**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-K**

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

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

|             New                York             |              11-1978958                                           |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                         |                                                                                                                                                                                           |
| (State                or other jurisdiction of incorporation or organization)                                                                                           | (I.R.S.                Employer Identification No.)                                                                                                                                       |
| 145                Oser Avenue, Hauppauge, New York                                                                                                                     |                 11788               |
|                                                                                                                                                                         |                                                                                                                                                                                           |
| (Address                of principal executive offices)                                                                                                                 | (Zip                Code)                                                                                                                                                                 |

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**DOCUMENTS      INCORPORATED BY REFERENCE.**

----

|   | **Forward-Looking                Statements** |
|--------|-----------------------------------------------|

----

**PART      I**

|   | ***Item                1.  Business.*** |
|--------|---------------------------------------------------|

*www.jacoelectronics.com/investor-fin-news.asp*

|   | **Our                Company** |
|--------|--------------------------------|

| •                telecommunications equipment                                                      | •                computers and office equipment                                                                                                       |
|----------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •                medical devices and instrumentation                                               | •                industrial equipment and controls                                                                                                    |
| •                military/aerospace systems•                voting and gaming machines  | •                automotive electronics•                home entertainment and other                consumer   electronics  |

** **

----

|   | **Our                Industry** |
|--------|---------------------------------|

|   | **Products** |
|--------|--------------|

|    |   | **2007** |   |   | **2006** |   |   | **2005** |   |
|---------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Semi    |   |     | 54     | %      |     |   | 50     | %        |   |   | 58 | % |
| FPD     |   |     | 25     | %      |     |   | 27     | %        |   |   | 17 | % |
| Passive |   |     | 15     | %      |     |   | 15     | %        |   |   | 17 | % |
| EMCH    |   |     | 6      | %      |     |   | 8      | %        |   |   | 8 | % |

----

|   | **Value-Added                Services** |
|--------|-----------------------------------------|

| ·   | *Automated                Inventory Management Services*.  We offer comprehensive,                state-of-the-art solutions that effectively manage our customers’                inventory reordering, stocking and administration                functions.  These services reduce paperwork, inventory, cycle                time and the overall cost of doing business for our                customers. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Kitting*.  Kitting                consists of assembling to a customer’s specifications two or more of our                45,000 stock items into pre-packaged kits ready for use in the customer’s                assembly line.  Kitting services allow us to provide a partial                or complete fill of a customer’s order and enable the customer to more                efficiently manage its inventory. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Programming*.  We                offer both field programming instruments, as well as volume production                capabilities performed in-house.  All standard surface mount and                dip packages are available.  We provide custom oscillators at a                user-specified frequency.  In addition, we offer configurable                modular power supplies featuring the flexibility of 10 wide-range                outputs,                with the best technical specifications in its class.  This                configurable power supply series offers quick turnaround and fully-tested                units in medical, test and measurement, industrial and datacom                applications. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *FPD                Integration.*Our FPD sales specialists and technical engineers work                directly with our customers to design, develop, configure, test and                deliver highly customized solutions to meet specific FPD requirements                for                both business and consumer applications. We are able to internalize                key                elements of the FPD integration process that were previously                sub-contracted to outside vendors and offer customers a one-stop                source                for their FPD and integration needs through our state-of-the-art                FPD                integration facility.  See “Operations –                Manufacturing.” |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**        Sales      and      Marketing**

----

|   | **Suppliers** |
|--------|---------------|

----

|   | **Operations** |
|--------|----------------|

*Component      Distribution.  *

*Manufacturing.  *

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**        Discontinued      Operations**

----

**        Competition**

|   | **Backlog** |
|--------|-------------|

----

|   | **Employees** |
|--------|---------------|

***Item      1A. Risk Factors***

**Our      industry is highly cyclical, and an industry downturn could have a material      adverse effect on our business.**

**Our      revenues and profitability previously declined significantly from historical      highs and, although revenues have shown growth recently, we may be unable to      achieve profitability at levels experienced in the past.**

----

**We      are dependent on a limited number of suppliers.  Loss of one or more      of our key suppliers could have a material adverse effect on our      business.**

**Declines      in the value of our inventory could materially adversely affect our      business.**

**Significant      order cancellations, reductions or delays by our customers could materially      adversely affect our business.**

----

**The      market for our products and services is very competitive and, if we cannot      effectively compete, our business will be harmed.**

**Substantial      defaults by our customers on accounts receivable or the loss of significant      customers could have a material adverse effect on our      business.**

**We      may not have adequate liquidity or access to capital resources, and our      substantial leverage and debt service obligations could materially adversely      affect our ability to meet our cash needs.**

----

| -   | increasing                our vulnerability to general adverse economic and industry                conditions; |
|---------------|-----------------------------------------------------------------------------------------------------------------|

| -   | increasing                our exposure to increasing interest                rates; |
|---------------|-------------------------------------------------------------------------------------|

| -   | restricting                our credit with our suppliers, which would limit our ability to purchase                inventory; |
|---------------|-------------------------------------------------------------------------------------------------------------------------------|

| -   | limiting                our ability to obtain additional financing on acceptable terms or                at                all; |
|---------------|---------------------------------------------------------------------------------------------------------------------------------|

| -   | requiring                the dedication of a portion of any cash flow from operations to service                our indebtedness (currently, our credit facility requires the deposit                of                customer receipts to be directed to a blocked account and applied                directly                to the repayment of outstanding indebtedness), thereby reducing the                amount                of any cash flow available for other purposes, including capital                expenditures; |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | limiting                our flexibility in planning for, or reacting to, changes in our business                and the industry in which we compete;                and |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | placing                us at a possible competitive disadvantage relative to less leveraged                competitors and competitors that have better access to capital                resources. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Interest      rate changes may adversely affect our operating results**

**Our      business in non-U.S. locations, particularly Asia, represent a significant      and      growing portion of our sales, and our failure to expand in Asia may negatively      impact our sales.**

| -   | import                and export regulations that could erode profit margins or restrict                exports; |
|---------------|------------------------------------------------------------------------------------------------------------------|

| -   | the                burden and cost of compliance with foreign laws, treaties and technical                standards and changes in those                regulations; |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | potential                restrictions on transfers of funds; |
|---------------|--------------------------------------------------------------|

| -   | foreign                currency fluctuations; |
|---------------|-----------------------------------------------|

| -   | import                and export duties and value added                taxes; |
|---------------|-------------------------------------------------------------------------------|

| -   | transportation                delays and interruptions; |
|---------------|---------------------------------------------------------|

| -   | uncertainties                arising from local business practices and cultural considerations;                and |
|---------------|--------------------------------------------------------------------------------------------------------------------|

| -   | potential                military conflicts and political                risks. |
|---------------|---------------------------------------------------------------------------------|

**We      are dependent on foreign manufacturers and subject to trade regulations which      expose us to political and economic risk.**

| -   | increases                in tariffs or duties; |
|---------------|------------------------------------------------|

| -   | changes                in trade treaties; |
|---------------|-------------------------------------------|

| -   | strikes                or delays in air or sea                transportation; |
|---------------|-------------------------------------------------------------------------------|

| -   | future                U.S. legislation with respect to pricing and/or import quotas on                products                imported from foreign countries;                and |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | turbulence                in offshore economies or financial                markets. |
|---------------|--------------------------------------------------------------------------------------|

----

**Our      industry is subject to supply shortages. Any delay or inability to obtain      components may have a material adverse effect on our      business.**

**The      prices of our components are subject to volatility.**

**A      reversal of the trend for distribution to play an increasing role in the      electronic components industry could materially adversely affect our      business.**

**Our      operations would be materially adversely affected if third party carriers were      unable to transport our products on a timely basis.**

**Our      products may be found to be defective and, as a result, warranty and/or product      liability claims may be asserted against us which could have a material adverse      effect on our business.**

----

**If      we are unable to recruit and retain key personnel necessary to operate our      business, our ability to compete successfully will be adversely      affected.**

**We      rely heavily on our internal information systems which, if not properly      functioning, could materially adversely affect our      business.**

**If      we fail to maintain an effective system of internal controls or discover      material weaknesses in our internal controls over financial reporting, we may      not be able to report our financial results accurately or timely, which could      have a material adverse effect on our business.**

----

***    Item      1B.      Unresolved Staff Comments.***

| ***Item                2.*** | ***Properties.*** |
|------------------------------|-------------------|

| **Location**                            |   |   | **Base                      Rent****Per                      Month** |   |   | **Square                      Feet** |   |   | **Use** |   |            | **Lease****Expiration****Date**                   |   |
|-----------------------------------------|--------|--------|----------------------------------------------------------------------|--------|--------|--------------------------------------|--------|--------|---------|--------|-----------------|---------------------------------------------------|--------|
|                                    |   |   |                                                                 |   |   |                                 |   |   |    |   |            |                                              |   |   |   |   |   |   |
| Hauppauge,                    NY (1)    |   |   | $                                                                    | 57,881 |   |                                 |   | 72,000 |    |   | Administrative, |                                              |   | 12/31/13 |   |
|                                    |   |   |                                                                 |   |   |                                 |   |   |    |   |            | Sales,                                            |   |   |   |   |   |
|                                    |   |   |                                                                 |   |   |                                 |   |   |    |   |            | Warehouse,                    and FPD Integration |   |   |   |   |   |
|                                    |   |   |                                                                 |   |   |                                 |   |   |    |   |            |                                              |   |   |   |   |   |   |
| Westlake                    Village, CA |   |   | $                                                                    | 4,500  |   |                                 |   | 3,750  |    |   | Administrative, |                                              |   | 4/30/09 |   |
|                                    |   |   |                                                                 |   |   |                                 |   |   |    |   |            | Sales                    and                      |   |   |   |   |   |
|                                    |   |   |                                                                 |   |   |                                 |   |   |    |   |            | Warehouse                                         |   |   |   |   |   |
|                                    |   |   |                                                                 |   |   |                                 |   |   |    |   |            |                                              |   |   |   |   |   |   |

| (1)   | Leased                from a partnership owned by Joel H. Girsky, Chairman and President                of the                Company, and Charles B. Girsky, Executive Vice President, at a current                monthly rent, which the Company believes represents the fair market                value                for such space. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ***Item                3.*** | ***Legal                Proceedings.*** |
|------------------------------|-----------------------------------------|

| ***Item                4.*** | ***Submission                of Matters to a Vote of Security                Holders.*** |
|------------------------------|------------------------------------------------------------------------------------------|

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**PART      II**

| ***Item                5.*** | ***Market                For Registrant’s Common Equity, Related Stockholder Matters and Issuer                Purchases of Equity                Securities.*** |
|------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | Our                common stock is traded on the Nasdaq National Market under the symbol                “JACO”.  The stock prices listed below represent the high and                low sale prices of our common stock, as reported by the Nasdaq National                Market, for each fiscal quarter beginning with the first fiscal quarter                of                the fiscal year ended June 30,                2006. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **High** |   |   | **Low** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|---------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |     |   |   |    |   |   |   |
| **Fiscal                    Year 2006:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |   |    |   |   |   |
| First                    quarter ended September 30, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $        | 4.50   |   |    | $      | 2.80 |   |
| Second                    quarter ended December 31, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |     | 3.97   |   |    |   | 3.02 |   |
| Third                    quarter ended March 31,                    2006                                                                        |   |     | 4.10   |   |    |   | 3.34 |   |
| Fourth                    quarter ended June 30,                    2006                                                                        |   |     | 4.10   |   |    |   | 3.16 |   |
| **Fiscal                    Year 2007:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |   |    |   |   |   |
| First                    quarter ended September 30, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $        | 4.38   |   |    | $      | 3.11 |   |
| Second                    quarter ended December 31, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |     | 3.89   |   |    |   | 3.05 |   |
| Third                    quarter ended March 31,                    2007                                                                        |   |     | 4.49   |   |    |   | 3.11 |   |
| Fourth                    quarter ended June 30,                    2007                                                                        |   |     | 3.60   |   |    |   | 2.00 |   |

| (b)   | As                of September 20, 2007, there were approximately 151 holders of record                of                our common stock.  We believe our stock is held by more than                1,800 beneficial owners. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | We                have never declared or paid any cash dividends on our common                stock.  We intend for the foreseeable future to retain future                earnings for use in our business.  The amount of dividends we                pay in the future, if any, will be at the discretion of our Board                of                Directors and will depend upon our financial condition, operating                results                and other factors as the Board of Directors, in its discretion, deems                relevant.  In addition, our credit facility prohibits us from                paying cash dividends on our common                stock. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) |  There                have been on issuer repurchases on the open market or in connection                with                equity plans. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   |
|--------|--------|

| ***Item                6.*** | ***Selected                Financial Data.*** |
|------------------------------|-----------------------------------------------|

