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

                                    FORM 10-Q

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

                   For the Fiscal Quarter Ended June 30, 1998

                                       or

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

               For the Transition period from _____ to _________.

                         Commission file number: 0-26620

                                   ACCOM, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                                            94-3055907
(State or other jurisdiction of                               (IRS Employer
incorporation or organization)                           Identification Number)

                               1490 O'Brien Drive
                          Menlo Park, California 94025
                    (Address of principal executive offices)

               Registrant's telephone number, including area code:
                                 (650) 328-3818

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for at least the past 90 days.

         Yes   X                                                 No
             -----                                                   -----

As of August 3, 1998,  6,675,164 shares of the Registrant's common stock, $0.001
par value, were outstanding.
<PAGE>
                                   ACCOM, INC.

                  FORM 10-Q For the Quarter Ended June 30, 1998

                                      INDEX
<TABLE>
<CAPTION>
                                                                                                             Page
<S>          <C>                                                                                            <C>

             Facing sheet                                                                                      1

             Index                                                                                             2

Part I.      Financial Information (unaudited)

Item 1.      a)      Condensed consolidated interim balance sheets at June 30, 1998 and 
                     September 30, 1997                                                                        3

             b)      Condensed consolidated interim statements of operations for the three and 
                     nine month periods ended June 30, 1998 and June 28, 1997                                  4

             c)      Condensed consolidated interim statements of cash flows for the nine month 
                     periods ended June 30, 1998 and June 28, 1997                                             5
                     
             d)      Notes to condensed consolidated interim financial statements                              6

Item 2.      Management's Discussion and Analysis of Financial Condition and Results of 
             Operations                                                                                        8

Item 3       Quantitative and Qualitative Disclosures About Market Risks                                      15

Part II.     Other Information                                                                                16

Item 1       Legal Proceedings                                                                                16

Item 2       Changes in Securities and Use of Proceeds                                                        16

Item 3       Defaults Upon Senior Securities                                                                  16

Item 4       Submission of Matters to a Vote of Security Holders                                              16

Item 5       Other Information                                                                                16

Item 6       Exhibits and Reports on Form 8-K                                                                 16

             Signature                                                                                        17

             Exhibit 11.1 - Statement re:  computation of net income (loss) per share                         18
</TABLE>
                                      -2-
<PAGE>
                         PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                                   ACCOM, INC.
                  CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
                      (In thousands, except per share data)
<TABLE>
<CAPTION>
                                                                        As of
                                                                     ------------
                                                                 June 30,  September 30,
                                                                   1998        1997
                                                                 --------    --------
                                                               (Unaudited)    (Note)
<S>                                                              <C>         <C>     
                                   Assets
Current assets:
     Cash and cash equivalents                                   $  4,244    $  5,317
     Accounts receivable, net                                       2,395       3,239
     Inventories                                                    1,660         980
     Income tax refunds receivable                                    243         621
     Deferred tax assets                                               38          38
     Prepaid expenses and other current assets                        367         334
                                                                 --------    --------
         Total current assets                                       8,947      10,529
Property and equipment, net                                         1,133         967
Other assets                                                           49          49
                                                                 --------    --------
         Total assets                                            $ 10,129    $ 11,545
                                                                 ========    ========

                    Liabilities and Stockholders' Equity
Current liabilities:
     Notes payable                                               $   --      $     24
     Accounts payable                                               1,528       1,476
     Accrued liabilities                                            1,305       1,338
     Deferred revenue                                                  83         141
                                                                 --------    --------
         Total current liabilities and total liabilities            2,916       2,979
                                                                 --------    --------
Stockholders' equity:
     Common stock, $0.001 par value; 20,233 shares authorized;
         6,671 and 6,627 shares issued and outstanding on
         June 30, 1998 and September 30, 1997, respectively        21,462      21,427
     Accumulated deficit                                          (14,249)    (12,861)
                                                                 --------    --------
         Total stockholders' equity                                 7,213       8,566
                                                                 --------    --------

         Total liabilities and stockholders' equity              $ 10,129    $ 11,545
                                                                 ========    ========
<FN>

Note:    The condensed consolidated balance sheet at September 30, 1997 has been
         derived from the audited annual consolidated balance sheet at that date
         but does not include all of the information  and footnotes  required by
         generally accepted  accounting  principles for a complete  consolidated
         balance sheet.

