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

                                    FORM 10-Q

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

                  For the quarterly period ended July 31, 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 0-27022

                            OPTICAL CABLE CORPORATION
             (Exact name of registrant as specified in its charter)

                  VIRGINIA                                      54-1237042
(State or other jurisdiction of incorporation                (I.R.S. Employer
           or organization)                                  Identification No.)


                              5290 CONCOURSE DRIVE
                             ROANOKE, VIRGINIA 24019
          (Address of principal executive offices, including zip code)

                                 (540) 265-0690
              (Registrant's telephone number, including area code)

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

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

       As of September 8, 1998,  38,018,636  shares of the  registrant's  Common
Stock, no par value, were outstanding.  Of these outstanding shares,  36,000,000
shares were held by Robert Kopstein,  Chairman of the Board, President and Chief
Executive Officer of the registrant.
<PAGE>
                           OPTICAL CABLE CORPORATION
                                Form 10-Q Index
                        Nine Months Ended July 31, 1998
                                                                            PAGE
                                                                            ----
PART I.  FINANCIAL INFORMATION

         ITEM 1.    FINANCIAL STATEMENTS

                    Condensed Balance Sheets - July 31, 1998 and
                      October 31, 1997........................................2

                    Condensed Statements of Income - Three Months
                      and Nine Months Ended July 31, 1998 and 1997............3

                    Condensed Statement of Changes in Stockholders'
                      Equity - Nine Months Ended July 31, 1998................4

                    Condensed Statements of Cash Flows - Nine Months
                      Ended July 31, 1998 and 1997............................5

                    Condensed Notes to Condensed Financial Statements.......6-8

         ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
                      OF OPERATIONS AND FINANCIAL CONDITION................9-13

PART II. OTHER INFORMATION

         ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K..........................14

SIGNATURES....................................................................15

INDEX TO EXHIBITS.............................................................16

<PAGE>



                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                            OPTICAL CABLE CORPORATION
                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          JULY 31,        OCTOBER 31,
                             ASSETS                                         1998             1997
                                                                            ----             ----
<S>                                                                   <C>                <C>           
Current assets:
     Cash and cash equivalents                                        $       396,092    $      985,807
     Trade accounts receivable, net of allowance for doubtful
        accounts of $325,000 at July 31, 1998 and $307,400
        at October 31, 1997                                                10,737,743         9,931,276
     Other receivables                                                        156,803           540,102
     Due from employees                                                         6,139             3,534
     Inventories                                                           12,021,517        12,019,443
     Prepaid expenses                                                         153,455           121,046
     Deferred income taxes                                                    218,626            81,484
                                                                      ---------------   ---------------
            Total current assets                                           23,690,375        23,682,692

Other assets, net                                                              38,200            50,953
Property and equipment, net                                                11,252,311        11,480,433
                                                                      ---------------   ---------------
            Total assets                                              $    34,980,886   $    35,214,078
                                                                      ===============   ===============
            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Notes payable                                                    $       405,000   $             -
     Accounts payable and accrued expenses                                  3,219,070         2,593,256
     Accrued compensation and payroll taxes                                   553,896           612,736
     Income taxes payable                                                     334,549           564,999
                                                                      ---------------   ---------------
            Total current liabilities                                       4,512,515         3,770,991
Deferred income taxes                                                         150,071            64,382
                                                                      ---------------   ---------------
            Total liabilities                                               4,662,586         3,835,373
                                                                      ---------------   ---------------
Stockholders' equity:
     Preferred stock, no par value, authorized 1,000,000 shares;
        none issued and outstanding                                                 -                 -
     Common stock; no par value, authorized 100,000,000 shares;
        issued and outstanding 38,104,936 shares at July 31,
        1998 and 38,675,416 shares at October 31, 1997                     12,006,917        18,594,116
     Retained earnings                                                     18,311,383        12,784,589
                                                                      ---------------   ---------------
            Total stockholders' equity                                     30,318,300        31,378,705
Commitments and contingencies
                                                                      ---------------   ---------------
            Total liabilities and stockholders' equity                $    34,980,886   $    35,214,078
                                                                      ===============   ===============
                                                                               
</TABLE>
      See accompanying condensed notes to condensed financial statements.