----

|                                                                                                                              |   | Year                                              Ended June 30,                   |        |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|-------------|
|                                                                                                                              |   |                                                                               |        |
|                                                                                                                              |   | **2007**                                                                           |        |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   | (in                                              thousands, except per share data) |        |
| Net                                              sales                                                                            |   | **$**                                                                              | **240,232** |   |   | $ | 228,521 |   |   | $ | 231,824 |   |   | $ | 249,100 |   |   | $ | 202,656 |   |
| Cost                                              of Goods Sold                                                                   |   | ** **                                                                         | **206,507** |   |   |   | 198,316 |   |   |   | 205,924 |   |   |   | 214,389 |   |   |   | 176,918 |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Gross                                              profit                               |   | ** **                                                                         | **33,725**  |   |   |   | 30,205 |   |   |   | 25,900 |   |   |   | 34,711 |   |   |   | 25,738 |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,                                              general and administrative expenses                                         |   | ** **                                                                         | **30,851**  |   |   |   | 28,082 |   |   |   | 32,112 |   |   |   | 35,016 |   |   |   | 28,184 |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Operating                                              income (loss)                    |   | ** **                                                                         | **2,875**   |   |   |   | 2,123 |   |   |   | (6,212 | ) |   |   | (305 | ) |   |   | (2,446 | ) |
| Interest                                              expense                                                                     |   | ** **                                                                         | **2,789**   |   |   |   | 2,618 |   |   |   | 2,029 |   |   |   | 1,539 |   |   |   | 1,025 |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Income                                              (loss) from continuing              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          operations                                              before income taxes |   | ** **                                                                         | **85**      |   |   |   | (495 | ) |   |   | (8,241 | ) |   |   | (1,844 | ) |   |   | (3,471 | ) |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                                              tax provision (benefit)                                                       |   | ** **                                                                         | **23**      |   |   |   | 6,467 |   |   |   | (2,814 | ) |   |   | (553 | ) |   |   | (1,180 | ) |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                                              (loss) from continuing operations                                             |   | ** **                                                                         | **62**      |   |   |   | (6,962 | ) |   |   | (5,427 | ) |   |   | (1,291 | ) |   |   | (2,291 | ) |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                                              (loss) from discontinued operations,                                          |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   net                                              of tax                                                               |   | ** **                                                                         | **(3,183**  | **)** |   |   | - |   |   |   | 567 |   |   |   | 736 |   |   |   | (693 | ) |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        NET                                              INCOME (LOSS)                          |   | **$**                                                                              | **(3,121**  | **)** |   | $ | (6,962 | ) |   | $ | (4,860) |   |   | $ | (555 | ) |   | $ | (2,984 | ) |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PER                                              SHARE INFORMATION                                                                |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Basic                                              income (loss) per common share:                                    |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Income                                              (loss) from continuing operations                           |   | **$**                                                                              | **0.01**    |   |   | $ | (1.11 | ) |   | $ | (0.87 | ) |   | $ | (0.22 | ) |   | $ | (0.40 | ) |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Income                                              (loss) from discontinued operations                         |   | ** **                                                                         | **(0.51**   | **)** |   |   | - |   |   |   | 0.09 |   |   |   | 0.13 |   |   |   | 0.12 |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net                                              loss                                                           |   | **$**                                                                              | **(0.50**   | **)** |   | $ | (1.11 | ) |   | $ | (0.78 | ) |   | $ | (0.09 | ) |   | $ | (0.52 | ) |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Diluted                                              income (loss) per common share:                                  |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Income                                              (loss) from continuing operations                           |   | **$**                                                                              | **0.01**    |   |   | $ | (1.11 | ) |   | $ | (0.87 | ) |   | $ | (0.22 | ) |   | $ | (0.40 | ) |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Income                                              (loss) from discontinued operations                         |   | ** **                                                                         | **(0.50**   | **)** |   |   | - |   |   |   | 0.09 |   |   |   | 0.13 |   |   |   | (0.12 | ) |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net                                              Loss                                                           |   | **$**                                                                              | **(0.49**   | **)** |   | $ | (1.11 | ) |   | $ | (0.78 | ) |   | $ | (0.09 | ) |   | $ | (0.52 | ) |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                                              common shares and                                                   |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                                              equivalent shares outstanding:                                      |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Basic                                                                                                           |   | ** **                                                                         | **6,294**   |   |   |   | 6,283 |   |   |   | 6,250 |   |   |   | 5,974 |   |   |   | 5,783 |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Diluted                                                                                                         |   | ** **                                                                         | **6,360**   |   |   |   | 6,283 |   |   |   | 6,250 |   |   |   | 5,974 |   |   |   | 5,783 |   |
|                                                                                                                              |   |                                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                 |   | **June                      30,**                          |       |
|------------------------------------------------------|--------|------------------------------------------------------------|------------|
|                                                 |   |                                                       |       |
|                                                 |   | **2007**                                                   |       |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                 |   |                                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Consolidated                      Balance Sheet:** |   | (in                      thousands, except per share data) |       |
|                                                 |   |                                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Working                      capital                 |   | **$**                                                      | **3,897**  |   |   | $ | 4,106 |   |   | $ | 7,334 |   |   | $ | 17,459 |   |   | $ | 11,437 |   |
|                                                 |   |                                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                      assets                    |   | ** **                                                 | **96,087** |   |   |   | 103,080 |   |   |   | 112,222 |   |   |   | 121,782 |   |   |   | 114,212 |   |
|                                                 |   |                                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term                      debt                 |   | ** **                                                 | **37,772** |   |   |   | 35,142 |   |   |   | 33,266 |   |   |   | 37,089 |   |   |   | 35,736 |   |
|                                                 |   |                                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term                      debt                  |   | ** **                                                 | **35**     |   |   |   | 88 |   |   |   | 57 |   |   |   | 119 |   |   |   | 63 |   |
|                                                 |   |                                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders’                      equity      |   | ** **                                                 | **32,115** |   |   |   | 35,171 |   |   |   | 42,071 |   |   |   | 46,706 |   |   |   | 45,568 |   |

| ***Item                7.*** | ***Management’s                Discussion and Analysis of Financial Condition and Results of                Operations.*** |
|------------------------------|----------------------------------------------------------------------------------------------------------------------------------|

**Overview**

----

|   | **Critical                Accounting Policies** |
|--------|-------------------------------------------------|

**THE      ACCOUNTING POLICIES IDENTIFIED AS CRITICAL ARE AS FOLLOWS**

**Valuation      of Receivables**

**Valuation      of Inventories**

----

**Goodwill      and Other Intangible Assets**

**Valuation      of Deferred Income Taxes**

**Revenue      Recognition**

----

**Stock      Based Compensation**

|   | **New                Accounting Standards** |
|--------|---------------------------------------------|

----

*”, *

----

**Results      of Operations**

***The      following table sets forth certain items in our statement of operations as      a      percentage of net sales for the periods shown:***

|                                                                                                                                   |   | **2007** |   |   | **2006** |   |   | **2005** |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
|                                                                                                                                   |   |     |   |   |     |   |   |     |   |   |   |   |
| Net                                      Sales                                                                                         |   |     | 100.0  | %      |     |   | 100.0  | %        |   |   | 100.0 | % |
| Cost                                      of goods sold                                                                                |   |     | 86.0   |   |     |   | 86.8   |     |   |   | 88.8 |   |
| Gross                                      profit                                                                                      |   |     | 14.0   |   |     |   | 13.2   |     |   |   | 11.2 |   |
| Selling,                                      general and administrative expenses                                                      |   |     | 12.8   |   |     |   | 12.3   |     |   |   | 13.9 |   |
| Operating                                      income (loss)                                                                           |   |     | 1.2    |   |     |   | 0.9    |     |   |   | (2.7 | ) |
| Interest                                      expense                                                                                  |   |     | 1.2    |   |     |   | 1.1    |     |   |   | .09 |   |
| Income                                      (loss) from continuing operations before income                                      taxes |   |     | -      |   |     |   | (0.2   | )        |   |   | (3.6 | ) |
| Income                                      tax provision (benefit)                                                                    |   |     | -      |   |     |   | 2.8    |     |   |   | (1.2 | ) |
| Income                                      (loss) from continuing operations                                                          |   |     | -      |   |     |   | (3.0   | )        |   |   | (2.4 | ) |
| Earnings                                      (loss) from discontinued operations, net of                                      taxes   |   |     | (1.3   | )      |     |   | -      |     |   |   | 0.3 |   |
| Net                                      loss                                                                                          |   |     | (1.3   | )%     |     |   | (3.0   | )%       |   |   | (2.1 | )% |
|                                                                                                                                   |   |     |   |   |     |   |   |     |   |   |   |   |

***Comparison      of Fiscal Year Ended June 30, 2007 (“Fiscal 2007”) with Fiscal Year Ended June      30, 2006 (“Fiscal 2006”)***

**Results      from Continuing Operations:**

----

----

***Comparison      of Fiscal Year Ended June 30, 2006 (“Fiscal 2006”) with Fiscal Year Ended June      30, 2005 (“Fiscal 2005”)***

----

**Liquidity      and Capital Resources**

----

----

|   | **Off-Balance                Sheet Arrangements** |
|--------|---------------------------------------------------|

----

|   | **Contractual                Obligations** |
|--------|--------------------------------------------|

|                                                       |   | **Total** |       |   | **<                                            1 Year** |   |       | **1                                            to 3 Years** |   |   | **3                                            to 5 Years** |   |   | **>                                            5 Years** |      |
|------------------------------------------------------------|--------|-----------|------------|--------|------------------------------------------------------------|--------|------------|-------------------------------------------------------------|--------|--------|-------------------------------------------------------------|--------|--------|-------------------------------------------------------------|-----------|
|                                                       |   |      |       |   |                                                       |   |       |                                                        |   |   |                                                        |   |   |                                                        |      |   |   |   |   |   |
| Line                                            of Credit  |   | $         | 37,718,924 |   |                                                       | $      | 37,718,924 |                                                        |   | __     |                                                        |   | __     |                                                        |      | __ |   |
| Capital                                            Lease   |   | $         | 88,111     |   |                                                       | $      | 53,145     |                                                        |   | $      | 34,966                                                      |   |   |                                                        |      |   |   |   |   |   |
| Operating                                            Lease |   | $         | 6,499,322  |   |                                                       | $      | 1,351,378  |                                                        |   | $      | 2,004,866                                                   |   |   | $                                                           | 1,769,048 |   |   | $ | 1,374,030 |   |
|  Total                                                |   | $         | 44,306,357 |   |                                                       | $      | 39,123,447 |                                                        |   | $      | 2,039,832                                                   |   |   | $                                                           | 1,769,048 |   |   | $ | 1,374,030 |   |

|   | **Inflation                and Seasonality** |
|--------|----------------------------------------------|

| ***Item                7A.*** | ***Quantitative                and Qualitative Disclosures About Market                Risk.*** |
|-------------------------------|-------------------------------------------------------------------------------------------------|

| ***Item                8.*** | ***Financial                Statements and Supplementary                Data.*** |
|------------------------------|----------------------------------------------------------------------------------|

| ***Item                9.*** | ***Changes                in and Disagreements With Accountants on Accounting and Financial                Disclosure.*** |
|------------------------------|---------------------------------------------------------------------------------------------------------------------------|

| ***Item                9A.*** | ***  Controls                and Procedures.*** |
|-------------------------------|-----------------------------------------------------------|

----

| ***Item                9B.*** | ***Other                Information*** |
|-------------------------------|----------------------------------------|

**PART      III**

| ***Item                10.*** | ***Directors                and Executive Officers of the                Registrant.*** |
|-------------------------------|-----------------------------------------------------------------------------------------|

|   | **Code                of Ethics** |
|--------|-----------------------------------|

*www.jacoelectronics.com*

| ***Item                11.*** | ***Executive                Compensation.*** |
|-------------------------------|----------------------------------------------|

| ***Item                12.*** | ***Security                Ownership of Certain Beneficial Owners and Management and Related                Stockholder Matters.*** |
|-------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|

|   | **Equity                Compensation Plan                Disclosure** |
|--------|-----------------------------------------------------------------------|

| **Plan                                  category**                                                                                   |   |   | **(a)****Number                                  of Securities****To                                  be Issued Upon****Exercise                                  of Outstanding Options, Warrants and Rights** |    |   | **(b)****Weighted-Average****Exercise                                  Price of****Outstanding                                  Options, Warrants and Rights** |   |   | **©****Number                                  of Securities****Remaining                                  Available for****Future                                  Issuance Under Equity****Compensation                                  Plans (Excluding Securities****Reflected                                  in Column (a))** |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                 |   |   |                                                                                                                                                                                                            |    |   |                                                                                                                                                           |   |   |                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |
| Equity                                  compensation plans (stock options) approved by                                  stockholders |   |   |                                                                                                                                                                                                            | 624,750 |   |                                                                                                                                                           | $      | 4.74   |                                                                                                                                                                                                                                                                                                                                       |   |   | 575,250 |   |
|                                                                                                                                 |   |   |                                                                                                                                                                                                            |    |   |                                                                                                                                                           |   |   |                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |
| Total                                                                                                                                |   |   |                                                                                                                                                                                                            | 624,750 |   |                                                                                                                                                           | $      | 4.74   |                                                                                                                                                                                                                                                                                                                                       |   |   | 575,250 |   |
|                                                                                                                                 |   |   |                                                                                                                                                                                                            |    |   |                                                                                                                                                           |   |   |                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |

----

| ***Item                13.*** | ***Certain                Relationships and Related                Transactions.*** |
|-------------------------------|-------------------------------------------------------------------------------------|

| ***Item                14.*** | ***Principal                Accountant Fees and                Services.*** |
|-------------------------------|-----------------------------------------------------------------------------|

**PART      IV**

| ***Item                15.*** | ***Exhibits                and Financial Statement                Schedules.*** |
|-------------------------------|---------------------------------------------------------------------------------|

|      |   |                                                                                                                                                                                                                      | Page                            |
|-----------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|
|      |   |                                                                                                                                                                                                                      |                                 |
| (a)       | (1)    | Financial                Statements included in Part II, Item 8, of this Report:                                                                                                                                          |                            |
|      |   | Index                to Consolidated Financial Statements and Schedule                                                                                                                                                    | F-1                             |
|      |   | Report                of Independent Registered Public Accounting Firm                                                                                                                                                    | F-2                             |
|      |   | Consolidated                Balance Sheets                                                                                                                                                                                | F-3                – F-4  |
|      |   | Consolidated                Statements of Operations                                                                                                                                                                      | F-5                             |
|      |   | Consolidated                Statement of Changes in Shareholders’ Equity                                                                                                                                            | F-6                             |
|      |   | Consolidated                Statements of Cash Flows                                                                                                                                                                      | F-7                             |
|      |   | Notes                to Consolidated Financial Statements                                                                                                                                                                 | F-8                – F-30 |
|      | (2)    | Financial                Statement Schedule included in Part IV of this Report:                                                                                                                                           |                            |
|      |   | Report                of Independent Registered Public Accounting Firm on supplemental                schedule                                                                                                            | F-31                            |
|      |   | Schedule                II - Valuation and Qualifying Accounts                                                                                                                                                            | F-32                            |
|  (b) |   | See                Exhibit Index on pages 32 through 38 of this report for a list of the                exhibits filed, furnished or incorporated by reference as part of                this                report. |                            |

----

| **Exhibit                No.** | **Exhibit** |
|--------------------------------|-------------|

| 3.1 | Restated                Certificate of Incorporation adopted November, 1987, incorporated                by                reference to the Company’s definitive proxy statement distributed in                connection with the Company’s annual meeting of shareholders held in                November, 1987, filed with the SEC on November 3, 1986, as set forth                in                Appendix A to the aforesaid proxy                statement. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.1.1 | Certificate                of Amendment of the Certificate of Incorporation, adopted December,                1995,                incorporated by reference to the Company’s Annual Report on Form 10-K for                the year ended June 30, 1996 (“the Company’s 1996 10-K”), Exhibit                3.1.1. |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Restated                By-Laws adopted June 18, 1987, incorporated by reference to the Company’s                Annual Report on Form 10-K for the year ended June 30, 1987 (“the                Company’s 1987 10-K”),  Exhibit                3.2. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1 | Form                of Common Stock Certificate, incorporated by reference to the Company’s                Registration Statement on Form S-1, Commission File No. 2-91547,                filed                June 9, 1984, Exhibit 4.1. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1 | Sale                and leaseback with Bemar Realty Company (as assignee of Hi-Tech Realty                Company), incorporated by reference to the Company’s Annual Report on Form                10-K for the year ended June 30, 1983, Exhibit 10(1), pages                48-312. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | Amendment                No. 1 to Lease between the Company and Bemar Realty Company (as assignee                of Hi-Tech Realty Company), incorporated by reference to the Company’s                Registration Statement on Form S-1, Commission File No. 2-91547,                filed                June 9, 1984, Exhibit 10.2. 10.2.2 Lease between the Company and                Bemar                Realty Company, dated January 1, 1996, incorporated by reference                to the                Company’s 1996 10-K, Exhibit                10.2.2. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6 | 1993                Non-Qualified Stock Option Plan, incorporated by reference to the                Company’s 1993 10-K, Exhibit 10.6. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6.1 | 1993                Non-Qualified Stock Option Plan, as amended (filed as Exhibit A to                the                Company’s Definitive Proxy Statement, dated November 3, 1997 for the                Annual Meeting of Shareholders held on December 9,                1997. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6.2 | 1993                Non-Qualified Stock Option Plan, as amended (filed as Exhibit A to                the                Company’s Definitive Proxy Statement, dated November 2, 1998 for the                Annual Meeting of Shareholders held on December 7,                1998. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.7 | Stock                Purchase Agreement, dated as of February 8, 1994 by and among the                Company                and Reilrop, B.V. and Guaranteed by Cray Electronics Holdings PLC,                incorporated by reference to the Company’s Current Report on Form 8-K,                dated March 11, 1994. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.8 | 1993                Stock Option Plan for Outside Directors, incorporated by reference                to the                Company’s Annual Report on Form 10-K for the year ended June 30, 1994,                Exhibit 10.8. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.10 | Authorized                Electronic Industrial Distributor Agreement, dated as of August 24,                1970                by and between AVX and the Company, incorporated by reference to                the                Company’s Annual Report on Form 10-K for the year ended June 30, 1995,                Exhibit 10.10. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.11 | Electronics                Corporation Distributor Agreement, dated November 15, 1974, by and                between                KEMET and the Company, incorporated by reference to the Company’s Annual                Report on Form 10-K for the year ended June 30, 1995, Exhibit                10.11. |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.12 | Restricted                Stock Plan (filed as Exhibit B to the Company’s Definitive Proxy                Statement, dated November 3, 1997 for the Annual Meeting of Shareholders                held on December 9, 1997). |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.12.1 | Form                of Escrow Agreement under the Restricted Stock Plan, incorporated                by                reference to the Company’s Registration Statement on Form S-8/S-3,                Commission File No. 333 -49877, filed April 10, 1998 Exhibit                4.2. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.12.2 | Form                of Stock Purchase Agreement under the Restricted Stock Plan, incorporated                by reference to the Company’s Registration Statement on Form S-8/S-3,                Commission File No. 333 - 49877, filed April 10, 1998 Exhibit                4.3. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.12.3 | Form                of Stock Option Agreement, incorporated by reference to the Company’s                Registration Statement on Form S-8/S-3, Commission File No. 333 -49877,                filed April 10, 1998 Exhibit 4.4. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.12.4 | Restricted                Stock Plan (filed as Exhibit B to the Company’s Definitive Proxy                Statement, dated November 2, 1998 for the Annual Meeting of Shareholders                held on December 7, 1998). |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.13 | Employment                agreement between Joel Girsky and the Company, incorporated by reference                to the Company’s Quarterly Report on Form 10-Q for the quarter ended                September 30, 1998, Exhibit 10.13. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.13.1 | Amendment                No. 1 to Employment Agreement between Joel Girsky and the Company,                incorporated by reference to the Company’s Annual Report on Form 10-K for                the year ended June 30, 2001, Exhibit                10.13.1. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.14 | Employment                Agreement between Charles Girsky and the Company, incorporated by                reference to the Company’s Quarterly Report on Form 10-Q for the quarter                ended September 30, 1998, Exhibit                10.14. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.15 | Employment                Agreement between Jeffrey D. Gash and the Company, incorporated by                reference to the Company’s Quarterly Report on Form 10-Q for the quarter                ended September 30, 1998, Exhibit                10.15. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.15.1 | Amendment                No. 1 to the Employment Agreement between Jeffrey D. Gash and the                Company,                incorporated by reference to the Company’s Annual Report on Form 10-K for                the year ended June 30, 2001, Exhibit                10.15.1. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.16 | Employment                Agreement, dated June 6, 2000, between the Company and Joseph Oliveri,                incorporated by reference to the Company’s Current Report on Form 8-K,                filed June 12, 2000, Exhibit 10.16. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.16.1 | Amendment                No. 1 to the Employment Agreement between Joseph Oliveri and the                Company,                incorporated by reference to the Company’s Annual Report on Form 10-K for                the year ended June 30, 2001, Exhibit                10.16.1. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.17 | Stock                Purchase Agreement by and among Jaco Electronics, Inc. and all of                the                Stockholders of Interface Electronics Corporation as of May 4, 2000,                incorporated by reference to the Company’s Current Report on Form 8-K,                filed May 15, 2000, Exhibit 2.1. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.17.1 | Amendment                No. 1 to the Stock Purchase Agreement by and among Jaco Electronics,                Inc.                and all of the Stockholders of Interface Electronics Corp. as of                May 4,                2000, dated June 6, 2000, incorporated by reference to the Company’s                Current Report on Form 8-K, filed June 12, 2000, Exhibit                2.2. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.18 | Agreement                between the Company and Gary Giordano, incorporated by reference                to the                Company’s Annual Report on Form 10-K for the year ended June 30, 2001,                Exhibit 10.18. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.19 | Employment                Agreement between Joel H. Girsky and the Company, incorporated by                reference to the Company’s Annual Report on Form 10-K for the year ended                June 30, 2001, Exhibit 10.19. |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.20 | Employment                Agreement between Charles Girsky and the Company, incorporated by                reference to the Company’s Annual Report on Form 10-K for the year ended                June 30, 2001, Exhibit 10.20. |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.21 | Asset                Purchase Agreement dated as of May 19, 2003 by and between the Company                and                Reptron Electronics, Inc., incorporated by reference to the Company’s                Current Report on Form 8-K, filed June 26, 2003, Exhibit                2.1. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.21.1 | First                Amendment to the Asset Purchase Agreement dated as of June 2, 2003                by and                between the Company and Reptron Electronics, Inc., incorporated by                reference to the Company’s Current Report on Form 8-K, filed June 26,                2003, Exhibit 2.2. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22 | Second                Restated and Amended Loan and Security Agreement dated September                13, 1995                among the Company, Nexus Custom Electronics, Inc., BNYCC and NatWest                Bank,                N.A. (“Second Restated and Amended Loan and Security Agreement”),                incorporated by reference to the Company’s Registration Statement on Form                S-2, Commission File No. 33-62559, filed October 13, 1995, Exhibit                99.8. |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.1 | Amendment                to the Second Restated and Amended Loan and Security Agreement, dated                as                of April 10, 1996, incorporated by reference to the Company’s 1996 10-K,                Exhibit 99.8.1. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.2 | Amendment                to the Second Restated and Amended Loan and Security Agreement, dated                as                of August 1, 1997, incorporated by reference to the Company’s Annual                Report on Form 10-K for the year ended June 30, 1998, Exhibit                99.8.2. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.3 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                July 1,                1998, incorporated by reference to the Company’s Quarterly Report on Form                10-Q for the quarter ended September 30, 1998, Exhibit                99.8.3. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.22.4 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                September                21, 1998 incorporated by reference to the Company’s Quarterly Report on                Form 10-Q for the quarter ended September 30, 1998, Exhibit                99.8.4. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.5 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                October                26, 1999, incorporated by reference to the Company’s Quarterly Report on                Form 10-Q for the quarter ended September 30, 1999, Exhibit                99.8.5. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.6 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                December                31, 1999, incorporated by reference to the Company’s Quarterly Report on                Form 10-Q for the quarter ended December 31, 1999, Exhibit                99.8.6. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.7 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                June 6,                2000, incorporated by reference to the Company’s Annual Report on Form                10-K for the fiscal year ended June 30, 2000, Exhibit                99.8.7. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.8 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                September                28, 2000, incorporated by reference to the Company’s Quarterly Report on                Form 10-Q for the quarter ended September 30, 2000, Exhibit                99.8.8. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.9 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                January                29, 2001, incorporated by reference to the Company’s Quarterly Report on                Form 10-Q for the quarter ended December 31, 2000, Exhibit                99.8.9. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.10 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                June 12,                2001, incorporated by reference to the Company’s Annual Report on Form                10-K for the year ended June 30, 2001, Exhibit                99.8.10. |
|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.11 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                July 1,                2001, incorporated by reference to the Company’s Annual Report on Form                10-K for the year ended June 30, 2001, Exhibit                99.8.11. |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.12 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                November                14, 2001, incorporated by reference to the Company’s Quarterly Report on                Form 10-Q for the quarter ended September 30, 2001, Exhibit                99.8.12. |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.13 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                February                6, 2002, incorporated by reference to the Company’s Quarterly Report on                Form 10-Q for the quarter ended December 31, 2001, Exhibit                99.8.13. |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.14 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                September                23, 2002, incorporated by reference to the Company’s Annual Report on Form                10K for the year ended June 30, 2002, Exhibit                99.8.14. |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.15 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                May 12,                2003, incorporated by reference to the Company’s Quarterly Report on Form                10-Q for the quarter ended March 31, 2003, Exhibit                99.8.15. |
|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.16 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                June 5,                2003, incorporated by reference to the Company’s Current Report on Form                8-K, filed June 26, 2003, Exhibit                99.8.16. |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.22.17 | Amendment                to Second Restated and Amended Loan and Security Agreement dated                September                19, 2003, incorporated by reference to the Company’s Annual Report on                Form  10-K for the year ended June 30, 2003, Exhibit                99.8.17. |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22.18   | Amendment                to Second Restated and Amended Loan and Security Agreement                dated     November 7, 2003, incorporated by                reference to the Company’s Quarterly Report on Form 10-Q for the quarter                ended September 30, 2003, Exhibit                99.8.18. |
|----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23 | Third                Restated and Amended Loan and Security Agreement dated as of December                22,                2003, by and among GMAC Commercial Finance LLC as Lender and as Agent,                PNC                Bank, National Association, as Lender and Co-Agent, Jaco Electronics,                Inc., Nexus Custom Electronics, Inc., Interface Electronics Corp.                and Jaco                de Mexico, Inc. (“Third Restated and Amended Loan and Security                Agreement”), incorporated by reference to the Company’s Current Report on                Form 8-K, filed January 8, 2004, Exhibit                10.23. |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23.1 | Amendment                to Third Restated and Amended Loan and Security Agreement dated September                20, 2004, by and among GMAC Commercial Finance LLC, as Lender and                as                Agent, PNC Bank, National Association, as Lender and Co-Agent, Jaco                Electronics, Inc., Nexus Custom Electronics, Inc. and Interface                Electronics Corp., incorporated by reference to the Company’s Annual                Report on Form 10-K for the year ended June 30, 2004, Exhibit                10.23.1. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23.2 | Amendment                to Third Restated and Amended Loan and Security Agreement dated November                23, 2004, by and among GMAC Commercial Finance LLC, as Lender and                as                Agent, PNC Bank, National Association, as Lender and Co-Agent, Jaco                Electronics, Inc., Nexus Custom Electronics, Inc. and Interface                Electronics Corp., incorporated by reference to the Company’s Quarterly                Report on Form 10-Q for the quarter ended December 31, 2004, Exhibit                10.23.2. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23.3 | Amendment                to Third Restated and Amended Loan and Security Agreement dated February                11, 2005, by and among GMAC Commercial Finance LLC, as Lender and                as                Agent, PNC Bank, National Association, as Lender and Co-Agent, Jaco                Electronics, Inc., Nexus Custom Electronics, Inc. and Interface                Electronics Corp., incorporated by reference to the Company’s Quarterly                Report on Form 10-Q for the quarter ended December 31, 2004, Exhibit                10.23.3. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23.4 | Amendment                to Third Restated and Amended Loan and Security Agreement dated May                10,                2005, by and among GMAC Commercial Finance LLC, as Lender and as                Agent,                PNC Bank, National Association, as Lender and Co-Agent, Jaco Electronics,                Inc., Nexus Custom Electronics, Inc. and Interface Electronics Corp.,                incorporated by reference to the Company’s Quarterly Report on Form 10-Q                for the quarter ended March 31, 2005, Exhibit                10.23.4. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23.5 | Amendment                to Third Restated and Amended Loan and Security Agreement dated September                28, 2005, by and among GMAC Commercial Finance LLC, as Lender and                as                Agent, PNC Bank, National Association, as Lender and Co-Agent, Jaco                Electronics, Inc., Nexus Custom Electronics, Inc. and Interface                Electronics Corp., incorporated by refinance to the Company’s Annual                Report on Form 10-K for the year ended June 30, 2005, Exhibit                10.23.5. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.23.6 | Waiver                to Third Restated and Amended Loan and Security Agreement dated November                14, 2005, by and among GMAC Commercial Finance LLC, as Lender and                as                Agent, PNC Bank, National Association, as Lender and Co-Agent, Jaco                Electronics, Inc., Nexus Custom Electronics, Inc. and Interface                Electronics Corp., incorporated by reference to the Company’s Quarterly                Report on Form 10-Q for the quarter ended September 30, 2005, Exhibit                10.23.6. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23.7 | Amendment                to Third Restated and Amended Loan and Security Agreement dated February                13, 2006, by and among GMAC Commercial Finance LLC, as Lender and                as                Agent, PNC Bank, National  Association, as Lender and Co-Agent,                Jaco  Electronics, Inc., Nexus Custom Electronics, Inc. and                Interface Electronics Corp., incorporated by reference to the Company’s                Quarterly Report on Form 10-Q for the quarter ended December 31,                2005,                Exhibit 10.23.7. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23.8 | Amendment                to Third Restated and Amended Loan and Security Agreement dated May                2,                2006, by and among GMAC Commercial Finance LLC, as Lender and as                Agent,                The CIT Group /Business Credit, Inc., as Lender and Co-Agent, Jaco                Electronics, Inc., Nexus Custom Electronics, Inc. and Interface                Electronics Corp., incorporated by reference to the Company’s Quarterly                Report on Form 10-Q for the quarter ended March 31, 2006, Exhibit                10.23.8. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.24 | Asset                Purchase Agreement made and entered into as of September 20, 2004                among                Sagamore Holdings, Inc., NECI Acquisition, Inc., Nexus Custom Electronics,                Inc. and Jaco Electronics, Inc., incorporated by reference to the                Company’s Current Report on Form 8-K, filed September 23, 2004, Exhibit                10.24. |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.25 | 2000                Stock Option Plan, incorporated by reference to Exhibit A to the                Company’s                Definitive Proxy Statement on Schedule 14A, dated November 17, 2000,                for                the Company’s Annual Meeting of Shareholders held on December 12,                2000. |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.26 | 2000                Stock Option Plan, as amended, incorporated by reference to the Company’s                Annual Report on Form 10-K for the year ended June 30, 2005, Exhibit                10.26. |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.27 | Credit                Agreement dated as of December 22, 2006 among Jaco Electronics, Inc.                and                Interface Electronics Corp., as borrowers, and The CIT Group/Business                Credit, Inc., as Agent, Swingline Lender and Issuing Bank (“CIT”), and CIT                Capital Securities, LLC, as Syndication Agent, Sole Bookrunner, and                Sole                Load Arranger (the “Credit                Agreement”). |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.27.1 | Amendment                No. 1 to Credit Agreement dated as of January 23, 2007 among CIT,                as Agent                under the Credit Agreement, and Jaco Electronics, Inc. and Interface                Electronics Corp., as Borrowers under the Credit                Agreement. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.27.2 | Assignment                and Assumption Agreement dated as of January 23, 2007 between CIT                and Bank                of America, N.A., consented to by Jaco Electronics,                Inc. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.27.3 |  Consent                to Supplemental Loan under Loan and Security Agreement dated as of                March                5,    2007 among CIT, as Agent under the Credit                Agreement, and Jaco Electronics, Inc. and Interface Electronics Corp.,                as                Borrowers under the Credit                Agreement. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.27.4 | Amendment                No. 1 to Consent to Supplemental Loan under Loan and Security                Agreement dated as of March 23, 2007 among CIT, as Agent under the                Credit Agreement, and Jaco Electronics, Inc. and Interface Electronics                Corp., as Borrowers under the Credit                Agreement. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.27.5 | Amendment                No. 2 to Consent to Supplemental Loan under Loan and Security                Agreement dated as of May 18, 2007 among CIT, as Agent under the                Credit                Agreement, and Jaco Electronics, Inc. and Interface Electronics Corp.,                as                Borrowers under the Credit                Agreement. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.27.6 | Amendment                No. 3 to Consent to Supplemental Loan under Loan and Security                Agreement dated as of July 24, 2007 among CIT, as Agent under the                Credit Agreement, and Jaco Electronics, Inc. and Interface Electronics                Corp., as Borrowers under the Credit                Agreement. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.1 | Subsidiaries                of the Company. |
|------|---------------------------------------------|