The  accompanying  notes are an integral  part of these  condensed  consolidated
interim financial statements.
</FN>
</TABLE>

                                      -3-


<PAGE>
                                   ACCOM, INC.
             CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                              Three months ended             Nine months ended
                                              ------------------             -----------------
                                            June 30,       June 28,        June 30,       June 28,
                                              1998           1997            1998           1997
                                              ----           ----            ----           ----
<S>                                          <C>            <C>            <C>           <C>    
Net sales                                    $3,028         $4,466         $10,234       $12,916

Cost of sales                                 1,546          2,027           4,655         8,896
                                         -----------------------------------------------------------

Gross margin                                  1,482          2,439           5,579         4,020
                                         -----------------------------------------------------------

Operating expenses:
     Research and development                   773            893           2,392         2,530
     Marketing and sales                      1,362          1,220           3,757         4,661
     General and administrative                 340            292             946         1,622
                                         -----------------------------------------------------------

Total operating expenses                      2,475          2,405           7,095         8,813
                                         -----------------------------------------------------------

Operating income (loss)                        (993)            34          (1,516)       (4,793)

     Interest and other income, net              41             43             134           115
                                         -----------------------------------------------------------

Income (loss) before provision for
     income taxes                              (952)            77          (1,382)       (4,678)

     Provision for income taxes                 -              -                 6           -
                                         -----------------------------------------------------------

Net income (loss)                             $(952)           $77         $(1,388)      ($4,678)
                                         ===========================================================

Net income (loss) per share - basic          $(0.14)         $0.01          ($0.21)       ($0.71)
                                         ===========================================================
Net income (loss) per share - diluted        $(0.14)         $0.01          ($0.21)       ($0.71)
                                         ===========================================================
Shares used in computation of net
     income (loss) per share - basic          6,672          6,592           6,658         6,577
                                         ===========================================================
Shares used in computation of net
     income (loss) per share - diluted        6,672          6,865           6,658         6,577
                                         ===========================================================
<FN>

   The accompanying notes are an integral part of these condensed consolidated
                         interim financial statements.
</FN>
</TABLE>

                                      -4-

<PAGE>
                                   ACCOM, INC.
             CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                        Nine Months Ended
                                                                        -----------------
                                                                       June 30,   June 28,
                                                                        1998       1997
                                                                        ----       ----
<S>                                                                    <C>        <C>     
                   Cash flows from operating activities:
Net loss                                                               $(1,388)   $(4,678)
Adjustments to reconcile net loss to net cash used in
  operating activities:
     Depreciation and amortization                                         411        439
     Establishment of reserves against accounts receivable,
       inventories, and property and equipment and accruals
       for streamlining operations                                        --        3,995
     Changes in operating assets and liabilities,  net of effects of
       reserves to streamline operations
         Accounts receivable                                               844      1,266
         Inventories                                                      (680)     1,712
         Income tax refunds receivable                                     378       --
         Prepaid expenses and other current assets                         (33)       165
         Accounts payable                                                   52     (1,049)
         Accrued liabilities and customer deposits                         (33)       126
         Deferred revenue                                                  (58)      (241)
                                                                       ------------------
           Net cash provided (used) in operating activities               (507)     1,735
                                                                       ------------------

                   Cash flows from investing activities:
Expenditures for property and equipment                                   (577)      (311)
Other assets                                                              --           (6)
                                                                       ------------------
           Net cash used in investing activities                          (577)      (317)
                                                                       ------------------

                   Cash flows from financing activities:
Repayments on notes payable                                                (24)       (43)
Issuance of common stock                                                    39         71
Purchase of common stock                                                    (4)      --
                                                                       ------------------
           Net cash provided by financing activities                        11         28
                                                                       ------------------

Net increase (decrease) in cash and cash equivalents                    (1,073)     1,446
Cash and cash equivalents at beginning of period                         5,317      4,221
                                                                       ------------------
           Cash and cash equivalents at end of period                  $ 4,244    $ 5,667
                                                                       ==================
<FN>

   The accompanying notes are an integral part of these condensed consolidated
                          interim financial statements
</FN>
</TABLE>
                                      -5-


<PAGE>

          NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1.  Basis of Preparation
         --------------------

         The condensed  consolidated  interim balance sheet as of June 30, 1998,
and the condensed  consolidated  interim statements of operations and cash flows
for the three and nine-month  periods ended June 30, 1998 and June 28, 1997 have
been prepared by the Company and are  unaudited.  In the opinion of  management,
all adjustments  (consisting of normal accruals) necessary to present fairly the
financial  position as of June 30, 1998 and the results of  operations  and cash
for the three and nine-month  periods ended June 30, 1998 and June 28, 1997, and
have been made.

