======         ======       ======
</TABLE>

     Options to purchase 0.6 million and 4.2 million shares of common stock for
the three months ended September 30, 2000 and 2001, respectively, were not
included in the calculation of diluted net income (loss) per share because the
effect of these instruments was anti-dilutive. Options to purchase 1.2 million
and 4.8 million shares of common stock for the nine months ended September 30,
2000 and 2001, respectively, were not included in the calculation of diluted net
income per share because the effect of these instruments was anti-dilutive.

(6) Segment Information

     The Company's operations are organized along service lines and include
three reportable industry segments: Design and Deployment, Network Management,
and Business Consulting. Due to the nature of these services, the amount of
capital assets used in providing services to customers is not significant.
Revenues and operating income (loss) provided by the Company's industry segments
for the three and nine months ended September 30, 2000 and 2001 are as follows
(in millions):
<TABLE>
<CAPTION>
                                                     Three months ended         Nine months ended
                                                        September 30,              September 30,
                                                     ------------------         -------------------
                                                      2000        2001           2000         2001
                                                     ------      ------         ------       ------
<S>                                                   <C>         <C>            <C>           <C>
Revenues:
     Design and deployment ........................  $ 58.0      $ 42.4         $142.3       $123.8
     Network management ...........................    12.8        10.0           28.4         32.1
     Business consulting ..........................     2.3         2.4            5.2          6.3
                                                     ------      ------         ------       ------
          Total revenues ..........................  $ 73.1      $ 54.8         $175.9       $162.2
                                                     ======      ======         ======       ======
</TABLE>
                                       8

<PAGE>
<TABLE>
<CAPTION>
<S>                                                   <C>         <C>            <C>           <C>
Operating income (loss):
     Design and deployment ........................  $ 11.2      $(5.3)         $ 26.4       $(50.9)
     Network management ...........................     2.3         1.1            7.8        (10.4)
     Business consulting ..........................     0.6         0.5            2.0         (1.0)
                                                     ------      ------         ------       ------
          Total operating income (loss) ...........  $ 14.1      $(3.7)         $ 36.2       $(62.3)
                                                     ======      ======         ======       ======
</TABLE>

     Revenues derived by geographic region are as follows (in millions):
<TABLE>
<CAPTION>
                                                     Three months ended         Nine months ended
                                                        September 30,              September 30,
                                                     ------------------         -------------------
                                                      2000        2001           2000         2001
                                                     ------      ------         ------       ------
<S>                                                   <C>         <C>            <C>           <C>
Revenues:
     U.S. .........................................  $ 51.1     $ 35.5          $ 128.4     $ 106.9
     Central and South America ....................    17.8       14.4             38.3        35.7
     Europe, Middle East and Africa ...............     4.2        4.9              9.2        19.6
                                                     ------     ------          -------     -------
          Total revenues ..........................  $ 73.1     $ 54.8          $ 175.9     $ 162.2
                                                     ======     ======          =======     =======
</TABLE>

(7) Subsequent Events

     On October 10, 2001, the Company executed an agreement to sell $35.0
million of its Series A Convertible Preferred Stock in a private placement to
investment funds managed by Oak Investment Partners. Pursuant to the agreement,
on October 29, 2001, the investment funds managed by Oak Investment Partners
purchased an aggregate of 63,637 shares of Series A Convertible Preferred Stock
for a common stock equivalent price of $5.50 per share. The shares of Series A
Convertible Preferred Stock have a liquidation preference and price
anti-dilution protection. These shares are not registered under the Securities
Act of 1933 and may not be offered or sold in the United States absent
registration or applicable exemption from registration requirements. Each share
of Series A Convertible Preferred Stock is initially convertible into 100 shares
of common stock at the option of the holder at any time subject to certain
provisions in the agreement. After July 2004, the Series A Convertible Preferred
Stock will automatically convert into shares of the Company's common stock if
and when the Company's common stock trades at or above $11.00 per share for
30 consecutive days after that date. Oak Investment Partners agreed to a lockup
with respect to the shares of Series A Convertible Preferred Stock (and the
underlying shares of common stock). The lockup will expire in stages beginning
18 months from October 29, 2001. On October 30, 2001, the Company received $35.0
million pursuant to this agreement.

     Under the agreement for the sale and purchase of the entire issued share
capital of Questus Limited, dated August 29, 2000, the Company agreed to issue
additional stock to the former Questus shareholders if the value of our common
stock decreased to less than the lower collar amount, which is equivalent to 50%
of the price at which the shares were originally issued pursuant to the
agreement. As of August 29, 2001, the last day of the escrow period, based on
the calculation set forth in the agreement, the Company's stock price was less
than the lower collar amount, which triggered the payment of additional shares
of our common stock under the agreement. Pursuant to the agreement, the Company
will issue an aggregate of 146,806 shares of its common stock based on this
lower collar adjustment.

                                       9

<PAGE>

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

     This report contains forward-looking statements. These statements relate to
future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may," "will,"
"should," "expect," "plan," "anticipate," "believe," "estimate," "predict,"
"potential" or "continue," the negative of such terms or other comparable
terminology. These statements are only predictions. Actual events or results may
differ materially.

     Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we, nor any other
person, assume responsibility for the accuracy and completeness of the
forward-looking statements. We are under no obligation to update any of the
forward-looking statements after the filing of this Quarterly Report on Form
10-Q to conform such statements to actual results or changes in our
expectations.

     The following discussion should be read in conjunction with our
consolidated financial statements and the related notes and other financial
information appearing elsewhere in this Form 10-Q. Readers are also urged to
carefully review and consider the various disclosures made by us which attempt
to advise interested parties of the factors which affect our business, including
without limitation to the disclosures made under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations," under
the caption "Risk Factors," and the audited consolidated financial statements
and related notes included in our Annual Report filed on Form 10-K for the year
ended December 31, 2000 and other reports and filings made with the Securities
and Exchange Commission.

Overview

     Wireless Facilities, Inc. offers network business consulting, network
planning, design and deployment, and network operations and maintenance services
to the wireless telecommunications industry. For the nine months ended September
30, 2001, our design and deployment, network management and business consulting
segments contributed to 76%, 20% and 4% of our revenues, respectively. During
2000, we formed a subsidiary in the United Kingdom, Wireless Facilities
International, Ltd. ("WFIL"). WFIL began servicing existing contracts and
entering into new contracts in Europe, the Middle East and Africa ("EMEA") in
April 2000. These contracts include services performed for many of the latest
wireless technologies, including UMTS (Universal Mobile Telephone Service)
broadband wireless applications, and voice and video applications. Revenues from
our international operations contributed 34% of our total revenues for the nine
months ended September 30, 2001.

     Revenues from network planning, design and deployment contracts are
primarily fixed price contracts which are recognized using the
percentage-of-completion method. Under the percentage-of-completion method of
accounting, expenses on each project are recognized as incurred, and revenues
are recognized based on a comparison of the current costs incurred for the
project to date compared to the then estimated total costs of the project from
start to completion. Accordingly, revenue recognized in a given period depends
on the costs incurred on each individual project and the current estimate of the
total costs to complete a project, determined at that time. As a result, gross
margins for any single project may fluctuate from period to period. The full
amount of an estimated loss is charged to operations in the period it is
determined that a loss will be realized from the performance of a contract. For
business consulting, network planning, design and deployment contracts offered
on a time and expense basis, we recognize revenues as services are performed. We
typically charge a fixed monthly fee for ongoing radio frequency optimization
and network operations and maintenance services. With respect to these services,
we recognize revenue as services are performed.

     Cost of revenues includes direct compensation and benefits, living and
travel expenses, payments to third-party sub-contractors, allocation of
overhead, costs of expendable computer software and equipment, and other direct
project-related expenses.

     Selling, general and administrative expenses include compensation and
benefits, computer software and equipment, facilities expenses and other
expenses not related directly to projects. Our sales personnel have, as part of
their compensation package, incentives based on their productivity. As of
December 31, 2000, we had completed the first phase of implementing a new
financial management and accounting software program in our domestic operations.
We completed the same software program implementation in Mexico by the second
quarter of fiscal 2001 and as of September 30, 2001, we have started to plan the
initial phases in the United Kingdom with anticipated completion by first
quarter of fiscal 2002. Such software is expected to better accommodate our
growth. We expect to incur expenses in subsequent periods related to licensing
the software package and related personnel costs associated with completing its
implementation in our domestic and international operations. We may incur
expenses related to a given project in advance of the commencement of the
project as we increase our personnel to work on the project. New hires typically
undergo training on our systems and project management process prior to being
deployed on a project.

                                       10

<PAGE>

     Due to the recent downturn in the financial markets in general, and
specifically within the telecommunications industry, many of our customers are
having trouble obtaining funding in the capital markets to fund the expansion of
their businesses, including telecom network deployments and upgrades. The
current volatility of the financial markets and slowdown in the U.S. economy has
also intensified the uncertainty experienced by many of our customers, who are
finding it increasingly difficult to predict demand for their products and
services. As a result, many of our customers have and continue to slow and
postpone the deployment of new wireless networks and the development of new
technologies and products, which has reduced the demand for our services. Some
of our customers have recently cancelled or suspended their contracts with us
and many of our customers or potential customers have postponed entering into
new contracts for our services. For example, during the first quarter of 2001,
we announced that we received notice of contract suspension and termination from
Metricom, Inc. Also due to the difficult financing and economic conditions, some
of our customers may not be able to pay us for services that we have already
performed. If we are not able to collect amounts owed to us, we may be required
to write-off or convert significant amounts of our accounts receivable. For
example, three of our customers, Metricom, Inc., Advanced Radio Telecom and US
Wireless filed for bankruptcy protection this year. This caused us to recognize
bad debt expense of $3.5 million for Advanced Radio Telecom in the first quarter
of fiscal 2001, and $13.9 million for Metricom, Inc. and $1.3 million for US
Wireless in the second quarter of fiscal 2001, which thereby negatively affected
our profitability. Also, some of our contracts with our customers include
billing milestones, whereby we do not bill for work performed until certain
milestones are reached. However, we recognize revenue under the
percentage-of-completion method of accounting. Whereby, if a contract is
terminated by a customer or modified before a milestone is reached, we generally
will be required to renegotiate the terms of payment for work performed but not
yet billed. As a result of the market conditions described above, we began to
experience this during fiscal 2001 with a number of our contracts that contain
billing milestones. Due to the circumstances surrounding such cancellations or
modifications and the financial condition of the related customers, the amount
we ultimately collect from such customers may be, and often is, discounted from
the amount we have previously recorded in unbilled accounts receivable and
revenue. Because we are not able to reduce our costs as fast as our revenues may
decline, our costs as a percentage of revenues may increase and,
correspondingly, our net earnings may decline disproportionately to any
decreases in revenues. We have experienced this challenge particularly with
respect to managing our employee base, and this has resulted in underutilization
of employees due to the sudden reduction in the demand for our services during
fiscal 2001. In response to these factors and the lack of visibility and
uncertain market conditions, we have taken steps and are continuing to take
steps to reduce our level of expenditures. Specifically, we have reduced our
headcount by approximately 19% since December 31, 2000. We have also implemented
a more stringent expenditure approval policy, in an effort to further reduce our
costs. Additionally, we expect to continue to review our internal processes
throughout 2001 and make further adjustments as necessary.

