UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                              ---------------------

                                   FORM 10-QSB

(Mark One)


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


                     For the quarterly period ended        June 30, 1998
                                                           ---------------------




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


                     For the transition period from           To
                                                    ---------      -------------





                    Commission File Number                  0-13324
                                                    ----------------------------



                            QUESTRON TECHNOLOGY, INC.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)




<TABLE>
<S>                                                                 <C>

                  Delaware                                                   23-2257354
--------------------------------------------------------------      ----------------------------------------------
(State or other jurisdiction of incorporation or organization)        (I. R. S. Employer Identification Number)

       6400 Congress Avenue, Suite 200A, Boca Raton, FL                                 33487
--------------------------------------------------------------      ----------------------------------------------
           (Address of principal executive offices)                                   (Zip Code)
</TABLE>



                                (561) 241 - 5251
--------------------------------------------------------------------------------
                (Issuer's telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 July 31, 1998, there were 3,799,301 shares of the issuer's Common
Stock outstanding.









746927.1

<PAGE>



                            QUESTRON TECHNOLOGY, INC.


                                      INDEX






                                                                      Page No.
                                                                    ------------
PART I.         Financial Information

    Item 1. Financial Statements (Unaudited)

        Consolidated Balance Sheet -
        At June 30, 1998 and December 31, 1997                           3

        Consolidated Statement of Operations -
        For the Three Month and Six Month Periods Ended
        June 30, 1998 and 1997                                           4

        Consolidated Statement of Cash Flows -
        For the Six Month Periods Ended June 30, 1998 and
        1997                                                             5

        Notes to Consolidated Financial Statements                     6 - 8

        Item 2. Management's Discussion and Analysis or 
        Plan of Operation                                              9 - 11

PART II.        Other Information                                      12 -13


Signature Page                                                         14





                                       2


746927.1

<PAGE>





                         PART I - FINANCIAL INFORMATION

Item 1.           Financial Statements

                    QUESTRON TECHNOLOGY, INC. & SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                       JUNE 30, 1998 AND DECEMBER 31, 1997

                                     ASSETS
<TABLE>
<CAPTION>

                                                                                     June 30,
                                                                                       1998             December 31,
                                                                                   (Unaudited)             1997
                                                                                   -----------          ------------
<S>                                                                               <C>                  <C>
Current assets:
   Cash and cash equivalents                                                      $        543,208     $        875,080
   Accounts receivable, less allowance for
     doubtful accounts of $112,174 and $93,561, respectively                             5,988,714            4,740,678
   Other receivables                                                                        92,005               77,733
   Inventories                                                                          10,817,340            8,415,777
   Other current assets                                                                    264,342              158,597
                                                                                ------------------   ------------------

Total current assets                                                                    17,705,609           14,267,865

Property and equipment - net                                                             1,244,447              910,988
Cost in excess of net assets of businesses acquired,
   less accumulated amortization of $767,322 and $549,566, respectively                 16,937,936           16,549,726
Deferred income taxes                                                                    3,020,722            3,192,947
Other assets                                                                               626,389              273,321
                                                                                ------------------   ------------------

      Total assets                                                                   $  39,535,103        $  35,194,847
                                                                                ==================   ==================


                                        LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                                                $     3,826,909       $    2,378,381
   Accrued expenses                                                                        396,915              839,514
   Income taxes payable                                                                    876,149              201,477
   Current portion of long-term debt                                                     1,861,667            1,801,667
                                                                                ------------------   ------------------

Total current liabilities                                                                6,961,640            5,221,039
Deferred income taxes payable                                                              373,754              182,552
Long-term debt                                                                          10,826,607            9,893,521
                                                                                ------------------   ------------------

      Total liabilities                                                                 18,162,001           15,297,112
                                                                                ------------------   ------------------

Commitments and contingencies
Common stock subject to put option agreement                                               384,990              622,857
Shareholders' equity:
   Preferred stock, $.01 par value; authorized 10,000,000
     shares; 1,150,000 issued and outstanding                                               11,500               11,500
   Common stock, $.001 par value; authorized 20,000,000
     shares; issued 2,139,783 shares in 1998 and 2,122,439 in 1997                           2,139                2,122
   Additional paid-in capital                                                           34,206,450           33,462,524
   Accumulated deficit                                                                (12,876,499)         (13,845,790)
                                                                                ------------------   ------------------
                                                                                        21,343,590           19,630,356
   Less: Treasury stock, 11,849 shares,  at cost                                         (355,478)            (355,478)
                                                                                ------------------   ------------------
Total shareholders' equity                                                              20,988,112           19,274,878
                                                                                ------------------   ------------------
Total liabilities and shareholders' equity
                                                                                     $  39,535,103        $  35,194,847
                                                                                ==================   ==================
</TABLE>

                 See Notes to Consolidated Financial Statements.