         These condensed  consolidated  interim  financial  statements should be
reviewed  in  conjunction  with  the  audited   consolidated   annual  financial
statements  and notes thereto  included in the  Company's  Annual Report on Form
10-K for the fiscal year ended September 30, 1997. The results of operations for
the three and  nine-month  periods  ended  June 30,  1998,  are not  necessarily
indicative of the operating results for any future period.

Note 2.  Inventories
         -----------

         Inventories consist of the following (in thousands):

                                                 June 30,     September 30,
                                                   1998           1997
                                                   ----           ----

Purchased parts and materials                   $  174         $  225
Work-in-process                                    591            204
Finished goods                                     206            182
Demonstration inventory                            689            369
                                             ------------- -------------
                                                $1,660         $  980
                                             ============= =============

Note 3.  Bank Information
         ----------------

         The Company has no credit  facilities  available  as of June 30,  1998.
There are no borrowings outstanding.

Note 4.  New Accounting Guidelines
         -------------------------

         In fiscal  1999,  the Company  will be  required to adopt newly  issued
accounting  guidelines  addressing the reporting of  comprehensive  income.  The
adoption is expected to have no  significant  impact on the Company's net income
or shareholders'  equity. The guidelines require any unrealized gains and losses
on available-for-sale  securities or foreign currency translation adjustments to
be  included  in  other  comprehensive  income.  Prior  to  adoption  of the new
guidelines,  such items are reported as a separate  component  of  stockholders'
equity.

         Also in fiscal 1999, the Company will be required to adopt newly issued
accounting   guidelines   addressing   disclosures  about  segment  and  related
information.  As the Company  operates in one  segment,  the adoption of the new
guidelines is not expected to have a significant impact on the Company's results
of operations, financial position, or disclosure of segment information.

         In October,  1997, the Accounting  Standards Executive Committee issued
Statement  of  Position  97-2 ("SOP  97-2"),  as  amended by SOP 98-4  "Software
Revenue  Recognition."  These statements  provide guidance on applying generally
accepted accounting principles in recognizing revenue on
                                      -6-
<PAGE>
software  transactions and are effective for the Company's  transactions entered
into subsequent to October 1, 1998.

         The  Company is in the process of  assessing  the  implications  of the
implementation. Detailed implementation guidelines for these statements have not
yet been issued. Once issued, such detailed guidance could lead to unanticipated
changes in the Company's  current revenue practices and material adverse changes
in the Company's  reported  revenues and earnings.  In the event  implementation
guidance is contrary to the revenue accounting  practices,  the Company believes
it can change its current  business  practices  to comply with the  guidance and
avoid any material  adverse effect on reported  revenues and earnings.  However,
there can be no assurance this will be the case.
                                      -7-
<PAGE>
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

         The  following  Management's   Discussion  and  Analysis  of  Financial
Condition  and  Results of  Operations  should be read in  conjunction  with the
Company's  Consolidated  Financial  Statements as of September 30, 1997 and 1996
and for the three fiscal years ended  September 30, 1997, 1996 and 1995 included
in its Annual Report on Form 10-K for the fiscal year ended September 30, 1997.

         Additionally,  the following  Management's  Discussion  and Analysis of
Financial Condition and Results of Operations  contains certain  forward-looking
statements and should be read in conjunction with the discussion following under
"Additional Factors That May Affect Future Results" and with "Item 1. Business -
Additional Factors That May Affect Future Results" included in its Annual Report
on Form 10-K for the fiscal year ended  September 30, 1997 and  incorporated  by
reference  in its entirety  into this  Management's  Discussion  and Analysis of
Financial Condition and Results of Operations.

Overview

         Accom  designs,  manufactures,  sells,  and supports a complete line of
digital video signal  processing,  editing,  and disk recording  tools,  and its
ELSET virtual set systems,  primarily for the  professional  worldwide video and
computer graphics production, post production and distribution marketplaces.

         The following table  summarizes the Company's  products and the primary
marketplaces they address.

