FORM 10-Q
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


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

For the Quarterly Period ended March 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 0-5896

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


           NEW YORK                                    11-1978958
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)


                   145 OSER  AVENUE,  HAUPPAUGE,  NEW  YORK  11788  
                   (Address of principal executive office)   (Zip Code)




Registrant's telephone number, including area code:   (516)  273-5500

Indicated  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 report),  and (2) has been subject to such
filing requirements for the past 90 days.



                       YES X            NO __







Number of Shares of Registrant's  Common Stock  Outstanding as of May 12, 1998 -
3,975,721  (Excluding  199,500  Shares of  Treasury  Stock and 90,000  Shares of
Restricted Stock).



<PAGE>

FORM 10-Q                                                        March 31, 1998
Page  2


PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                     JACO ELECTRONICS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                                                                March 31,              June 30,
                                                                  1998                    1997
                                                             --------------          -------------
ASSETS

Current Assets

<S>                                                           <C>                       <C>
         Cash                                                 $   285,741               $   463,352
         Marketable securities                                    764,359                   627,179
         Accounts receivable - net                             22,728,887                22,008,210
         Inventories                                           36,195,836                33,311,201
         Prepaid expenses and other                             1,449,354                 1,359,617
         Prepaid income taxes                                     299,937                   528,243
         Deferred income taxes                                    897,000                   750,000
                                                              -----------               -----------

                  Total current assets                         62,621,114                59,047,802


Property, plant and equipment - net                             5,663,763                 5,009,045

Deferred income taxes                                             282,000                   244,000

Excess of cost over net assets acquired                         4,001,615                 4,151,574

Other assets                                                    1,614,331                 1,543,257
                                                              -----------               -----------


                                                              $74,182,823               $69,995,678
                                                              ===========               ===========


</TABLE>





     See accompanying notes to condensed consolidated financial statements.

<PAGE>

FORM 10-Q                                                        March 31, 1998
Page 3
<TABLE>
<CAPTION>



                                  JACO ELECTRONICS, INC. AND SUBSIDIARIES
                                   CONDENSED CONSOLIDATED BALANCE SHEETS
                                                (UNAUDITED)


                                                                       March 31,             June 30,
                                                                         1998                  1997
                                                                      ------------         ------------
LIABILITIES & SHAREHOLDERS' EQUITY

Current Liabilities

<S>                                                                 <C>                 <C>
         Accounts payable and accrued expenses                      $ 19,703,465        $ 17,302,127
         Current maturities of long term debt and
           capitalized lease obligations                                 681,930             599,239
                                                                   -------------        ------------


         Total current liabilities                                    20,385,395          17,901,366

Long term debt and capitalized lease obligations                      16,606,446          15,552,549

Deferred compensation                                                    687,500             650,000


SHAREHOLDERS' EQUITY


         Preferred  stock -  authorized,  100,000  shares,  
           $10 par value;  none issued  
         Common stock - authorized  10,000,000  shares,  
           $.10 par value; issued 4,065,721 and 3,975,721 
           shares  respectively,  and 3,866,221 and 3,888,221 
           shares outstanding, respectively                              406,572             397,572
         Additional paid-in capital                                   22,334,420          22,180,295
         Unrealized gain on marketable securities                        164,684             120,200
         Retained earnings                                            15,017,768          13,893,696
         Treasury stock                                               (1,419,962)           (700,000)
                                                                     ------------        ------------

         Total shareholders' equity                                   36,503,482          35,891,763
                                                                      ----------          ----------


                                                                     $74,182,823         $69,995,678
                                                                     ===========         ===========


</TABLE>



     See accompanying notes to condensed consolidated financial statements.
<PAGE>

FORM 10-Q                                                         March 31, 1998
Page 4

<TABLE>
<CAPTION>


                                  JACO ELECTRONICS, INC. AND SUBSIDIARIES
                               CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                    FOR THE THREE MONTHS ENDED MARCH 31,
                                                (UNAUDITED)



                                                                   1998                 1997
                                                               -----------           ----------


<S>                                                               <C>                 <C>
NET SALES                                                         $38,334,936         $38,661,610
                                                                  -----------         -----------


COST AND EXPENSES

Cost of goods sold                                                 30,421,293          30,798,265
                                                                   ----------          ----------

         Gross profit                                               7,913,643           7,863,345

Selling, general and administrative expenses                        7,190,963           7,012,577
                                                                 ------------        ------------

         Operating profit                                             722,680             850,768

Interest expense                                                      280,821             266,430
                                                                 ------------        ------------

         Earnings before income taxes                                 441,859             584,338

Income tax provision                                                  179,000             237,000
                                                                 ------------        ------------


         NET EARNINGS                                            $    262,859        $    347,338
                                                                 ============        ============

Net earnings per common share

Basic and diluted                                                $       0.07        $       0.09
                                                                 ============        ============

Weighted average common shares outstanding

         Basic                                                      3,798,010           3,888,221
         Diluted                                                    3,920,838           3,937,253
                                                                 ============        ============


</TABLE>


     See accompanying notes to condensed consolidated financial statements.

