SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB

(Mark One)
X     Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the quarterly period ended February 28, 1997

      Transition report pursuant to Section 13 or 15(d) of the Exchange Act
   
For the transition period from           to 

Commission file number  1 - 14188
                                Surge Components, Inc.

  (Exact name of small business issuer as specified in its charter)

             New York                                 11-2602030
   (State or other jurisdiction of                  (I.R.S. Employer
   incorporation or organization)                   Identification No.)
   
1016 Grand Boulevard, Deer Park, NY 11729

(Issuers telephone number, including area code)
(516) 595 - 1818 
 
(Issuers telephone number, including area code)


        (Former name, former address and former fiscal year,
                 if changed since last report)

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

APPLICABLE ONLY TO ISSUERS  INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

   Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.

Yes          No 

APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuers classes of
common  equity, as of the latest practicable date:  As of March 31, 1997: 
4,823,958 shares of common stock, par value $.001 per share. 

   Transitional Small Business Disclosure Format (check one):

Yes      No    X

                SURGE COMPONENTS, INC. AND SUBSIDIARY

                       Index to Form 10-QSB
              for the Period Ended February 28, 1997



      PART I .  FINANCIAL INFORMATION
                                                        
      Item 1.  Financial Statements:

      Consolidated Balance Sheets                                   3 - 4
      
      Consolidated Statements of Income                                 5
      
      Consolidated Statements of Cash Flows                             6
      
      Notes to Consolidated Financial Statements                        7 
      
      
      Item 2.  Managements Discussion and Analysis or 
                Plan of Operation                                   8 - 10
      
      
      PART II.  OTHER INFORMATION
      
      Item 6.  Exhibits and Reports on Form 8-K                         11
      
      Signatures                                                        11      
      











                                             2

                           SURGE COMPONENTS, INC. AND SUBSIDIARY

                                CONSOLIDATED BALANCE SHEETS

                                                  




                   ASSETS 
                          
                                                     February 28,   November 30,
                                                       1 9 9 7        1 9 9 6
Current assets:
   Cash                                             $2,635,923   $3,241,360
   Marketable securities                             2,079,581    2,042,681
   Accounts receivable (net of allowance for 
     doubtful accounts of $9,206)                    1,079,354      899,851
   Inventory                                         1,381,995    1,332,644
   Prepaid expenses and taxes                           44,963       21,827
   Cash surrender value                                 16,473       16,472

       Total current assets                          7,238,289    7,554,835

Fixed assets - net of accumulated depreciation
   of  $119,931 and $107,114, respectively             161,316      169,777

Other assets:
  Security deposits                                      2,985        2,985

       Total assets                                 $7,402,590   $7,727,597








See accompanying notes to consolidated financial statements.


                                       3

                        SURGE COMPONENTS, INC. AND SUBSIDIARY

                              CONSOLIDATED BALANCE SHEETS
                                                  
                                                  

                   LIABILITIES AND STOCKHOLDERS' EQUITY

                                                   February 28,   November 30,
                                                      1 9 9 7        1 9 9  6

Current liabilities:
   Loan payable bank                             $   166,390       $   164,232
   Accounts payable                                  809,743           969,954
   Accrued expenses                                  103,709           220,792
   Corporation taxes payable                           1,050            61,762

      Total current liabilities                    1,080,892         1,416,740

Long term debt:
   Deferred income tax                                 5,038             4,488

      Total liabilities                            1,085,930         1,421,228

Stockholders' equity:
   Preferred stock - $.001 par value stock,
      1,000,000 shares authorized, none issued
      and outstanding                                     --                --
   Common stock - $.001 par value stock,
      25,000,000 shares authorized, 4,823,958 
      shares issued and outstanding respectively       4,824             4,824
   Additional paid-in capital                      6,335,862         6,335,862
   Unrealized holding gain                            37,811            35,751
   Retained deficit                                  (61,837)          (70,068)

      Total stockholders' equity                   6,316,660         6,306,369

      Total liabilities and stockholders' equity  $7,402,590        $7,727,597



See accompanying notes to consolidated financial statements.