Results of Operations

Comparison of Results for the Three Months Ended September 30, 2000 to the Three
Months Ended September 30, 2001

     Revenues. Revenues decreased 25% from $73.1 million for the three months
ended September 30, 2000 to $54.8 million for the three months ended
September 30, 2001. The $18.3 million decrease was primarily attributable to the
termination and cancellation of certain contracts following the continued
downturn and uncertainty in the economy and the wireless telecommunications
industry.

     Cost of Revenues. Cost of revenues decreased 9% from $40.8 million for the
three months ended September 30, 2000 to $37.0 million for the three months
ended September 30, 2001, primarily due to a corresponding reduction in
contracts. Gross profit was 44% of revenues for the three months ended September
30, 2000 compared to 32% for the three months ended September 30, 2001. The
decrease in gross profit is due primarily to the termination and cancellation of
higher margin contracts and continued pressure associated with competitive
pricing demands resulting from capital spending challenges within the wireless
telecommunications industry.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 3% from $15.4 million for the three months
ended September 30, 2000 to $15.9 million for the three months ended
September 30, 2001. As a percentage of revenues, selling, general and
administrative expenses increased from 21% for the three months ended
September 30, 2000 to 29% for the three months ended September 30, 2001. The
increase was primarily due to higher fixed costs associated with our domestic
and international expansion compared to a lower revenue base, partially offset
by improved domestic utilization rates.

     Depreciation and Amortization Expense. Depreciation and amortization
expense increased 100% from $2.8 million for the three months ended
September 30, 2000 to $5.6 million for the three months ended September 30,
2001. The increase is primarily due to amortization of goodwill and other
identifiable intangibles resulting from our acquisitions completed subsequent to
September 30, 2000.

                                       11

<PAGE>

     Net Other Income (Expense). For the three months ended September 30, 2000,
net other income was $0.1 million as compared to net other expense of $0.2
million for the three months ended September 30, 2001. The change is primarily
attributable to higher interest expense resulting from increased debt
outstanding during the periods under comparison, lower other income and interest
income, offset by higher foreign currency gain resulting from increased
international activity and associated fluctuations in foreign exchange rates.

     Provision (Benefit) for Income Taxes. Our effective income tax rate
decreased from 37% for the three months ended September 30, 2000 to 26% for the
three months ended September 30, 2001. The decrease was primarily attributable
to a change in projected earnings combined with an increase in the valuation
allowance on the losses from certain foreign operations.

Comparison of Results for the Nine Months Ended September 30, 2000 to the Nine
Months Ended September 30, 2001

     Revenues. Revenues decreased 8% from $175.9 million for the nine months
ended September 30, 2000 to $162.2 million for the nine months ended
September 30, 2001. The $13.7 million decrease was primarily attributable to the
recent decline in the economy and specifically, in wireless telecommunications
infrastructure spending, which resulted in the suspension and termination of
certain contracts, including our contracts with Metricom, Inc. and Advanced
Radio Telecom, partially offset by our expansion into international markets.
Revenues from international markets comprised 27% of our total revenues during
the nine months ended September 30, 2000 compared to 34% of our total revenues
during the nine month period ended September 30, 2001.

     Cost of Revenues. Cost of revenues increased 9% from $99.2 million for the
nine months ended September 30, 2000 to $108.6 million for the nine months ended
September 30, 2001 and gross profit was 44% of revenues for the nine months
ended September 30, 2000 compared to 33% for the nine months ended September 30,
2001. The increase in cost of revenues and decline in gross profit is primarily
attributable to the recent decline in the economy and specifically, in wireless
telecommunications infrastructure spending, which resulted in the suspension and
termination of certain contracts, including our contracts with Metricom, Inc.
and Advanced Radio Telecom. The sudden and unexpected loss of these customers
caused the expected overall margin on the related contracts to decrease and
therefore a cumulative entry was recorded in the first half of fiscal 2001 to
adjust the margin recorded to date to the expected final margin on the
contracts. Gross profit also decreased due to costs incurred to demobilize staff
as well as work performed on milestones that could not be completed and billed.
Additionally, we have begun to experience pressure associated with competitive
pricing demands within the wireless telecommunications industry.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 149% from $34.7 million for the nine months
ended September 30, 2000 to $86.5 million for the nine months ended September
30, 2001. As a percentage of revenues, selling, general and administrative
expenses increased from 20% for the nine months ended September 30, 2000 to 53%
for the nine months ended September 30, 2001. The increase is due primarily to
higher administrative costs to accommodate our domestic and international
growth, combined with lower utilization rates caused by the recent downturn in
the wireless telecommunications industry. Additionally, bad debt expense of
$21.2 million, which included allowances for receivables due from Metricom, Inc.
of $13.9 million, Advanced Radio Telecom of $3.1 million, US Wireless of $1.3
million and certain unusual charges of $3.6 million were recorded during the
second quarter of fiscal 2001. These unusual charges included accruals for
estimated contractor liability in our Mexico subsidiary of $2.2 million and the
estimated loss on unused office space of $1.4 million.

     Depreciation and Amortization Expense. Depreciation and amortization
expense increased 184% from $5.8 million for the nine months ended September 30,
2000 to $16.5 million for the nine months ended September 30, 2001. The increase
is primarily due to the amortization of goodwill and other identifiable
intangibles resulting from our acquisitions completed subsequent to
September 30, 2000.

     Asset Impairment Charges. For the nine months ended September 30, 2001,
asset impairment charges totaled $12.9 million, compared to no charge for the
nine months ended September 30, 2000. The recent slowdown in the economy,
current economic conditions and visible trends in the telecommunications
industry, triggered an impairment evaluation by the Company of its goodwill and
other intangible assets in the second quarter of fiscal 2001. Based on the
Company's analyses of the results of operations and projected future cash flows
associated with certain goodwill and other intangible assets, the Company
determined that impairment existed. Accordingly, the Company recorded a $12.9
million impairment charge in the second quarter of fiscal 2001 determined as the
amount by which the carrying amount of the assets exceeded the present value of
the estimated future cash flows. Assets determined to be impaired included
goodwill and contract and workforce intangibles approximating $8.2 million in
the Company's design and deployment segment and $4.7 million in its network
management segment. There were no impairment charges recorded during the third
quarter of fiscal 2001. The Company does not believe these write-downs will
impair or affect the Company's ongoing operations.

                                       12

<PAGE>

     Net Other Income (Expense). For the nine months ended September 30, 2000,
net other income was $1.1 million compared to net other expense of $4.8 million
for the nine months ended September 30, 2001. This increase in expense of $5.9
million was primarily attributable to higher interest expense resulting from
increased debt outstanding during the periods under comparison, higher foreign
currency transaction losses due to increased international activity combined
with foreign currency exchange rate fluctuations during the nine months ended
September 30, 2001, and $1.1 million realized loss on available-for-sale
investment securities related to the bankruptcy filing of Advanced Radio Telecom
which was recorded in the first quarter of fiscal 2001.

     Provision (Benefit) for Income Taxes. Our effective income tax rate
decreased from 39% for the nine months ended September 30, 2000 to 26% for the
nine months ended September 30, 2001. The decrease was primarily attributable to
a change in projected earnings which included the effect of certain asset
impairment and bad debt charges recorded in the second quarter of fiscal 2001,
combined with an increase in the valuation allowance on the losses from certain
foreign operations.

Earn-out Provision for Davis Bay, LLC Acquisition

     In June 2000, the Company acquired the assets of Davis Bay, LLC, a
Washington State limited liability company, for $3.0 million in cash and stock.
Of the total purchase price, $2.4 million was paid through the issuance of
approximately 49,000 shares of the Company's common stock. Included in the asset
purchase agreement was an earn-out provision whereby the Company agreed to pay
Davis Bay additional consideration contingent on certain quarterly earnings
results from existing and potential future contracts secured by Davis Bay for
the Company. These earn-out payments were capped at $20.0 million. During the
six months ended June 30, 2001, $10.5 million in additional goodwill was
recorded under the earn-out provision, bringing the total earn-out up to the
$20.0 million allowed under the contract. Effective September 27, 2001, Davis
Bay and the Company executed a second amendment to the original asset purchase
agreement that replaced the remaining, unpaid earn-out with a final earn-out
equal to 1,638,838 shares of the Company's common stock issued at the then
current market value. Accordingly, the estimated liability of common stock to be
issued related to the earn-out agreement decreased from $10.5 million as of
June 30, 2001 to $7.3 million as of September 30, 2001, and goodwill was reduced
by $3.2 million. On October 17, 2001, 1,638,838 shares of the Company's common
stock were issued to Davis Bay.

New Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141 (SFAS No. 141), "Business
Combinations", and Statement No. 142 (SFAS No. 142), "Goodwill and Other
Intangible Assets". SFAS No. 141 supersedes APB Opinion No. 16, "Business
Combinations" and SFAS No. 38, "Accounting for Preacquisition Contingencies of
Purchases Enterprises" and eliminates pooling-of-interests accounting
prospectively. SFAS No. 141 was adopted on July 1, 2001. SFAS No. 142 supersedes
APB Opinion No. 17, "Intangible Assets" and changes the accounting for goodwill
from an amortization method to an impairment-only approach. Under SFAS No. 142,
goodwill will be tested annually and whenever events or circumstances occur
indicating that goodwill might be impaired. The provisions of SFAS No. 142 are
required to be applied starting with fiscal years beginning after December 15,
2001. Upon adoption of SFAS No. 142, amortization of goodwill recorded for
business combinations consummated prior to July 1, 2001 will cease, and
intangible assets acquired prior to July 1, 2001 that do not meet the criteria
for recognition under SFAS No. 141 will be reclassified to goodwill. The
adoption of SFAS No. 141 did not have an impact on the Company's financial
position or results of operations. The Company will adopt SFAS No. 142 on
January 1, 2002, upon which time the Company will cease amortizing goodwill and
separately identifiable intangibles in accordance with the guidelines set forth
in the standard. As of the date of adoption, the Company expects remaining
unamortized goodwill and unamortized other intangible assets to be approximately
$54.6 million and $8.6 million, respectively, all of which will be subject to
the transition guidelines of SFAS No. 142. The Company is currently evaluating
the impact that the adoption of SFAS No. 142 will have on its results of
operations and financial position.

     In August 2001, the FASB issued Statement of Financial Accounting Standards
No. 143 (SFAS No. 143), "Accounting for Asset Retirement Obligations," which
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and for the associated asset retirement
costs. The standard applies to tangible long-lived assets that have a legal
obligation associated with their retirement that results from the acquisition,
construction or development or normal use of the asset. SFAS No. 143 requires
that the fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made. The fair value of the liability is added to the carrying
amount of the associated asset and this additional carrying amount is
depreciated over the remaining life of the asset. The liability is accreted at
the end of each period through charges to operating expense. The provisions of
SFAS No. 143 are required to be applied during the quarter ending March 31,
2003. To accomplish this, the Company must identify all legal obligations for
asset retirement obligations, if any, and determine the fair value of these
obligations on the date of adoption. The determination of fair value is complex
and will require the Company to gather market information and develop cash flow
models. Additionally, the Company will be required to develop processes to track
and monitor these obligations. It is not anticipated that the financial impact
of this statement will have a material effect on our consolidated financial
statements.

     In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144 (SFAS No. 144), "Accounting for the Impairment or Disposal of
Long-Lived Assets", which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets. While SFAS No. 144 supersedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of", it retains many of the fundamental provisions of SFAS
No. 121, including the recognition and measurement of the impairment of
long-lived assets to be held and used, and the measurement of long-lived assets
to be disposed of by sale. SFAS No. 144 also supersedes the accounting and
reporting provisions of Accounting Principles Board Opinion No. 30 (APB 30),
"Reporting the Results of Operations--Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions", for the disposal of a segment of a business. However,
it retains the requirement in APB 30 to report separately discontinued
operations and extends that reporting to a component of an entity that either
has been disposed of (by sale, abandonment, or in a distribution to owners) or
is classified as held for sale. SFAS No. 144 is effective for fiscal years
beginning after December 15, 2001. At this time, the Company does not anticipate
that the adoption of SFAS No. 144 will have a material effect on the Company's
consolidated financial statements.