<PAGE>

FORM 10-Q                                                         March 31, 1998
Page 5

<TABLE>
<CAPTION>


                                  JACO ELECTRONICS, INC. AND SUBSIDIARIES
                               CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                    FOR THE NINE MONTHS ENDED MARCH 31,
                                                (UNAUDITED)



                                                                   1998                 1997
                                                               --------------       ------------


<S>                                                              <C>                 <C>
NET SALES                                                        $115,001,364        $115,178,339



COST AND EXPENSES

Cost of goods sold                                                 91,071,936          91,187,699
                                                                   ----------          ----------

         Gross profit                                              23,929,428          23,990,640

Selling, general and administrative expenses                       21,217,183          20,366,027
                                                                   ----------          ----------

         Operating profit                                           2,712,245           3,624,613

Interest expense                                                      823,173             672,353
                                                                  -----------        ------------

         Earnings before income taxes                               1,889,072           2,952,260

Income tax provision                                                  765,000           1,196,000
                                                                 ------------        ------------


         NET EARNINGS                                              $1,124,072          $1,756,260
                                                                   ==========          ==========

Net earnings per common share

Basic                                                          $         0.29      $         0.45
Diluted                                                        $         0.29      $         0.44
                                                               ==============      ==============

Weighted average common shares outstanding

Basic                                                               3,856,787           3,902,783
Diluted                                                             3,932,061           3,953,384
                                                                    =========           =========

</TABLE>


     See accompanying notes to condensed consolidated financial statements.

<PAGE>

FORM 10-Q                                                         March 31, 1998
Page 6
<TABLE>
<CAPTION>



                                                            JACO ELECTRONICS, INC. AND SUBSIDIARIES
                                                                CONSOLIDATED STATEMENT OF CHANGES
                                                                      IN SHAREHOLDERS' EQUITY
                                                            FOR THE NINE MONTHS ENDED MARCH 31, 1998
                                                                          (UNAUDITED)




                                                                                     Unrealized
                                                                    Additional        Gain on
                                           Common Stock              Paid-In         Marketable        Retained         Treasury
                                        Shares       Amount          Capital         Securities        Earnings            Stock
                                   --------------- ------------- ----------------- --------------- ----------------- ---------------


<S>             <C>                     <C>           <C>            <C>                <C>            <C>                <C>
Balance at July 1, 1997                 3,975,721     $ 397,572      $ 22,180,295       $ 120,200      $ 13,893,696      $ (700,000)

Issuance of restricted stock               90,000         9,000           621,000

Deferred compensation expense

Purchase of treasury stock                                                                                                 (719,962)

Unrealized gain on marketable
  securities - net                                                                         44,484

Net earnings                                                                                              1,124,072
                                   --------------- ------------- ----------------- --------------- ----------------- --------------


Balance at March 31, 1998               4,065,721     $ 406,572      $ 22,801,295       $ 164,684      $ 15,017,768    $ (1,419,962)
                                   =============== ============= ================= =============== ================= ===============



                                                       Total
                                     Deferred       Shareholders'
                                    Compensation      Equity
                                   --------------- -------------



<S>             <C>                     <C>           <C>
Balance at July 1, 1997                             $ 35,891,763

Issuance of restricted stock      $ (540,000)            90,000

Deferred compensation expense         73,125             73,125

Purchase of treasury stock                             (719,962)

Unrealized gain on marketable
  securities - net                                        44,484

Net earnings                                           1,124,072
                                   --------------- -------------



Balance at March 31, 1998          $ (466,875)      $ 36,503,482
                                   =============== =============


</TABLE>

     See accompanying notes to condensed consolidated financial statements.