                                       2
<PAGE>


                            OPTICAL CABLE CORPORATION
                         CONDENSED STATEMENTS OF INCOME
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED           NINE MONTHS ENDED
                                                                  JULY 31,                    JULY 31,
                                                       -----------------------------   --------------------------
                                                           1998         1997              1998           1997
                                                           ----         ----              ----           ----

<S>                                                   <C>            <C>          <C>              <C>       
Net sales                                             $  13,727,433  $14,285,834     $  37,289,648  $ 37,422,716
Cost of goods sold                                        8,056,752    8,669,025        21,473,444    22,161,654
                                                      -------------  -----------     -------------  ------------
        Gross profit                                      5,670,681    5,616,809        15,816,204    15,261,062

Selling, general and administrative expenses              2,602,800    2,516,972         7,330,234     6,914,034
                                                      -------------  -----------     -------------  ------------
        Income from operations                            3,067,881    3,099,837         8,485,970     8,347,028

Other income (expense):
    Interest income                                           6,185        4,313            46,749        13,382
    Interest expense                                           (122)      (1,078)             (317)      (12,176)
    Other, net                                               (1,167)        (227)           (4,311)       (5,713)
                                                      -------------  -----------      -------------  ------------
        Other income (expense), net                           4,896        3,008            42,121        (4,507)
                                                      -------------  -----------      -------------  ------------
        Income before income tax expense                  3,072,777    3,102,845         8,528,091     8,342,521

Income tax expense                                        1,081,403    1,086,162         3,001,297     2,932,954
                                                      -------------  -----------      -------------  ------------
        Net income                                    $   1,991,374  $ 2,016,683     $   5,526,794  $  5,409,567
                                                      =============  ===========      =============  ============
Earnings per share (note 5):
    Earnings per common share                         $       0.052  $     0.052     $       0.144  $      0.140
                                                      =============  ===========      =============  ============
    Earnings per common share -
        assuming dilution                             $       0.052   $    0.052     $       0.143   $     0.139
                                                      =============  ===========      =============  ============
</TABLE>

       See accompanying condensed notes to condensed financial statements.


                                       3
<PAGE>



                            OPTICAL CABLE CORPORATION
             CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                        NINE MONTHS ENDED JULY 31, 1998
                                    --------------------------------------------------------------------
                                             Common Stock                                     Total
                                    -------------------------------       Retained         Stockholders'
                                      Shares             Amount           Earnings            Equity
                                      ------             ------           --------            ------

<S>                                  <C>           <C>               <C>                <C>           
Balances at October 31, 1997          38,675,416    $   18,594,116    $    12,784,589    $   31,378,705

Net income                                     -                 -          5,526,794         5,526,794
Repurchase of common stock              (648,330)       (6,781,824)                 -        (6,781,824)
Stock options exercised                   77,850           194,625                  -           194,625
                                      ----------    --------------    ---------------    --------------
Balances at July 31, 1998             38,104,936    $   12,006,917    $    18,311,383    $   30,318,300
                                      ==========    ==============    ===============    ==============
</TABLE>



       See accompanying condensed notes to condensed financial statements.