                                       13

<PAGE>

Liquidity and Capital Resources

     Our sources of cash liquidity included cash, cash from operations, amounts
available under credit facilities, and other external sources of funds. As of
September 30, 2001, we had cash of $12.0 million and had $23.0 million
outstanding on our line of credit with a group of financial institutions. On
October 30, 2001, the Company received $35.0 million from the investment funds
managed by Oak Investment Partners for the sale of its Series A Convertible
Preferred Stock in a private placement pursuant to an agreement executed on
October 10, 2001.

     Cash used in or provided by operations is primarily derived from our
contracts in process and changes in working capital. Cash used in operations
totaled $37.7 million for the nine months ended September 30, 2000 while cash
provided by operations totaled $0.4 million for the nine months ended
September 30, 2001.

     Cash used in investing activities totaled $5.4 million and $4.3 million for
the nine months ended September 30, 2000 and 2001, respectively. Investing
activities for the nine months ended September 30, 2000 consisted primarily of
proceeds totaling $34.7 million received from the sale of investments, offset by
cash paid of approximately $37.1 million for acquisitions and investments. Cash
used in investing activities for the nine months ended September 30, 2001
consisted of capital expenditures.

     Cash provided by financing activities for the nine months ended
September 30, 2000 was $33.0 million, which was primarily derived from net
borrowings under the line of credit of $23.9 million and sales of common stock
issued through our stock option and employee stock purchase plans of
$9.5 million. Cash used in financing activities totaled $2.1 million for the
nine months ended September 30, 2001 and consisted primarily of repayment of
borrowings under our line of credit, notes payable and capital lease
obligations, partially offset by proceeds from the issuance of common stock.

     As of September 30, 2001, $23.0 million was outstanding under our senior
secured credit facility ("line of credit") with a group of financial
institutions. The line of credit expires in February 2004. Loans under this line
of credit bear interest, at our discretion, at either (i) the greater of the
bank prime rate and the Federal Funds Rate plus 0.5%, plus a margin ranging from
0.75% to 1.50%, the ("base rate margin"), or (ii) at the London Interbank
Offering Rate ("LIBOR") plus a margin ranging from 1.75% to 2.50%, the ("LIBOR
rate margin"). The line of credit is secured by substantially all of our assets.
The line of credit agreement contains restrictive covenants, which, among other
things, require maintenance of certain financial ratios. On July 19, 2001, we
executed an amendment to our line of credit agreement, which among other items,
changed the minimum EBITDA covenant to exclude unusual charges up to a specified
amount with respect to the first and second quarters of our fiscal 2001
financial results.

     We have no material cash commitments other than obligations under our
credit facilities, promissory notes, and operating and capital leases. Future
capital requirements will depend upon many factors, including the timing of
payments under contracts and increases in personnel in advance of new contracts.

                                       14

<PAGE>

Risk Factors That May Affect Results of Operations and Financial Condition

     You should carefully consider the following risk factors and all other
information contained herein as well as the information included in our Annual
Report on Form 10-K for the year ended December 31, 2000, and other reports and
filings made with the Securities and Exchange Commission before investing in our
common stock. Investing in our common stock involves a high degree of risk.
Risks and uncertainties, in addition to those we describe below, that are not
presently known to us or that we currently believe are immaterial may also
impair our business operations. If any of the following risks occur, our
business could be harmed, the price of our common stock could decline and you
may lose all or part of your investment. See the note regarding forward-looking
statements included at the beginning of Item 2. Management's Discussion and
                                        -----------------------------------
Analysis of Financial Condition and Results of Operations.
----------------------------------------------------------

We expect our quarterly results to fluctuate. If we fail to meet earnings
estimates, our stock price could decline.

     Our quarterly and annual operating results have fluctuated in the past and
will vary in the future due to a variety of factors, many of which are outside
of our control. The factors outside of our control include:

     o telecommunications market conditions and economic conditions generally;

     o the timing and size of network deployments by our carrier customers and
       the timing and size of orders for network equipment built by our vendor
       customers;

     o fluctuations in demand for our services;

     o the length of sales cycles;

     o reductions in the prices of services offered by our competitors; and

     o costs of integrating technologies or businesses that we add.

     The factors substantially within our control include:

     o changes in the actual and estimated costs and time to complete
       fixed-price, time-certain projects;

     o the timing of expansion into new markets, both domestically and
       internationally; and

     o the timing and payments associated with possible acquisitions.

     Due to these factors, our quarterly revenues, expenses and results of
operations have recently varied significantly and could continue to vary
significantly in the future. You should take these factors into account when
evaluating past periods, and, because of the potential variability due to these
factors, you should not rely upon results of past periods as an indication of
our future performance. In addition, we may from time to time provide estimates
of our future performance. Estimates are inherently uncertain and actual results
are likely to deviate, perhaps substantially, from our estimates as a result of
the many risks and uncertainties in our business, including, but not limited to,
those set forth in these risk factors. We undertake no duty to update estimates
if given. In addition, the long-term viability of our business could be
negatively impacted if there were a sustained downward trend in our revenues and
results of operations. Because our operating results may vary significantly from
quarter to quarter based upon the factors described above, results may not meet
the expectations of securities analysts and investors, and this could cause the
price of our common stock to decline significantly.

     In recent months, we have experienced a negative impact to our earnings and
stock price as a result of the foregoing factors that may cause our quarterly
results to fluctuate. We may continue to incur losses for the foreseeable
future. Due to the recent downturn in the financial markets generally, and
specifically the slowdown in wireless telecommunications infrastructure
spending, some of our customers have cancelled or suspended their contracts with
us and many of our customers and potential customers have postponed entering
into new contracts for our services. The reduction in the availability of
capital due to the downturn has also delayed the completion of mergers
contemplated by some of our customers, which has resulted in project delays. In
addition, unfavorable economic conditions are causing some of our customers to
take longer to pay us for services we perform, increasing the average number of
days that our receivables are outstanding. Also due to the difficult financing
and economic conditions, some of our customers may not be able to pay us for
services that we have already performed and three of our customers have filed
for bankruptcy protection in recent months. If we are not able to collect
amounts due to us, we may be required to write-off significant amounts of our
accounts receivable. For example, we recognized bad debt expense of $3.5

                                       15

<PAGE>

million during the first quarter of fiscal 2001 due to Advanced Radio Telecom's
filing for bankruptcy protection and we recognized bad debt expense of $13.9
million for the entire Metricom, Inc. receivable due to Metricom's filing for
bankruptcy protection and $1.3 million for US Wireless during the second quarter
of 2001. Because we are not able to reduce our costs as fast as our revenues may
decline, our costs as a percentage of revenues may increase and,
correspondingly, our net earnings may decline disproportionately to any decrease
in revenues. If we restructure our business in an effort to minimize our
expenses, we may incur associated charges. As a result of these and other
factors, it has become extremely difficult to forecast our future revenues and
earnings, and any predictions we make are subject to significant revisions and
are very uncertain.

Our success is dependent on the continued growth in the deployment of wireless
networks, and to the extent that such growth cannot be sustained our business
may be harmed.

     The wireless telecommunications industry has historically experienced a
dramatic rate of growth both in the United States and internationally. Recently,
however, many telecommunications carriers have been re-evaluating their network
deployment plans in response to downturns in the capital markets, changing
perceptions regarding industry growth, the adoption of new wireless
technologies, and a general economic slowdown in the United States. It is
difficult to predict whether these changes will result in a sustained downturn
in the telecommunications industry. If the rate of growth continues to slow and
carriers continue to reduce their capital investments in wireless infrastructure
or fail to expand into new geographies, our business will be significantly
harmed.

     The uncertainty associated with rapidly changing telecommunications
technologies may also continue to negatively impact the rate of deployment of
wireless networks and the demand for our services. Telecommunications service
providers face significant challenges in assessing consumer demand and in
acceptance of rapidly changing enhanced telecommunications capabilities. If
telecommunications service providers continue to perceive that the rate of
acceptance of next generation telecommunications products will grow more slowly
than previously expected, they may, as a result, continue to slow their
development of next generation technologies. Any significant sustained slowdown
will further reduce the demand for our services and adversely affect our
financial results.

Our revenues will be negatively impacted if there are delays in the deployment
of new wireless networks.

     A significant portion of our revenues is generated from new licensees
seeking to deploy their networks. To date, the pace of network deployment has
sometimes been slower than expected, due in part to difficulty experienced by
holders of licenses in raising the necessary financing, and there can be no
assurance that future bidders for licenses will not experience similar
difficulties. In addition, uncertainties regarding the availability and
allocation of spectrum have caused delays in network deployment. There has also
been substantial regulatory uncertainty regarding payments owed to the United
States government by past successful wireless bidders, and such uncertainty has
also delayed network deployments. In addition, factors adversely affecting the
demand for wireless services, such as allegations of health risks associated
with the use of mobile phones, could slow or delay the deployment of wireless
networks. These factors, as well as delays in granting the use of spectrum,
legal decisions and future legislation regulations may slow or delay the
deployment of wireless networks, which in turn, could harm our business.

If our customers do not receive sufficient financing, our business may be
seriously harmed.

     Some of our customers and potential customers have limited or no operating
histories and limited financial resources. These customers often must obtain
significant amounts of financing to pay for their spectrum licenses, fund
operations and deploy their networks. Other customers of ours rely upon outside
financing to pay the considerable costs of deploying their networks. In either
instance, we frequently work with these companies prior to their receipt of
financing. If these companies fail to receive adequate financing or experience
delays in receiving financing, particularly after we have begun working with
them, our results of operations may be harmed. In addition, to the extent our
customers continue to experience capital constraints, they could place pressure
on us to lower the prices we charge for our services. If competitive pressures
force us to make price concessions or otherwise reduce prices for our services,
then our revenues and margins will decline and our results of operations would
be harmed.

Our success is dependent on the continued trend toward outsourcing wireless
telecommunications services.

     Our success is dependent on the continued trend by wireless carriers and
network equipment vendors to outsource their network design, deployment and
management needs. If wireless carriers and network equipment vendors elect to
perform more network deployment services themselves, our revenues would likely
decline and our business would be harmed.

                                       16

<PAGE>

A loss of one or more of our key customers or delays in project timing for key
customers could cause a significant decrease in our net revenues.

     We have derived, and believe that we will continue to derive, a significant
portion of our revenues from a limited number of customers. We anticipate that
our key customers will change in the future as current projects are completed
and new projects begin. The services required by any one customer could be
limited by a number of factors, including industry consolidation, technological
developments, economic slowdown and internal budget constraints. None of our
customers is obligated to purchase additional services from us and most of our
contracts with customers can be terminated without cause or penalty by the
customer on notice to us. As a result of these factors, the volume of work
performed for specific customers is likely to vary from period to period, and a
major customer in one period may not use our services in a subsequent period.
Accordingly, we cannot be certain that present or future customers will not
terminate their network service arrangements with us or significantly reduce or
delay their contracts.

     The consolidation of equipment vendors or carriers could adversely impact
our business.