<PAGE>

FORM 10-Q                                                        March 31, 1998
Page 7
<TABLE>
<CAPTION>


                                                   JACO ELECTRONICS, INC. AND SUBSIDIARIES
                                               CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                      FOR THE NINE MONTHS ENDED MARCH 31,
                                                                (UNAUDITED)

                                                                                   1998                 1997
                                                                             -----------------    -----------------

Cash flows from operating activities
<S>                                                                           <C>                  <C>
      Net earnings                                                            $      1,124,072      $    1,756,260

Adjustments to reconcile net earnings to net
     cash provided by (used in)operating activities
          Depreciation  and amortization                                              993,183              737,898
          Deferred compensation                                                       110,625               37,500
          Deferred income tax benefit                                                (215,000)            (141,000)
          Gain on sale of equipment                                                                        (10,094)
          Provision for doubtful accounts                                             364,965              220,206
          Changes in operating assets and liabilities, net
             of effect of acquisitions
          Increase in operating assets - net                                       (3,741,708)          (1,847,191)
          Increase (decrease) in operating liabilities - net                        2,401,338             (574,142)
                                                                             -----------------    -----------------

          Net cash provided by operating activities                                 1,037,475              179,437
                                                                             -----------------    -----------------

Cash flows from investing activities
         Capital expenditures                                                        (783,323)            (682,586)
         Proceeds from sale of equipment                                                                    36,683
         Business acquisitions - net                                                                    (4,694,519)
         Increase in marketable securities - net                                      (62,696)
         Increase in other assets                                                    (171,073)            (218,449)
                                                                             -----------------    -----------------

         Net cash used in investing activities                                     (1,017,092)          (5,558,871)
                                                                             -----------------    -----------------

Cash flows from financing activities
       Borrowings under line of credit                                            112,863,510          118,419,608
       Payments under line of credit                                             (111,670,859)        (111,773,984)
       Principal payments under equipment financing
       and term loans                                                                (670,683)            (375,054)
       Purchase of treasury stock                                                    (719,962)            (700,000)
                                                                             -----------------    -----------------

Net cash (used in) provided by financing activities                                  (197,994)           5,570,570
                                                                             -----------------    -----------------

NET (DECREASE) INCREASE IN CASH                                                      (177,611)             191,136
                                                                             -----------------    -----------------

Cash at beginning of period                                                           463,352              164,161
                                                                             -----------------    -----------------

Cash at end of period                                                               $ 285,741            $ 355,297
                                                                             =================    =================

Supplemental schedule of non-cash financing and investing activities
Equipment under capital leases                                                      $ 614,620            $ 355,824

</TABLE>

   See accompanying notes to condensed consolidated financial statements.

<PAGE>

FORM 10-Q                                                         March 31, 1998
 Page 8


                     JACO ELECTRONICS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE A - BASIS OF PRESENTATION

1)   The accompanying  condensed  consolidated  financial statements reflect all
     adjustments, consisting only of normal recurring accrual adjustments, which
     are in the opinion of management,  necessary for a fair presentation of the
     consolidated  financial  position and the results of  operations at and for
     the periods  presented.  Such  financial  statements do not include all the
     information or footnotes necessary for a complete presentation.  Therefore,
     they should be read in conjunction with the Company's audited  consolidated
     statements for the year ended June 30, 1997 and the notes thereto  included
     in the Company's  annual report on Form 10-K. The results of operations for
     the interim periods are not  necessarily  indicative of the results for the
     entire year.

2)   The  Company  has a  $30,000,000  term  loan and  revolving  line of credit
     facility with its banks,  which are based  principally on eligible accounts
     receivables and inventories as defined in the agreement.  The agreement was
     amended to (i) extend the maturity date to September 13, 2000,  (ii) change
     the  interest  rate to a rate  based on the  average 30 day LIBOR rate plus
     3/4%  to 1  1/4%  depending  on the  Company's  performance  measured  by a
     financial   ratio   effective   January  1,  1998  and  (iii)  changed  the
     requirements of certain financial  covenants.  The applicable interest rate
     may  be  adjusted   quarterly  and  borrowings   under  this  facility  are
     collateralized by substantially all of the assets of the Company.

3)   The Board of Directors of the Company has  authorized the purchase of up to
     250,000  shares of its  outstanding  common stock under a stock  repurchase
     program.  The purchases may be made by the Company from time to time on the
     open market. The Company has made purchases of 199,500 shares of its common
     stock as of May 12, 1998 for aggregate consideration of $1,419,962.

4)   For interim financial reporting purposes, the Company uses the gross profit
     method for computing inventories, which consists of goods held for resale.