                                       3

<PAGE>


                    QUESTRON TECHNOLOGY, INC. & SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                    FOR THE THREE MONTH AND SIX MONTH PERIODS
                    ENDED JUNE 30, 1998 AND 1997 (Unaudited)

<TABLE>
<CAPTION>

                                                                Three Months Ended                  Six Months Ended
                                                                     June 30,                           June 30,
                                                         --------------------------------   --------------------------------



<S>                                                       <C>               <C>               <C>              <C> 
                                                              1998              1997              1998              1997
                                                          -------------    --------------     -------------    --------------

Sales                                                     $  10,670,970    $    5,181,060     $  21,071,936    $    9,093,337
                                                          -------------    --------------     -------------    --------------

Operating costs and expenses:
   Cost of products and services sold                         6,380,473         3,130,894        12,561,823         5,459,268
   Selling, general & administrative expenses                 2,573,014         1,433,823         5,063,581         2,519,843
   Depreciation and amortization                                169,559           101,557           333,159           181,427
                                                          -------------    --------------     -------------    --------------
                                                              9,123,046         4,666,274        17,958,563         8,160,538
                                                         --------------    --------------    --------------    --------------
Operating income                                              1,547,924           514,786         3,113,373           932,799

Interest expense                                                331,398            66,890           612,773           127,099
                                                         --------------    --------------    --------------    --------------

Income before income taxes                                    1,216,526           447,896         2,500,600           805,700
Provision for income taxes                                      498,776           184,981         1,025,246           332,754
                                                          -------------    --------------     -------------    --------------
Net income                                                $     717,750     $     262,915     $   1,475,354     $     472,946
                                                         ==============    ==============    ==============    ==============

Net income                                                $     717,750     $     262,915     $   1,475,354     $     472,946
Deduct: Preferred Stock dividend                                 33,063            33,063            66,126            33,063
              Imputed non-cash Preferred Stock dividend         214,709           187,038           412,478           187,038
                                                          -------------    --------------     -------------    --------------
Net income used in per common share calculation           $     469,978     $      42,814     $     996,750     $     252,845
                                                         ==============    ==============    ==============    ==============


Net income per common share                                     $   .22            $   .03           $   .47           $   .16
                                                              =========         ==========         =========         =========
Net income per diluted common share                             $   .15            $   .03           $   .31           $   .16
                                                              =========         ==========         =========         =========

Average number of common shares outstanding                   2,127,934         1,551,968         2,121,897         1,543,771
                                                         ==============    ==============    ==============    ==============
Average number of diluted common shares outstanding           4,911,357         3,255,067         4,816,487         2,616,241
                                                         ==============    ==============    ==============    ==============
</TABLE>



                 See Notes to Consolidated Financial Statements

                                       4


746927.1

<PAGE>

                    QUESTRON TECHNOLOGY, INC. & SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
               SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (Unaudited)

<TABLE>
<CAPTION>

                                                                         June 30,               June 30,
                                                                           1998                   1997
                                                                   ---------------------   ---------------------
<S>                                                                <C>                     <C>
Cash flows from operating activities:
  Net income                                                       $          1,475,354    $            472,946
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depreciation and amortization                                             333,159                181,427
      Provision for doubtful accounts                                            20,013                 38,571
      Recognition of income tax benefit of net
        operating loss carryforward                                             172,225                225,680
  Change in assets and liabilities:
     Increase in accounts receivable                                         (1,268,049)              (244,453)
     Increase in other receivables                                              (14,272)               (25,093)
     (Increase) decrease in inventories                                      (2,401,562)               292,774
     Increase (decrease) in accounts payable                                  1,448,528               (233,277)
     (Decrease) increase in accrued expenses                                   (442,599)               150,943
     Increase in income taxes payable                                           674,671                 34,200
     Increase in deferred income taxes                                          191,202                 33,050
     (Increase) decrease in prepaid expenses and other assets                  (458,813)               282,654
                                                                   ---------------------   --------------------
     Net cash (used) provided by operating activities                          (270,143)             1,209,422
                                                                   ---------------------   --------------------

Cash flows from investing activities:
  Net cash consideration paid for acquired business                            (605,966)            (3,821,809)
  Acquisition of property and equipment                                        (448,849)               (37,371)
                                                                   ---------------------   ---------------------
     Net cash used for investing activities                                  (1,054,815)            (3,859,180)
                                                                   ---------------------   ---------------------