     Recently, the wireless telecommunications industry has been characterized
by significant consolidation activity. This consolidation may lead to a greater
ability among equipment vendors and carriers to provide a full suite of network
services, and may simplify integration and installation, which could lead to a
reduction in demand for our services. Moreover, the consolidation of equipment
vendors or carriers could have the effect of reducing the number of our current
or potential customers, which could result in bargaining power for our remaining
customers. This potential increase in bargaining power could create competitive
pressures whereby a particular customer may request our exclusivity with them in
a particular market and put downward pressure on the prices we charge for our
services. Accordingly, we may not be able to represent some customers who wish
to retain our services.

We may not be able to hire and retain a sufficient number of qualified engineers
or other employees to sustain our growth, meet our contract commitments or
maintain the quality of our services.

     To the extent we continue to grow, our future success will depend on our
ability to hire and retain additional highly skilled engineering, managerial,
marketing and sales personnel. Competition for such personnel is intense,
especially for engineers and project managers, and we may be unable to attract
sufficiently qualified personnel in adequate numbers to meet the demand for our
services in the future. In addition, as of September 30, 2001, 22% of our
employees in the United States were working under H-1B visas. H-1B visas are a
special class of nonimmigrant working visas for qualified aliens working in
specialty occupations, including, for example, radio frequency engineers. We are
aware that the Department of Labor has issued interim final regulations that
place greater requirements on H-1B dependent companies, such as WFI, and may
restrict our ability to hire workers under the H-1B visa category in the future.
In addition, these regulations expose us to significant penalties, including a
prohibition on the hiring of H-1B workers, if the Department of Labor deems us
noncompliant.

     In addition, immigration policies are subject to rapid change, and these
policies have generally become more stringent since the events of September 11,
2001. For example, the Mexican government will not issue visas to enter Mexico
for people of certain nationalities without a prior background check conducted
by the Gubernacion office in Mexico City. These policies may restrict our
ability to send certain of our employees to Mexico that we deem necessary to
sustain the growth of our subsidiary, WFI de Mexico. Any additional significant
changes in immigration law or regulations may further restrict our ability to
continue to employ or to hire new workers on H-1B visas and otherwise restrict
our ability to utilize our existing employees as we see fit, and, therefore,
could harm our business.

A significant percentage of our revenue is accounted for on a
percentage-of-completion basis, which could cause our quarterly results to
fluctuate.

     A significant percentage of our revenue is derived from fixed priced
contracts which are accounted for on a percentage-of-completion basis. The
portion of our revenue from fixed price contracts accounted for approximately
51% of our revenues for the nine months ended September 30, 2001. With the
percentage-of-completion method, in each period we recognize expenses as they
are incurred and we recognize revenue based on a comparison of the current costs
incurred for the project to date to the then estimated total costs of the
project. Accordingly, the revenue we recognize in a given quarter depends on the
costs we have incurred for individual projects and our then current estimate of
the total remaining costs to complete individual projects. If, in any period, we
significantly increase our estimate of the total costs to complete a project, we
may recognize very little or no

                                       17

<PAGE>

additional revenue with respect to that project. As a result, our gross margin
in such period and in future periods may be significantly reduced and in some
cases we may recognize a loss on individual projects prior to their completion.
For example, in 1999 we revised the estimated costs to complete two large
contracts which resulted in a reduction of gross margins by 9.9% in the first
quarter of 1999 and 6.9% in the second quarter of 1999. To the extent that our
estimates fluctuate over time or differ from actual requirements, gross margins
in subsequent quarters may vary significantly from our estimates and could harm
our financial results.

     Similarly, the cancellation or modification of a contract which is
accounted for on a percentage-of-completion basis may adversely affect our gross
margins for the period during which the contract is modified or cancelled. In
the first quarter of fiscal 2001, we experienced such gross margin adjustments
related to the suspension and termination of the Metricom and Advanced Radio
Telecom contracts. Under certain circumstances, a cancellation or modification
of a fixed price contract could also result in our having to reverse revenue
that we recognized in a prior period, which could significantly reduce the
amount of revenues we recognize for the period in which the adjustment is made.
For example, if we have a three year fixed price contract where the contract fee
is $1 million and the initial estimated costs associated with the contract are
$550,000, and if, during the first year we incur $220,000 in costs related to
the contract and correspondingly estimate that the contract is 40% complete,
then under the percentage-of-completion accounting method we would recognize
40%, or $400,000 in revenue during the first year of the contract. If, during
the second year of the contract the project is terminated with 35% of the
services deemed provided to the client, then the total revenue for the project
would be adjusted downward to $350,000, and the revenue recognizable during the
second year would be the total revenue earned to date, the $350,000 less the
revenue previously recognized or $400,000, resulting in a reversal of $50,000 of
revenue previously recognized. To the extent we experience additional
adjustments such as those described above, our revenues and gross margins will
be adversely affected.

Our financial results may be harmed if we maintain or increase our staffing
levels in anticipation of one or more projects and underutilize our personnel
because such projects are delayed, reduced or terminated.

     Since our business is driven by large, and sometimes multi-year contracts,
we forecast our personnel needs for future projected business. If we maintain or
increase our staffing levels in anticipation of one or more projects and those
projects are delayed, reduced or terminated, we may underutilize these
additional personnel, which would increase our general and administrative
expenses, reduce our earnings and possibly harm our results of operations.

     Additionally, due to current market conditions, we are faced with the
challenge of managing the appropriate size of our workforce in light of
projected demand for our services. If we maintain a workforce sufficient to
support a resurgence in demand, then in the meantime our general and
administrative expenses will be high relative to our revenues and our
profitability will suffer. Alternatively, if we reduce the size of our workforce
in response to any decrease in the demand for our services, then our ability to
quickly respond to any resurgence in demand will be impaired. As a result, to
the extent that we fail to successfully manage this challenge our financial
results will be harmed.

Our short operating history, our recent growth in expanding services, and the
recent and sudden slowdown due to the current economic conditions in our
industry limit our ability to forecast operating results.

     We have generated revenues for only six years and, thus, we have only a
short history from which to predict future revenues. This limited operating
experience, together with the dynamic market environment in which we operate,
including fluctuating demand for our services, reduces our ability to accurately
forecast our quarterly and annual revenues. Further, we plan our operating
expenses based primarily on these revenue projections. Because most of our
expenses are incurred in advance of anticipated revenues, we may not be able to
decrease our expenses in a timely manner to offset any unexpected shortfall in
revenues. For further financial information relating to our business, see
"Management's Discussion and Analysis of Financial Condition and Operating
Results."

Our operating results may suffer because of competition in our industry.

     The wireless network services market is highly competitive and fragmented
and is served by numerous companies. Many of these competitors have
significantly greater financial, technical and marketing resources, generate
greater revenues and have greater name recognition and experience than us. We do
not know of any competitors that are dominant in our industry. For a more
complete description of our competition, see "Business--Competition" in our
Annual Report on Form 10-K for the year ended December 31, 2000.

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<PAGE>

     We believe that the principal competitive factors in our market include the
ability to deliver results within budget and on time, reputation,
accountability, project management expertise, industry experience and pricing.
In addition, expertise in new and evolving technologies, such as wireless
internet services, has become increasingly important. We also believe our
ability to compete depends on a number of factors outside of our control,
including:

     o the prices at which others offer competitive services;

     o the ability and willingness of our competitors to finance customers'
       projects on favorable terms;

     o the ability of our customers to perform the services themselves; and

     o the responsiveness of our competitors to customer needs.

     We may not be able to compete effectively on these or other bases, and, as
a result, our revenues and income may decline. In addition, we have recently
begun to face competition from a new class of entrants into the wireless network
services market comprised of recently unemployed telecommunications workers who
have started their own businesses and are willing to operate at lower profit
margins than ours. To the extent that these competitors are able to increase
their market share, our business may suffer.

We must keep pace with rapid technological changes, market conditions and
industry developments to maintain and grow our revenues.

     The market for wireless and other network system design, deployment and
management services is characterized by rapid change and technological
improvements. Our future success will depend in part on our ability to enhance
our current service offerings to keep pace with technological developments and
to address increasingly sophisticated customer needs. We may not successfully
develop or market service offerings that respond in a timely manner to the
technological advances of our customers and competitors. In addition, the
services that we do develop may not adequately or competitively address the
needs of the changing telecommunications marketplace. If we are not successful
in responding to technological changes, market conditions or industry
developments, our revenues may decline and our business may be harmed.

Our business operations could be significantly disrupted if we lose members of
our management team.

     Our success depends to a significant degree upon the continued
contributions of our executive officers, both individually and as a group. See
"Directors and Executive Officers of the Registrant," incorporated by reference
into our Annual Report on Form 10-K for the year ended December 31, 2000, for a
listing of our executive officers. Our future performance will be substantially
dependent on our ability to retain and motivate them.

We may not be successful in our efforts to identify, acquire or integrate
acquisitions.

     Our failure to manage risks associated with acquisitions could harm our
business. One important component of our business strategy is to expand our
presence in new and existing markets by acquiring additional businesses. During
2000, we acquired seven businesses. We are almost continuously engaged in
discussions or negotiations regarding the acquisition of businesses or strategic
investments in businesses, some potentially material in relation to our size. We
may not be able to identify, acquire or profitably manage additional businesses
or integrate successfully any acquired businesses without substantial expense,
delay or other operational or financial problems. Acquisitions involve a number
of risks, including:

     o diversion of significant time and attention of our management;

     o difficulty in integrating and absorbing the acquired business, its
       employees, corporate culture, managerial systems and processes and
       services;

     o failure to retain key personnel and employee turnover;

     o customer dissatisfaction or performance problems with an acquired
       company;

     o assumption of unknown liabilities; and

     o other unanticipated events or circumstances.


                                       19

<PAGE>

     Our failure to adequately address any of these factors may negatively
affect our expected profitability from acquisitions or harm our ability to
successfully negotiate or complete future acquisitions.

We may not be successful in our efforts to integrate international acquisitions.

     A key component of our business model is to expand our operations in
international markets. International acquisitions pose a challenge, as we must
integrate operations despite differences in culture, language and legal
environments. To date, we have limited experience with international
acquisitions and face risks related to those transactions, including:

     o difficulties in staffing, managing and integrating international
       operations due to language, cultural or other differences;

     o different or conflicting regulatory or legal requirements;

     o foreign currency fluctuations; and

     o diversion of significant time and attention of our management.

     Our failure to address these risks could inhibit or preclude our efforts to
pursue or complete international acquisitions.

We have recently expanded our operations internationally. Our failure to
effectively manage our international operations could harm our business.

     We currently have international operations, including offices in Brazil,
India, Mexico, United Kingdom and Sweden. For the nine months ended September
30, 2001, international operations accounted for approximately 34% of our total
revenues. We believe that the percentage of our total revenues attributable to
international operations will continue to be significant. We intend to expand
our existing international operations and may enter additional international
markets, which will require significant management time and financial resources
and could adversely affect our operating margins and earnings. In order to
expand our international operations, we will need to hire additional personnel
and develop relationships with potential international customers. To the extent
that we are unable to do so on a timely basis, our growth in international
markets will be limited, and our business could be harmed.

     Our international business operations are subject to a number of material
risks, including, but not limited to:

     o difficulties in building and managing foreign operations;

     o difficulties in enforcing agreements and collecting receivables through
       foreign legal systems and addressing other legal issues;

     o longer payment cycles;

     o foreign and U.S. taxation issues;

     o potential weaknesses in foreign economies, particularly in Europe, South
       America and Mexico;

     o fluctuations in the value of foreign currencies; and

     o unexpected domestic and international regulatory, economic or political
       changes.