| 23 | Consent                of Grant Thornton LLP. |
|----|-----------------------------------------------|

| 31.1 | Rule                13a-14(a)/15d-14(a) Certification of Principal Executive                Officer. |
|------|------------------------------------------------------------------------------------------------------|

| 31.2 | Rule                13a-14(a)/15d-14(a) Certification of Principal Financial                Officer. |
|------|------------------------------------------------------------------------------------------------------|

| 32.1   | Section                1350 Certification of Principal Executive                Officer. |
|------------------|------------------------------------------------------------------------------------------|

| 32.2   | Section                1350 Certification of Principal Financial                Officer. |
|------------------|------------------------------------------------------------------------------------------|

----

**INDEX        TO CONSOLIDATED**

**FINANCIAL        STATEMENTS AND SCHEDULE**

----

**REPORT        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**Jaco        Electronics,        Inc.**

----

**CONSOLIDATED        BALANCE SHEETS**

| ASSETS                                                                                                                                                                |   | **                                      2007** |           |   |   2006 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|----------------|--------|------------------|--------|
|                                                                                                                                                                  |   |                                                               |           |   |             |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |
| CURRENT                                  ASSETS                                                                                                                       |   |                                                               |           |   |             |   |
| Cash                                  and cash equivalents                                                                                                            |   | **$**                                                              | **15,713**     |   |             | $      | 29,211 |   |
| Accounts                                  receivable, less allowance for doubtful accountsof                                  $1,029,000 in 2007 and $491,000 in 2006 |   | ** **                                                         | **35,752,247** |   |             |   | 36,498,390 |   |
| Inventories,                                  net                                                                                                                     |   | ** **                                                         | **30,364,720** |   |             |   | 33,271,437 |   |
| Prepaid                                  expenses and other                                                                                                           |   | ** **                                                         | **551,159**    |   |             |   | 1,027,763 |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
| Total                                  current assets                                                                                                                 |   | ** **                                                         | **66,683,839** |   |             |   | 70,826,801 |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
| PROPERTY,                                  PLANT AND EQUIPMENT - NET                                                                                                  |   | ** **                                                         | **1,433,286**  |   |             |   | 1,766,467 |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
| GOODWILL                                                                                                                                                              |   | ** **                                                         | **25,416,087** |   |             |   | 25,416,087 |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
| NOTE                                  RECEIVABLE                                                                                                                      |   | ** **                                                         | **-**          |   |             |   | 2,750,000 |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
| OTHER                                  ASSETS                                                                                                                         |   | ** **                                                         | **2,553,345**  |   |             |   | 2,320,296 |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |
|              Total                                  assets                                           |   | **$**                                                              | **96,086,557** |   |             | $      | 103,079,651 |   |
|                                                                                                                                                                  |   |                                                               |           |   |             |   |   |   |

*The        accompanying notes are an integral part of these        statements.*

----

**CONSOLIDATED        BALANCE SHEETS (continued)**

| LIABILITIES                                  AND                                                                                             |   |           |           |   |                                         |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|----------------|--------|----------------------------------------------|--------|
| SHAREHOLDERS’                                  EQUITY                                                                                  |   | ** 2007** |           |   |                                    2006 |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |
| CURRENT                                  LIABILITIES                                                                                         |   |           |           |   |                                         |   |   |
| Accounts                                  payable                                                                                            |   | **$**          | **22,762,966** |   |                                         | $      | 28,947,720 |   |
| Current                                  maturities of long-term debt and                                                                    |   |           |           |   |                                         |   |   |   |
| capitalized                                  lease obligations                                                                               |   | ** **     | **37,772,069** |   |                                         |   | 35,141,702 |   |
| Accrued                                  compensation                                                                                        |   | ** **     | **995,521**    |   |                                         |   | 950,573 |   |
| Accrued                                  expenses and other current liabilities                                                              |   | ** **     | **1,240,755**  |   |                                         |   | 1,640,758 |   |
| Income                                  taxes payable                                                                                        |   | ** **     | **15,657**     |   |                                         |   | 39,812 |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
| Total                                  current liabilities                                                                                   |   | ** **     | **62,786,968** |   |                                         |   | 66,720,565 |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
| LONG-TERM                                  DEBT AND CAPITALIZED LEASE                                                                        |   |           |           |   |                                         |   |   |   |
| OBLIGATIONS                                                                                                                                  |   | ** **     | **34,966**     |   |                                         |   | 88,111 |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
| DEFERRED                                  COMPENSATION                                                                                       |   | ** **     | **1,150,000**  |   |                                         |   | 1,100,000 |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
|                Total                                  liabilities |   |           | 63,971,934     |   |                                         |   | 67,908,676 |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
| COMMITMENTS                                  AND CONTINGENCIES                                                                               |   |           |           |   |                                         |   |   |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
| SHAREHOLDERS’                                  EQUITY                                                                                  |   |           |           |   |                                         |   |   |   |
| Preferred                                  stock - authorized, 100,000 shares, $10                                                           |   |           |           |   |                                         |   |   |   |
| par                                  value; none issued                                                                                      |   |           |           |   |                                         |   |   |   |
| Common                                  stock - authorized, 20,000,000 shares,                                                               |   |           |           |   |                                         |   |   |   |
| $.10                                  par value; 6,954,232 shares                                                                            |   |           |           |   |                                         |   |   |   |
|  issued  and                                  6,294,332                                                                       |   |           |           |   |                                         |   |   |   |
|  shares                                  outstanding                                                                                    |   | ** **     | **695,423**    |   |                                         |   | 695,423 |   |
| Additional                                  paid-in capital                                                                                  |   | ** **     | **27,114,567** |   |                                         |   | 27,049,999 |   |
| Retained                                  earnings                                                                                           |   | ** **     | **6,619,199**  |   |                                         |   | 9,740,119 |   |
|  Treasury                                  stock – 659,900 shares at cost                                                         |   | ** **     | **(2,314,566** | **)**  |                                         |   | (2,314,566 | ) |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
|                                                                                                                                         |   | ** **     | **32,114,623** |   |                                         |   | 35,170,975 |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |
|                                                                                                                                         |   | **$**          | **96,086,557** |   |                                         | $      | 103,079,651 |   |
|                                                                                                                                         |   |           |           |   |                                         |   |   |   |