--------------------------------------------------------------------------------
                         Primary Marketplaces / Products
                         -------------------------------

Production:
     ELSET(TM) Virtual Set
     Work Station Disk ("WSD(R)") 2Xtreme(TM) Computer Graphics Digital 
      Disk Recorder
Post Production:
     Signal Processors
     Editing:
         On-line Video Editor:
              Axial(R) 3000
         Digital Disk Recorders:
              Real Time Disk ("RTD(TM) ") 4224
              Accom Professional Recorder ("APR(TM) ") Attache(TM)
Distribution:
     Axess(TM) Digital News Graphic and Clip Server
--------------------------------------------------------------------------------

         The Company's  revenues are currently  derived  primarily  from product
sales.  The Company  generally  recognizes  revenue  upon product  shipment.  If
significant  obligations exist at the time of shipment,  revenue  recognition is
deferred until obligations are met.

         The Company's gross margin has historically  fluctuated from quarter to
quarter. If the Company resells a Silicon Graphics,  Inc. ("SGI") workstation as
part of the ELSET Virtual Set, gross margins will decline.  Additionally,  gross
margins will be dependent on the mix of higher and lower-priced  products having
various gross margin percentages and the percentage of sales made through direct
and indirect distribution channels.

         Software development costs are recorded in accordance with Statement of
Financial  Accounting Standards No. 86. To date, the Company has expensed all of
its internal software development costs.
                                      -8-
<PAGE>
Results of Operations

Three Months Ended June 30, 1998 and June 28, 1997

         The  following  table  presents the  Company's  Condensed  Consolidated
Interim  Statements of  Operations  for the three months ended June 30, 1998 and
June 28, 1997 as reported (dollar amounts in thousands, except per share data).
<TABLE>
<CAPTION>
                                                       Three Months Ended
                                                       ------------------         Increase (Decrease)
                                                      June 30,     June 28,       -------------------
                                                        1998         1997         Amount       Percent
                                                        ----         ----         ------       -------
<S>                                                   <C>            <C>        <C>            <C>    
Net sales                                             $ 3,028        $ 4,466    $ (1,438)      (32.2)%
Cost of sales                                           1,546          2,027        (481)      (23.7)%
                                                    ------------- ------------ ------------- ------------
     Gross margin                                       1,482          2,439        (957)      (39.2)%
Operating expenses:
  Research and development                                773            893        (120)      (13.4)%
  Marketing and sales                                   1,362          1,220         142        11.6%
  General and administrative                              340            292          48        16.4%
                                                    ------------- ------------ ------------- ------------
  Total operating expenses                              2,475          2,405          70         2.9%
                                                    ------------- ------------ ------------- ------------
Operating income (loss)                                  (993)            34      (1,027)    (3,020.6)%
Interest and other income, net                             41             43          (2)       (4.7)%
                                                    ------------- ------------ ------------- ------------
Income (loss) before provision for income taxes          (952)            77      (1,029)    (1,336.4)%
Provision for income taxes                                  -              -           -            -
Net income (loss)                                      $ (952)          $ 77      (1,029)    (1,336.4)%
                                                    ============= ============ ============= ============

Net income (loss) per share - basic                     $(0.14)        $0.01       $(0.15)   (1,500.0)%
                                                    ============= ============ ============= ============
Net income (loss) per share - diluted                   $(0.14)        $0.01       $(0.15)   (1,500.0)%
                                                    ============= ============ ============= ============
</TABLE>

         The  following  table  presents the  Company's  Condensed  Consolidated
Interim  Statements of  Operations  for the three months ended June 30, 1998 and
June 28, 1997 as a percentage of net sales, as reported.


                                               Three Months Ended
                                               ------------------
                                               June 30,   June 28,   Increase
                                                 1998       1997    (Decrease)
                                                 ----       ----    ----------
Net sales                                         100.0%     100.0%       0.0%
Cost of sales                                      51.1%      45.4%       5.7%
                                               --------------------------------
           Gross margin                            48.9%      54.6%      (5.7)%
Operating expenses:
     Research and development                      25.5%      20.0%       5.5%
     Marketing and sales                           45.0%      27.3%      17.7%
     General and administrative                    11.2%       6.5%       4.7%
                                               --------------------------------
     Total operating expenses                      81.7%      53.8%      27.9%
                                               --------------------------------
Operating income (loss)                          (32.8)%       0.8%     (33.6)%
Interest and other income,  net                     1.4%       1.0%       0.4%
                                               --------------------------------
Income (loss) before provision for income taxes  (31.4)%       1.8%     (33.2)%
Provision for income taxes                           -           -          -
                                               ================================
Net income (loss)                                (31.4)%       1.8%     (33.2)%
                                               ================================



         The following  discussion of results of operations for the three months
ended June 30, 1998 and June 28, 1997 is based upon reported results.