     To date, we have encountered each of the risks set forth above in our
international operations. If we are unable to expand and manage our
international operations effectively, our business may be harmed.

Fluctuations in the value of foreign currencies could harm our profitability.

     The majority of our international sales are currently denominated in U.S.
dollars. Fluctuations in the value of foreign currencies, compared to the U.S.
dollar, may make our services more expensive than local service offerings in
international locations. This would make our service offerings less price
competitive than local service offerings, which could harm our business. To
date, our experience with this foreign currency risk has predominately related
to the Brazilian real and Mexican

                                       20

<PAGE>

peso. In addition, we conduct business in Swedish krona, British pound sterling,
and Euro. We do not currently engage in currency hedging activities to limit the
risks of currency fluctuations. Therefore, fluctuations in foreign
currencies could have a negative impact on the profitability of our global
operations, which would harm our financial results.

We may encounter potential costs or claims resulting from project performance.

     Our engagements often involve large scale, highly complex projects. Our
performance on such projects frequently depends upon our ability to manage the
relationship with our customers, and to effectively manage the project and
deploy appropriate resources, including third-party contractors, personnel and
our own, in a timely manner. Many of our engagements involve projects that are
significant to the operations of our customers' businesses. Our failure to meet
a customer's expectations in the planning or implementation of a project or the
failure of our personnel or third-party contractors to meet project completion
deadlines could damage our reputation, result in termination of our engagement
and adversely affect our ability to attract new business. We frequently
undertake projects in which we guarantee performance based upon defined
operating specifications or guaranteed delivery dates. Unsatisfactory
performance or unanticipated difficulties or delays in completing such projects
may result in a direct reduction in payments to us, or payment of damages by us,
which would harm our business.

As of September 30, 2001, executive officers and directors and their affiliates
controlled 51% of our outstanding common stock and as a result are able to
exercise control over matters requiring stockholder approval.

     As of September 30, 2001, executive officers and directors and their
affiliates beneficially owned, in the aggregate, approximately 51% of our
outstanding common stock. In particular, our Chairman, Massih Tayebi, and our
Chief Executive Officer, Masood K. Tayebi, beneficially owned, in the aggregate,
approximately 45% of our outstanding common stock. In addition, other members of
the Tayebi family owned, in the aggregate, approximately 7% of our outstanding
common stock. As a result, these stockholders are able to exercise control over
matters requiring stockholder approval, such as the election of directors and
approval of significant corporate transactions, which include preventing a
third-party from acquiring control over us. These transactions may also include
those that other stockholders deem to be in their best interests and in which
those other stockholders might otherwise receive a premium for their shares. For
further information regarding our stock ownership, see "Security Ownership of
Certain Beneficial Owners and Management" incorporated by reference into our
Annual Report on Form 10-K for the year ended December 31, 2000.

Our stock price may be particularly volatile because of our industry.

     The stock market in general has recently experienced extreme price and
volume fluctuations. In addition, the market prices of securities of technology
and telecommunications companies have been extremely volatile, and have
experienced fluctuations that have often been unrelated to or disproportionate
to the operating performance of those companies. These broad market fluctuations
could adversely affect the price of our common stock. For further information
regarding recent stock trends, see "Market for Registrant's Common Equity and
Related Stockholder Matters" in our Annual Report on Form 10-K for the year
ended December 31, 2000.

Provisions in our charter documents and Delaware law may make it difficult for a
third-party to acquire us and could depress the price of our common stock.

     Delaware corporate law and our certificate of incorporation and bylaws
contain provisions that could delay, defer or prevent a change in control of our
management or us. These provisions may also discourage proxy contests and make
it more difficult for our stockholders to elect directors and take other
corporate action. As a result, these provisions could limit the price that
investors are willing to pay for shares of our common stock. These provisions
include:

     o authorizing the board of directors to issue preferred stock;

     o prohibiting cumulative voting in the election of directors;

     o limiting the persons who may call special meetings of stockholders;

     o prohibiting stockholder action by written consent; and

                                       21

<PAGE>

     o establishing advance notice requirements for nominations for election to
       our board of directors or for proposing matters that can be acted on by
       stockholders at meetings of our stockholders.

     We are also subject to certain provisions of Delaware law which could
delay, deter or prevent us from entering into an acquisition, including Section
203 of the Delaware General Corporation Law, which prohibits us from engaging in
a business combination with an interested stockholder unless specific conditions
are met.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     We are exposed to foreign currency risks due to both transactions and
translations between a functional and reporting currency in our Mexican,
Brazilian and United Kingdom subsidiaries. We currently do not hedge any of
these risks because we do not believe that to do so is justified by the current
exposure and the cost at this time. We are exposed to the impact of foreign
currency fluctuations due to the operations of and intercompany transactions
with our consolidated foreign subsidiaries. While these intercompany balances
are eliminated in consolidation, exchange rate changes do affect consolidated
earnings. The following table sets forth total amounts owed to our U.S.
operations from our Mexican, Brazilian, and United Kingdom subsidiaries at
September 30, 2000 and 2001 (denominated in U.S. dollars, in millions):

                                                     2000          2001
                                                     -----        -----
            Mexico ................................  $10.0        $ 9.2
            Brazil ................................  $ 1.3        $ 2.4
            United Kingdom ........................  $ 2.4        $ 9.0

     The potential foreign currency translation losses from a hypothetical 10%
adverse change in the exchange rates from the intercompany balances at September
30, 2000 and 2001 are as follows (denominated in U.S. dollars, in millions):

                                                     2000          2001
                                                     -----        -----
            Mexico ................................  $ 1.0        $ 0.9
            Brazil ................................  $ 0.1        $ 0.2
            United Kingdom ........................  $ 0.2        $ 0.9

     In addition, we estimate that a 10% change in foreign exchange rates would
impact reported operating profit by approximately $1.0 million and $0.7 million
for the nine months ended September 30, 2000 and 2001, respectively. This was
estimated using a 10% deterioration factor to the average monthly exchange rates
applied to net income or loss for each of the subsidiaries in the respective
period.

     We do not use derivative financial instruments, derivative commodity
instruments or other market risk sensitive instruments, positions or
transactions. Accordingly, management believes that it is not subject to any
material risks arising from changes in interest rates, foreign currency exchange
rates, commodity prices, equity prices or other market changes that affect
market risk sensitive instruments.

     As of September 30, 2001, $23.0 million was outstanding under our senior
secured credit facility ("line of credit") with a group of financial
institutions. The line of credit expires in February 2004. Loans under this line
of credit bear interest, at our discretion, at either (i) the greater of the
bank prime rate and the Federal Funds Rate plus 0.5%, plus a margin ranging from
0.75% to 1.50%, the ("base rate margin"), or (ii) at the London Interbank
Offering Rate ("LIBOR") plus a margin ranging from 1.75% to 2.50%, the ("LIBOR
rate margin"). The line of credit is secured by substantially all of our assets.
The line of credit agreement contains restrictive covenants, which, among other
things, require maintenance of certain financial ratios. On July 19, 2001, we
executed an amendment to our line of credit agreement, which among other items,
changed the minimum EBITDA covenant to exclude unusual charges up to a specified
amount with respect to the first and second quarters of our fiscal 2001
financial results.

     We do not utilize any derivative financial instruments to hedge the
interest rate fluctuation as our balances under the credit facility are borrowed
over the short term and we currently retain the ability to pay down amounts
borrowed through our operational funds. A hypothetical 10% adverse change in the
weighted average interest rate for the nine months ended September 30, 2001
would have increased net loss for the period by approximately $0.1 million.

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<PAGE>

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings

      In October 2000, we were notified that Norm Korey, a former employee who
was terminated by us, has asserted that he is owed certain commissions and stock
options and severance pay from us. We were served with a formal arbitration
demand relating to the matter in January 2001. Limited discovery commenced in
August 2001. During discovery, Mr. Korey made claims against us for in excess of
$6.0 million. We believe the arbitration claims of Mr. Korey are without merit
and intend to vigorously defend against them.

      In June and July 2001, the Company and certain of its directors and
officers were named as defendants in five purported class action complaints
filed in the United States District Court for the Southern District of New York
on behalf of persons and entities who acquired the Company's common stock at
various times on or after November 4, 1999. The complaints allege that the
registration statement and prospectus dated November 4, 1999, issued by the
Company in connection with the public offering of the Company's common stock
contained untrue statements of material fact or omissions of material fact in
violation of securities laws because the registration statement and prospectus
allegedly failed to disclose that the offering's underwriters had (a) solicited
and received additional and excessive compensation and benefits from their
customers beyond what was listed in the registration statement and prospectus
and (b) entered into tie-in or other arrangements with certain of their
customers which were allegedly designed to maintain, distort and/or inflate the
market price of the Company's common stock in the aftermarket. The actions seek
unspecified monetary damages and other relief. On August 8, 2001, the
above-referenced lawsuits were consolidated for pretrial purposes with hundreds
of similar lawsuits filed against other initial public offering issuers and
their underwriters in the Southern District of New York. An initial case
management conference was held on September 7, 2001 for all the lawsuits, at
which time the court ordered that the time for all defendants to respond to any
complaint be postponed until further notice of the Court. The Company believes
these lawsuits are without merit and intends to vigorously defend against them.

     In addition to the foregoing matters, from time to time, we may become
involved in various lawsuits and legal proceedings which arise in the ordinary
course of business. However, litigation is subject to inherent uncertainties,
and an adverse result in these or other matters may arise from time to time that
may harm our business.

Item 2. Changes in Securities and Use of Proceeds

     On October 17, 2001, we issued an aggregate of 1,638,838 shares of our
common stock, valued at $7.3 million, to Davis Bay, LLC. The shares were issued
pursuant to a second amendment to the asset purchase agreement executed on
September 27, 2001 by the Company and Davis Bay. The shares were issued pursuant
to the exemption from registration provided for under Rule 506 of Regulation D
of the Securities Act of 1933, based on the representation by Davis Bay that it
is an accredited investor.

     On October 30, 2001, we issued an aggregate of 63,637 shares of Series A
Convertible Preferred Stock, valued at $35.0 million, in a private placement to
investment funds managed by Oak Investment Partners. The shares were issued for
a common stock equivalent price of $5.50 per share. Each share of Series A
Convertible Preferred Stock is initially convertible into 100 shares of common
stock at the option of the holder at any time subject to certain provisions in
the agreement. After July 2004, the Series A Convertible Preferred Stock will
automatically convert into shares of the Company's common stock if and when our
common stock trades at or above $11.00 per share for 30 consecutive days after
that date. The shares were issued pursuant to the exemption from registration
provided for under Rule 506 of Regulation D of the Securities Act of 1933, based
on the representation by the purchasers that they are accredited investors.

Item 6. Exhibits and Reports on Form 8-K:

     (a). Exhibits:

          Exhibit
          Number      Description of Document
          -------     -----------------------
          4.1         Restated Certificate of Incorporation filed and effective
                      on November 5, 1999.

          4.2         Certificate of Designations, Preferences and Rights of
                      Series A Preferred Stock.

     (b). Reports on Form 8-K:

None.


                                       23

<PAGE>

                                   SIGNATURES

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

                                    WIRELESS FACILITIES, INC.