*The        accompanying notes are an integral part of these statements.*

----

**CONSOLIDATED        STATEMENTS OF OPERATIONS**

|                                                                                                                                                                                                                                                               |   | **                                                        2007** |            |   |                                                         2006 |   |        |                                                           2005 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|-----------------|--------|----------------------------------------------------------------------------------|--------|-------------|----------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |
| Net                                                    sales                                                                                                                                                                                                       |   | **$**                                                                                | **240,231,746** |   |                                                                             | $      | 228,520,887 |                                                                                         |   | $ | 231,824,516 |   |
| Cost                                                    of goods sold                                                                                                                                                                                              |   | ** **                                                                           | **206,506,584** |   |                                                                             |   | 198,316,412 |                                                                                         |   |   | 205,924,065 |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Gross                                                    profit                                                                                                                                                                                                    |   | ** **                                                                           | **33,725,162**  |   |                                                                             |   | 30,204,475  |                                                                                         |   |   | 25,900,451 |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Selling,                                                    general and administrative expenses                                                                                                                                                                    |   | ** **                                                                           | **30,850,381**  |   |                                                                             |   | 28,081,652  |                                                                                         |   |   | 32,112,561 |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Operating  income                                                    (loss)                                                                                                                                                                              |   | ** **                                                                           | **2,874,781**   |   |                                                                             |   | 2,122,823   |                                                                                         |   |   | (6,212,110 | ) |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Interest                                                    expense                                                                                                                                                                                                |   | ** **                                                                           | **2,789,309**   |   |                                                                             |   | 2,617,770   |                                                                                         |   |   | 2,028,631 |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Income                                                    (loss) from continuing operations                                                    before income taxes                                                                                                 |   | ** **                                                                           | **85,472**      |   |                                                                             |   | (494,947    | )                                                                                            |   |   | (8,240,741 | ) |
| Income                                                    tax provision (benefit)                                                                                                                                                                                  |   | ** **                                                                           | **22,991**      |   |                                                                             |   | 6,467,470   |                                                                                         |   |   | (2,813,575 | ) |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Income                                                    (loss) from continuing operations                                                                                                                                                                        |   | ** **                                                                           | **62,481**      |   |                                                                             |   | (6,962,417  | )                                                                                            |   |   | (5,427,166 | ) |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Discontinued                                                    operations:                                                                                                                                                                                        |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| (Loss)                                                    income from discontinued operations,                                                    net of income tax provision (benefit)                                                    of  $(39,312) |   | ** **                                                                           | **-**           |   |                                                                             |   | -           |                                                                                         |   |   | (64,140 | ) |
| (Loss)                                                    gain on sale of net assets of                                                    subsidiary, net of income                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
|    tax                                                    provision of $449,048 in 2005                                                                                                                                                             |   | ** **                                                                           | **(3,183,401**  | **)**  |                                                                             |   | -           |                                                                                         |   |   | 631,446 |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| (Loss)                                                    income from discontinued operations                                                                                                                                                                      |   | ** **                                                                           | **(3,183,401**  | **)**  |                                                                             |   | -           |                                                                                         |   |   | 567,306 |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| NET                                                    LOSS                                                                                                                                                                                                        |   | **$**                                                                                | **(3,120,920**  | **)**  |                                                                             | $      | (6,962,417  | )                                                                                            |   | $ | (4,859,860 | ) |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| PER                                                    SHARE INFORMATION                                                                                                                                                                                           |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Basic                                                    income (loss) earnings per common                                                    share:                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Income                                                    (loss) from continuing operations                                                                                                                                                                        |   | **$**                                                                                | **0.01**        |   |                                                                             | $      | (1.11       | )                                                                                            |   | $ | (0.87 | ) |
| Income                                                    (loss) from discontinued operations                                                                                                                                                                      |   | ** **                                                                           | **(0.51**       | **)**  |                                                                             |   | 0.00        |                                                                                         |   |   | 0.09 |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Net                                                    loss                                                                                                                                                                                                        |   | **$**                                                                                | **(0.50**       | **)**  |                                                                             | $      | (1.11       | )                                                                                            |   | $ | (0.78 | ) |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Diluted                                                    income (loss) earnings per common                                                    share:                                                                                                             |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Income                                                    (loss) from continuing operations                                                                                                                                                                        |   | **$**                                                                                | **0.01**        |   |                                                                             | $      | (1.11       | )                                                                                            |   | $ | (0.87 | ) |
| (Loss)                                                    income from discontinued operations                                                                                                                                                                      |   | ** **                                                                           | **(0.50**       | **)**  |                                                                             |   | 0.00        |                                                                                         |   |   | 0.09 |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Net                                                    loss                                                                                                                                                                                                        |   | **$**                                                                                | **(0.49**       | **)**  |                                                                             | $      | (1.11       | )                                                                                            |   | $ | (0.78 | ) |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Weighted-average                                                    common shares and common                                                                                                                                                                       |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| equivalent                                                    shares outstanding:                                                                                                                                                                                  |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Basic                                                                                                                                                                                                                                                              |   | ** **                                                                           | **6,294,332**   |   |                                                                             |   | 6,282,601   |                                                                                         |   |   | 6,249,622 |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |
| Diluted                                                                                                                                                                                                                                                            |   | ** **                                                                           | **6,360,216**   |   |                                                                             |   | 6,282,601   |                                                                                         |   |   | 6,249,622 |   |
|                                                                                                                                                                                                                                                               |   |                                                                                 |            |   |                                                                             |   |        |                                                                                         |   |   |   |   |

*The        accompanying notes are an integral part of these statements.*

----

**CONSOLIDATED        STATEMENT OF CHANGES**

**IN        SHAREHOLDERS’ EQUITY**

|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   | Accumulated                                                          |       |   |                |   |    |          |   |   |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|-----------|--------|---------|--------|---------|------------|--------|--------|---------------|--------|--------|----------------------------------------------------------------------|------------|--------|---------------------|--------|---------|---------------|--------|--------|------------|
|                                                                                                                                                               |   |                                                                |      |   |    |   |    | Additional |   |   |          |   |   | other                                                                |       |   |                |   |    | Total         |   |   |       |
|                                                                                                                                                               |   | Common                                                        stock |      |   | paid-in |   |    | Retained   |   |   | comprehensive |   |   | Treasury                                                             |       |   | shareholders’ |   |    | Comprehensive |
|                                                                                                                                                               |   | Shares                                                              |      |   | Amount  |   |    | capital    |   |   | Earnings      |   |   | income                                                        (loss) |       |   | stock               |   |    | equity        |   |   | loss       |
|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |
|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |
| Balance                                                        at June 30, 2004                                                                                    |   |                                                                | 6,855,232 |   |    |   | 685,523 |       |   |   | 26,735,295    |   |   |                                                                 | 21,562,396 |   |                |   | 37,120  |          |   |   | (2,314,566 | ) |   |   | 46,705,768 |   |   |   |
|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |
| Net                                                        loss                                                                                                    |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 | (4,859,860 | )      |                |   |    |          |   |   |       |   |   |   | (4,859,860 | ) |   | $ | (4,859,860 | ) |
| Unrealized                                                        gain on marketable                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |
| securities                                                        - net of deferred taxes of                                                        $19,254        |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   | 31,415  |          |   |   |       |   |   |   | 31,415 |   |   | $ | 31,415 |   |
| Reclassification                                                        adjustment for gains on                                                                    |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |
| marketable                                                        securities recognized included                                                                   |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |
| in                                                        net loss – net of deferred taxes of                                                        $42,005 |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   | (68,535 | )             |   |   |       |   |   |   | (68,535 | ) |   | $ | (68,535 | ) |
| Exercise                                                        of stock options                                                                                   |   |                                                                | 72,500    |   |    |   | 7,250   |       |   |   | 173,250       |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   | 180,500 |   |   |   |
| Stock                                                        options income tax benefits                                                                           |   |                                                                |      |   |    |   |    |       |   |   | 81,829        |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   | 81,829 |   |   |   |
|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |   |   |
| Comprehensive                                                        loss                                                                                          |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   | $ | (4,896,980 | ) |
|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |   |   |
| Balance                                                        at June 30, 2005                                                                                    |   |                                                                | 6,927,732 |   |    |   | 692,773 |       |   |   | 26,990,374    |   |   |                                                                 | 16,702,536 |   |                |   | -       |          |   |   | (2,314,566 | ) |   |   | 42,071,117 |   |   |   |
|  Net                                                        loss                                                                                              |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 | (6,962,417 | )      |                |   |    |          |   |   |       |   |   |   | (6,962,417 | ) |   | $ | (6,962,417 | ) |
|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |   |   |
| Exercise                                                        of stock options                                                                                   |   |                                                                | 26,500    |   |    |   | 2,650   |       |   |   | 59,625        |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   | 62,275 |   |   |   |   |   |
|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |   |   |
| Comprehensive                                                        loss                                                                                          |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   | $ | (6,962,417 | ) |
|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |   |   |
| Balance                                                        at June 30, 2006                                                                                    |   |                                                                | 6,954,232 |   |    |   | 695,423 |       |   |   | 27,049,999    |   |   |                                                                 | 9,740,119  |   |                |   | -       |          |   |   | (2,314,566 | ) |   |   | 35,170,975 |   |   |   |
| Net                                                        loss                                                                                                    |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 | (3,120,920 | )      |                |   |    |          |   |   |       |   |   |   | (3,120,920 | ) |   | $ | (3,120,920 | ) |
|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |   |   |
| Stock                                                        based compensation                                                                                    |   |                                                                |      |   |    |   |    |       |   |   | 64,568        |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   | 64,568 |   |   |   |   |   |
|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |   |   |
| Comprehensive                                                        loss                                                                                          |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   | $ | (3,120,920 | ) |
|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |   |   |
| Balance                                                        at June 30, 2007                                                                                    |   |  $                                                             | 6,954,232 |   |    | $      | 695,423 |       |   | $      | 27,114,567    |   |   | $                                                                    | 6,619,199  |   |                | $      | -       |          |   | $      | (2,314,566 | ) |   | $ | 32,114,623 |   |   |   |
|                                                                                                                                                               |   |                                                                |      |   |    |   |    |       |   |   |          |   |   |                                                                 |       |   |                |   |    |          |   |   |       |   |   |   |   |   |   |   |