                                       4
<PAGE>



                            OPTICAL CABLE CORPORATION
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                NINE MONTHS ENDED
                                                                                      JULY 31,
                                                                           -----------------------------
                                                                               1998            1997
                                                                               ----            ----
<S>                                                                      <C>               <C>         
Cash flows from operating activities:
     Net income                                                          $    5,526,794    $  5,409,567
     Adjustments to reconcile net income to net cash provided by
        operating activities:
            Depreciation and amortization                                       576,989         532,200
            Bad debt expense                                                     45,402           4,868
            Deferred income taxes                                               (51,453)        (18,512)
            (Increase) decrease in:
               Trade accounts receivable                                       (851,869)       (967,040)
               Other receivables                                                383,299         (61,095)
               Due from employees                                                (2,605)         (3,200)
               Inventories                                                       (2,074)     (1,869,803)
               Prepaid expenses                                                 (32,409)        (64,693)
            Increase (decrease) in:
               Accounts payable and accrued expenses                            852,204        (806,478)
               Accrued compensation and payroll taxes                           (58,840)        (72,261)
               Income taxes payable                                            (230,450)        183,720
                                                                         --------------    ------------
                    Net cash provided by operating activities                 6,154,988       2,267,273
                                                                         --------------    ------------
Cash flows from investing activities:
     Purchase of property and equipment                                        (562,504)     (3,427,458)
                                                                         --------------    ------------
                    Net cash used in investing activities                      (562,504)     (3,427,458)
                                                                         --------------    ------------
Cash flows from financing activities:
     Net change in notes payable                                                405,000        (182,000)
     Repurchase of common stock                                              (6,781,824)              -
     Proceeds from exercise of stock options                                    194,625               -
                                                                         --------------    ------------
                    Net cash used in financing activities                    (6,182,199)       (182,000)
                                                                         --------------    ------------
Net decrease in cash and cash equivalents                                      (589,715)     (1,342,185)

Cash and cash equivalents at beginning of period                                985,807       1,677,739
                                                                         --------------    ------------

Cash and cash equivalents at end of period                               $      396,092    $    335,554
                                                                         ==============    ============
</TABLE>

       See accompanying condensed notes to condensed financial statements.


                                       5
<PAGE>
                           OPTICAL CABLE CORPORATION
                CONDENSED NOTES TO CONDENSED FINANCIAL STATEMENTS
                         NINE MONTHS ENDED JULY 31, 1998
                                   (Unaudited)

(1)      GENERAL

         The accompanying  unaudited  condensed  financial  statements have been
         prepared in accordance with generally  accepted  accounting  principles
         for interim  financial  reporting  information and the  instructions to
         Form 10-Q and Article 10 of Regulation  S-X.  Accordingly,  they do not
         include all of the information and notes required by generally accepted
         accounting principles for complete financial statements. In the opinion
         of management, all material adjustments (consisting of normal recurring
         accruals)  considered  necessary  for a  fair  presentation  have  been
         included. Operating results for the nine months ended July 31, 1998 are
         not necessarily  indicative of the results that may be expected for the
         fiscal year ending October 31, 1998. The unaudited  condensed financial
         statements and condensed  notes are presented as permitted by Form 10-Q
         and do not contain certain information included in the Company's annual
         financial statements and notes. For further  information,  refer to the
         financial statements and notes thereto included in the Company's annual
         report on Form 10-K for the fiscal year ended October 31, 1997.

(2)      INVENTORIES

         Inventories  at July 31,  1998 and  October  31,  1997  consist  of the
         following:

<TABLE>
<CAPTION>
                                                       JULY 31,           OCTOBER 31,
                                                         1998                 1997
                                                         ----                 ----
<S>                                                <C>                 <C>             
         Finished goods                            $     4,000,307     $      4,854,697
         Work in process                                 2,194,230            1,976,970
         Raw materials                                   5,775,498            5,125,044
         Production supplies                                51,482               62,732
                                                   ---------------     ----------------
                                                   $    12,021,517     $     12,019,443
                                                   ===============     ================
</TABLE>
         
(3)      NOTES PAYABLE

         On  February  25,  1998,  the  Company  and its  bank  executed  a loan
         commitment letter,  which renewed its $5 million secured revolving line
         of credit available for general corporate  purposes and its $10 million
         secured line of credit to fund potential acquisitions, mergers or joint
         ventures.  The lines of credit bear  interest at 1.50 percent above the
         monthly LIBOR rate and are equally

                                                                     (CONTINUED)


                                       6

<PAGE>
                            OPTICAL CABLE CORPORATION
                CONDENSED NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

(3)      (CONTINUED)

         and ratably  secured by the  Company's  accounts  receivable,  contract
         rights, inventory,  furniture and fixtures, machinery and equipment and
         general  intangibles.  The lines of credit will expire on February  28,
         1999, unless renewed or extended.