Cash flows from financing activities:
  Proceeds from borrowings under revolving facility                           2,900,000                825,000
  Proceeds from Convertible Preferred Stock Unit Offering                            --              6,900,000
  Proceeds from capital lease for computer system                               371,228                     --
  Payments on capital lease for computer system                                 (29,676)                    --
  Costs associated with  Convertible Preferred Stock Unit Offering                   --             (1,260,447)
  Repayment of long-term debt                                                  (833,334)              (427,149)
  Repayment of revolving facilities                                          (1,325,000)            (2,850,071)
  Payments on other capital leases                                              (25,414)                    --
  Payments on note issued for acquired business                                 (64,718)                    --
                                                                   ---------------------   ---------------------
     Net cash provided by financing activities                                  993,086              3,187,333
                                                                   ---------------------   ---------------------

(Decrease) increase in cash and cash equivalents                               (331,872)               537,575
Cash and cash equivalents at beginning of period                                875,080                237,239
                                                                   ---------------------   ---------------------
Cash and cash equivalents at end of period                         $            543,208   $            774,814
                                                                   =====================   =====================
</TABLE>



                 See Notes to Consolidated Financial Statements.



                                       5

746927.1

<PAGE>


                   QUESTRON TECHNOLOGY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (Unaudited)


Note 1.   Basis of presentation.

          The accompanying  unaudited  consolidated financial statements include
the accounts of the Company and its  subsidiaries.  The  consolidated  financial
statements have been prepared in accordance with generally  accepted  accounting
principles  for  interim  financial  information  and  in  accordance  with  the
Securities and Exchange Commission's instructions for Form 10-QSB.  Accordingly,
they do not include all of the information  and footnotes  required by generally
accepted accounting principles for complete financial statements.

          Management  believes  that  all  adjustments   (consisting  of  normal
recurring  adjustments)  considered  necessary for a fair presentation have been
included. Operating results for the six month period ended June 30, 1998 are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 1998. The consolidated  balance sheet at December 31, 1997 reflects
the audited  balance sheet at that date. For further  information,  refer to the
financial  statements  and footnotes  thereto  included in the Company's  annual
report on Form 10-KSB for the year ended December 31, 1997.

Note 2.   Acquisition of Webb Distribution.

          In March 1997, the Company acquired 100% of the issued and outstanding
capital stock of Comp Ware, Inc. d/b/a Webb Distribution  ("Webb"),  a privately
owned company.  The business of Webb is  substantially  similar to the fastener,
electronic hardware,  and related products value-added  distribution business of
the Company,  serving customers in the high-technology  equipment  manufacturing
industry. The purchase price for Webb consisted of:

                (i)   $3,250,000 in cash;

                (ii)  Note A in the amount of $375,000.  Principal  and interest
                      at the rate of 10% are due and  payable 18 months from the
                      effective date of the closing;

                (iii) Note B in the amount of $375,000.  Principal  and interest
                      at the rate of 10% are  payable  monthly  over five  years
                      from the effective date
                      of the closing; and

                (iv)  1,500,000 Series IV Warrants (the "Webb Warrants")  issued
                      to the  majority  shareholder  of Webb  as a down  payment
                      under the Stock Purchase Agreement.


                                       6


746927.1

<PAGE>





                   QUESTRON TECHNOLOGY, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
               SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (Unaudited)


          Such acquisition was effected  pursuant to a Stock Purchase  Agreement
dated as of December 16, 1996.  The Company has accounted  for such  acquisition
using the purchase method of accounting.  In connection  with this  acquisition,
the Company recorded  $3,723,277 of cost in excess of net assets of the business
acquired.

          In  connection  with  the sale of the Webb  warrants  by the  majority
shareholder of Webb, Note A (as described in (ii) above) was satisfied  pursuant
to the terms of the acquisition  agreement,  effectively resulting in a $375,000
reduction in the cost of the acquisition.

Note 3.   Convertible Preferred Stock Unit Offering

          In March 1997, the Company completed an Offering of 1,150,000 Units of
its  securities.  Each  Unit  consisted  of one  share of  Series B  Convertible
Preferred  Stock and one  Series  IV  Common  Stock  Purchase  Warrant.  The net
proceeds  to the  Company,  after  deducting  underwriting  discounts  and other
expenses of the Offering,  were $5,639,553.  These proceeds were used in part to
finance the cash  portion of the  purchase  price of Webb.  The  remaining  cash
($2,389,553)  was  used  to  repay  the  outstanding  balance  on the  Company's
revolving  credit facility  ($750,000) and to repay the  outstanding  balance on
Webb's  revolving  credit  facility  ($1,000,000),  with the  remaining  balance
($639,553) retained by the Company for working capital.

Note 4.   Acquisition of Integrated Material Systems, Inc.