         Net sales. The decrease in net sales during the third quarter of fiscal
1998 from  fiscal  1997  levels  was  primarily  due to  decreased  sales in the
production and post production  marketplaces.  International sales for the third
quarter  of fiscal  1998 and 1997  represented  39.3%  and  37.2% of net  sales,
respectively.
                                      -9-
<PAGE>
         The  following  table  presents net sales  dollar  volume for the three
months  ended June 30, 1998 and June 28, 1997 by market and related  percentages
of total net sales (dollar amounts in thousands).
<TABLE>
<CAPTION>
                                                         Three Months Ended
                                    --------------------------------------------------------------
                                           June 30, 1998                    June 28, 1997
                                           -------------                    -------------
       Marketplace                     Amount        Percent             Amount        Percent
       -----------                     ------        -------             ------        -------
<S>                                   <C>             <C>               <C>              <C>  
Production                             $1,405          46.4%             $2,495           55.9%
Post Production                           592          19.6%              1,090           24.4%
Broadcasting                              899          29.7%                774           17.3%
Other                                     132           4.3%                107            2.4%
                                    -----------------------------    -----------------------------
                                       $3,028         100.0%             $4,466          100.0%
                                    =============================    =============================
</TABLE>

         Cost of sales.  Gross margin percentage for the third quarter of fiscal
1998  decreased over levels in the third quarter of fiscal 1997 primarily due to
a greater proportion of sales of the lower-priced WSD model and increased impact
of manufacturing overhead.

         Research and  development.  Research and  development  expenses for the
third  quarter of fiscal  1998  decreased  over  levels in the third  quarter of
fiscal 1997 primarily due to decreases in project expenses, consulting services,
bonuses, and recruiting expenses.

         Marketing and sales. Marketing and sales expenses for the third quarter
of  fiscal  1998  increased  over  levels in the third  quarter  of fiscal  1997
primarily due to increased advertising and ELSET marketing expenses.

         General and administrative.  The increase in general and administrative
expenses in the third  quarter of fiscal 1998 from levels for the same period in
fiscal 1997 was primarily due to increases in headcount.

         Interest and other  income,  net. Net interest and other income for the
third quarter of fiscal 1998 was  essentially  comparable to levels for the same
period in fiscal 1997.

         Provision  for income  taxes.  In the third  quarter of fiscal 1998 and
1997, the Company was in a net operating loss carryforward position.
                                      -10-
<PAGE>
Nine Months Ended June 30, 1998 and June 28, 1997

         The  following  table  presents the  Company's  Condensed  Consolidated
Interim  Statements  of  Operations  for the nine months ended June 30, 1998 and
June 28, 1997 as  reported  and as  normalized  to remove the effects of special
charges incurred during the first three months of fiscal 1997 (dollar amounts in
thousands, except per share data).
<TABLE>
<CAPTION>
                                                   Nine Months Ended
                                                   -----------------         Increase (Decrease)
                                                 June 30,     June 28,       -------------------
                                                   1998         1997         Amount       Percent
                                                   ----         ----         ------       -------
<S>                                            <C>             <C>          <C>           <C>    
Net sales
  Reported                                     $  10,234       $ 12,916     $(2,682)      (20.8)%
  Normalized                                      10,234         12,916      (2,682)      (20.8)%
Cost of sales
  Reported                                         4,655          8,896      (4,241)      (47.7)%
  Normalized                                       4,655          6,396      (1,741)      (37.4)%
                                               ------------- ------------ ------------- ------------
     Gross margin
       Reported                                    5,579          4,020       1,559        38.8%
       Normalized                                  5,579          6,520        (941)      (14.4)%
                                               ------------- ------------ ------------- ------------
Operating expenses:
  Research and development
     Reported                                      2,392          2,530        (138)       (5.5)%
     Normalized                                    2,392          2,530        (138)       (5.5)%
  Marketing and sales
     Reported                                      3,757          4,661        (904)      (19.4)%
     Normalized                                    3,757          3,816         (59)       (1.5)%
  General and administrative
     Reported                                        946          1,622        (676)      (41.7)%
     Normalized                                      946            972         (26)       (2.7)%
                                               ------------- ------------ ------------- ------------
  Total operating expenses
     Reported                                      7,095          8,813      (1,718)      (19.5)%
     Normalized                                    7,095          7,318        (223)       (3.0)%
                                               ------------- ------------ ------------- ------------
Operating loss
  Reported                                        (1,516)        (4,793)      3,277        68.4%
  Normalized                                      (1,516)          (798)       (718)      (90.0)%
Interest and other income, net
  Reported                                           134            115          19        16.5%
  Normalized                                         134            115          19        16.5%
                                               ------------- ------------ ------------- ------------
Loss before provision for income taxes
  Reported                                        (1,382)        (4,678)      3,296        70.5%
  Normalized                                      (1,382)          (683)       (699)     (102.3)%
Provision for income taxes
  Reported                                             6             -            6         -
  Normalized                                           6             -            6         -
                                               ------------- ------------ ------------- ------------
Net loss
  Reported                                      $ (1,388)    $   (4,678)     $3,290        70.3%
  Normalized                                      (1,388)          (683)       (705)     (103.2)%
                                               ============= ============ ============= ============
Net loss per share Reported:
     Basic and diluted                             $(0.21)       $(0.71)       $0.50        70.4%
                                               ============= ============ ============= ============
  Normalized:
     Basic and diluted                             $(0.21)       $(0.11)      $(0.10)      (90.9)%
                                               ============= ============ ============= ============
<FN>
         Note:  Special  charges  for the first  quarter  of fiscal  1997  ended
December 31, 1996  represent  $4.0 million  pretax to streamline  operations and
provide valuation  reserves against  inventories,  receivables and fixed assets.
The charges were taken to reflect  historic  changes in existing product support
as well as anticipated changes due to future product development.
</FN>
</TABLE>
                                      -11-