5)   In February 1997, the Financial Accounting Standards Board issued Statement
     of Financial  Accounting  Standards No. 128, "Earnings Per Share," which is
     effective  for  financial  statements  for both interim and annual  periods
     ending after  December 15, 1997.  The new standard  eliminates  primary and
     fully  diluted  earnings per share and requires  presentation  of basic and
     diluted  earnings per share  together with  disclosure of how the per share
     amounts  were  computed.  The  Company has adopted  this  standard  and has
     restated its earnings per share for prior periods presented.



<PAGE>


FORM 10-Q                                                        March 31, 1998
 Page 9
<TABLE>
<CAPTION>

           The number of shares used in the Company's basic and diluted earnings
     per share computations are as follows


                                                         Three Months Ended             Nine Months Ended
                                                             March 31,                      March 31,
                                                      -------------------------      ------------------------
                                                         1998          1997             1998        1997
                                                      -----------   -----------      ----------- ------------

Weighted average common shares
  outstanding net of treasury shares,
<S>                                                    <C>           <C>              <C>          <C>
  for basic earnings per share                         3,798,010     3,888,221        3,856,787    3,902,783

Common stock equivalents for
  stock options and restricted stock                     122,828        49,032           75,274       50,601
                                                      -----------   -----------      -----------  -----------

Weighted average common shares
  outstanding for diluted earnings per share           3,920,838     3,937,253        3,932,061    3,953,384
                                                       =========     =========        =========    =========


</TABLE>


6)   During  August  1996,   and  January  1997,   the  Company   purchased  QPS
     Electronics, Inc. and Corona Electronics, Inc., respectively, both of which
     are electronic component distributors. Aggregate consideration paid for the
     acquisitions approximated $4,700,000 of which $157,500 was paid through the
     issuance of 20,000 shares of the Company's common stock. These acquisitions
     have been accounted for by the purchase method and, as such, the fair value
     of the assets and  liabilities  acquired  have been recorded on the date of
     the respective acquisitions. The respective results of their operations are
     included with those of the Company from the date of acquisition. The excess
     of the  purchase  price,  over  the  fair  value  of the  assets  acquired,
     approximately $3,053,000, is being amortized using the straight-line method
     over a period of twenty years. Pro forma  historical  results of operations
     are not presented,  as such results would not be materially  different from
     the historical results of the Company.

7) In December 1997, the  shareholders'  of the Company approved an amendment to
the Company's 1993 Non-Qualified Stock Option Plan, (the "Plan") to increase the
aggregate  number of shares of common stock which may be issued upon exercise of
all  options  granted  under the Plan from  293,000  shares to  600,000  shares.
Additionally,  the shareholders'  approved the adoption of the Jaco Electronics,
Inc.  Restricted Stock Plan (the "Restricted Stock Plan").  The Restricted Stock
Plan,  enables the Board of Directors or Plan Committee to have sole  discretion
and  authority to determine  who may purchase  restricted  stock,  the number of
shares,  the  price  to be paid and the  restrictions  placed  upon  the  stock.
Pursuant to the Restricted Stock Plan, the Board of Directors has authorized the
purchase of 90,000 shares of the Company's common stock by certain  employees at
a purchase price of $1.00 per share. Shares purchased are subject to a four-year
vesting period.


<PAGE>

FORM 10-Q                                                        March 31, 1998
Page 10




                  JACO ELECTRONICS, INC. AND SUBSIDIARIES
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS


Statements  in this filing,  and  elsewhere,  which look forward in time involve
risks and uncertainties  which may effect the actual results of operations.  The
following  important  factors,  among others,  have affected and, in the future,
could affect the Company's  actual  results:  dependence on a limited  number of
suppliers for products  which  generate a  significant  portion of the Company's
sales, the effect upon the Company of increases in tariffs or duties, changes in
trade  treaties,  strikes or delays in air or sea  transportation  and  possible
future United States legislation with respect to pricing and/or import quotas on
products  imported  from foreign  countries,  and general  economic  effect upon
manufacturers,  end users of  electronic  components  and  electronic  component
distributors.


GENERAL

Jaco  is a  distributor  of  electronic  components  and  provider  of  contract
manufacturing  and value-added  services.  Products  distributed by Jaco include
semiconductors,  capacitors,  resistors,  electromechanical  devices, flat panel
displays  (FPD's) and power supplies used in the assembly and  manufacturing  of
electronic equipment.