*The        accompanying notes are an integral part of this statement.*

----

**CONSOLIDATED        STATEMENTS OF CASH FLOWS**

|                                                                                                                                                                                                          |   | **2007**   |             |   | 2006   |       |         | 2005   |   |       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|------------------|--------|--------|------------|--------------|--------|--------|------------|
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| Cash                                              flows from operating activities                                                                                                                             |   |       |             |   |   |       |         |   |
| Net                                              loss                                                                                                                                                         |   | **$**      | **(3,120,920**   | **)**  |   | $          | (6,962,417   | )      |   | $          | (4,859,860 | ) |
| Loss                                              from discontinued operations                                                                                                                                |   |       |             |   |   |       |         |   |   |       | 64,140 |   |
| Loss                                              (gain) on sale of net assets of subsidiary                                                                                                                  |   | ** ** | **3,183,401**    |   |   |       |         |   |   |       | (631,446 | ) |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |   |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| Income                                              (loss) from continuing operations                                                                                                                         |   | ** ** | **62,481**       |   |   |       | (6,962,417   | )      |   |       | (5,427,166 | ) |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| Adjustments                                              to reconcile net loss to net cash                                                                                                                    |   |       |             |   |   |       |         |   |   |       |
| used                                              in operating activities                                                                                                                                     |   |       |             |   |   |       |         |   |   |       |
| Depreciation                                              and amortization                                                                                                                                    |   | ** ** | **725,309**      |   |   |       | 910,337      |   |   |       | 1,162,019 |   |
| Deferred                                              compensation                                                                                                                                            |   | ** ** | **50,000**       |   |   |       | 50,000       |   |   |       | 50,000 |   |
| Stock-based                                              compensation                                                                                                                                         |   | ** ** | **64,568**       |   |   |       |         |   |   |       |
| Deferred                                              income tax provision (benefit)                                                                                                                          |   |       |             |   |   |       | 6,394,000    |   |   |       | (3,230,249 | ) |
|  Stock                                            options income tax expense                                                                                                                             |   |       |             |   |   |       |         |   |   |       | 81,829  |   |
| Gain                                              on sale of marketable securities                                                                                                                            |   |       |             |   |   |       |              |   |   |       | (110,540) |   |
| Provision                                              for doubtful accounts                                                                                                                                  |   | ** ** | **546,126**      |   |   |       | (88,295      | )      |   |       | 366,100 |   |
| Changes                                              in operating assets and liabilities,                                              net of                                                                 |   |       |             |   |   |       |         |   |   |       |
| effects                                              of acquisitions                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| Decrease                                              (increase) in accounts receivable                                                                                                                       |   | ** ** | **200,017**      |   |   |       | (1,715,284   | )      |   |       | 865,642 |   |
| Decrease                                              (increase) in inventories                                                                                                                               |   | ** ** | **2,906,717**    |   |   |       | 3,785,512    |   |   |       | (39,559 | ) |
| Decrease                                              in prepaid expenses and other                                                                                                                           |   | ** ** | **43,203**       |   |   |       | 7,870        |   |   |       | 728,024 |   |
| Increase                                              in other assets                                                                                                                                         |   | ** ** | **(404,073**     | **)**  |   |       | (218,623     | )      |   |       | (39,043 | ) |
| (Decrease)                                              increase in accounts payable                                                                                                                          |   | ** ** | **(6,184,754**   | **)**  |   |       | 4,230,606    |   |   |       | (6,815,927 | ) |
| (Decrease)                                              increase in unearned revenue                                                                                                                          |   |       |             |   |   |       | (8,285,200   | )      |   |       | 8,285,200 |   |
| Decrease                                              in income taxes payable                                                                                                                                 |   | ** ** | **(24,155**      | **)**  |   |       | (26,542      | )      |   |       | (387,469 | ) |
| Increase                                              (decrease) in accrued compensation                                                                                                                      |   | ** ** | **44,948**       |   |   |       | (338,639     | )      |   |       | (292,710 | ) |
| (Decrease)                                              increase  in accrued expenses and other current                                              liabilities                                    |   | ** ** | **(400,003**     | **)**  |   |       | 220,978      |   |   |       | 207,776 |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |   |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| Net                                              cash used in continuing operations                                                                                                                           |   | ** ** | **(2,369,616**   | **)**  |   |       | (2,035,697   | )      |   |       | (4,596,073 | ) |
| Net                                              cash used in discontinued operations                                                                                                                         |   | ** ** |             |   |   |       |         |   |   |       | (439,405 | ) |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |   |   |
| Net                                              cash used in operating activities                                                                                                                            |   | ** ** | **(2,369,616**   | **)**  |   |       | (2,035,697   | )      |   |       | (5,035,478 | ) |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |   |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| Cash                                              flows from investing activities                                                                                                                             |   |       |             |   |   |       |         |   |   |       |
| Purchase                                              of marketable securities                                                                                                                                |   |       |             |   |   |       |         |   |   |       | (8,470 | ) |
| Proceeds                                              from sale of marketable securities                                                                                                                      |   |       |             |   |   |       |         |   |   |       | 829,422 |   |
| Capital                                              expenditures                                                                                                                                             |   | ** ** | **(221,104**     | **)**  |   |       | (152,915     | )      |   |       | (1,143,080 | ) |
| Proceeds                                              from sale of assets of a subsidiary,                                              net of transaction                                              costs |   | ** ** |             |   |   |       |         |   |   |       | 8,990,254 |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |   |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| Net                                              cash (used in) provided by continuing                                              operations                                                                |   | ** ** | **(221,104**     | **)**  |   |       | (152,915     | )      |   |       | 8,668,126 |   |
| Net                                              cash used in discontinued operations                                                                                                                         |   |       |             |   |   |       |         |   |   |       | (57,855 | ) |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |   |   |
| Net                                              cash (used in) provided by investing                                              activities                                                                 |   | ** ** | **(221,104**     | **)**  |   |       | (152,915     | )      |   |       | 8,610,271 |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |   |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| Cash                                              flows from financing activities                                                                                                                             |   |       |             |   |   |       |         |   |   |       |
| Borrowings                                              from line of credit                                                                                                                                   |   | ** ** | **247,580,648**  |   |   |       | 221,637,540  |   |   |       | 250,582,387 |   |
| Repayments                                              of line of credit                                                                                                                                     |   | ** ** | **(244,957,813** | **)**  |   |       | (219,746,562 | )      |   |       | (254,376,969 | ) |
| Principal                                              payments under equipment financing                                                                                                                     |   | ** ** | **(45,613**      | **)**  |   |       | (56,853      | )      |   |       | (53,498 | ) |
| Payments                                              under term loan                                                                                                                                         |   | ** ** | **-**            |   |   | ** ** | **-**        |   |   |       | (35,552 | ) |
| Proceeds                                              from exercise of stock options                                                                                                                          |   | ** ** | **-**            |   |   |       | 62,275       |   |   |       | 180,500 |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |   |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| Net                                              cash provided by (used in) continuing                                              operations                                                                |   | ** ** | **2,577,222**    |   |   |       | 1,896,400    |   |   |       | (3,703,132 | ) |
| Net                                              cash used in discontinued operations                                                                                                                         |   | ** ** | **-**            |   |   | ** ** | **-**        |   |   |       | (102,893 | ) |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |   |   |
| Net                                              cash provided by (used in) financing                                              activities                                                                 |   | ** ** | **2,577,222**    |   |   |       | 1,896,400    |   |   |       | (3,806,025 | ) |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |   |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| NET                                              DECREASE IN CASH                                                                                                                                             |   | ** ** | **(13,498**      | **)**  |   |       | (292,212     | )      |   |       | (231,232 | ) |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| Cash                                              and cash equivalents at beginning of                                              year                                                                      |   | ** ** | **29,211**       |   |   |       | 321,423      |   |   |       | 552,655 |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |   |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| Cash                                              and cash equivalents at end of year                                                                                                                         |   | **$**      | **15,713**       |   |   | $          | 29,211       |   |   | $          | 321,423 |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |   |   |
|                                                                                                                                                                                                          |   |       |             |   |   |       |         |   |   |       |
| Supplemental                                              disclosures of cash flow information:                                                                                                               |   |       |             |   |   |       |         |   |   |       |
| Cash                                              paid during the year for:                                                                                                                                   |   |       |             |   |   |       |         |   |   |       |
| Interest                                                                                                                                                                                                      |   | **$**      | **2,900,000**    |   |   | $          | 2,600,000    |   |   | $          | 2,100,000 |   |
| Income                                              taxes                                                                                                                                                     |   | ** ** | **65,000**       |   |   |       | 84,000       |   |   |       | 101,000 |   |
| Supplemental                                              schedule of non-cash financing and                                                                                                                  |   |       |             |   |   |       |         |   |   |       |
| investing                                              activities:                                                                                                                                            |   |       |             |   |   |       |         |   |   |       |
| Equipment                                              acquired capital leases                                                                                                                                |   | ** ** | **-**            |   |   | $          | 72,052       |   |   | ** ** | **-** |   |

*The        accompanying notes are an integral part of these statements.*

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE        A – DESCRIPTION OF BUSINESS AND LIQUIDITY MATTERS**

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

** NOTE        B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

*1.      Principles        of Consolidation*

*2.      Revenue        Recognition*

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

*3.      Cash        and Cash Equivalents*

*4.      Investments        in Marketable Securities*

| *                      5.  * | *Accounts                  Receivable* |
|------------------------------------------------------------|----------------------------------------|

|                                                                 |   | **2007**   |          |   | 2006   |   |
|----------------------------------------------------------------------|--------|------------|---------------|--------|--------|--------|
|                                                                 |   |       |          |   |   |   |
| Beginning                                balance                |   | **$**      | **491,000**   |   |   | $      | 554,000 |   |
| Provision                                for doubtful accounts       |   | ** ** | **544,000**   |   |   |   | 88,000 |   |
| Other                                                                |   | ** ** | **42,000**    |   |   |   | 10,000 |   |
| Write-offs                                of un-collectible accounts |   | ** ** | **(48,000**   | **)**  |   |   | (161,000 | ) |
|                                                                 |   |       |          |   |   |   |   |   |
|                                                                 |   |       |          |   |   |   |   |   |
| Ending                                balance                        |   | **$**      | **1,029,000** |   |   | $      | 491,000 |   |

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

|   |   |   |
|--------|--------|--------|

*6.      Inventories*

*7.             Property, Plant and Equipment*

*8.      Goodwill        And Other Intangible Assets*

**.**

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

| Year                            ending June 30, |   |   |    |
|-------------------------------------------------|--------|--------|---------|
| 2008                                            |   | $      | 171,000 |   |
| 2009                                            |   |   | 171,000 |   |
| 2010                                            |   |   | 171,000 |   |
| 2011                                            |   |   | 171,000 |   |
| 2012                                            |   |   | 171,000 |   |

*     9.           Impairment        of Long-Lived Assets*

*10.    Income        Taxes*

*     11.       Income        (Loss) Per Common Share*

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

|                                                                                   |   | Twelve                                      months ended           |      |
|----------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|-----------|
|                                                                                   |   | June                                      30,       |      |
|                                                                                   |   | 2007                                                                              |      |   | 2006 |   |   | 2005 |   |
| Weighted-average                                      number of common shares          |   |                                                                              |      |   |   |   |   |   |   |
|      outstanding                                      (basic) |   |                                                                              | 6,294,332 |   |   |   | 6,282,601 |   |   |   | 6,249,622 |   |
|                                                                                   |   |                                                                              |      |   |   |   |   |   |   |   |   |   |
| Effect                                      of dilutive securities:                    |   |                                                                              | 65,884    |   |   |   | - |   |   |   | - |   |
|                                                                                   |   |                                                                              |      |   |   |   |   |   |   |   |   |   |
|      Stock                                      options       |   |                                                                              |      |   |   |   |   |   |   |   |   |   |
|                                                                                   |   |                                                                              |      |   |   |   |   |   |   |   |   |   |
| Weighted-average                                      number of common shares          |   |                                                                              |      |   |   |   |   |   |   |   |   |   |
|      outstanding                                      (basic) |   |                                                                              | 6,360,216 |   |   |   | 6,282,601 |   |   |   | 6,249,622 |   |
|                                                                                   |   |                                                                              |      |   |   |   |   |   |   |   |   |   |

*12.    Fair        Value of Financial Instruments and Business Concentrations*

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

*13.    Use        of Estimates*

| *14.  * | * Comprehensive                  Loss* |
|-------------------|---------------------------------------------|

*15.      Shipping        and Handling Fees*

*16.      Advertising*

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

*17.    Stock-based        Compensation*

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

|                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2005   |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |       |
| Net                                      loss, as reported                                                                                                                                                                                                                                                                                                                                       |   | $      | (4,859,860 | ) |
| Deduct:  Total                                      stock-based employee     compensation                                      expense determined under     the                                      fair value based method for all     awards,                                      net of related tax effects |   |   | (134,997   | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |       |   |
| Pro                                      forma net loss                                                                                                                                                                                                                                                                                                                                               |   | $      | (4,994,857 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |       |   |
| Net                                      loss per common share:                                                                                                                                                                                                                                                                                                                                       |   |   |       |   |
| Basic                                      - as reported                                                                                                                                                                                                                                                                                                                                              |   | $      | (0.78      | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |       |   |
| Basic                                      - pro forma                                                                                                                                                                                                                                                                                                                                                |   | $      | (0.80      | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |       |   |
| Diluted                                      - as reported                                                                                                                                                                                                                                                                                                                                            |   | $      | (0.78      | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |       |   |
| Diluted                                      - pro forma                                                                                                                                                                                                                                                                                                                                              |   | $      | (0.80      | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |       |   |

*18.           Adoption        of New Accounting Pronouncements*

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

*19.           Impact        of Recently Issued Accounting Pronouncements*

*”,*

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        C – DISCONTINUED OPERATIONS**

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        C - DISCONTINUED OPERATIONS (continued)**