<PAGE>

         The   following   table   presents  the  Company's   fiscal   Condensed
Consolidated  Interim  Statements  of  Operations  for the first nine  months of
fiscal 1998 and 1997 as a percentage of net sales, as reported and as normalized
to remove the effects of special  charges and credits  incurred during the first
quarter of fiscal 1997.


                                             Nine Months Ended
                                             -----------------
                                              June 30,   June 28,   Increase
                                                1998       1997    (Decrease)
                                                ----       ----    ----------
Net sales
     Reported                                  100.0%     100.0%       0.0%
     Normalized                                100.0%     100.0%       0.0%
Cost of sales
     Reported                                   45.5%      68.9%     (23.4)%
     Normalized                                 45.5%      49.5%      (4.0)%
                                           ---------------------------------
           Gross margin
             Reported                           54.5%      31.1%      23.4%
             Normalized                         54.5%      50.5%       4.0%
                                           ---------------------------------
Operating expenses:
     Research and development
        Reported                                23.4%      19.6%       3.8%
        Normalized                              23.4%      19.6%       3.8%
     Marketing and sales
        Reported                                36.7%      36.1%       0.6%
        Normalized                              36.7%      29.5%       7.2%
     General and administrative
        Reported                                 9.2%      12.6%      (3.4)%
        Normalized                               9.2%       7.5%       1.7%
                                           ---------------------------------
     Total operating expenses
        Reported                                69.3%      68.3%       1.0%
        Normalized                              69.3%      56.6%      12.7%
                                           ---------------------------------
Operating loss
     Reported                                  (14.8)%    (37.2)%     22.4%
     Normalized                                (14.8)%     (6.1)%     (8.7)%
Interest and other income,  net
     Reported                                    1.3%       0.9%       0.4%
     Normalized                                  1.3%       0.9%       0.4%
                                           ---------------------------------
Loss before provision for income taxes
     Reported                                  (13.5)%    (36.3)%     22.8%
     Normalized                                (13.5)%     (5.2)%     (8.3)
Provision for income taxes
     Reported                                    0.1 %        - %      0.1 %
     Normalized                                  0.1 %        - %      0.1 %
                                           ---------------------------------
Net loss
     Reported                                  (13.6)%    (36.3)%     22.8%
     Normalized                                (13.6)%     (5.2)%     (8.3)%
                                           =================================


         Note:  Special  charges  for the first  quarter  of fiscal  1997  ended
December 31, 1996  represent  $4.0 million  pretax to streamline  operations and
provide valuation  reserves against  inventories,  receivables and fixed assets.
The charges were taken to reflect  historic  changes in existing product support
as well as anticipated changes due to future product development.
                                      -12-
<PAGE>
         The following  discussion of results of operations  for the nine months
ended June 30, 1998 and June 28, 1997 is based upon normalized results,  without
inclusion of the above noted  special  charges and credits  incurred  during the
first quarter of fiscal 1997, which ended December 28, 1996.

