** **

| Class                                        | Shares                Outstanding at May 15, 2007                                         |
|----------------------------------------------|-------------------------------------------------------------------------------------------|
| Common                Stock, $0.10 Par Value | 6,294,332                (excluding 659,900 shares held as treasury                stock) |

----

**PART          I - FINANCIAL INFORMATION**

**Item        1. Financial Statements**

|                                                                                                              |   |                           |       |   |                          |   |
|-------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|------------|--------|-------------------------------|--------|
|                                                                                                              |   | March                      31, |       |   | June                      30, |   |
|                                                                                                              |   | 2007                           |       |   | 2006                          |   |
|                                                                                                              |   | (Unaudited)                    |       |   |                          |   |
| ASSETS                                                                                                            |   |                           |       |   |                          |   |
|                                                                                                              |   |                           |       |   |                          |   |
| Current                      Assets                                                                               |   |                           |       |   |                          |   |
|                                                                                                              |   |                           |       |   |                          |   |
|         Cash                                                              |   | $                              | 17,709     |   |                          | $      | 29,211 |   |
|         Accounts                      receivable - net                    |   |                           | 27,924,818 |   |                          |   | 36,498,390 |   |
|         Inventories                      -                      net       |   |                           | 35,127,687 |   |                          |   | 33,271,437 |   |
|         Prepaid                      expenses and other                   |   |                           | 1,293,408  |   |                          |   | 1,027,763 |   |
|                                                                                                              |   |                           |       |   |                          |   |   |   |
|             Total                      current assets |   |                           | 64,363,622 |   |                          |   | 70,826,801 |   |
|                                                                                                              |   |                           |       |   |                          |   |   |   |
|                                                                                                              |   |                           |       |   |                          |   |   |   |
| Property,                      plant and equipment - net                                                          |   |                           | 1,563,249  |   |                          |   | 1,766,467 |   |
|                                                                                                              |   |                           |       |   |                          |   |   |   |
| Goodwill                                                                                                          |   |                           | 25,416,087 |   |                          |   | 25,416,087 |   |
|                                                                                                              |   |                           |       |   |                          |   |   |   |
| Note                      receivable                                                                              |   |                           | 2,750,000  |   |                          |   | 2,750,000 |   |
|                                                                                                              |   |                           |       |   |                          |   |   |   |
| Other                      Assets                                                                                 |   |                           | 2,241,121  |   |                          |   | 2,320,296 |   |
|                                                                                                              |   |                           |       |   |                          |   |   |   |
|                                                                                                              |   |                           |       |   |                          |   |   |   |
| Total                      Assets                                                                                 |   | $                              | 96,334,079 |   |                          | $      | 103,079,651 |   |