** **

**NOTE        D - PROPERTY, PLANT AND EQUIPMENT**

|                                                                                                                                                                                                                                                                                                          |   |  Useful                                              |   |   |                                                |          |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|--------|-----------------------------------------------------|---------------|
|                                                                                                                                                                                                                                                                                                          |   |  Life                                                |   |   | June                                            30, |          |
|                                                                                                                                                                                                                                                                                                          |   |  in                                            years |   |   | **2007**                                            |          |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                          |   |                                                      |   |   |                                                |          |   |   |   |   |
|                                                                                                                                                                                                                                                                                                          |   |                                                      |   |   |                                                |          |   |   |   |   |
| Machinery                                            and equipment                                                                                                                                                                                                                                            |   | 3                                            to 7         |   |   | **$**                                               | **8,747,253** |   |   | $ | 8,526,149 |   |
| Internally                                            developed software costs                                                                                                                                                                                                                                |   |                                                      | 7      |   |                                                | ** **    | **2,224,345** |   |   |   | 2,224,345 |   |
| Transportation                                            equipment                                                                                                                                                                                                                                           |   | 3                                            to 5         |   |   | ** **                                          | **76,942**    |   |   |   | 76,942 |   |
| Leasehold                                            improvements                                                                                                                                                                                                                                             |   | 5                                            to 10        |   |   | ** **                                          | **601,218**   |   |   |   | 601,218 |   |
|                                                                                                                                                                                                                                                                                                          |   |                                                      |   |   |                                                |          |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                          |   |                                                      |   |   |                                                |          |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                          |   |                                                      |   |   |                                                | ** **    | **11,649,758** |   |   |   | 11,428,654 |   |
|                                                                                                                                                                                                                                                                                                          |   |                                                      |   |   |                                                |          |   |   |   |   |   |   |
| Less                                            accumulated depreciation and amortization(including                                            $166,693 in 2007 and $120,898 in 2006                                            of capitalized                                            lease amortization) |   |                                                      |   |   |                                                | ** **    | **(10,216,472** | **)** |   |   | (9,662,187 | ) |
|                                                                                                                                                                                                                                                                                                          |   |                                                      |   |   |                                                |          |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                          |   |                                                      |   |   |                                                |          |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                          |   |                                                      |   |   |                                                | **$**         | **1,433,286** |   |   | $ | 1,766,467 |   |
|                                                                                                                                                                                                                                                                                                          |   |                                                      |   |   |                                                |          |   |   |   |   |   |   |

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        E - INCOME TAXES**

|     |   |                                       Year Ended June 30, |       |
|----------|--------|-----------------------------------------------------------------------------------------|------------|
|     |   | **2007**                                                                                |       |   | 2006 |   |   | 2005 |   |
|     |   |                                                                                    |       |   |   |   |   |   |   |
| Federal  |   |                                                                                    |       |   |   |   |   |   |   |
| Current  |   | **$**                                                                                   | **-**      |   |   | $ | - |   |   | $ | (443,067 | ) |
| Deferred |   | -                                                                                       |       |   |   | 6,394,449 |   |   |   | (2,431,201 | ) |
|     |   |                                                                                    |       |   |   |   |   |   |   |   |   |   |
|     |   |                                                                                    |       |   |   |   |   |   |   |   |   |   |
|     |   | ** **                                                                              | **-**      |   |   |   | 6,394,449 |   |   |   | (2,874,268 | ) |
|     |   |                                                                                    |       |   |   |   |   |   |   |   |   |   |
| State    |   | ** **                                                                              | **22,991** |   |   |   | 73,021 |   |   |   | 60,693 |   |
|     |   |                                                                                    |       |   |   |   |   |   |   |   |   |   |
|     |   |                                                                                    |       |   |   |   |   |   |   |   |   |   |
|     |   | **$**                                                                                   | **22,991** |   |   | $ | 6,467,470 |   |   | $ | (2,813,575 | ) |
|     |   |                                                                                    |       |   |   |   |   |   |   |   |   |   |

|                                                                        |   |                                            Year Ended June 30, |      |
|-----------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|-----------|
|                                                                        |   | **2007**                                                                                                                        |      |   | 2006 |   |   | 2005 |   |
| Statutory                              U.S. Federal tax rate                |   | ** **                                                                                                                      | **34.0**  | **%** |   |   | (34.0 | )% |   |   | (34.0 | )% |
| State                              income taxes, net of Federal tax benefit |   | ** **                                                                                                                      | **(0.5)** |   |   |   | 9.7 |   |   |   | (1.4 | ) |
| Sales                              expense for which no tax benefit arises  |   | ** **                                                                                                                      | **(6.6)** |   |   |   | 13.6 |   |   |   | 1.0 |   |
| Other                                                                       |   | ** **                                                                                                                      | **-**     |   |   | ** ** | **-** |   |   |   | 0.3 |   |
| Valuation                              Allowance                            |   | **                               -**                                                                                       |      |   |   | 1,317.4 |   |   | - |   |
|                                                                        |   |                                                                                                                            |      |   |   |   |   |   |   |   |   |   |
| Effective                              tax rate                             |   | ** **                                                                                                                      | **26.9**  | **%** |   |   | 1,306.7 | % |   |   | (34.1 | )% |
|                                                                        |   |                                                                                                                            |      |   |   |   |   |   |   |   |   |   |

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        E - INCOME TAXES (continued)**

|                                                                                                                                 |    | **2007**                                    |           |    | 2006                                                              |   |
|--------------------------------------------------------------------------------------------------------------------------------------|---------|---------------------------------------------|----------------|---------|-------------------------------------------------------------------|--------|
|                                                                                                                                 |    |                                        |           |    |                                                              |   |
|                                                                                                                                 |    |                                        |           |    |                                                              |   |
| Deferred                                  tax assets                                                                                 |    |                                        |           |    |                                                              |   |
| Net                                  operating loss and other carryforwards                                                          |    | **$**                                       | **3,300,000**  |    |                                                              | $      | 3,590,000 |   |
| Allowance                                  for bad debts                                                                             |    | ** **                                  | **391,000**    |    |                                                              |   | 187,000 |   |
| Inventory                                  valuation                                                                                 |    | ** **                                  | **2,500,000**  |    |                                                              |   | 2,514,000 |   |
| Deferred                                  compensation                                                                               |    | ** **                                  | **625,000**    |    |                                                              |   | 618,000 |   |
| Other                                  deferred tax assets                                                                           |    | ** **                                  | **1,404,000**  |    |                                                              |   | 175,000 |   |
|                                                                                                                                 |    |                                        |           |    |                                                              |   |   |   |
|                                                                                                                                 |    |                                        |           |    |                                                              |   |   |   |
| Total                                  deferred tax assets                                                                           |    | ** **                                  | **8,220,000**  |    |                                                              |   | 7,084,000 |   |
|                                                                                                                                 |    |                                        |           |    |                                                              |   |   |   |
| Deferred                                  tax liabilities                                                                            |    |                                        |           |    |                                                              |   |   |   |
| Depreciation                                                                                                                         |    | ** **                                  | **(300,000**   | **)**   |                                                              |   | (259,000 | ) |
|                                                                                                                                 |    |                                        |           |    |                                                              |   |   |   |
| Total                                  deferred tax liabilities                                                                      |    | ** **                                  | **(300,000**   | **)**   |                                                              |   | (259,000 | ) |
|     Valuation                                  AllowanceNet                                  deferred tax assets |    | ** **                                  | **(7,920,000** | **)**   |                                                              |   | (6,825,000 | ) |
|                                                                                                                                 |    |                                        |           |    |                                                              |   |   |   |
|                                                                                                                                 |    |                                        |           |    |                                                              |   |   |   |
|      Less:                                  Current portion                                                 |    |  -       |           |    | -                                                                 |   |
|                                                                                                                                 |    |                                        |           |    |                                                              |   |   |   |
|                                                                                                                                 |    |                                        |           |    |                                                              |   |   |   |
|      Net                                  deferred tax asset                                                |  $ | **  -**                           |           |  $ |                                        - |   |
|                                                                                                                                 |    |                                        |           |    |                                                              |   |   |   |

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        F - DEBT AND CAPITALIZED LEASE OBLIGATIONS**

|                                                                                     |   |       | June                                        30,     |   |
|------------------------------------------------------------------------------------------|--------|------------|-------------------------------------------------------------------------|--------|
|                                                                                     |   |       | 2007                                           |   |   |   |      2006 |   |
|                                                                                     |   |       |                                                                    |   |   |   |   |   |
| Revolving                                        line of credit (a)                      |   | **$**      | **37,718,924**                                                          |   |   | $ | 35,096,088 |   |
| Capitalized                                        lease obligations (b)                 |   | ** ** | **99,834**                                                              |   |   |   | 162,888 |   |
|                                                                                     |   |       |                                                                    |   |   |   |   |   |
|                                                                                     |   | ** ** | **37,818,758**                                                          |   |   |   | 35,258,976 |   |
|                                                                                     |   |       |                                                                    |   |   |   |   |   |
| Less                                        amounts representing interest on capitalized |   |       |                                                                    |   |   |   |   |   |
| lease                                        obligations                                 |   | ** ** | **(11,723**                                                             | **)**  |   |   | (29,163 | ) |
|                                                                                     |   |       |                                                                    |   |   |   |   |   |
|                                                                                     |   | ** ** | **37,807,305**                                                          |   |   |   | 35,229,813 |   |
|                                                                                     |   |       |                                                                    |   |   |   |   |   |
| Less                                        current maturities                           |   | ** ** | **(37,772,069**                                                         | **)**  |   |   | (35,141,702 | ) |
|                                                                                     |   |       |                                                                    |   |   |   |   |   |
|                                                                                     |   | **$**      | **34,966**                                                              |   |   | $ | 88,111 |   |
|                                                                                     |   |       |                                                                    |   |   |   |   |   |

|   | *(a)* | *Revolving                  Line of Credit Facility* |
|--------|-------|------------------------------------------------------|

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        F - DEBT AND CAPITALIZED LEASE OBLIGATIONS (continued)**

|   | *(b)* | *Capitalized                  Lease Obligations* |
|--------|-------|--------------------------------------------------|

|   | The                  Company leases certain equipment under agreements accounted for                  as capital                  leases.  The aggregate obligations for the equipment require the                  Company to make monthly payments through January 19, 2009, with                  an                  implicit interest rate of 15.38%. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        F - DEBT AND CAPITALIZED LEASE OBLIGATIONS (continued)**

|                                                |   |       |       |   | Capitalized |   |
|-----------------------------------------------------|--------|------------|------------|--------|-------------|--------|
|                                                |   | Debt       |       |   | Leases      |   |
|                                                |   |       |       |   |        |   |
| Year                                ending June 30, |   |       |       |   |        |   |
| 2008                                                |   |       | 37,718,924 |   |        |   | 63,053 |   |
| 2009                                                |   | ** ** |       |   |        |   | 36,781 |   |
|                                                |   |       |       |   |        |   |   |   |
|                                                |   | $          | 37,718,924 |   |        | $      | 99,834 |   |
|                                                |   |       |       |   |        |   |   |   |

**NOTE        G - COMMITMENTS AND CONTINGENCIES**

*1.      Leases*

| Year                              ending June 30, |   |   |      |
|---------------------------------------------------|--------|--------|-----------|
| 2008                                              |   | $      | 1,351,378 |   |
| 2009                                              |   |   | 1,099,804 |   |
| 2010                                              |   |   | 905,062   |   |
| 2011                                              |   |   | 903,680   |   |
| 2012                                              |   |   | 865,368   |   |
| Thereafter                                        |   |   | 1,374,030 |   |
|                                              |   |   |      |   |
|                                              |   |   |      |   |
|                                              |   | $      | 6,499,322 |   |
|                                              |   |   |      |   |

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        G - COMMITMENTS AND CONTINGENCIES (continued)**

*2.      Other        Leases*

| Year                                      ending June 30, |   |   |    |
|-----------------------------------------------------------|--------|--------|---------|
| 2008                                                      |   | $      | 78,674  |   |
| 2009                                                      |   |   | 55,419  |   |
| 2010                                                      |   |   | 33,527  |   |
| 2011                                                      |   |   | 808     |   |
|                                                      |   |   |    |   |
|                                                      |   | $      | 168,428 |   |
|                                                      |   |   |    |   |