         Net sales.  The  decrease in net sales  during the first nine months of
fiscal 1998 from levels for the same period in fiscal 1997 was  primarily due to
decreased sales in the video post production  marketplace.  International  sales
for the first nine months of fiscal 1998 and 1997 represented 46.5% and 43.5% of
net sales, respectively.

         The following table presents net sales dollar volume for the six months
ended June 30, 1998 and June 28, 1997 by market and related percentages of total
net sales (dollar amounts in thousands).

<TABLE>
<CAPTION>
                                                             Nine Months Ended
                                       --------------------------------------------------------------
                                              June 30, 1998                    June 28, 1997
                                              -------------                    -------------
             Marketplace                  Amount        Percent             Amount        Percent
             -----------                  ------        -------             ------        -------
<S>                                       <C>             <C>               <C>              <C>  
Production                                $5,633          55.0%             $5,686           44.0%
Post Production                            2,567          25.1%              5,422           42.0%
Broadcasting                               1,597          15.6%              1,454           11.3%
Other                                        437           4.3%                354            2.7%
                                       -----------------------------    -----------------------------
                                         $10,234         100.0%            $12,916          100.0%
                                       =============================    =============================
</TABLE>

         Cost of sales.  Normalized  gross margin  percentage for the first nine
months of fiscal 1998  increased  over levels for the same period in fiscal 1997
primarily  due to a  greater  portion  of higher  margin  ELSET  software  sales
included in the sales mix and increased margins on disk-based products partially
offset by increased manufacturing overhead variance.

         Research  and  development.  The  decrease in  normalized  research and
development  expenses  in the first  nine  months  of fiscal  1998 from the same
period  in fiscal  1997 was  primarily  due to  decreases  in  salary  expenses,
resulting  from  an  increased  proportion  of  lower  salaried  employees,  and
depreciation, resulting from an increase in fully depreciated assets.

         Marketing  and sales.  The decrease in  normalized  marketing and sales
expenses  in the first nine months of fiscal 1998 from the same period in fiscal
1997 is primarily due to decreases in salary expenses,  demonstration  equipment
refurbishment costs, and commission expenses partially offset by increased trade
show expenses,  depreciation  and expenses  relating to the marketing of virtual
sets.

         General and administrative.  General and administrative expenses in the
first nine months of fiscal 1998 were  essentially  comparable to levels for the
same period in fiscal 1997.

         Interest and other income,  net. The increase in net interest and other
income  during  the first  nine  months of fiscal  1998,  was  primarily  due to
increased average interest bearing cash and cash equivalent balances.

         Provision for income taxes. In the first nine months of fiscal 1998 and
1997, the Company was in a net operating loss carryforward position.
                                      -13-
<PAGE>
Liquidity and Capital Resources

         Since   inception,   the  Company  has  financed  its   operations  and
expenditures  for  property  and  equipment  through the sale of capital  stock,
borrowings  under a bank line of credit and term loans As of June 30, 1998,  the
Company had $4.2 million of cash and cash equivalents.

         Operating  activities  used  $507,000 in net cash during the first nine
months of fiscal  1998 and  provided  $1.7  million in net cash during the first
nine months of fiscal 1997. Net cash used by operations in the first nine months
of fiscal 1998 was due primarily to the net loss and an increase in  inventories
partially  offset by  decreases  in accounts  receivable  and income tax refunds
receivable.  Additional  net  cash  was  used in  investing  activities  for the
acquisition of property and equipment. The increase in cash and cash equivalents
in the first nine months of fiscal 1997 was  primarily  due to net cash provided
by  operations,   which  resulted   substantially  from  decreases  in  accounts
receivable and  inventories,  partially offset by the net loss and by a decrease
in accounts payable.

         The Company has no credit  facilities  available  as of June 30,  1998.
There are no bank borrowings outstanding.

         Based on current revenue levels, the Company believes that its existing
cash and cash equivalents  will be sufficient to meet its cash  requirements for
at least the next twelve months.  Although operating activities may provide cash
in certain periods, to the extent the Company grows in the future, its operating
and investing activities may use cash and, consequently, such growth may require
the Company to obtain additional sources of financing. There can be no assurance
that any  necessary  additional  financing  will be  available to the Company on
commercially reasonable terms, if at all.