          In June 1997, the Company  acquired 100% of the issued and outstanding
capital stock of Integrated  Material Systems,  Inc. ("IMS"),  a privately owned
company.  The purchase price for IMS consisted of 50,000 shares of the Company's
common stock and an additional 75,000 shares of the Company's common stock to be
earned if IMS attains certain  earnings  targets.  In addition,  the acquisition
agreement calls for deferred purchase payments of up to $1,500,000 in cash based
on the future earnings of IMS.

Note 5.   Acquisition of Power Components, Inc.

          In September 1997, the Company  purchased the net operating  assets of
Power Components,  Inc. ("PCI"), a privately owned  Philadelphia  distributor of
lithium  batteries  and  customized  battery  packs  and  assemblies,  through a
simultaneously  acquired  wholly-owned  subsidiary.  The purchase  price for PCI
consisted of:

                (i)   $900,000 in cash;

                (ii)  50,000 shares of the Company's common stock;

                (iii) a note payable in the amount of $250,000; and

                (iv)  100,000 shares of the Company's  common stock to be earned
                      if PCI attains certain earnings targets.


                                       7

746927.1

<PAGE>




                   QUESTRON TECHNOLOGY, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
               SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (Unaudited)


          Such   transactions  were  effected  pursuant  to  an  Asset  Purchase
Agreement and a Stock Purchase  Agreement  dated  September 4, 1997. The Company
has accounted for such transactions using the purchase method of accounting.  In
connection with these  transactions,  the Company recorded $1,237,028 of cost in
excess of net assets of the business acquired.

Note 6.   Acquisition of California Fasteners, Inc.

          In  September  1997,  the  Company  acquired  100% of the  issued  and
outstanding capital stock of California Fasteners, Inc. ("Calfast"), a privately
owned company. The purchase price for Calfast consisted of:

                (i)   $6,594,441 in cash;
           
                (ii)  the assumption of $1,058,712 in debt net of cash on hand;

                (iii) 475,106 shares of the Company's common stock,  including
                      125,896 shares of the Company's common stock which sellers
                      of Calfast may put to the Company, valued at $2,981,288;

                (iv)  up to  $795,559  in cash to be  paid if  Calfast  attained
                      certain  earnings  targets for the four month period ended
                      December  31,  1997,  of which  $600,000 was paid in March
                      1998; and

                (v)   up to  $3,500,000  (50% in cash and 50% in  shares  of the
                      Company's   common  stock)  if  Calfast   attains  certain
                      earnings targets for the year ending December 31, 1998.

          The  acquisition of Calfast was effected  pursuant to a Stock Purchase
Agreement  dated as of August 29,  1997.  The  Company  has  accounted  for such
acquisition  using the purchase  method of accounting.  In connection  with this
acquisition,  the Company recorded $8,355,314 of cost in excess of net assets of
the business acquired.

Note 7.   Revolving Credit Facility and Long-Term Debt

          In connection with the  acquisitions  of PCI and Calfast,  the Company
entered  into a loan  agreement  with  a  bank.  The  agreement  provides  for a
$14,000,000  credit facility  consisting of a six-year term loan for $10,000,000
and a  $4,000,000  revolving  credit  facility.  The loan  agreement  contains a
provision for the calculation of a borrowing base,  which  determines the amount
of  borrowings  available  under  the  revolving  facility.  At June  30,  1998,
$3,000,000  was borrowed  and  outstanding  under the  revolving  facility.  The
remaining amount of the $4,000,000 revolving credit facility, or $1,000,000, was
fully available at June 30, 1998 for future working  capital needs.  Interest on
the revolving facility is due monthly at the prime rate plus 1%. Interest on the
six-year term loan is due monthly at the prime rate plus 1.5%.



                                       8

746927.1

<PAGE>



Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
          OPERATION

Results of Operations

For the three month and six month periods ended June 30, 1998.

          The results of operations  through June 30, 1998 include the operating
results of the  Company's  inventory  logistics  management  business,  Questron
Distribution  Logistics,  Inc.  ("QDL"),  its master  distribution  of fasteners
business,  Integrated Material Systems, Inc. ("IMS") and its lithium battery and
battery pack distribution business, Power Components,  Inc. (PCI"). QDL includes
the  operating  results  of Quest  Electronic  Hardware,  Inc.  ("Quest"),  Webb
Distribution ("Webb") and California Fasteners, Inc. ("Calfast").

          The Company's revenues for the three month and six month periods ended
June 30, 1998  amounted to  $10,670,970  and  $21,071,936,  respectively,  which
represent a record level of revenues for the Company,  compared with  $5,181,060
and $9,093,337 for the comparable prior year periods.  The significant growth in
the  Company's  revenues  for  the  periods  is  primarily  attributable  to the
acquisitions  of Calfast,  Webb, IMS, and PCI, as well as the internal growth of
Quest and the  opening  of a new QDL  branch  in Grand  Rapids,  MI  during  the
quarter.  The revenues associated with the acquired businesses for the three and
six month periods ended June 30, 1998  amounted to $6,735,280  and  $12,803,597,
respectively,  compared with $715,377 and $2,782,368 for the three and six month
periods ended June 30, 1997, respectively.