(4)      STOCKHOLDERS' EQUITY

         The Company's Board of Directors has authorized the repurchase of up to
         $10  million of the  Company's  common  stock in the open  market or in
         privately  negotiated  transactions.  During the nine months ended July
         31, 1998,  the Company  repurchased  648,330 shares of its common stock
         for $6,781,824.

         Subsequent to July 31, 1998 and through  September 8, 1998, the Company
         repurchased  86,300 additional shares of its common stock in connection
         with its share repurchase program.

         On March 10, 1998, the Company's  stockholders approved an amendment to
         the Company's articles of incorporation to increase the total number of
         authorized  shares of common  stock of the Company from  50,000,000  to
         100,000,000.

(5)      EARNINGS PER SHARE

         In February  1997,  the  Financial  Accounting  Standards  Board issued
         Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE
         (SFAS No. 128).  SFAS No. 128  establishes  new standards for computing
         and  presenting  earnings per share (EPS) and applies to entities  with
         publicly held common stock or potential  common stock.  It replaces the
         presentation  of primary EPS with a presentation  of basic EPS. It also
         requires dual  presentation of basic and diluted EPS on the face of the
         income  statement for all entities with complex capital  structures and
         requires a reconciliation of the numerator and denominator of the basic
         EPS  computation  to the numerator and  denominator  of the diluted EPS
         computation.

         Basic  EPS  excludes  dilution  and  is  computed  by  dividing  income
         available  to common  stockholders  by the  weighted-average  number of
         common  shares  outstanding  for the period.  Diluted EPS  reflects the
         potential dilution that could occur if securities or other contracts to
         issue  common stock were  exercised  or converted  into common stock or
         resulted  in the  issuance  of common  stock  that  then  shared in the
         earnings of the entity.

                                                                     (CONTINUED)


                                       7

<PAGE>
                         OPTICAL CABLE CORPORATION
                CONDENSED NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

(5)      (CONTINUED)

         SFAS No. 128 was  required  to be adopted by the Company at January 31,
         1998. SFAS No. 128 also requires  restatement of all  prior-period  EPS
         data previously  presented.  The following is a  reconciliation  of the
         numerators and  denominators of the basic and diluted EPS  computations
         for the periods presented:


<TABLE>
<CAPTION>
                                                          Net Income          Shares            Per Share
THREE MONTHS ENDED JULY 31, 1998                         (Numerator)       (Denominator)         Amount
--------------------------------                         -------------     -------------       ------------
<S>                                                   <C>                    <C>             <C>              
Earnings per common share                             $     1,991,374        38,208,593      $           0.052
                                                                                             =================
Effect of dilutive stock options                                    -           258,690
                                                      ---------------        ----------
Earnings per common share - assuming dilution         $     1,991,374        38,467,283      $           0.052
                                                      ===============        ==========      =================

THREE MONTHS ENDED JULY 31, 1997
--------------------------------
Earnings per common share                             $     2,016,683        38,675,416     $           0.052
                                                                                             =================
Effect of dilutive stock options                                    -           327,234
                                                      ---------------        ----------
Earnings per common share - assuming dilution         $     2,016,683        39,002,650      $           0.052
                                                      ===============        ==========      =================

NINE MONTHS ENDED JULY 31, 1998
--------------------------------
Earnings per common share                             $     5,526,794        38,388,822      $           0.144
                                                                                             =================
Effect of dilutive stock options                                    -           289,737
                                                      ---------------        ----------
Earnings per common share - assuming dilution         $     5,526,794        38,678,559      $           0.143
                                                      ===============        ==========      =================

NINE MONTHS ENDED JULY 31, 1997
--------------------------------
Earnings per common share                             $     5,409,567        38,675,416      $           0.140
                                                                                             =================
Effect of dilutive stock options                                    -           357,792
                                                      ---------------        ----------
Earnings per common share - assuming dilution         $     5,409,567        39,033,208      $           0.139
                                                      ===============        ==========      =================
</TABLE>

         Stock  options  that could  potentially  dilute basic EPS in the future
         that were not included in the  computation of diluted EPS because to do
         so would have been  antidilutive  totaled  229,500 for the three months
         and nine months ended July 31, 1998.