----

|                                                                                        |   | March                  31, |       |   | June                  30, |   |
|---------------------------------------------------------------------------------------------|--------|----------------------------|------------|--------|---------------------------|--------|
|                                                                                        |   | 2007                       |       |   | 2006                      |   |
|                                                                                        |   | (Unaudited)                |       |   |                      |   |
| LIABILITIES                  & SHAREHOLDERS' EQUITY                                     |   |                       |       |   |                      |   |
|                                                                                        |   |                       |       |   |                      |   |
| Current                  Liabilities                                                        |   |                       |       |   |                      |   |
|                                                                                        |   |                       |       |   |                      |   |
| Accounts                  payable and accrued expenses                                      |   | $                          | 25,321,333 |   |                      | $      |                     31,539,051 |   |
| Current                  maturities of long-term debt and                                   |   |                       |       |   |                      |   |   |   |
|      capitalized                  lease obligations                |   |                       | 34,921,765 |   |                      |   | 35,141,702 |   |
| Income                  taxes payable                                                       |   |                       | 43,004     |   |                      |   | 39,812 |   |
|                                                                                        |   |                       |       |   |                      |   |   |   |
| Total                  current liabilities                                                  |   |                       | 60,286,102 |   |                      |   | 66,720,565 |   |
|                                                                                        |   |                       |       |   |                      |   |   |   |
| Long-term                  debt and capitalized lease obligations                           |   |                       | 49,023     |   |                      |   | 88,111 |   |
|                                                                                        |   |                       |       |   |                      |   |   |   |
| Deferred                  compensation                                                      |   |                       | 1,137,500  |   |                      |   | 1,100,000 |   |
|                                                                                        |   |                       |       |   |                      |   |   |   |
|                                                                                        |   |                       |       |   |                      |   |   |   |
| SHAREHOLDERS'                  EQUITY                                                       |   |                       |       |   |                      |   |   |   |
|                                                                                        |   |                       |       |   |                      |   |   |   |
|                                                                                        |   |                       |       |   |                      |   |   |   |
|   Preferred                  stock -                  authorized, 100,000 shares, |   |                       |       |   |                      |   |   |   |
|   $10                  par value; none issued                                     |   |                       | -          |   |                      |   | - |   |
|  Common                  stock -                  authorized, 20,000,000 shares,       |   |                       |       |   |                      |   |   |   |
|                     $.10 par value; 6,954,232 shares issued                       |   |                       |       |   |                      |   |   |   |
|  and                  6,294,332 shares                  outstanding                    |   |                       | 695,423    |   |                      |   | 695,423 |   |
| Additional                  paid-in capital                                                 |   |                       | 27,085,839 |   |                      |   | 27,049,999 |   |
| Retained                  earnings                                                          |   |                       | 9,394,758  |   |                      |   | 9,740,119 |   |
| Treasury                  stock                                                             |   |                       | (2,314,566 | )      |                      |   | (2,314,566 | ) |
|                                                                                        |   |                       |       |   |                      |   |   |   |
| Total                  shareholders' equity                                                 |   |                       | 34,861,454 |   |                      |   | 35,170,975 |   |
|                                                                                        |   |                       |       |   |                      |   |   |   |
|                                                                                        |   |                       |       |   |                      |   |   |   |
| Total                  liabilities and shareholders' equity                                 |   | $                          | 96,334,079 |   |                      | $      |                     103,079,651 |   |

----

|                                                                                                                         |   | 2007   |       2006 |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------|
| Net                        sales                                                                                             |   | $      | 49,890,362                               |   |   | $ | 60,905,905 |   |
|                                                                                                                         |   |   |                                     |   |   |
| Cost                        of goods sold                                                                                    |   |   | 42,110,385                               |   |   |   | 53,124,309 |   |
|                                                                                                                         |   |   |                                     |   |   |
|              Gross                        profit            |   |   | 7,779,977                                |   |   |   | 7,781,596 |   |
|                                                                                                                         |   |   |                                     |   |   |
| Selling,                        general and administrative expenses                                                          |   |   | 7,920,780                                |   |   |   | 7,062,146 |   |
|                                                                                                                         |   |   |                                     |   |   |
|              Operating                        (loss) profit |   |   | (140,803                                 | ) |   |   | 719,450 |   |
|                                                                                                                         |   |   |                                     |   |   |
| Interest                        expense                                                                                      |   |   | 590,697                                  |   |   |   | 621,580 |   |
|                                                                                                                         |   |   |                                     |   |   |
|            (Loss)                        earnings before income taxes |   |   | (731,500                                 | ) |   |   | 97,870 |   |
|                                                                                                                         |   |   |                                     |   |   |
| Income                        tax provision                                                                                  |   |   | 15,000                                   |   |   |   | 14,337 |   |
|                                                                                                                         |   |   |                                     |   |   |
|              Net                        (loss) earnings     |   | $      | (746,500                                 | ) |   | $ | 83,533 |   |
|                                                                                                                         |   |   |                                     |   |   |
|                                                                                                                         |   |   |                                     |   |   |
| PER                        SHARE INFORMATION                                                                                 |   |   |                                     |   |   |
|                                                                                                                         |   |   |                                     |   |   |
| Basic                        (loss) earnings per common share:                                                               |   | $      | (.12                                     | ) |   | $ | .01 |   |
|                                                                                                                         |   |   |                                     |   |   |
| Diluted                        (loss) earnings per common share:                                                             |   | $      | (.12                                     | ) |   | $ | .01 |   |
|                                                                                                                         |   |   |                                     |   |   |
| Weighted-average                        common shares and                                                                    |   |   |                                     |   |   |   |   |   |   |
|    common                        equivalent shares outstanding:                                               |   |   |                                     |   |   |   |   |
|                                                                                                                         |   |   |                                     |   |   |
|         Basic                                                                        |   |   | 6,294,332                                |   |   |   | 6,293,115 |   |
|                                                                                                                         |   |   |                                     |   |   |
|         Diluted                                                                      |   |   | 6,294,332                                |   |   |   | 6,387,780 |   |