*3.      Employment        Agreements*

*4.      Other        Matters*

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        G - COMMITMENTS AND CONTINGENCIES (continued)**

| *5.  * | *Guarantees* |
|------------------|--------------|

**NOTE        H - RETIREMENT PLAN**

**NOTE        I - SHAREHOLDERS’ EQUITY**

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        I -  SHAREHOLDERS’ EQUITY (continued)**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          | Weighted- |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------|----------------|--------|---------------|-----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Nonqualified                                                                              |  average  |        |          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | stock                                                                            options  |  exercise |   |          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Price                                                                            range    |           | Shares |          | price     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |
| Outstanding                                                                            at June                                                                            30, 2004                                                                                                                                                                                                                                                                                    |   | $2.35                                                                            - $13.71 |           |   | 744,750       |      |   | $5.17 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |   |   |
| Expired                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $3.25                                                                            - $13.71 |           |   | (140,250      | )         |   | $7.31 |   |
| Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $2.35                                                                            - $2.50  |           |   | (72,500       | )         |   | $2.49 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |   |   |
| Outstanding                                                                            at June                                                                            30, 2005                                                                                                                                                                                                                                                                                    |   | $2.35                                                                            - $8.31  |           |   | 532,000       |      |   | $4.97 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |   |   |
| Expired                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $8.00                                                                                     |           |   | (5,750        | )         |   | $8.00 |   |
| Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $2.35                                                                                     |           |   | (26,500       | )         |   | $2.35 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |   |   |
| Outstanding                                                                            at June                                                                            30, 2006                                                                                                                                                                                                                                                                                    |   | $2.35                                                                            - $8.31  |           |   | 499,750       |      |   | $5.07 |   |
| Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $3.10                                                                            - $3.80  |           |   | 190,000       |      |   | $3.48 |   |
| Expired                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $2.35                                                                            - $8.00  |           |   | (65,500       | )         |   | $3.55 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |   |   |
| Outstanding                                                                            at June                                                                            30, 2007                                                                                                                                                                                                                                                                                    |   | $2.35                                                                            - $8.31  |           |   | 624,250       |      |   | $4.74 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |   |   |
| Options                                                                            exercisable                                                                            at June                                                                            30, 2007                                                                                                                                                                                                 |   |                                                                                      |           |   | 434,250       |      |   | $5.30 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |   |   |
| Options                                                                            exercisable                                                                            at June                                                                            30, 2006                                                                                                                                                                                                 |   |                                                                                      |           |   | 499,750       |      |   | $5.07 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                      |           |   |          |      |   |   |   |
|  Options                                                                          exercisable                                                                          at June                                                                          30, 2005                                 |   |                                                                                      |           |   | 532,000  |      |   | $4.97  |   |

|                                                         |   |                                   |    |   |                                        |   |   | Weighed                              Average     |   |   |                                              |   |
|--------------------------------------------------------------|--------|----------------------------------------|---------|--------|---------------------------------------------|--------|--------|--------------------------------------------------|--------|--------|---------------------------------------------------|--------|
|                                                         |   |                                   |    |   | Weighted                                    |   |   | Remaining                                        |   |   |                                              |   |
|                                                         |   | Number                              of |    |   | Average                                     |   |   | Contractual                              Term in |   |   | Aggregated                              Intrinsic |   |
|                                                         |   | Options                                |    |   | Exercise                              Price |   |   | Years                                            |   |   | Value                              (1)            |   |
|                                                         |   |                                   |    |   |                                        |   |   |                                             |   |   |                                              |   |   |   |   |   |
|                                                         |   |                                   |    |   |                                        |   |   |                                             |   |   |                                              |   |   |   |   |   |
| Outstanding                              as of June 30, 2007 |   |                                   | 624,250 |   |                                        | $      | 4.74   |                                             |   |   | 6.17                                              |   |   | $ | - |   |
|                                                         |   |                                   |    |   |                                        |   |   |                                             |   |   |                                              |   |   |   |   |   |
| Exercisable                              as of June 30, 2007 |   |                                   | 434,250 |   |                                        | $      | 5.30   |                                             |   |   | 4.75                                              |   |   | $ | - |   |

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        I -  SHAREHOLDERS’ EQUITY (continued)**

**NOTE        J – RELATED PARTY TRANSACTIONS**

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        K – GEOGRAPHIC AND PRODUCT INFORMATION**

|                                                         |   | Year                                    ended June 30,    |        |
|--------------------------------------------------------------|--------|--------------------------------------------------------------------------|-------------|
|                                                         |   | 2007                                                                     |        |   | 2006 |   |   | 2005 |   |
|                                                         |   |                                                                     |        |   |   |   |   |   |   |
| Semiconductors                                               |   | $                                                                        | 129,915,000 |   |   | $ | 114,674,000 |   |   | $ | 133,532,000 |   |
| Flat                                    Panel Displays       |   |                                                                     | 59,395,000  |   |   |   | 60,626,000 |   |   |   | 38,946,000 |   |
| Passive                                    components        |   |                                                                     | 37,028,000  |   |   |   | 35,822,000 |   |   |   | 40,106,000 |   |
| Electromechanical                                    devices |   |                                                                     | 13,894,000  |   |   |   | 17,399,000 |   |   |   | 19,241,000 |   |
|                                                         |   |                                                                     |        |   |   |   |   |   |   |   |   |   |
| Total                                                        |   | $                                                                        | 240,232,000 |   |   | $ | 228,521,000 |   |   | $ | 231,825,000 |   |

----

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**NOTE        L - SUPPLEMENTAL SELECTED QUARTERLY FINANCIAL DATA        (UNAUDITED)**

|                                                          |              Quarter                  Ended |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |
|---------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|---------------------------------------------------|-------------------------------------------------------------|-------------------------------------------------------------------|---------------------------------------------------------|-------------------------------------------------------------------------|---------------------------------------------------------|
|                                                          |      June                  30,                                                      |   March                  31,            | December                  31,                               | September                  30,                                    |      June                  30, |     March                  31,                      | December                  31,                           | September                  30, |
|                                                          |        2007                                                               |       2007          |        2006              |        2006                    |        2006          |        2006                          |        2005          |        2005 |
|                                                          |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| Net                  Sales                                    | $54,734,060                                                                                                  | $49,890,362                                       | $65,989,744                                                 | $69,617,579                                                       | $67,046,409                                             | $60,905,905                                                             | $48,107,541                                             | $52,461,032 |
|                                                          |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| Gross                  Profit                                 |   $8,771,989                                                                                       |   $7,779,977                            |   $8,516,081                                      |   $8,657,114                                            |   $8,640,801                                  |   $7,781,596                                                  |   $6,664,660                                  |   $7,117,418 |
|                                                          |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| Income                  (Loss) from continuing operations     |      $407,843                                                                       |    $(746,500)                 |     $140,063                       |      $261,075                       |     $416,132                   |        $83,533                  | $(7,362,609)                  (b)                       |      $(99,473) |
| (Loss)                  earnings from discontinued operations | $(3,183,401)                  (a)                                                                            |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
|                                                          |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| Net                  Income (Loss)                            | $(2,775,558)                  (a)                                                                            |   $(746,500)                            |     $140,063                            |      $261,075                            |    $416,132                              |        $83,533                       | $(7,362,609)                  (b)                       |      $(99,473) |
|                                                          |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| Income                  (Loss) from continuing operations     |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| Basic                                                         |           $0.06                                            |        $(0.12) |          $0.02 |           $0.04 |         $0.07   |            $0.01 |         $(1.17) |          $(0.02) |
| Diluted                                                       |           $0.06                                            |        $(0.12) |          $0.02 |           $0.04 |         $0.07   |            $0.01 |         $(1.17) |          $(0.02) |
|                                                          |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| (Loss)                  earnings from discontinued operations |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| Basic                                                         |          $(0.51)                                                |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| Diluted                                                       |          $(0.50)                                                |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
|                                                          |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| Income                  (Loss) Per Share                      |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| Basic                                                         |          $(0.45)                                                |        $(0.12) |         $0.02       |          $0.04       |         $0.07   |           $0.01       |        $(1.17)       |          $(0.02) |
| Diluted                                                       |          $(0.44)                                                |        $(0.12) |         $0.02       |          $0.04       |         $0.07   |           $0.01       |        $(1.17)       |          $(0.02) |
|                                                          |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| Weighted                  Shares Outstanding                  |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |
| Basic                                                         |     6,294,332                                                                            |   6,294,232                             |   6,294,332                                       |    6,294,332                                       |  6,294,332                                         |    6,293,115                                             |   6,275,480                                   |    6,267,832 |
| Diluted                                                       |     6,315,464                                                                            |   6,294,332                             |   6,369,866                                       |    6,373,733                                       |  6,381,941                                         |    6,387,780                                             |   6,275,480                                   |    6,267,832 |
|                                                          |                                                                                                         |                                              |                                                        |                                                              |                                                    |                                                                    |                                                    |   |   |   |   |

----

**REPORT        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**Jaco        Electronics,        Inc.**

----

**SCHEDULE        II - VALUATION AND QUALIFYING ACCOUNTS**

|  Column                                                                                                          A                                                                                                                                                                                                                                                          |   | Column                                                                                                          B         | Column                                                                                                          C     | Column                                                                                                          D |        | Column                                                                                                          E                                 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                      | Additions                                                                                                                  |                                                                                                              |        |                                                                                                                                              |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                      | (1)                                                                                                    |                                                                                                              |        |  (2)                                                                                                                                         |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                      |                                                                                                                                      |                                                                                                              |        |  Charged                                                                                                          to                         |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |  Balance                                                                                                          at |  Charged                                                                                                          to                 |                                                                                                              |        |  other                                                                                                                                       |   |   |   |   |  Balance |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |  beginning                                                                                                           |  costs                                                                                                          and                  |                                                                                                              |        |  accounts                                                                                                          -     |   |   |  Deductins                                                                                                          - |   |  at                                                                                                          end                                                                                                          of |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |  of                                                                                                          period  |  expenses                                                                                                                            |                                                                                                              |        |  describe                                                                                                                                    |   |   |  describe |   |  period |   |
| Allowance                                                                                                          for                                                                                                          doubtful                                                                                                          accounts                                                                                                       |   |                                                                                                                      |                                                                                                                                      |                                                                                                              |        |                                                                                                                                              |   |   |   |   |   |   |
| **Year                                                                                                          ended                                                                                                          June                                                                                                          30,                                                                                                          2007** |   | **$**                                                                                                                     | **491,000**                                                                                                                               | **$**                                                                                                             | **544,000** |                                                                                                                                              |   | **$** | **42,000** | **(a)** |   | **$** | **48,000** | **(b)** | **$** | **1,029,000** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                      |                                                                                                                                      |                                                                                                              |        |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |
| Year                                                                                                          ended                                                                                                          June                                                                                                          30,                                                                                                          2006     |   | $                                                                                                                         | 554,000                                                                                                                                   | $                                                                                                                 | 88,000      |                                                                                                                                              |   | $ | 10,000 | (a) |   | $ | 161,000 | (b) | $ | 491,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                      |                                                                                                                                      |                                                                                                              |        |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |
| Year                                                                                                          ended                                                                                                          June                                                                                                          30,                                                                                                          2005     |   | $                                                                                                                         | 695,000                                                                                                                                   | $                                                                                                                 | 366,000     |                                                                                                                                              |   | $ | 89,000 | (a) |   | $ | 596,000 | (b) | $ | 554,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                      |                                                                                                                                      |                                                                                                              |        |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |
| Deferred                                                                                                          tax                                                                                                          asset                                                                                                                                                                                                                             |   |                                                                                                                      |                                                                                                                                      |                                                                                                              |        |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |
|     valuation                                                                                                          allowance                                                                                                                                                                                                                                                                                                             |   |                                                                                                                      |                                                                                                                                      |                                                                                                              |        |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |
| **Year                                                                                                          ended                                                                                                          June                                                                                                          30,                                                                                                          2007** |   | **$**                                                                                                                     | **6,394,000**                                                                                                                             | **$**                                                                                                             | **-**       |                                                                                                                                              |   | **$** | **-** |   |   | **$** | **-** |   | **$** | **6,394,000** |   |
| Year                                                                                                          ended                                                                                                          June                                                                                                          30,                                                                                                          2006     |   | **$**                                                                                                                     | **-**                                                                                                                                     | $                                                                                                                 | 6,394,000   |                                                                                                                                              |   | **$** | **-** |   |   | **$** | **-** |   | $ | 6,394,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                      |                                                                                                                                      |                                                                                                              |        |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |

----

**SIGNATURES**

| Name                                                                                                                                                                                                                                                                                                                                                   | Title                                                                                                                                            | Date                                |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                       |                                          |
| /s/                Joel H.                Girsky                                            Joel                H. Girsky       | Chairman                of the Board,President                and Treasurer(Principal                Executive Officer)                               | September                28,* *2007 |
|                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                  |                                     |
| /s/                Jeffrey D.                Gash                                            Jeffrey                D. Gash     | Executive                Vice President-Finance                and Secretary(Principal                Financial andAccounting                Officer) | September                28,* *2007 |
|                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                  |                                     |
| /s/                Joseph F.                Oliveri                                            Joseph                F. Oliveri | Vice                Chairman of the Boardand                Executive Vice President                                                                  | September                28,* *2007 |
|                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                  |                                     |
| /s/                Charles B.                Girsky                                            Charles                B. Girsky | Executive                Vice President andDirector                                                                                                   | September                28,* *2007 |
|                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                  |                                     |
| /s/                Don                Ackley                                            Don                Ackley               |  Director                                                                                                                                        | September                28,* *2007 |
|                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                  |                                     |
| /s/                Marvin                Meirs                                            Marvin                Meirs           | Director                                                                                                                                              | September                28,* *2007 |
|                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                  |                                     |
| /s/                Neil                Rappaport                                            Neil                Rappaport       | Director                                                                                                                                              | September                28,* *2007 |
|                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                  |                                     |
| /s/                Robert J. WaldmanRobert                J. Waldman                                                                                                                                                                                                                                                                                        | Director                                                                                                                                              | September                28,* *2007 |
|                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                  |                                     |