          The  Company's   operating   income  was  $1,547,924  and  $3,113,373,
respectively,  for the three month and six month  periods  ended June 30,  1998,
compared with operating income of $514,786 and $932,799 for the comparable prior
year periods. The increase in operating income for the three month and six month
periods ended June 30, 1998, compared with the comparable prior year periods, is
primarily due to the increased  operating  income  attributable  to the acquired
businesses,  as  well  as  continued  internal  growth.  Operating  income  as a
percentage  of sales for the three  month and six month  periods  ended June 30,
1998 amounted to 14.5% and 14.8%, respectively, compared with 9.9% and 10.3% for
the three month and six month  periods ended June 30, 1997,  respectively.  This
improvement  is  attributable  to the  successful  integration  of the  acquired
businesses  and the  resultant  cost  savings  from  the  combination  of  these
businesses with the Company.

          Interest  expense,  which  reflects the cost of borrowings  associated
with the acquisition of Calfast in September 1997 and borrowings associated with
QDL's  working  capital  needs,  for the three month and six month periods ended
June  30,  1998  amounted  to  $331,398  and  $612,773,  respectively.  For  the
comparable  periods of the prior year, the Company's  results  include  interest
expense of $66,890 and $127,099,  respectively. The increase in interest expense
principally   reflects  the  costs  of  increased  borrowings  to  complete  the
acquisition of Calfast and to support the working capital needs of QDL.


                                       9


746927.1

<PAGE>


          The  provision  for  income  taxes for the  three  month and six month
periods ended June 30, 1998 and 1997,  respectively,  reflects a federal  income
tax provision at an effective  rate of 35% and 35.1%,  respectively  and a state
income tax provision at an effective rate of 6% and 6.1%, respectively,  for the
states in which the Company does business.

          Net income for the three  month and six month  periods  ended June 30,
1998 amounted to $717,750 and $1,475,354, respectively, compared with net income
of $262,915 and $472,946 for the comparable prior year periods. This improvement
reflects the increased operating income attributable to the acquired businesses,
as well as continued internal growth,  partially reduced by increased  corporate
expenses, interest expense, and income taxes.


Liquidity and Capital Resources

          As of June 30, 1998,  the Company had $543,208 in cash and  short-term
investments,  compared to $875,080 as of December 31, 1997. As of June 30, 1998,
the Company had working capital of $10,743,969, compared with working capital of
$9,046,826 as of December 31, 1997.

          For the six  months  ended  June 30,  1998,  the net cash  used by the
Company's operating activities amounted to $270,143,  principally reflecting the
increase in  inventories  and  receivables,  as well as the increases in prepaid
expenses,  other  assets  and other  receivables  and the  decrease  in  accrued
expenses,  offset in part by the  profits of the Company  and the  increases  in
accounts payable, income taxes payable and deferred income taxes.

          For the six  months  ended  June 30,  1998,  the net cash  used in the
Company's investing  activities  amounted to $1,054,815,  including $600,000 net
cash  consideration  paid in  connection  with the  deferred  purchase  price of
Calfast. The Company also had capital expenditures  $448,849 for the acquisition
of fixed assets, $392,040 of which represents the purchase and installation of a
new on-line  real-time  computer  system.  The Company does not have significant
commitments  for capital  expenditures  as of June 30,  1998 and no  significant
commitments are anticipated for the remainder of 1998.

          For the six months ended June 30, 1998,  the net cash  provided by the
Company's  financing   activities  amounted  to  $993,086,   which  consists  of
$2,900,000 of bank borrowings under the Company's revolving credit facility,  as
well as $371,228 of net  proceeds  from a capital  lease for the purchase of the
Company's  computer  system,  reduced by long-term  debt  principal  payments of
$833,334,  revolving  facility  repayments of $1,325,000,  principal payments of
$25,414 on various capital leases, principal payments of $64,718 on notes issued
for acquired  businesses  and  principal  payments on the capital  lease for the
computer system of $29,676.