                                        4

                        SURGE COMPONENTS, INC. AND SUBSIDIARY

                          CONSOLIDATED STATEMENTS OF INCOME

                                                   Three Months Ended
                                                February 28, February 29,
                                                   1 9 9 7     1 9 9 6
                                                                         
Sales                                            $2,137,379  $2,014,476
  Less returns and allowances                         7,767       8,586 

  Net sales                                       2,129,612   2,005,890

Cost of goods sold                                1,565,271   1,531,898 

Gross profit                                        564,341     473,992 

Operating expenses:
  General and administrative 
   Expenses                                         452,158     299,742
  Selling and shipping expenses                     146,945     117,136
  Interest expense                                   11,486      12,160
  Depreciation                                       13,766       4,425 

      Total operating expenses                      624,355     433,463 

Income from operations                              (60,014)     40,529

Investment income                                    71,100       8,776
  
Income  before income taxes                          11,086      49,305

Income taxes                                          2,855      12,743 

Net income                                      $     8,231  $   36,562 

Weighted average shares outstanding               4,872,926   3,011,733

Earnings per share                              $        --  $      .01




See accompanying notes to consolidated financial statements.



                                        5

                         SURGE COMPONENTS, INC. AND SUBSIDIARY

                         CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                       Three Months Ended   
                                                   February 28, February 29,
                                                     1 9 9 7       1 9 9 6
OPERATING ACTIVITIES:
    Net income                                      $     8,231 $   36,562
    Adjustments to reconcile net income to net 
    cash provided by operating activities:
        Depreciation                                     13,766      4,425
        Deferred income taxes                               550         32
CHANGES IN OPERATING ASSETS AND LIABILITIES:
    Accounts receivable                                (179,503)   (64,336)
    Inventory                                           (49,351)    16,981)
    Prepaid expenses and taxes                          (23,136)    (6,035)
    Accounts payable                                   (160,211)   (35,002)
    Accrued expenses and taxes                         (177,795)  (175,249)
    Customer deposit                                         --    (24,837)

NET CASH USED IN  OPERATING ACTIVITIES                 (567,449)  (281,421)

INVESTING ACTIVITIES
    Purchase of marketable securities                   (34,840)        --
    Acquisition of fixed assets                          (5,305)    (9,523)

NET CASH USED IN INVESTING ACTIVITIES                   (40,145)    (9,523)

FINANCING ACTIVITIES
    Deferred offering costs                                  --   (110,434)
    Net borrowings under  letter-of-credit agreement      2,157    206,123
    Proceeds from issuance of stock                         --     325,000

NET CASH PROVIDED BY FINANCING ACTIVITIES                 2,157    420,689
    
NET CHANGE IN CASH                                     (605,437)   129,745

CASH AT BEGINNING OF PERIOD                           3,241,360    679,995

CASH AT END OF PERIOD                                $2,635,923  $ 809,740

SUPPLEMENTAL CASH FLOW INFORMATION:
    Income taxes paid                                $   74,607  $   2,272
    Interest paid                                    $   11,486  $  12,160


See accompanying notes to consolidated financial statements.


                                         6

                        SURGE COMPONENTS, INC. AND SUBSIDIARY

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               February 28, 1997



NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

In the opinion of management, the accompanying financial statements of Surge
Components Inc. and Subsidiary contain all adjustments necessary to present 
fairly the Companys financial position as of February 28, 1997 and November 
30, 1996 and the results of operations and cash flows for the three months 
ended February 28,1997 and February 29,1996.

The accounting policies followed by the Company are set forth in Note 2 to the
Companys financial statements included in its Annual Report on Form 10-KSB, for
the year ended November 30, 1996.

The results of operations for the three months ended February 28, 1997 and 
February 29, 1996 are not necessarily indicative of the results to be expected 
for the full year.

NOTE 2  STOCK OPTION AGREEMENT

In January 1997, the Company granted five-year incentive stock options under 
the Companys 1995 Employee Stock Option Plan (the Option Plan) to two employees
to purchase 20,000 common shares each.  The options became effective on January
8, 1997, are exercisable at $3.50 per common share and vest ratably over a four 
year period.  The Company also granted nonqualified stock options under the 
Option Plan to purchase 10,000 common shares to each of two members of the 
Board of Directors. The options became effective on January 8, 1997 and are 
exercisable at $3.50 per common share at any time on or after January 8, 1997.

In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation.  The Company currently accounts for its stock-based compensation
plans using the accounting prescribed by Accounting Principles Board Opinion No
25 Accounting for Stock Issued to Employees.  Since the Company is not required
to adopt the fair value based recognition provisions prescribed under SFAS No.
123, it has elected only to comply with the disclosure requirements set forth 
in the statement which includes disclosing pro forma net income and earnings 
per share as if the fair value based method of accounting had been applied.  
The proforma net loss and loss per share for the quarter ended February 28, 
1997 would have been $66,468 and $.01 had the new method been applied.