                                    By:   /s/ MASOOD K. TAYEBI, PH.D
                                       -----------------------------------------
                                              Masood K. Tayebi, Ph.D.
                                              Chief Executive Officer


                                    By:   /s/ DAN STOKELY
                                       -----------------------------------------
                                              Dan Stokely
                                       Vice President Corporate Controller and
                                       Principle Accounting Officer

Date: November 13, 2001


                                       24

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1
<SEQUENCE>3
<FILENAME>dex41.txt
<DESCRIPTION>AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
<TEXT>
<PAGE>

                                                                     EXHIBIT 4.1

                              AMENDED AND RESTATED

                          CERTIFICATE OF INCORPORATION

     WIRELESS FACILITIES, INC., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies as follows:

     1. The name of the Corporation is Wireless Facilities, Inc.

     2. The original name of this Corporation is Wireless Facilities, Inc. and
the date of filing the original Certificate of Incorporation of this Corporation
with the Secretary of State of the State of Delaware was July 7, 1997.

     3. The Amended and Restated Certificate of Incorporation of this
Corporation, in the form attached hereto as Exhibit A, has been duly adopted by
the Board of Directors and by the stockholders of the corporation in accordance
with Sections 228, 242 and 245 of the General Corporation Law of the State of
Delaware.

     4. The Amended and Restated Certificate of Incorporation so adopted reads
in full as set forth in Exhibit A attached hereto and hereby incorporated by
reference.

     IN WITNESS WHEREOF, Wireless Facilities, Inc. has caused this Amended and
Restated Certificate of Incorporation to be signed by its Chief Executive
Officer and Secretary this 2nd day of November, 1999.


                                           /s/ Massih Tayebi
                                           -----------------------------------
                                           Massih Tayebi, Ph.D.
                                           Chief Executive Officer and Secretary


                                       1.

<PAGE>

                                    Exhibit A

                              AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                            WIRELESS FACILITIES, INC.

                                       I.

     The name of this corporation is Wireless Facilities, Inc.

                                      II.

     The address of the registered office of the corporation in the State of
Delaware is 9 East Loockerman Street, City of Dover, County of Kent, and the
name of the registered agent of the corporation in the State of Delaware at such
address is National Registered Agents, Inc.

                                      III.

     The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.

                                      IV.

     A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is two hundred million
(200,000,000) shares. One hundred ninety five million (195,000,000) shares shall
be Common Stock, each having a par value of one tenth of one cent ($0.001). Five
million (5,000,000) shares shall be Preferred Stock, each having a par value of
one tenth of one cent ($0.001).

     B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law,
to fix or alter from time to time the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions of any wholly unissued series of Preferred Stock, and to establish
from time to time the number of shares constituting any such series or any of
them; and to increase or decrease the number of shares of any series subsequent
to the issuance of shares of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be decreased in accordance with the foregoing sentence, the shares constituting
such decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.

                                       1.

<PAGE>

                                       V.

     For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:

     A. 1. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed exclusively
by one or more resolutions adopted by the Board of Directors.

        2. Board of Directors

           a. Directors shall be elected at each annual meeting of stockholders
to hold office until the next annual meeting. Each director shall hold office
either until the expiration of the term for which elected or appointed and until
a successor has been elected and qualified, or until such director's death,
resignation or removal. No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director.

           b. No person entitled to vote at an election for directors may
cumulate votes to which such person is entitled, unless, at the time of such
election, the corporation (i) is subject to Section 2115(b) of the California
General Corporation Law ("CGCL") and (ii) is not a "listed" corporation or
ceases to be a "listed" corporation under Section 301.5 of the CGCL. During
this  time, every stockholder entitled to vote at an election for directors may
cumulate such stockholder's votes and give one candidate a number of votes equal
to the number of directors to be elected multiplied by the number of votes to
which such stockholder's shares are otherwise entitled, or distribute the
stockholder's votes on the same principle among as many candidates as such
stockholder thinks fit. No stockholder, however, shall be entitled to so
cumulate such stockholder's votes unless (i) the names of such candidate or
candidates have been placed in nomination prior to the voting and (ii) the
stockholder has given notice at the meeting, prior to the voting, of such
stockholder's intention to cumulate such stockholder's votes. If any stockholder
has given proper notice to cumulate votes, all stockholders may cumulate their
votes for any candidates who have been properly placed in nomination. Under
cumulative voting, the candidates receiving the highest number of votes, up to
the number of directors to be elected, are elected.

        3. Removal of Directors

           a. During such time or times that the corporation is subject to
Section 2115(b) of the CGCL, the Board of Directors or any individual director
may be removed from office at any time without cause by the affirmative vote of
the holders of at least a majority of the outstanding shares entitled to vote on
such removal; provided, however, that unless the entire Board is removed, no
individual director may be removed when the votes cast against such director's
removal, or not consenting in writing to such removal, would be sufficient to
elect that director if voted cumulatively at an election which the same total
number of votes were cast (or, if such action is taken by written consent, all
shares entitled to vote were voted) and the entire

                                       2.

<PAGE>

number of directors authorized at the time of such director's most recent
election were then being elected.

           b. At any time or times that the corporation is not subject to
Section 2115(b) of the CGCL and subject to any limitations imposed by law,
Section A(3)(a) above shall not apply and the Board of Directors or any director
may be removed from office at any time with or without cause by the affirmative
vote of the holders of a majority of the voting power of all then-outstanding
shares of voting stock of the corporation, entitled to vote at an election of
directors.

        4. Vacancies

           c. Subject to the rights of the holders of any series of Preferred
Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorshipsresulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the stockholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders (except as stockholders may have such
rights as described below). Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
director for which the vacancy was created or occurred and until such director's
successor shall have been elected and qualified.

           d. If at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Delaware Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in offices as aforesaid, which election shall be governed by Section 211 of the
DGCL.

           e. At any time or times that the Corporation is subject to Section
2115(b) of the CGCL, if, after the filling of any vacancy by the directors then
in office, where the number of such directors voting to fill, such vacancy who
have been elected by stockholders shall constitute less than a majority of the
directors then in office, then

              (i) Any holder or holders of an aggregate of five percent (5%) or
more of the total number of shares at the time outstanding having the right to
vote for those directors may call a special meeting of stockholders; or

              (ii) The Superior Court of the proper county shall, upon
application of such stockholder or stockholders, summarily order a special
meeting of stockholders, to be held to elect the entire board, all in accordance
with Section 305(c) of the CGCL. The term of office of any director shall
terminate upon that election of a successor.

                                       3.

<PAGE>

     B. 1. Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws may
be altered or amended or new Bylaws adopted by the affirmative vote of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the
then-outstanding shares of the voting stock of the Corporation entitled to vote.
The Board of Directors shall also have the power to adopt, amend, or repeal
Bylaws.

        2. The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.

        3. No action shall be taken by the  stockholders of the Corporation
except at an annual or special  meeting of  stockholders  called in accordance
with the Bylaws. No action shall be taken by the stockholders by written
consent.

        4. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.

                                       VI.

     A. The liability of the directors for monetary damages shall be eliminated
to the fullest extent under applicable law.

     B. This corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the CGCL) for breach of duty to the corporation and
its shareholders through bylaw provisions or through agreements with the agents,
or through shareholder resolutions, or otherwise, in excess of the
indemnification otherwise permitted by Section 317 of the CGCL, subject, at any
time or times the corporation is subject to Section 2115(b) to the limits on
such excess indemnification set forth in Section 204 of the CGCL.

     C. Any repeal or modification of this Article VI shall be prospective and
shall not affect the rights under this Article VI in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.

                                      VII.

     A. The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, except as provided in paragraph B of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.

     B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the voting stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the voting stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI,
and VII.

                                       4.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.2
<SEQUENCE>4
<FILENAME>dex42.txt
<DESCRIPTION>CERTIFICATE OF DESIGNATIONS, PREFERENCES & RIGHTS
<TEXT>
<PAGE>

                                                                     EXHIBIT 4.2

               CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS

                                       of

                            SERIES A PREFERRED STOCK

                                       of

                            WIRELESS FACILITIES, INC.

     I, Masood K. Tayebi, Chief Executive Officer of WIRELESS FACILITIES, INC.,
a corporation organized and existing under the laws of the State of Delaware
(the "Corporation"), in accordance with the provisions of Section 151 of the
Delaware General Corporation Law, DO HEREBY CERTIFY:

     That pursuant to the authority conferred upon the Board of Directors of the
Corporation (the "Board of Directors") by the Certificate of Incorporation of
the Corporation and by Section 151(g) of the Delaware General Corporation Law,
on October 9, 2001, the Board of Directors adopted the following resolution,
creating a series of shares of convertible preferred stock, Series A, designated
as "Series A Preferred Stock":

     "RESOLVED, that pursuant to the authority vested in the Board of Directors
     (the "Board of Directors") of WIRELESS FACILITIES, INC., a corporation
     organized and existing under the laws of the State of Delaware (the
     "Corporation"), by the Certificate of Incorporation of the Corporation (the
     "Certificate of Incorporation"), the Board of Directors does hereby provide
     for the authorization and issuance of a series of convertible preferred
     stock, Series A, par value U.S.$0.001 per share, of the Corporation, to be
     designated "Series A Preferred Stock," initially consisting of 63,637
     shares, and to the extent that the designations, powers, preferences, and
     relative participating, optional, or other special rights, and the
     qualifications, limitations, and restrictions of the Series A Preferred
     Stock are not stated and expressed in the Certificate of Incorporation, the
     Board of Directors does hereby fix and herein state and express such
     designations, powers, preferences, and relative participating, optional, or
     other special rights, and the qualifications, limitations, and restrictions
     thereof, as follows:

1.   Designation and Rank.

     (a)  Sixty-three thousand six hundred thirty-seven (63,637) shares of the
preferred stock of the Corporation, par value $0.001 per share, shall be
designated and known as the "Series A Preferred Stock."

     (b)  The Series A Preferred Stock shall rank senior and prior to the common
stock, par value U.S.$0.001 per share, of the Corporation (the "Common Stock"),
and all other classes or series of the capital stock (other than preferred
stock) of the Corporation (now or hereafter authorized or issued), with respect
to the payment of any dividends, the conversion rights set forth herein and any
payment upon liquidation or redemption. The Corporation may not issue any
additional classes or series of preferred stock with liquidation, redemption or
conversion rights or right of payment of any kind that is senior to the Series A
Preferred Stock, except pursuant to Section 12.


                                       1.



<PAGE>

2.   Dividend Rights.

     From and after the date hereof, when and if the Board of Directors declares
a dividend or distribution payable with respect to the then-outstanding shares
of Common Stock (other than in additional shares of Common Stock or Common Stock
Equivalents (as defined in Section 4(e)(i) below), the holders of the Series A
Preferred Stock shall be entitled to the amount of dividends per share in the
same form as such Common Stock dividends that would be payable on the largest
number of whole shares of Common Stock into which a holder's aggregate shares of
Series A Preferred Stock could then be converted pursuant to Section 4 hereof
(such number to be determined as of the record date for the determination of
holders of Common Stock entitled to receive such dividend).

3.   Liquidation Rights.

     (a)  Liquidation Events. The occurrence of any of the following events
shall be deemed a "Liquidation": (i) any liquidation, dissolution, or winding-up
of the affairs of the Corporation; (ii) any transaction or series of related
transactions in which securities of the Corporation representing 50% or more of
the combined voting power of the Corporation's then outstanding voting
securities are acquired by a person, entity or group of related persons or
entities, excluding any consolidation or merger effected exclusively to change
the domicile of the Corporation; (iii) any consolidation, merger or
reorganization of the Corporation with or into any other corporation or other
entity or person pursuant to which the holders of the Corporation's outstanding
securities receive, pursuant to such transaction, securities in the surviving
entity that represent less than 50% of the voting power of such surviving
entity; or (iv) any sale, lease, exclusive license or other disposition of all
or substantially all of the assets of the Corporation.