                                       10

746927.1

<PAGE>


          In connection with the acquisition of Calfast,  the Company  increased
its  revolving  facility to  $4,000,000,  under terms and  conditions  generally
consistent with those of its original facility. At June 30, 1998, $3,000,000 was
borrowed and outstanding under the revolving  facility.  The remaining amount of
the $4,000,000 revolving credit facility, or $1,000,000,  was fully available at
June 30, 1998 for future working capital needs.  Amounts  outstanding  under the
revolving  facility  bear  interest  at a rate equal to 1.0% above the  lender's
prime  rate.  As of August 10,  1998,  the  interest  rate  under the  revolving
facility  was 9.5%.  In order to secure the  obligations  of the Company and its
subsidiaries  under the  revolving  facility and the related term loan  facility
under the loan and security  agreement with the lender, the Company entered into
a stock  pledge  agreement  with the lender  whereby the Company  pledged to the
lender the shares of capital  stock of each of its  subsidiaries  at the date of
such  agreement  and any shares of its  subsidiaries  in which the  Company  may
thereafter  acquire an interest.  In addition,  the Company and its subsidiaries
granted a security interest in substantially all of their assets to the lender.

          In June 1998,  the Company  signed  definitive  agreements  to acquire
Fas-Tronics,  Inc.  and Fortune  Industries,  Inc.,  both of Fort Worth,  Texas.
Fas-Tronics  is a  value-added  distributor  of fasteners  and other  components
principally  to the  commercial  aerospace  industry.  Fortune is a  value-added
distributor of fasteners and other components  principally to aerospace  defense
contractors.  Both  acquisitions are subject to the completion of due diligence,
financing  and other  customary  closing  conditions.  The  Company  intends  to
continue to identify and evaluate  additional  potential  merger and acquisition
candidates engaged in businesses complementary to its business. While certain of
such additional  potential  acquisition  opportunities  are at various stages of
consideration  and  evaluation,  none is at any  definitive  stage at this time.
Management  believes that its working capital,  funds available under its credit
agreement,  and funds  generated from operations will be sufficient to meets its
obligations  through 1998,  exclusive of cash  requirements  associated with any
business acquisitions.


                                       11

746927.1

<PAGE>




                           PART II - OTHER INFORMATION


Item  1.    LEGAL PROCEEDINGS

            Not applicable.

Item 2.     CHANGES IN SECURITIES


                  On June 11, 1998, the  shareholders and the board of directors
            (the  "Board") of the Company  approved a proposed  amendment to the
            Certificate of Designation of the Company (the "Amended  Certificate
            of  Designation") to accelerate the conversion date (the "Conversion
            Date") of the Company's  Series B Convertible  Preferred  Stock, par
            value $.01 per share ("Series B Preferred Stock") into common stock,
            par value $.001 per share ("Common  Stock").  The Board  established
            July 2,  1998  as the  Conversion  Date  upon  which  the  Series  B
            Preferred  Stock  would be  automatically  converted  into shares of
            Common Stock,  together with the payment of the full annual dividend
            that would have been payable with respect thereto in 1999.

                  On June 30, 1998, the Company filed the Amended Certificate of
            Designation  with the  Secretary  of State of the State of Delaware,
            providing that (i) each share of the Series B Preferred  Stock would
            automatically  convert as of the close of business on the Conversion
            Date,  without  any action on the part of the holder  thereof or the
            Company,  into 1.4375  shares of Common  Stock;  (ii) holders of the
            Series B Preferred Stock would be entitled,  when and as declared by
            the Board,  to receive an annual  dividend per share equal to $0.115
            per share;  (iii) such dividends would accrue from March 4, 1997 and
            would  be  payable  on  March 4,  1998  and on the  Conversion  Date
            (payable  with respect to a full year),  in cash or shares of Common
            Stock of the Company;  (iv) the  aforementioned  dividends  would be
            cumulative and no dividends would be paid or set apart in respect of
            the Common Stock or any other class of securities which ranks junior
            to the Series B  Preferred  Stock  unless and until all  accrued and
            unpaid dividends upon such Series B Preferred Stock had been paid or
            set apart in full;  and (v) no interest would accrue with respect to
            dividends in arrears.

                  On July 2, 1998,  each share of Series B  Preferred  Stock was
            converted  into  Common  Stock at a rate of 1.4375  shares of Common
            Stock and received  $0.115 per share in Common Stock for the related
            dividend.

Item 3.     DEFAULTS UPON SENIOR SECURITIES

            Not applicable.



                                       12


746927.1

<PAGE>



Item 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  The 1998 Annual Meeting of the Shareholders of the Company was
            held on June 11, 1998 to consider  approval of the matters set forth
            below:

                  With respect to the election of the following  directors,  the
            votes of the shareholders were as follow:


<TABLE>
<CAPTION>
                                              For                  Withheld                Abstain
                                          ---------                --------                -------
<S>                                       <C>                        <C>                       <C>
Milton M. Adler                           3,519,053                  9,512                     0
Robert V. Gubitosi                        3,519,053                  9,512                     0
Frederick W. London                       3,519,053                  9,512                     0
William J. McSherry, Jr.                  3,519,053                  9,512                     0
Dominic A. Polimeni                       3,518,964                  9,603                     0
</TABLE>

                  On Proposal  No. 1 relating to the approval of an amendment to
            the  Certificate  of  Incorporation  of the  Company  to change  the
            automatic   date  of  conversion  for  the   outstanding   Series  B
            Convertible Preferred Stock into Common Stock, (i) of the holders of
            the  outstanding   shares  of  Series  B  Preferred  Stock,   voting
            separately  as a class,  there  were  1,404,448  votes  for, 0 votes
            against, and 0 votes abstained and (ii) of the outstanding shares of
            Common  Stock and Series B Preferred  Stock voting  together,  there
            were  2,769,509  votes for,  13,871 votes  against,  and 9,473 votes
            abstained.