                                       8

<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

THREE MONTHS ENDED JULY 31, 1998 AND 1997

Net Sales

Net sales  consists  of gross sales of  products,  less  discounts,  refunds and
returns.  Net sales decreased 3.9 percent to $13.7 million in third quarter 1998
from $14.3  million for the same period in 1997.  This  decrease  was  primarily
attributable to weather  conditions and delays in large  projects,  as well as a
reallocation  of  capital   spending  by  the  Company's   customers  away  from
communications expenditures towards Year 2000 projects.

Gross Profit Margin

Cost of goods sold  consists of the cost of  materials,  compensation  costs and
overhead related to the Company's manufacturing operations.  The Company's gross
profit  margin  (gross  profit as a percentage  of net sales)  increased to 41.3
percent in third  quarter 1998 from 39.3  percent in third  quarter  1997.  This
increase was due to reduced raw fiber prices, the Company's product mix sold and
the ratio of net sales  attributable  to the Company's  distributors  during the
period.   During  third  quarter  1998,   sales  from  orders  $50,000  or  more
approximated  18 percent  compared  to 21 percent  for third  quarter  1997.  In
addition,  during third quarter 1998, net sales to distributors  approximated 64
percent versus 51 percent for the same period in 1997. Discounts on large orders
and on  sales to  distributors  are  generally  greater  than  for  sales to the
Company's other customer base.

Selling, General and Administrative Expenses

Selling,  general and administrative  expenses consist of the compensation costs
(including  sales  commissions)  for  sales  and  marketing  personnel,   travel
expenses,  customer  support  expenses,  trade show expenses,  advertising,  the
compensation cost for administration,  finance and general management personnel,
as well as legal  and  accounting  fees.  Selling,  general  and  administrative
expenses as a percentage  of net sales were 19.0  percent in third  quarter 1998
compared to 17.6  percent in third  quarter  1997.  This higher  percentage  was
primarily the result of the fact that net sales for third quarter 1998 decreased
3.9  percent  compared  to  third  quarter  1997,  while  selling,  general  and
administrative expenses increased 3.4 percent.

Income Before Income Tax Expense

Income before income tax expense of $3.1 million for the three months ended July
31,  1998 was  comparable  to the three  months  ended July 31,  1997.  This was
primarily  due to the  increased  gross profit  margin,  offset by decreased net
sales and increased selling, general and administrative expenses.

Income Tax Expense

Income tax expense of $1.1  million for the three months ended July 31, 1998 was
comparable to the same period in 1997. The Company's effective tax rate was 35.2
percent during the three months ended July 31, 1998 compared to 35.0 percent for
the same period in 1997.
                                        9

<PAGE>
Net Income

Net income for third  quarter 1998 of $2.0 million was  comparable  to the third
quarter 1997.

NINE MONTHS ENDED JULY 31, 1998 AND 1997

Net Sales

Net sales  consists  of gross sales of  products,  less  discounts,  refunds and
returns. Net sales decreased slightly to $37.3 million for the nine months ended
July 31,  1998 from  $37.4  million  for the same  period in 1997.  This  slight
decrease  was  attributable  to the 3.9  percent  decrease in net sales in third
quarter 1998 compared to the same period in 1997 as described above, and the 4.9
percent  decrease  in net  sales  in  first  quarter  1998  attributable  to the
completion  of shipments  for a large  international  military  project in first
quarter 1997 and the delay of large  potential  orders in first quarter 1998 due
to adverse weather conditions or economic uncertainty, offset by the 9.8 percent
increase in net sales in second quarter 1998 compared to the same period in 1997
attributable to an increase of approximately  22 percent in international  sales
over the second quarter of 1997.