New Accounting Guidelines

         In fiscal  1999,  the Company  will be  required to adopt newly  issued
accounting  guidelines  addressing the reporting of  comprehensive  income.  The
adoption is expected to have no  significant  impact on the Company's net income
or shareholders'  equity. The guidelines require any unrealized gains and losses
on available-for-sale  securities or foreign currency translation adjustments to
be  included  in  other  comprehensive  income.  Prior  to  adoption  of the new
guidelines,  such items are reported as a separate  component  of  stockholders'
equity.

         Also in fiscal 1999, the Company will be required to adopt newly issued
accounting   guidelines   addressing   disclosures  about  segment  and  related
information.  As the Company  operates in one  segment,  the adoption of the new
guidelines is not expected to have a significant impact on the Company's results
of operations, financial position, or disclosure of segment information.

         In October,  1997, the Accounting  Standards Executive Committee issued
Statement  of  Position  97-2 ("SOP  97-2"),  as  amended by SOP 98-4  "Software
Revenue  Recognition."  These statements  provide guidance on applying generally
accepted accounting  principles in recognizing revenue on software  transactions
and are  effective  for the Company's  transactions  entered into  subsequent to
October 1, 1998.

         The  Company is in the process of  assessing  the  implications  of the
implementation. Detailed implementation guidelines for these statements have not
yet been issued. Once issued, such detailed guidance could lead to unanticipated
changes in the Company's  current revenue practices and material adverse changes
in the Company's  reported  revenues and earnings.  In the event  implementation
guidance is contrary to the revenue accounting  practices,  the Company believes
it can change its current  business  practices  to comply with the  guidance and
avoid any material  adverse effect on reported  revenues and earnings.  However,
there can be no assurance this will be the case.
                                      -14-
<PAGE>
Additional Factors That May Affect Future Results

Accom desires to take  advantage of the "safe harbor"  provisions of the Private
Securities  Litigation Reform Act of 1995.  Specifically,  the Company wishes to
alert readers that certain important factors, as well as other factors, could in
the future affect,  and in the past have affected,  the Company's actual results
and could cause the  Company's  results  for future  years or quarters to differ
materially from those expressed in any forward looking  statements made by or on
behalf of the Company. A detailed  discussion of risk factors related to Accom's
business  is set forth in its  Annual  Report  on Form  10-K for the year  ended
September 30, 1997 under the heading  "Additional Factors That May Affect Future
Results."

In addition to the factors  discussed in the 10-K report,  the following factors
may also affect future results:

         Recent  Reduction in Sales. In the third quarter of fiscal 1998,  ended
June 30, 1998, the Company's  overall  revenues  declined by 32.2% from the same
period in fiscal 1997.  The Company  believes that this decline  resulted from a
decision by more than the usual  number of customers  to delay  purchases  until
after the transition path to new Digital Television (DTV) standards is clear. In
addition,  in the Company's production  marketplace,  it appeared customers took
longer than  anticipated to evaluate the Company's ELSET virtual set product and
the WSD 2Xtreme  digital disk recorder  product.  There can be no assurance that
these  customers  will  eventually  purchase the Company's  products or that the
Company's sales in these product areas will improve.

         Effects of  Economic  Conditions  in Asia.  In the first nine months of
fiscal  1998,  the  recent  economic  instability  in  certain  Asian  countries
contributed  to lower  revenue  results,  particularly  for the  Company's  core
(non-ELSET)  products.  Due to the continuing economic  instability in Asia, the
Company  believes  that lower  revenues from Asia are likely to continue for the
foreseeable  future,  which  could  adversely  affect  the  Company's  business,
financial condition, and operating results.


Item 3.  Quantitative and Qualitative Disclosures About Market Risks

         Not Applicable.
                                      -15-
<PAGE>
                           PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings

         None.


         Item 2.  Changes in Securities and Use of Proceeds

         None.


         Item 3.  Defaults Upon Senior Securities

         None.


         Item 4.  Submission of Matters to a Vote of Security Holders

         None.


         Item 5.  Other Information

                  On July 20, 1998, the Company's Common Stock was delisted from
                  the NASDAQ  National  Market  System.  The Common Stock is now
                  quoted on the OTC Bulletin Board.


         Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits.

                  11.1  Computation of net income (loss) per share

                  27.1  Financial Data Schedule (EDGAR filed version only)


         (b) Reports on Form 8-K.

                  None.
                                      -16-
<PAGE>
SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  Report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

         ACCOM, INC.



         By: /s/  Junaid Sheikh
             ---------------------
         Chairman, President and Chief Executive Officer



         Date:  August 12, 1998
                                      -17-