----

|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           | 2007                                                                                                                                                                          |                                                                                                                | 2006                                                                                                                              |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| Net                sales                                                                                                                                                                          |                                                                                                                                                                           |                                                                                                                                                           |  $                185,497,686                                                            |                                                                                                                |  $                              161,474,478            |   |   |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |
| Cost                of goods sold                                                                                                                                                                 |                                                                                                                                                                           |           160,544,514                                                                                        |                                                                                                                                                                          |            139,910,804                                       |                                                                                                                              |   |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |
|              Gross                profit                                                                                         |                                                                                                                                                                           |              24,953,172                                                                       |                                                                                                                                                                          |     21,563,674                                                                                  |                                                                                                                              |   |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |
| Selling,                general and administrative expenses                                                                                                                                       |                 23,122,891                                                                     |                                                                                                                                                           |                    20,749,685                                                                                                                                  |                                                                                                                |                                                                                                                              |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |
|              Operating                profit                                                                                     |                                                                                                                                                                           |                 1,830,281                                                      |                                                                                                                                                                          |                   813,989 |                                                                                                                              |   |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |
| Interest                expense                                                                                                                                                                   |                                                                                                                                                                           |                2,130,642                                                            |                                                                                                                                                                          |                1,740,068                 |                                                                                                                              |   |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |
|              Loss                before income taxes                                                                             |                    (300,361)                                                    |                                                                                                                                                           |                (926,079)                                                                           |                                                                                                                |                                                                                                                              |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |
| Income                tax provision                                                                                                                                                               |                                                                                                                                                                           |                      45,000                           |                                                                                                                                                                          |               6,452,470                       |                                                                                                                              |   |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |
|              Net                loss                                                                                             |                                                                                                                                                                           |  $                                     (345,361) |                                                                                                                                                                          |  $                (7,378,549)  |                                                                                                                              |   |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |
| PER                SHARE INFORMATION                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |
| Basic                loss per common share:                                                                                                                                                       |  $                           (.05) |                                                                                                                                                           |  $                                        (1.18) |                                                                                                                |                                                                                                                              |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |
| Diluted                loss per common share:                                                                                                                                                     |  $                           (.05) |                                                                                                                                                           |  $                                        (1.18) |                                                                                                                |                                                                                                                              |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |
| Weighted-average                common shares and                                                                                                                                                 |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |   |   |   |   |   |   |   |
|    common                equivalent shares outstanding:                                                                                                                            |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |
|                                Basic   |                                                                                                                                                                           |                                                                                                                                                           |                                     6,294,332                             |                                                                                                                |                     6,278,705 |   |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |
|                                Diluted |                                                                                                                                                                           |                                                                                                                                                           |                                      6,294,332                       |                                                                                                                |                     6,278,705 |   |
|                                                                                                                                                                                              |                                                                                                                                                                           |                                                                                                                                                           |                                                                                                                                                                          |                                                                                                                |                                                                                                                              |   |