                  On Proposal  No. 2 relating to the approval of an amendment to
            the  Company's  1996 Stock  Option  Plan to  increase  the number of
            options  available for grant under such plan,  there were  2,747,377
            votes for, 41,721 votes against, and 3,845 votes abstained.

                  For  Proposal  No. 3, the  shareholders  voted to  approve  an
            amendment to the Company's 1994 Director  Non-Qualified Stock Option
            Plan to  increase  the number of options  available  for grant under
            such plan and to  increase  the  number  of  options  to be  granted
            annually to Non-Employee Directors, and to ratify a grant of options
            to  Non-Employee  Directors.  There were 2,736,424 votes for, 49,726
            votes against, and 6,704 votes abstained.

                  For  Proposal  No. 4, the  shareholders  voted to  ratify  the
            appointment  of Moore  Stephens,  P.C. as the Company's  Independent
            Public  Accountants  for the fiscal year ending  December  31, 1998.
            There were 3,339,768  votes for,  2,040 votes  against,  and 228,079
            votes abstained.

Item 5.     OTHER INFORMATION

            Not applicable.

Item 6.     EXHIBITS AND REPORTS ON FORM 8-K

            (a)  Exhibits.
                 See Exhibit Index immediately following the signature page.

            (b)  Reports on Form 8-K.
                 None.



                                       13

746927.1  

<PAGE>




                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        QUESTRON TECHNOLOGY, INC.



                                         (1)  Principal Executive Officer:


Date:       August 14,  1998             /s/ Dominic A. Polimeni
            ----------------             -----------------------
                                         Dominic A. Polimeni
                                         Chief Executive Officer

                                         (2) Principal Financial and Accounting
                                             Officer:

Date:       August 14,  1998             /s/ Milton M. Adler
            ----------------             -------------------
                                         Milton M. Adler
                                         Treasurer



                                       14

                                  EXHIBIT INDEX


       The following exhibits are filed as part of this quarterly report on Form
10-Q:



<TABLE>
<CAPTION>
Exhibit                                                                                             Sequential
  No.                                        Description                                             Page No.
  ---                                        -----------                                             --------

<S>            <C>
3.0            Certificate  of  Incorporation,   incorporated  by  reference  to
               Exhibit  3(i) to the  Registrant's  Form  10-KSB  filed  with the
               Securities  and  Exchange  Commission  for the fiscal  year ended
               December 31, 1987 (File No. 0-13324)
3.1            Certificate of Amendment, dated March 20, 1985, to Certificate of
               Incorporation  of the  Registrant,  incorporated  by reference to
               Exhibit 4.1 to Amendment No. 1 of the  Registrant's  Registration
               Statement  on Form S-3 filed  with the  Securities  and  Exchange
               Commission on March 9, 1995 (File No. 33-44331)
3.3            Certificate  of Amendment,  dated June 9, 1989, to Certificate of
               Incorporation  of the  Registrant,  incorporated  by reference to
               Exhibit 4.1 to Amendment No. 1 of the  Registrant's  Registration
               Statement  on Form S-3 filed  with the  Securities  and  Exchange
               Commission on March 9, 1995 (File No. 33-44331)
3.4            Certificate of Correction,  dated May 17, 1991, to Certificate of
               Incorporation  of the  Registrant,  incorporated  by reference to
               Exhibit 4.1 to Amendment No. 1 of the  Registrant's  Registration
               Statement  on Form S-3 filed  with the  Securities  and  Exchange
               Commission on March 9, 1995 (File No. 33-44331)
3.5            Certificate of Amendment, dated December 20, 1993, to Certificate
               of Incorporation of the Registrant,  incorporated by reference to
               Exhibit  3(i) to the  Registrant's  Form  10-KSB  filed  with the
               Securities  and  Exchange  Commission  for the fiscal  year ended
               December 31, 1993 (File No. 0-13324)
3.6            Certificate of Correction, dated July 19, 1994, to Certificate of
               Incorporation  of the  Registrant,  incorporated  by reference to
               Exhibit 4.1 to Amendment No. 1 to the  Registrant's  Registration
               Statement  on Form S-3 filed  with the  Securities  and  Exchange
               Commission on March 9, 1995 (File No. 33-44331)
3.7            Certificate of Amendment,  dated April 2, 1996, to Certificate of
               Incorporation  of the  Registrant,  incorporated  by reference to
               Exhibit  3.5 to the  Registrant's  Form  10-KSB  filed  with  the
               Securities  and  Exchange  Commission  for the fiscal  year ended
               December 31, 1995 (File No. 0-13324)
</TABLE>