     (b)  Liquidation Preference.

          (i) In the event of any Liquidation, whether voluntary or involuntary,
before any payment of cash or distribution of other property shall be made to
the holders of Common Stock, or any other class or series of stock subordinate
in liquidation preference to the Series A Preferred Stock, the holders of the
Series A Preferred Stock shall be entitled to receive out of the assets of the
Corporation legally available for distribution to its stockholders, on behalf of
each share of Series A Preferred Stock held by such holder, U.S.$550.00 (the
"Original Issue Price") (as appropriately adjusted for any combinations,
divisions, or similar recapitalizations affecting the Series A Preferred Stock
after issuance) and all accumulated or accrued and unpaid dividends thereon
(collectively, the "Series A Liquidation Preference").

          (ii) If, upon any Liquidation, the assets of the Corporation available
for distribution to its stockholders are insufficient to pay the holders of the
Series A Preferred Stock the full amounts to which they are entitled pursuant to
clause (b)(i) above, the holders of the Series A Preferred Stock shall share pro
rata in any distribution of assets in proportion to the respective amounts which
would be payable to the holders of the Series A Preferred Stock and any other
class or series of capital stock of the Corporation ranking on par with the
Series A Preferred Stock in respect of the shares held by them if all amounts
payable to them in respect of such were paid in full pursuant to clause (b)(i)
above.


                                       2.



<PAGE>

          (iii)  After the distributions described in clause (b)(i) or (b)(ii)
above have been paid, subject to the rights of any other class or series of
capital stock of the Corporation that may from time to time come into existence,
the remaining assets of the Corporation available for distribution to
stockholders shall be distributed among the holders of Common Stock pro rata
based on the number of shares of Common Stock held by each.

     (c)  Non-Cash Distributions. If any distribution to be made pursuant to
this Section 3 is to be paid other than in cash or Common Stock or Common Stock
Equivalents, the value of such distribution will be deemed its fair market value
as determined in good faith by the Board of Directors. Any securities shall be
valued as follows:

          (i)  Securities not subject to investment letter or other similar
restrictions on free marketability covered by clause (ii) below:

               (1)  if traded on a securities exchange or through the Nasdaq
National Market, the value shall be deemed to be the average of the closing
prices of the securities on such quotation system over the thirty (30) trading
day period ending three (3) trading days prior to the occurrence of the
Liquidation;

               (2)  if actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty (30) trading day period ending three (3) trading
days prior to the occurrence of the Liquidation; and

               (3)  if there is no active public market, the value shall be the
fair market value thereof, as determined by the Board of Directors.

          (ii) The method of valuation of securities subject to investment
letter or other restrictions on free marketability (other than restrictions
arising solely by virtue of a stockholder's status as an affiliate or former
affiliate) shall be to effectuate an appropriate discount from the market value,
as determined by clause (i)(1), (2) or (3) of this Section 3(c), so as to
reflect the approximate fair market value thereof, as determined by the Board of
Directors.

          (iii) The holders of at least a majority of the outstanding Series A
Preferred Stock shall have the right to challenge any determination by the Board
of Directors of fair market value pursuant to this Section 3(c), in which case
the determination of fair market value shall be made by an independent appraiser
selected jointly by the Board of Directors and the challenging parties, the cost
of such appraisal to be borne equally by the Corporation and the challenging
parties.

4.   Conversion Rights.

     The holders of the Series A Preferred Stock shall have conversion rights as
follows (the "Conversion Right"):

     (a)  Conversion Price. The "Conversion Price" shall, initially, be U.S.
$5.50 per share and shall be subject to adjustment as set forth below in
Sections 4(e) and 4(f).


                                       3.



<PAGE>

     (b)  Automatic Conversion. If the closing price for the shares of the
Corporation's Common Stock (trading on a securities exchange or through Nasdaq
National Market or other national exchange or market) exceeds $11.00 per share
(as adjusted for events described in Section 4(e)(ii) and 4(e)(iii) below) for
any thirty consecutive trading day period that begins after July 29, 2004, then,
upon such occurrence, each share of Series A Preferred Stock shall be
automatically converted into such number of fully paid and non-assessable shares
of Common Stock as is determined by dividing (x) the Original Issue Price of
such share of Series A Preferred Stock (including any accumulated or accrued but
unpaid dividends thereon) by (y) the Conversion Price. The date of such
conversion is herein referred to as the "Conversion Date."

     (c)  Optional Conversion. The holders of the Series A Preferred Stock shall
have the right, at any time, to convert the shares of Series A Preferred Stock
held by such holder into that number of shares of Common Stock into which such
shares are convertible pursuant to Section 4(b) ("Optional Conversion"). In the
event of any Optional Conversion, the date of the such conversion shall be
referred to as the "Optional Conversion Date."

     (d)  Mechanics of Conversion. On the Conversion Date or Optional Conversion
Date, as the case may be, (x) each holder shall tender such holder's shares of
Series A Preferred Stock to the Corporation for cancellation, free and clear of
encumbrances of any type or nature, and (y) the Corporation shall cause to be
delivered to such holder a number of shares of Common Stock as calculated
pursuant to Section 4(b) above, free and clear of encumbrances of any type or
nature. Each holder and the Corporation shall take all other necessary or
appropriate actions in connection with or to effect such closing.

     (e)  Certain Adjustments. To the extent that the holders of Series A
Preferred Stock do not participate fully with other stockholders of the
Corporation with respect to dividends paid pursuant to Section 2 hereof, the
following adjustments shall be made to the Conversion Price:

          (i) Adjustment for Common Stock Dividends and Distributions. If, at
any time after the original issue date of the Series A Preferred Stock (the
"Original Issue Date"), the Corporation makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock or Common Stock
Equivalents, in each such event the Conversion Price that is then in effect
shall be decreased as of the time of such issuance or, in the event such record
date is fixed, as of the close of business on such record date, by multiplying
the Conversion Price then in effect by a fraction (i) the numerator of which is
the total number of shares of Common Stock and Common Stock Equivalents issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (ii) the denominator of which is the total
number of shares of Common Stock and Common Stock Equivalents issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock or Common
Stock Equivalents issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Conversion Price shall be recomputed accordingly as of the close of business
on such record date and thereafter the Conversion Price shall be adjusted
pursuant to this Section 4(e)(i) to reflect the actual payment of such dividend
or distribution.


                                       4.



<PAGE>

                A "Common Stock Equivalent" shall mean each share of Common
Stock into which securities or property or rights are convertible, exchangeable
or exercisable for or into shares of Common Stock, or otherwise entitle the
holder thereof to receive directly or indirectly, any of the foregoing.

          (ii)  Adjustments for Stock Splits, Stock Subdivisions and
Combinations. If, at any time after the Original Issue Date, the Corporation
subdivides or combines the Common Stock without making a corresponding
subdivision or combination of the Series A Preferred Stock, (A) in the case of a
subdivision (including a stock split), the Conversion Price in effect
immediately prior to such event shall be proportionately decreased and the
number of shares of Common Stock purchasable thereunder shall be proportionately
increased, and (B) in the case of a combination (including a reverse stock
split), the Conversion Price in effect immediately prior to such event shall be
proportionately increased and the number of shares of Common Stock purchasable
thereunder shall be proportionately decreased. Any adjustment under this Section
4(e)(ii) shall become effective at the close of business on the date the
subdivision or combination becomes effective.

          (iii) Adjustments for Reclassification, Reorganization and
Consolidation. In case of (A) any reclassification, reorganization, change or
conversion of securities of the class issuable upon conversion of the Series A
Preferred Stock (other than a change in par value, or from par value to no par
value) into other shares or securities of the Corporation, or (B) any merger or
consolidation of the Corporation with or into another entity (other than a
Liquidation or a merger or consolidation with another entity in which the
Corporation is the acquiring and the surviving entity and that does not result
in any reclassification or change of outstanding securities issuable upon
conversion of the Series A Preferred Stock) each holder of shares of Series A
Preferred Stock shall have the right to receive, in lieu of the shares of Common
Stock otherwise issuable upon the conversion of its shares of Series A Preferred
Stock (and accumulated or accrued and unpaid dividends then-outstanding
thereunder) in accordance with Section 4(b), the kind and amount of shares of
stock and other securities, money and property receivable upon such
reclassification, reorganization, change, merger or consolidation upon
conversion by a holder of the maximum number of shares of Common Stock into
which such shares of Series A Preferred Stock could have been converted
immediately prior to such reclassification, reorganization, change, merger or
consolidation, all subject to further adjustment as provided herein or with
respect to such other securities or property by the terms thereof. The
provisions of this clause (iii) shall similarly attach to successive
reclassifications, reorganizations, changes, mergers and consolidations.

     (f)  Antidilution Adjustments. To the extent that (i) the Corporation
issues after the Original Issue Date and before April 29, 2003, Additional
Shares of Common Stock (as defined below) (in one or more transactions, whether
or not related), (ii) each such issuance is at an Effective Price (as defined
below) per share less than Conversion Price then in effect and (iii) the
aggregate gross proceeds of such issuances exceed $15 million, then the
Conversion Price shall be adjusted to equal the lowest Effective Price received
by the Corporation pursuant to any such issuance. The previous sentence will
apply to any issuances of Additional Shares of Common Stock after the $15
million threshold has been met (provided any such issuance is below the
Conversion Price then in effect) but will not apply to any issuance of
Additional Shares of


                                       5.

<PAGE>

Common Stock occurring after April 29, 2003. Notwithstanding the foregoing, the
Conversion Price shall in no event be lower than U.S.$3.77.

          (i)   For the purpose of making any adjustment required under Section
4(f), the consideration received by the Company for any issue or sale of
securities shall (A) to the extent it consists of cash, be computed at the net
amount of cash received by the Company after deduction of any underwriting or
similar commissions, compensation or concessions paid or allowed by the Company
in connection with such issue or sale but without deduction of any expenses
payable by the Company (except for purposes of determining if the $15 million
threshold referred to above has been met, in which case the consideration
received will be deemed to be the aggregate gross proceeds received by the
Company), (B) to the extent it consists of property other than cash, be computed
at the fair value of that property as determined in good faith by the Board of
Directors, and (C) if Additional Shares of Common Stock, Convertible Securities
(as defined below) or rights or options to purchase either Additional Shares of
Common Stock or Convertible Securities are issued or sold together with other
stock or securities or other assets of the Company for a consideration which
covers both, be computed as the portion of the consideration so received that
may be reasonably determined in good faith by the Board of Directors to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
rights or options; provided, however, that the holders of at least a majority of
the outstanding Series A Preferred Stock shall have the right to challenge any
determination by the Board of Directors of fair market value pursuant to this
Section 4(f)(i), in which case the determination of fair market value shall be
made by an independent appraiser selected jointly by the Board of Directors and
the challenging parties, the cost of such appraisal to be borne equally by the
Corporation and the challenging parties.