Gross Profit Margin

Cost of goods sold  consists of the cost of  materials,  compensation  costs and
overhead related to the Company's manufacturing operations.  The Company's gross
profit  margin  (gross  profit as a percentage  of net sales)  increased to 42.4
percent for the nine months  ended July 31, 1998 from 40.8  percent for the nine
months ended July 31, 1997.  This  increase was due to reduced raw fiber prices,
the Company's  product mix sold and the ratio of net sales  attributable  to the
Company's  distributors during the period. During the nine months ended July 31,
1998,  sales from orders $50,000 or more  approximated 18 percent compared to 21
percent for the nine  months  ended July 31,  1997.  In  addition,  for the nine
months ended July 31, 1998, net sales to  distributors  approximated  57 percent
which was  comparable to the same period in 1997.  Discounts on large orders and
on sales to distributors  are generally  greater than for sales to the Company's
other customer base.

Selling, General and Administrative Expenses

Selling,  general and administrative  expenses consist of the compensation costs
(including  sales  commissions)  for  sales  and  marketing  personnel,   travel
expenses,  customer  support  expenses,  trade show expenses,  advertising,  the
compensation cost for administration,  finance and general management personnel,
as well as legal  and  accounting  fees.  Selling,  general  and  administrative
expenses  as a  percentage  of net sales were 19.7  percent  for the nine months
ended July 31, 1998  compared to 18.5 percent for the nine months ended July 31,
1997. This higher percentage was primarily the result of the fact that net sales
for the nine months ended July 31, 1998 decreased  slightly compared to the same
period in 1997, while selling, general and administrative expenses increased 6.0
percent due to increased selling efforts.

Income Before Income Tax Expense

Income before  income tax expense  increased 2.2 percent to $8.5 million for the
nine  months  ended July 31, 1998  compared to $8.3  million for the nine months
ended July 31,  1997.  This was  primarily  due to the  increased  gross  profit
margin, offset by increased selling, general and administrative expenses.

                                       10
<PAGE>
Income Tax Expense

Income tax expense  increased  2.3  percent to $3.0  million for the nine months
ended July 31, 1998  compared to $2.9 million for the same period in 1997 due to
the increase in income  before income tax expense.  The Company's  effective tax
rate was 35.2 percent during both the nine months ended July 31, 1998 and 1997.

Net Income

Net income for the nine months ended July 31, 1998 was $5.5 million  compared to
$5.4  million for the nine months  ended July 31,  1997.  Despite an increase in
income tax expense of $68,000, net income increased $117,000 due to the $185,000
increase in income before income tax expense.

FINANCIAL CONDITION

Total assets at July 31, 1998 were $35.0 million, a decrease of $233,000, or 0.7
percent from October 31, 1997. This decrease was primarily due to an increase of
$806,000 in trade  accounts  receivable,  offset by  decreases  in cash and cash
equivalents of $590,000 and other receivables of $383,000.

Total  stockholders'  equity at July 31, 1998  decreased  $1.1  million,  or 3.4
percent from October 31, 1997 with net income retained, offset by the repurchase
of common stock in the amount of $6.8 million accounting for the decrease.

LIQUIDITY AND CAPITAL RESOURCES

During  the first  nine  months of fiscal  years  1998 and 1997,  the  Company's
primary capital needs have been to fund working capital requirements and capital
expenditures as needed.  The Company's primary source of financing has been cash
provided from  operations.  The Company  maintains  bank lines of credit and had
$405,000  outstanding  under one of the lines as of the end of the third quarter
of fiscal year 1998.  There were no balances  outstanding  under the lines as of
the end of fiscal year 1997.

On  February  25,  1998,  the Company  and its bank  executed a loan  commitment
letter,  which renewed its $5 million secured revolving line of credit available
for general  corporate  purposes  and its $10 million  secured line of credit to
fund potential acquisitions,  mergers or joint ventures. The lines of credit are
equally and  ratably  secured by the  Company's  accounts  receivable,  contract
rights, inventory,  furniture and fixtures,  machinery and equipment and general
intangibles.  The lines of credit  will  expire on  February  28,  1999,  unless
renewed or  extended.  As of the date  hereof,  the  Company  has no  additional
material  sources of  financing.  The Company  believes  that its cash flow from
operations and available lines of credit will be adequate to fund its operations
for at least the next twelve months.