<PAGE>



<TABLE>
<CAPTION>
Exhibit                                                                                             Sequential
  No.                                        Description                                             Page No.
  ---                                        -----------                                             --------

<S>            <C>    
3.8            Certificate of Amendment, filed December 31, 1996, to Certificate
               of Incorporation of the Registrant,  incorporated by reference to
               Exhibit 3.10 to  Amendment  No. 1 to the  Registrant's  Form SB-2
               filed with the Securities and Exchange Commission on February 25,
               1997 (File No. 333-18243)
3.9            By-Laws of the  Registrant,  incorporated by reference to Exhibit
               3b(ii) to the Registrant's  Form 10-KSB filed with the Securities
               and Exchange  Commission  for the fiscal year ended  December 31,
               1987 (File No. 0-13324)
3.10           Amendment to By-Laws of the Registrant, incorporated by reference
               to Exhibit 3.4 of the  Registrant's  Form  10-KSB  filed with the
               Securities  and  Exchange  Commission  for the fiscal  year ended
               December 31, 1992 (File No. 0-13324)
4.0            Specimen Common Stock  Certificate,  incorporated by reference to
               Exhibit  4.0 to  Amendment  No. 1 to the  Registrant's  Form SB-2
               filed with the Securities and Exchange Commission on February 25,
               1997 (File No. 333-18243)
4.1            Specimen Preferred Stock  Certificate,  incorporated by reference
               to Exhibit 4.1 to Amendment No. 1 to the  Registrant's  Form SB-2
               filed with the Securities and Exchange Commission on February 25,
               1997 (File No. 333-18243)
4.2            Certificate  of  Designations,  Preferences  and  Rights  of  the
               Registrant's Series B Convertible  Preferred Stock,  incorporated
               by  reference   to  Exhibit  4.2  to  Amendment   No.  1  to  the
               Registrant's  Form SB-2 filed with the  Securities  and  Exchange
               Commission on February 25, 1997 (File No. 333-18243)
4.3            Form of Series IV Warrant Agreement, incorporated by reference to
               Exhibit  4.3 to  Amendment  No. 1 to the  Registrant's  Form SB-2
               filed with the Securities and Exchange Commission on February 25,
               1997 (File No. 333-18243)
4.4            Form of Series III  Warrant  Agreement,  dated as of  November 7,
               1994,   incorporated   by  reference  to  Exhibit  10.22  to  the
               Registrant's  Form 10-K filed with the  Securities  and  Exchange
               Commission  for the fiscal year ended December 31, 1994 (File No.
               0-13324)
4.5            Form of Underwriters' Purchase Option,  incorporated by reference
               to Exhibit 4.5 to Amendment No. 1 to the  Registrant's  Form SB-2
               filed with the Securities and Exchange Commission on February 25,
               1997 (File No. 333-18243)
4.6            Stock Purchase  Warrant  Certificate for Purchase of Common Stock
               of  Questron  Technology,  Inc.,  incorporated  by  reference  to
               Exhibit  4.6 to  Amendment  No. 1 to the  Registrant's  Form SB-2
               filed with the Securities and Exchange Commission on February 25,
               1997 (File No. 333-18243)
4.7            Amended  Certificate  of  Designation  Establishing  a Series  of
               Preferred Stock of Questron Technology, Inc.
10.1           Stock  Purchase  Agreement,  dated  as of June 12,  1998,  by and
               between  the   Company,   Fortune   Industries,   Inc.   and  the
               Stockholders  of the Company  listed on Schedule 1.1 thereto (the
               "Fortune Stock Purchase Agreement")
10.2           Stock  Purchase  Agreement,  dated  as of June 12,  1998,  by and
               between the Company Gregory  Fitzgerald,  Valerie  Fitzgerald and
               Fas-Tronics, Inc.
10.3           Letter  Agreement,  dated  July  29,  1998,  by and  between  the
               Company,  Fortune  Industries,  Inc. and the  stockholders of the
               Company  listed on  Schedule  1.1 to the Fortune  Stock  Purchase
               Agreement
10.4           Letter  Agreement,  dated  July  29,  1998,  by and  between  the
               Company, Gregory Fitzgerald,  Valerie Fitzgerald and Fas-Tronics,
               Inc.
27.1           Financial Data Schedule
</TABLE>