                                        7

Item 2. Managements Discussion and Analysis or Plan of Operation

Results of Operations

      Net sales for Surge Components, Inc. and Subsidiary (the Company) for 
the three months ended February 28, 1997 increased by  $123,722 or 6%, to 
$2,129,612 as compared to net sales of $2,005,890 for the three months ended 
February 29, 1996.  This increase was attributable primarily to increased sales
volumes with existing customers who purchased newly introduced products, as 
well as existing Surge products which they had not previously purchased. The 
Company introduced various new product lines in the fourth quarter Fiscal 1996.
The Company negotiated with a new Asian manufacturer to market one of these 
product lines, which had patent protection until recently.  This new line 
protects the product from high intensity heat found in products such as, 
ballast lighting fixtures and automotive products.

      
      The Companys gross profit for the three months ended February 28, 1997
increased by $ 90,349, or 19%, as compared to the three months ended February 
29, 1996.  This increase was due primarily to lower purchasing costs and 
increased sales volumn. The increased inventory, related to the Companys 
expansion plans, is expected to make operations more efficient and further 
reduce inventory acquisition costs, including air shipment costs,  by 
purchasing inventory in larger quantities, at more opportune times and at more 
favorable prices.  The Company has used inventory warehousing and  shipping 
services from a California firm.  The Company plans to open additional 
warehousing facilities in the later part of 1997.

      General and administrative expenses for the three months ended February 
28, 1997 increased by $152,416, or 51%, as compared to the three months ended
February 29, 1996. The increase is primarily due to the hiring of additional 
staff such as an engineer, national sales manager, public relations firm, 
investment banking consulting fees and the general costs incurred by a public 
reporting company. In addition, the Companys investment in personnel is 
expected to significantly increase costs prior to the generation of increased 
sales attributable from such additional employees during the fiscal year ending
November 30, 1997 (Fiscal 1997) or later.

      Selling and shipping expenses for the  three months ended February 28, 
1997 increased by $29,809, or 25%, as compared to the three months ended 
February 29, 1996.  This increase is primarily due to increased commissions 
resulting from the increase in sales volume and increased participation of 
independent sales representatives which received commissions typically at a 
rate of 5% of net sales.  The Company is committed to increasing sales through 
qualified sales representatives, literature, participation in trade shows and 
utilization of a marketing/public relations firm.   

                                        8
      Interest expense remained relatively unchanged for the three months ended
February 28, 1997 and February 29, 1996.  The Company intends to continue
utilizing letters of credit and bankers acceptances on an as needed basis based
on its cash needs. 

      Investment income increased by $ 62,324 for the three months ended 
February 28, 1997 as compared to the three months ended February 29, 1996. 
This is a result from the income derived from the investment of any unused 
funds from the public offering or excess operation funds.

      As result of the foregoing, the Company had net income of $8,231 for the
three months ended February 28, 1997, as compared to a net income of $36,562 
for the three months ended February 29, 1996. 

Liquidity and Capital Resources

Working capital increased by $19,302 during the three months ended February 28,
1997 from $6,138,095 at November 30, 1996, to $6,157,397 at February 28, 1997.
This increase resulted primarily from the increase in accounts receivable 
netted against additional spending related to the Companys expansion plans. The
Companys Current Ratio improved to 6.7:1 at February 28, 1997, as compared to
5.3:1 at November 30, 1996. Inventory turned less in the three months ended
February 28,  1997 as a result of the Companys commitment to increase stock
inventory levels. The average number of days to collect receivables remained 
the same at 42 days.  Working capital levels are adequate to meet the current
operating requirements of the Company.
      
      In May 1996, the Company renewed the letter of credit agreement with a 
bank allowing the Company to obtain up to $800,000 in outstanding letters of 
credit and $200,000 in direct borrowings.  The direct borrowings incur interest
at a prime rate plus one percent per annum.  The agreement also provides for 
the creation of banker's acceptance (a draft drawn on and accepted by a bank).  
Direct borrowings are limited to advances based on 80% of eligible receivables 
and 25% of eligible inventory capped at $100,000.  The Company is charged 
one-half percent (1/2%) upon opening of the letter of credit, one-half percent 
(1/2%) on negotiation and two percent (2%) per annum over the banker's 
acceptance rate over the borrowed term.  The agreement requires the Company to 
be in compliance with certain financial ratios including a debt to equity ratio
and a minimum amount of tangible net worth.  The Company was in compliance 
with the required financial ratios as of February 28, 1997.  As of February 
28, 1997 and February 29, 1996, there was no outstanding direct borrowings, 
although outstanding banker's acceptances and letters of credit totaled 
approximately $207,406 and $621,529, respectively. Borrowings are 
collateralized by the assets of the Company and guaranteed by officers of the
Company.