The Company's customers are primarily small and medium sized manufacturers.  The
trend for these customers has been to shift certain  manufacturing  functions to
third parties  (outsourcing).  The Company intends to seek to capitalize on this
trend toward outsourcing by increasing sales of products enhanced by value-added
services. Value-added services currently provided by Jaco consist of configuring
complete computer systems to customer  specifications  both in tower and desktop
configurations, kitting (e.g. supplying sets of specified quantities of products
to a customer that are prepackaged for ease of feeding the customer's production
lines),  automated  inventory  management  services and  contract  manufacturing
services   through  the   Company's   wholly-owned   subsidiary,   Nexus  Custom
Electronics, Inc.




<PAGE>


FORM 10-Q                                                         March 31, 1998
Page 11


Results of Operations

The  following  table sets forth  certain  items in the  Company's  statement of
earnings as a percentage of net sales for the periods shown; <TABLE> <CAPTION>
                                              Three Months Ended                             Nine Months Ended
                                                    March 31,                                     March 31,
                                        --------------------------------             ----------------------------------

                                            1998              1997                        1998               1997
                                        -------------     --------------             ---------------    ---------------

<S>                                     <C>               <C>                        <C>                <C>
Net Sales                                      100.0%            100.0%                     100.0%             100.0%

Cost of goods sold                               79.4               79.7                        79.2               79.2
                                        -------------     --------------             ---------------    ---------------

Gross profit                                     20.6               20.3                        20.8               20.8

Selling, general and
  administrative expenses                        18.7               18.1                        18.4               17.7
                                        -------------     --------------             ---------------    ---------------

Operating profit                                  1.9                2.2                         2.4                3.1

Interest expense                                  0.7                0.7                         0.7                0.6
                                        -------------     --------------             ---------------    ---------------

Earnings before income taxes                      1.2                1.5                         1.7                2.5

Income tax provisions                             0.5                0.6                         0.7                1.0
                                        -------------     --------------             ---------------    ---------------

NET EARNINGS                                      0.7%               0.9%                        1.0%               1.5%
                                        =============     ==============             ===============    ===============

</TABLE>

COMPARISON OF THE THREE AND NINE MONTHS ENDED MARCH  31, 1998 AND MARCH 31, 1997
--------------------------------------------------------------------------------

Net sales for the third  quarter and nine months ended March 31, 1998 were $38.3
million and $115.0  million as compared to $38.7 million and $115.2  million for
the three and nine months ended March 31, 1997.  This  represented a .8% and .2%
decrease in net sales, respectively. The decrease in net sales was primarily the
result of an industry wide reduction in component pricing.

<PAGE>

FORM 10-Q                                                        March 31, 1998
Page 12


While the Company  continues to sell more components  than in previous  quarters
and has added new franchises that has begun to result in additional  sales, this
was offset by the  component  price  decreases.  The Company  believes  that the
recent  addition of new  suppliers,  the  expansion  of it's flat panel  display
product  lines,  the addition of several  field  application  engineers  and the
continued  expansion and enhancement of it's semiconductor  group will result in
an increase in sales as market conditions improve.

Gross  profit  margins for the three and nine  months  ended March 31, 1998 were
20.6% and 20.8% as compared to 20.3% and 20.8% for the comparable periods of the
prior fiscal year. The Company experienced a slight increase in gross margin for
the three months while remaining  constant for the nine months.  The Company has
been able to maintain  these  margins even though  there has been a  significant
decrease in component  pricing by carefully  reviewing  the  purchasing of these
components and the profitability of sales  opportunities that arise. The Company
cannot give any  assurances  that this trend will  continue  in future  periods.
Selling,  general and administrative (SG&A) expenses were $7.2 million and $21.2
million for the three and nine months  ended  March 31,  1998,  compared to $7.0
million and $20.4 million last year. The  additional  costs incurred were due to
the acquisition of Corona Electronics,  Inc. ("Corona") during January 1997, the
addition of field  application  engineers,  and the  expansion of the flat panel
marketing and semiconductor groups. These increases were partially offset during
the quarter and nine months by management's  efforts to reduce costs in non-core
personnel and administrative  expenditures.  Interest expense increased slightly
to $281,000 this quarter  compared to $266,000 last year.  The minimal  increase
was  attributable to the cash outlay,  due to the acquisition of Corona that was
completed  during the third quarter last year. Net earnings for the three months
ended March 31, 1998 was  $263,000,  or $.07 per share  diluted,  as compared to
$347,000,  or $.09 per share  diluted for the three months ended March 31, 1997.
Net earnings for the nine months  ended March 31, 1998 was  $1,124,000,  or $.29
per share diluted, as compared to $1,756,000,  or $.44 per share diluted for the
comparable  period last year. The decrease in net earnings was  attributable  to
flat  sales  and  an  increase  in  SG&A  expenses  incurred  in  expanding  the
semiconductor  and flat-panel  display groups,  the field  application  engineer
program and the acquisition of Corona.