          (ii)  For the purpose of the adjustment required under this Section
4(f), if the Company issues or sells (A) stock or other securities convertible
into, Additional Shares of Common Stock (such convertible stock or securities
being herein referred to as "Convertible Securities") or (B) rights or options
for the purchase of Additional Shares of Common Stock or Convertible Securities
and if the Effective Price of such Additional Shares of Common Stock is less
than the Conversion Price, in each case the Company shall be deemed to have
issued at the time of the issuance of such rights or options or Convertible
Securities the maximum number of Additional Shares of Common Stock issuable upon
exercise or conversion thereof and to have received as consideration for the
issuance of such shares an amount equal to the total amount of the
consideration, if any, received by the Company for the issuance of such rights
or options or Convertible Securities, plus, in the case of such rights or
options, the minimum amounts of consideration, if any, payable to the Company
upon the exercise of such rights or options, plus, in the case of Convertible
Securities, the minimum amounts of consideration, if any, payable to the Company
(other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) upon the conversion thereof; provided that if in the
case of Convertible Securities the minimum amounts of such consideration cannot
be ascertained, but are a function of antidilution or similar protective
clauses, the Company shall be deemed to have received the minimum amounts of
consideration without reference to such clauses; provided further that if the
minimum amount of consideration payable to the Company upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or
on the occurrence or non-occurrence of specified events other than by reason of
antidilution adjustments, the Effective Price shall be recalculated using the
figure to which such minimum amount of consideration is


                                       6.

<PAGE>

reduced; provided further that if the minimum amount of consideration payable to
the Company upon the exercise or conversion of such rights, options or
Convertible Securities is subsequently increased, the Effective Price shall be
again recalculated using the increased minimum amount of consideration payable
to the Company upon the exercise or conversion of such rights, options or
Convertible Securities. No further adjustment of the Conversion Price, as
adjusted upon the issuance of such rights, options or Convertible Securities,
shall be made as a result of the actual issuance of Additional Shares of Common
Stock on the exercise of any such rights or options or the conversion of any
such Convertible Securities. If any such rights or options or the conversion
privilege represented by any such Convertible Securities shall expire without
having been exercised, the Conversion Price, as adjusted upon the issuance of
such rights, options or Convertible Securities, shall be readjusted to the
Conversion Price which would have been in effect had an adjustment been made on
the basis that the only Additional Shares of Common Stock so issued were the
Additional Shares of Common Stock, if any, actually issued or sold on the
exercise of such rights or options or rights of conversion of such Convertible
Securities, and such Additional Shares of Common Stock, if any, were issued or
sold for the consideration actually received by the Company upon such exercise,
plus the consideration, if any, actually received by the Company for the
granting of all such rights or options, whether or not exercised, plus the
consideration received for issuing or selling the Convertible Securities
actually converted, plus the consideration, if any, actually received by the
Company (other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities) on the conversion of such Convertible Securities.

     "Additional Shares of Common Stock" shall mean all shares of Common Stock
issued by the Company or deemed to be issued pursuant to this Section 4(f),
whether or not subsequently reacquired or retired by the Company other than (A)
shares of Common Stock and/or options, warrants or other Common Stock purchase
rights, and the Common Stock issued or issuable pursuant to such options,
warrants or other rights to employees, officers or directors of, or consultants
or advisors to the Company or any subsidiary pursuant to stock purchase or stock
option plans or other arrangements that are approved by the Board; (B) shares of
Common Stock issued or issuable pursuant to any equipment loan or leasing
arrangement, or debt financing from a bank or similar financial institution; (C)
shares of Common Stock issued or issuable in connection with licensing
transactions involving the Company and other entities, including (1) joint
ventures, manufacturing, marketing or distribution arrangements or (2)
technology transfer or development arrangements; provided that such transactions
in (1) and (2) and the issuance of shares therein has been approved by a
majority of the members of the Company's Board of Directors and the aggregate
number of shares so issued does not exceed four million (4,000,000)(as adjusted
for stock splits, stock dividends, stock combinations, recapitalizatons and the
like); and (D) any other issuances approved by the holders of a majority of the
Series A Preferred Stock then outstanding.

     The "Effective Price" of Additional Shares of Common Stock shall mean the
quotient determined by dividing the total number of Additional Shares of Common
Stock issued or sold, or deemed to have been issued or sold by the Company under
this Section 4(f), into the aggregate consideration received, or deemed to have
been received by the Company for such issue under this Section 4(f), for such
Additional Shares of Common Stock.

                                       7.

<PAGE>

5.   Other Distributions.

     In the event the Corporation provides the holders of its Common Stock with
consideration that is not otherwise addressed in Section 4 (including, without
limitation, declaring a distribution payable in securities, assets, cash or
evidences of indebtedness issued by other persons or the Corporation (excluding
cash dividends declared and paid by the Corporation out of retained earnings)),
then, in each such case, the holders of the Series A Preferred Stock shall be
entitled to a pro rata share of any such distribution as though such holders
were holders of the number of shares of Common Stock of the Corporation as
though the Series A Preferred Stock had been converted in whole as of the record
date fixed for the determination of the holders of Common Stock of the
Corporation entitled to receive such distribution.

6.   Recapitalizations.

     If at any time there occurs a recapitalization of the Common Stock (other
than a subdivision, combination, or merger or sale of assets provided for in
Section 4 hereof), the holders of the Series A Preferred Stock shall be entitled
to receive upon conversion of the Series A Preferred Stock the number of shares
of capital stock or other securities or property of the Corporation or otherwise
to which a holder of the Common Stock deliverable upon conversion would have
been entitled on such recapitalization. In any such case, appropriate adjustment
shall be made in the application of the provisions of Section 4 hereof with
respect to the rights of the holders of the Series A Preferred Stock after the
recapitalization to the end that the provisions of Section 4 hereof (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of the Series A Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.

7.   No Impairment.

     The Corporation will not, by amendment of the Certificate of Incorporation
or through any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions hereof
and in the taking of all such action as may be necessary or appropriate in order
to protect the Conversion Right of the holders of the Series A Preferred Stock
against impairment.

8.   No Fractional Shares and Certificate as to Adjustments.

     (a) No fractional shares of Common Stock will be issued upon the conversion
of any share or shares of the Series A Preferred Stock. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of Series A Preferred Stock by a holder shall be aggregated for purposes
of determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of a fraction of a share of Common Stock, the Corporation
shall, in lieu of issuing any fractional share, pay the holder otherwise
entitled to such fraction a sum in cash equal to such fraction multiplied by the
closing price of the Corporation's Common Stock on the Nasdaq National Market
(or any other national securities exchange on which the Common

                                       8.

<PAGE>

Stock is then traded) on the day immediately preceding the conversion. All
calculations under Section 4 hereof and this Section 8(a) shall be made to the
nearest cent or to the nearest share, as the case may be.

     (b) Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to Section 4 hereof, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of shares of Series A
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Series A Preferred Stock, use its reasonable best efforts to furnish or cause to
be furnished to such holder a like certificate setting forth (i) such adjustment
or readjustment, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of a share of Series A
Preferred Stock.

9.   Reservation of Stock Issuable Upon Conversion.

     The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred Stock, such
number of its shares of Common Stock that shall from time to time be sufficient
to effect the conversion of all outstanding shares of the Series A Preferred
Stock; and if at any time the number of authorized but unissued shares of Common
Stock not otherwise reserved for issuance shall not be sufficient to effect the
conversion of all then outstanding shares of the Series A Preferred Stock, the
Corporation shall take such corporate action that may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to its Certificate of
Incorporation.

10.  Notices.

     Any notice required by the provisions hereof to be given to the holders of
shares of Series A Preferred Stock shall be given in writing and shall be deemed
to have been given (i) in the case of personal or hand delivery, on the date of
such delivery, (ii) in the case of an internationally-recognized overnight
delivery courier, on the second business day after the date when sent, (iii) in
the case of mailing, on the fifth business day following that day on which the
piece of mail containing such communication is posted and (iv) in the case of
facsimile transmission, the date of telephone confirmation of receipt.

11.  Voting Rights.

     Holders of Series A Preferred Stock shall be entitled to vote on all
matters submitted to a vote of the holders of the Corporation's Common Stock,
including with respect to the election of directors of the Corporation, on an as
if converted to Common Stock basis; provided, however, that the number of votes
to which the Series A Preferred Stock is entitled shall be based on a conversion
price of $5.50 per share, giving effect to any future adjustments pursuant to
Section

                                       9.

<PAGE>

4(e) above, but without giving any effect to any future adjustments pursuant to
Section 4(f) above.

12.  Protective Provisions.

Subject to the rights of any series of preferred stock that may from time to
time come into existence, so long as any shares of Series A Preferred Stock are
outstanding, the Corporation shall not without first obtaining the approval (by
vote or written consent, as provided by law) of the holders of at least a
majority of the then-outstanding shares of Series A Preferred Stock, voting
separately as a series:

     (a) amend its Certificate of Incorporation (including the filing of a
Certificate of Designations) so as to (i) increase the number of authorized
shares of the Corporation's preferred stock or (ii) affect adversely the shares
of Series A Preferred Stock or any holder thereof, including, without
limitation, by creating any additional series of preferred stock (or issuing
shares under any such series) that is senior or pari passu in liquidation
preference, redemption right, conversion rights or right of payment to the
Series A Preferred Stock;

     (b) after the date of this Certificate of Designation, create any new debt
instrument or create or increase any new or existing bank line (or similar
arrangement pursuant to which the Company is or becomes indebted), so that the
Company's total indebtedness pursuant to such instruments, lines or arrangements
exceeds $105,000,000 in the aggregate; or

     (c) change the rights of the holders of the Series A Preferred Stock in any
other respect;

provided, however, that the authorization and issuance of additional shares of
Common Stock, and creation of any series of preferred stock (or issuing shares
under any such series) that is junior in right of payment upon liquidation,
redemption, conversion and payment rights and otherwise to the Series A
Preferred Stock shall not be deemed to adversely affect the rights, preferences
or privileges of the Series A Preferred Stock or any holder thereof or change
the rights of the holders of the Series A Preferred Stock in any other respect.

     The Series A Preferred Stock shall have no preemptive rights pursuant
hereto.

13.  Legend.

     The Series A Preferred Stock and any underlying shares of Common Stock will
be issued under an exemption or exemptions from registration under the Act.
Accordingly, the certificates evidencing the Series A Preferred Stock and the
underlying Common Stock shall, upon issuance, contain a legend, substantially in
the form as follows:

     "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
     SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE
     SECURITIES LAWS AND NO INTEREST HEREIN MAY BE SOLD, TRANSFERRED OR
     OTHERWISE DISPOSED OF UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT TO
     SUCH SECURITIES SHALL BE EFFECTIVE UNDER

                                       10.

<PAGE>

     THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) SUCH SECURITIES ARE
     TRANSFERRED PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT (OR ANY
     SUCCESSOR RULE) OR (3) THE ISSUER OF THESE SECURITIES SHALL HAVE RECEIVED
     AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
     SATISFACTORY TO THE ISSUER THAT NO VIOLATION OF THE ACT OR SIMILAR STATE
     SECURITIES LAWS WILL BE INVOLVED IN SUCH TRANSFER.

14.  Status of Converted Stock.

     In the event any shares of Series A Preferred Stock shall be converted
pursuant to Section 4 hereof, the shares so converted shall be canceled and
shall not be reissuable by the Corporation.

                            [Signature page follows]

                                       11.

<PAGE>

     IN WITNESS WHEREOF, said Wireless Facilities, Inc. has caused this
Certificate of Designations to be signed by Masood K. Tayebi, its Chief
Executive Officer, as of October 29, 2001.

                                      WIRELESS FACILITIES, INC.


                                      By:  /s/ Masood K. Tayebi
                                         ----------------------------------
                                      Name:    Masood K. Tayebi
                                      Title:   Chief Executive Officer


                                       12.

</TEXT>
</DOCUMENT>
</SUBMISSION>