----

|                                                                                                                                   |   | 2007   |         |   | 2006   |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------|--------|--------|--------|
| Cash                  flows from operating activities                                                                                  |   |   |         |   |   |   |
|       Net                  loss                                                                          |   | $      | (345,361     | )      |   | $      | (7,378,549 | ) |
|                                                                                                                                   |   |   |         |   |   |   |   |   |
| Adjustments                  to reconcile net loss to net                                                                              |   |   |         |   |   |   |   |   |
|      cash                  provided by (used in) operating activities                                         |   |   |         |   |   |   |   |   |
|            Depreciation                  and amortization                       |   |   | 547,803      |   |   |   | 719,928 |   |
|            Deferred                  compensation                               |   |   | 37,499       |   |   |   | 37,500 |   |
|            Stock-based                  compensation                            |   |   | 35,840       |   |   |   | - |   |
|            Deferred                  income tax expense                         |   |   | -            |   |   |   | 6,394,000 |   |
|            Provision                  for doubtful accounts                     |   |   | (225,607     | )      |   |   | (97,825 | ) |
|            Changes                  in operating assets and liabilities         |   |   |         |   |   |   |   |   |
|            Decrease                  (increase) in operating assets - net       |   |   | 6,628,185    |   |   |   | (199,007 | ) |
|            Decrease                  in operating liabilities – net       |   |   | (6,214,523   | )      |   |   | (3,094,835 | ) |
|                                                                                                                                   |   |   |         |   |   |   |   |   |
|            Net                  cash provided by (used in) operating activities |   |   | 463,836      |   |   |   | (3,618,788 | ) |
|                                                                                                                                   |   |   |         |   |   |   |   |   |
| Cash                  flows from investing activities                                                                                  |   |   |         |   |   |   |   |   |
| Capital                  expenditures                                                                                                  |   |   | (216,313     | )      |   |   | (140,914 | ) |
|                                                                                                                                   |   |   |         |   |   |   |   |   |
|            Net                  cash used in investing activities               |   |   | (216,313     | )      |   |   | (140,914 | ) |
|                                                                                                                                   |   |   |         |   |   |   |   |   |
| Cash                  flows from financing activities                                                                                  |   |   |         |   |   |   |   |   |
|            Borrowings                  under line of credit                     |   |   | 197,553,467  |   |   |   | 158,499,902 |   |
| Repayments                  under line of credit                                                                                       |   |   | (197,778,943 | )      |   |   | (155,056,093 | ) |
| Principal                  payments under equipment financing                                                                          |   |   | (33,549      | )      |   |   | (39,811 | ) |
| Proceeds                  from exercise of stock options                                                                               |   |   | -            |   |   |   | 62,273 |   |
|                                                                                                                                   |   |   |         |   |   |   |   |   |
| Net                  cash (used in) provided by financing activities                                                                   |   |   | (259,025     | )      |   |   | 3,466,271 |   |
|                                                                                                                                   |   |   |         |   |   |   |   |   |
| Net                  decrease in cash                                                                                                  |   |   | (11,502      | )      |   |   | (293,431 | ) |
|                                                                                                                                   |   |   |         |   |   |   |   |   |
| Cash                  at beginning of period                                                                                           |   |   | 29,211       |   |   |   | 321,423 |   |
|                                                                                                                                   |   |   |         |   |   |   |   |   |
| Cash                  at end of period                                                                                                 |   | $      | 17,709       |   |   | $      |  27,992 |   |
|                                                                                                                                   |   |   |         |   |   |   |   |   |
|                                                                                                                                   |   |   |         |   |   |   |   |   |
| Supplemental                  disclosures of cash flow information:                                                                    |   |   |         |   |   |   |   |   |
|      Cash                  paid during the year for:                                                          |   |   |         |   |   |   |   |   |
|              Interest                                                 |   | $      | 2,131,000    |   |   | $      | 1,732,000 |   |
|              Income                  taxes                            |   |   | 65,000       |   |   |   | 104,000 |   |