On October 29, 1997, the Company's Board of Directors  authorized the repurchase
of up to $5  million  of the  Company's  common  stock in the open  market or in
privately  negotiated  transactions.  On April 7, 1998,  the Company's  Board of
Directors  expanded the Company's  share  repurchase  program by authorizing the
repurchase of an aggregate of up to $10 million of the  Company's  common stock.
Through July 31, 1998, the Company has repurchased approximately $6.8 million of
the Company's common stock.  The repurchases were funded primarily  through cash
flows from  operating  activities.  The  Company  intends to use excess  working
capital  and other  sources  as  appropriate  to  finance  the  remaining  share
repurchase program.

                                       11
<PAGE>
Cash flows from operations were  approximately $6.2 million and $2.3 million for
the nine  months  ended July 31,  1998 and 1997,  respectively.  Cash flows from
operations  for the nine months ended July 31, 1998 were  primarily  provided by
operating  income and an increase in  accounts  payable and accrued  expenses of
$852,000,  offset by an increase in trade  accounts  receivable  of $852,000 and
income taxes paid of $3.3 million. For the nine months ended July 31, 1997, cash
flows from operations were primarily provided by operating income,  offset by an
increase in trade accounts  receivable of $967,000,  an increase in inventory of
$1.9 million,  a decrease in accounts  payable and accrued  expenses of $806,000
and income taxes paid of $2.8 million.

Net cash used in investing activities was for expenditures related to facilities
and  equipment  and was $563,000 and $3.4 million for the nine months ended July
31, 1998 and 1997,  respectively.  The Company's  expansion of its  headquarters
facilities  was  substantially  completed as of January 31, 1997. As of July 31,
1998, there were no material commitments for additional capital expenditures.

Net cash used in financing activities was $6.2 million and $182,000 for the nine
months  ended  July  31,  1998 and  1997,  respectively.  The net  cash  used in
financing   activities  for  the  nine  months  ended  July  31,  1998  included
approximately  $6.8 million  related to the  Company's  common stock  repurchase
program,  offset by  proceeds  from  exercise of stock  options of $195,000  and
borrowings under the Company's line of credit of $405,000.  The net cash used in
financing  activities  for the nine  months  ended July 31,  1997  consisted  of
repayment of debt outstanding under the Company's line of credit of $182,000.

DERIVATIVES

The Company does not use derivatives or off-balance  sheet  instruments  such as
future contracts, forward obligations, interest rate swaps, or option contracts.

YEAR 2000

The "Year 2000" problem will affect many computers and other electronic  devices
that are not  programmed  to  properly  recognize  a year that  begins with "20"
instead of "19." Some devices may recognize dates on or after January 1, 2000 as
a date during the 1900s, or may not recognize the date at all. If not corrected,
many devices could fail or create erroneous results.

Since 1997, the Company has been actively assessing,  planning and responding to
the risks to the Company  created by the Year 2000  problem.  In  assessing  the
risks, the Company has focused on both (i) its internal  information  technology
("IT") and non-IT systems,  including, but not limited to, computer hardware and
software,  manufacturing  equipment,  printers,  facsimile  machines,  and other
control and accounting devices,  and (ii) its interfaces with third parties with
which the Company has material relationships,  such as suppliers,  customers and
financial institutions.

The Company has completed its assessment  and response  planning with respect to
its internal IT and non-IT systems.  Additionally, the Company has substantially
completed necessary remediation measures with respect to those internal systems.
The Company's  remediation has included  updating various computer  hardware and
software and printers to be Year 2000 compliant. The Company has also determined
that the Year  2000  problem  will not have a  material  adverse  affect  on its
manufacturing machinery. To date, the Company has expended less than $100,000 on
its  remediation  measures and believes  future  remediation  expenditures  with
respect to its  internal  systems to be less than  $50,000.  With respect to the
Company's  internal  systems,  the Company believes it will complete its planned
remediation  and any  testing in time to ensure the Year 2000  problem  will not
have a material adverse affect on the Company or its business.  The Company does
not believe  contingency  plans are necessary  for its internal  systems at this
time.