LIQUIDITY AND CAPITAL RESOURCES


The Company has a $30,000,000  term loan and revolving  line of credit  facility
with its banks, which are based principally on eligible accounts receivables and
inventories as defined in the agreement. The agreement was amended to (i) extend
the maturity date to September 13, 2000, (ii) change the interest rate to a rate
based on the  average  30 day LIBOR rate plus 3/4 % to 1 1/4%  depending  on the
Company's  performance  measured by a financial ratio effective  January 1, 1998
and  (iii)  changed  the  requirements  of  certain  financial  covenants.   The
applicable  interest rate may be adjusted  quarterly and  borrowings  under this
facility are collateralized by substantially all of the assets of the Company.







<PAGE>




FORM 10-Q                                                         March 31, 1998
Page 13


The outstanding balance on the revolving line of credit facility was $15,176,169
at March 31, 1998. The term loan, with a remaining  balance of $642,857 at March
31, 1998 requires monthly principal payments of $17,857,  together with interest
through  September  13, 2000,  with a final payment of $107,147 on September 13,
2000. The agreement  contains  provisions for  maintenance of certain  financial
ratios,  all of which the Company believes it is in compliance with at March 31,
1998, and prohibits the payment of cash dividends.

For the nine  months  ended March 31, 1998 the  Company's  net cash  provided by
operating  activities  was  $1,037,000  as  compared  to net  cash  provided  by
operating  activities of $179,000 for the nine months ended March 31, 1997.  Net
cash used in investing  activities  decreased to  $1,017,000  for the first nine
months of fiscal 1998,  as compared to  $5,559,000  for the first nine months of
fiscal 1997. The acquisition of QPS  Electronics,  Inc. and Corona during fiscal
1997 required approximately $4,700,000, which was financed substantially through
additional borrowings from the Company's revolving line of credit. The Company's
cash expenditures may vary significantly from current levels,  based on a number
of factors, including, but not limited to, future acquisitions, if any.

On April 15, 1996, the Company's  Board of Directors  authorized the purchase of
up to  250,000  shares of its common  stock  under a stock  repurchase  program.
During fiscal 1998, the Company  repurchased 112,000 shares at an average market
price of $6.43 per share. As of May 12, 1998, in the aggregate,  the Company has
repurchased 199,500 shares at an average market price of $7.12 per share.

The year 2000 data management  issue,  which has received wide spread publicity,
is not expected to have a material impact on the Company.

For the first nine months of fiscal 1998 and fiscal 1997 inventory  turnover was
3.5x and 3.9x,  respectively.  The average  days  outstanding  of the  Company's
accounts  receivable  at March 31,  1998 was 53 days,  as compared to 55 days at
March 31, 1997. The Company has not experienced any significant trade collection
difficulties during fiscal 1998.

The Company  believes that cash flow from  operations and funds  available under
its credit  facility will be sufficient to fund the Company's  capital needs for
at least the next twelve months.

INFLATION

Inflation has not had a significant  impact on the Company's  operations  during
the last three fiscal years.



<PAGE>


FORM 10-Q                                                         March 31, 1998
Page 14


PART II - OTHER INFORMATION

Item 1.           Legal Proceedings

                           Nothing to Report

Item 2.           Changes in Securities and Use of Proceeds

                           Nothing to Report

Item 3.           Defaults Upon Senior Securities

                           Nothing to Report

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

                           Nothing to Report

Item 5.          Other Information

                            Nothing to Report

Item 6.          Exhibits and Reports on Form 8-K

                 a)          Exhibits

                             27. Financial Data Schedule

                 b)          Reports on Form 8-K  None



<PAGE>

                                S I G N A T U R E




         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.


                         JACO ELECTRONICS, INC.
                              (Registrant)



                         BY: /s/ Jeffrey D. Gash
                         Jeffrey D. Gash, Vice President/Finance
                         (Principal Financial Officer)









DATED:  May 15, 1998