The Company intends to expand its facilities over the next several years in 
order to achieve and maintain the growth expected primarily through the 
increased penetration  of the OEM and distribution market, the introduction


                                        9

of new products and the upgrade of existing product lines.  In order to effect
this expansion, the Company has allocated a portion of the net proceeds of the
Public Offering toward the significant up-front expenditures associated with the
expansion of office and warehouse space at its current facilities in addition 
to potentially establishing additional sales/stocking facilities in other 
strategic locations. The renovation of its current facilities is expected to 
commence in late 1997. Additionally, the renovation plans contain provisions 
for space for test labs, which will allow the Company to provide customers with
prompt information regarding the specifications and quality aspects of its 
products. 

      In addition to the costs associated with the expansion of the Company's
facilities, the Company expects to continue to incur significant operating 
costs. These costs consist principally of payroll and facilities related 
charges, as well as professional fees associated with being a public reporting 
company.  Upon the updating of its current facilities and the potential opening
of new facilities, facilities related charges are expected to rise 
dramatically. Staffing requirements for any new facilities may substantially 
increase payroll related costs.  The future profitability of the Company will 
therefore depend on increased future sales levels.  In that regard the Company 
does not plan on opening new facilities unless market potential and/or demand 
warrants such opening.

      Effective January 1, 1996, Challenge entered into an agreement to supply
audible transducers for computer motherboards to Intel Corporation.  The 
agreement is for one year with a one year renewal option; however, it is 
terminable at will by Intel Corporation.

      The Company is in the process of upgrading its equipment, procedures and
personnel which it hopes will better enable itself to attract new customers as
well as increase the sales volume with its existing customers. The Company 
hopes to expand  sales to its existing customer base by offering a broad range 
of complementary products. The Company has initiated a public relations program
to promote these products through various trade journals.  The Company has 
hired a national sales manager to assist in achieving these goals.

      During the three months ended February 28, 1997, the Company had net cash
used in operating activities of $567,449, as compared to $281,421 used in
operating activities in the three months ended February 29, 1996.  The increase
in cash used in operating activities resulted from an increase in accounts
receivable and inventory and decreased accounts payable and accrued expenses 
and taxes.

      During the three months ended February 28, 1997, The Company had net cash
provided by financial activities of $2,157 as compared with $420,689 in the 
three months ended February 29, 1996.  The decrease in the cash provided by
financing activities was the result of the proceeds from the issuance of stock 
and net borrowings under the letter-of-credit agreement during the first 
quarter of 1996.  As a result of the forgoing, the Company had a net decrease 
in cash of $605,437 during the three months ended February 28, 1997 as compared
to an increase in cash of $129,745 during the three months ended February 29, 
1996.

                                       10



PART II


Item 6.      Exhibits and Reports on Form 8-K

             (a)   Exhibits.

Exhibit No.        Description

11.1         Statement re:  Computation of per share earnings.

27.          Statement re:  Financial Data Schedule

             (b)   No Reports on Form 8-K were filed during the quarter
             for which this report is filed.


SIGNATURES

   
      In accordance with the requirements of the Securities Exchange Act of
   1934, the registrant caused this report to be signed on its behalf by the
   undersigned, thereunto duly authorized.
   
                                             SURGE COMPONENTS, INC.
   
   
   
                                        By:   /s/ Steven J Lubman       
                                             Steven J. Lubman
                                             Vice President, Principal
                                             Financial Officer, Secretary and
                                             Director
   
   
   
   Dated:  April 10, 1997
   
   





                                       11
                      
                      SURGE COMPONENTS, INC. AND SUBSIDIARY
                                           
                                  EXHIBIT II

                     COMPUTATION OF EARNINGS PER COMMON SHARE


                                                                             
                                                         Three Months Ended
                                                      February 28,  February 29,
                                                       1 9 9 7       1 9 9 6

Net income                                         $     8,231    $    36,562

Shares:
Weighted common shares outstanding                   4,823,958      2,049,233
Employees stock options                                 48,968             --
Options to The Harriman Group                               --        962,500
A warrants                                                  --             --
Underwriter options                                         --             --

Total weighted shares outstanding                    4,872,926      3,011,733

Earnings per share                                 $        --    $       .01