                                       12
<PAGE>
The Company is still in the process of  assessing,  planning and  responding  to
potential  Year 2000 problems  which may arise from failures of third parties to
be Year  2000  compliant.  To date,  the  Company  has sent  questionnaires  and
reviewed responses from some of its major suppliers. At present, the Company has
not been made aware of any Year 2000 issues of third  parties  that are expected
to have a material adverse effect on the Company.  The process of evaluating the
Company's  third  party risk is  expected  to be  ongoing  and at this point the
Company  cannot  determine  the level of Year 2000 risk  associated  with  third
parties.

The Company is still in the process of  evaluating  the  potential  effects of a
worst-case scenario.  While the Company believes that it is taking the necessary
steps to  resolve  its Year  2000  issues  in a timely  manner,  there can be no
assurance  that the Company  will not have any Year 2000  problems.  If any such
problems occur,  the Company will work to solve them as quickly as possible.  At
present, the Company does not expect that such problems related to the Company's
internal  IT and  non-IT  systems  will have a  material  adverse  affect on its
business. The failure, however, of one or more of the Company's major suppliers,
customers  or  financial  institutions  to be Year 2000  compliant  could have a
material adverse effect on the Company.

NEW ACCOUNTING STANDARDS

There have been no accounting pronouncements issued during the period that would
have a material  effect on the  financial  position,  results of  operations  or
liquidity of the Company.

FORWARD-LOOKING INFORMATION

This Form 10-Q may  contain  certain  "forward-looking"  information  within the
meaning of the federal  securities  laws. The  forward-looking  information  may
include,  among other  information,  (i)  statements  concerning  the  Company's
outlook  for  the  future,  (ii)  statements  of  belief,  (iii)  future  plans,
strategies or anticipated  events,  and (iv) similar  information and statements
concerning   matters  that  are  not  historical  facts.  Such   forward-looking
information is subject to risks and  uncertainties  that may cause actual events
to differ  materially from the  expectations of the Company.  Factors that could
cause or contribute  to such  differences  include,  but are not limited to, the
level of sales to key customers,  actions by  competitors,  fluctuations  in the
price of raw materials  (including optical fiber), the Company's dependence on a
single  manufacturing  facility,  the  ability of the  Company  to  protect  its
proprietary  manufacturing  technology,  the  Company's  dependence on a limited
number of suppliers,  technological  changes and  introductions of new competing
products,  and market and economic conditions in the areas of the world in which
the Company operates or markets its products.

                                       13
<PAGE>
                           PART II. OTHER INFORMATION

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            (a)   Exhibits required by Item 601 of Regulation S-K for the nine
                  months ended July 31, 1998.

                   Exhibit No.             Description
                   -----------             -----------

                     10.9            Optical Cable Corporation
                                     Employee Stock Purchase Plan

                      27             Financial Data Schedule

            (b) Reports on Form 8-K filed during the three months ended July 31,
                1998.

                  None.








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<PAGE>
                                   SIGNATURES

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.

                                   OPTICAL CABLE CORPORATION
                                          (Registrant)


Date:  September 10, 1998          /s/Robert Kopstein
                                   ---------------------------------------
                                   Robert Kopstein
                                   Chairman of the Board, President and
                                   Chief Executive Officer





Date:  September 10, 1998          /s/Kenneth W. Harber
                                   ---------------------------------------
                                   Kenneth W. Harber
                                   Vice President of Finance, Treasurer
                                      and Secretary
                                   (principal financial and accounting officer)










                                       15
<PAGE>

                                INDEX TO EXHIBITS

                     Exhibit No.           Description
                     -----------           -----------

                       10.9             Optical Cable Corporation
                                        Employee Stock Purchase Plan

                       27               Financial Data Schedule





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