----

| FORM                    10-Q                                                                                                               |   |                            |      |   |    |   |    |       |   |   |       |   |   | March                    31, 2007 |      |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|-----------|--------|---------|--------|---------|------------|--------|--------|------------|--------|--------|-----------------------------------|-----------|--------|--------|--------|
| Page                    7                                                                                                                  |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |
| JACO                    ELECTRONICS, INC. AND SUBSIDIARIES                                         |   |
| CONDENSED                    CONSOLIDATED STATEMENT OF CHANGES                                          |   |
| IN                    SHAREHOLDERS' EQUITY                                          |   |
| FOR                    THE NINE MONTHS ENDED MARCH 31, 2007                                        |   |
| (UNAUDITED)                                                                         |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |
|                                                                                                                                       |   |                            |      |   |    |   |    | Additional |   |   |       |   |   |                              |      |   | Total  |   |
|                                                                                                                                       |   | Common                    stock |      |   | paid-in |   |    | Retained   |   |   | Treasury   |   |   | shareholders'                     |      |
|                                                                                                                                       |   | Shares                          |      |   | Amount  |   |    | capital    |   |   | earnings   |   |   | stock                             |      |   | equity |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |
| Balance                    at July 1, 2006                                                                                                 |   |                            | 6,954,232 |   |    | $      | 695,423 |       |   | $      | 27,049,999 |   |   | $                                 | 9,740,119 |   |   | $      | (2,314,566 | ) |   | $ | 35,170,975 |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |   |   |   |   |   |   |
| Net                    loss                                                                                                                |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              | (345,361  | )      |   |   |   |   |   |   | (345,361 | ) |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |   |   |   |   |   |   |
| Stock-based                    compensation                                                                                                |   |                            |      |   |    |   |    |       |   |   | 35,840     |   |   |                              |      |   |   |   |   |   |   |   | 35,840 |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |   |   |   |   |   |   |
| Balance                    at March 31, 2007                                                                                               |   |                            | 6,954,232 |   |    | $      | 695,423 |       |   | $      | 27,085,839 |   |   | $                                 | 9,394,758 |   |   | $      | (2,314,566 | ) |   | $ | 34,861,454 |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                       |   |                            |      |   |    |   |    |       |   |   |       |   |   |                              |      |   |   |   |   |   |   |   |   |   |
| See                    accompanying notes to condensed consolidated financial                    statements.      |   |                            |      |   |    |

----

----

----

----

**Summary      of Stock Option Activity**

|                                                    |   |                                                                     |                                                                   |                                          |                                                |                                                                                                     |                                                                                 |           |   |   |   |
|---------------------------------------------------------|--------|--------------------------------------------------------------------------|------------------------------------------------------------------------|-----------------------------------------------|-----------------------------------------------------|----------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|----------------|--------|--------|--------|
|                                                    |   |                                                                     | **Options                 Outstanding**                           | **Weighted-****Average****Exercise****Price** |                                                |                                                                                                     | **Weighted-****Average****Remaining****Contractual****Term                (months)** |           |
|                                                    |   |                                                                     |                                                                   |                                          |                                                |                                                                                                     |                                                                                 |           |
| **Employee                Stock Option Plans:**         |   |                                                                     |                                                                   |                                          |                                                |                                                                                                     |                                                                                 |           |   |
| Shares                outstanding at June 30, 2006 |   |                                                                     | 499,750                                                                |                                          | $5.07                                               |                                                                                                     |                                                                                 |      |   |
| Granted                                                 |   |                                                                     | 190,000                                                                |                                          |  3.48                                          |                                                                                                     |                                                                                 |           |   |   |
| Terminated                                              |   |                                                                     |   32,500                                                     |                                          |  3.55                                          |                                                                                                     |                                                                                 |           |   |   |
|                                                    |   |                                                                     |                                                                   |                                          |                                                |                                                                                                     |                                                                                 |
| Shares                outstanding at March 31, 2007     |   |                                                                     |                    657,250                              |                                          |                      $4.69 |                                                                                                     |                                                                                 |   76 |   |
| Shares                exercisable at March 31, 2007     |   |                          467,250 |                          $5.18 |                                          |                                                |                  60 |                                                                                 |

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|                                                                                                                                                      |   | **Nine                    Months Ended**                 |      |                                               | **Three                    Months Ended** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|-----------|----------------------------------------------------|-------------------------------------------|--------|
|                                                                                                                                                      |   | **March                    31,**     |      | **March                    31,**    |                                      |
|                                                                                                                                                      |   | **2007**                                                 |      |                                               | **2006**                                  |   |   | **2007** |   |   | **2006** |   |
| Weighted                    average common shares outstanding, net of treasury shares, for                    basic                    earnings per share |   |                                                     | 6,294,332 |                                               |                                      |   | 6,278,705 |   |   |   | 6,294,332 |   |   |   | 6,293,115 |   |
|                                                                                                                                                      |   |                                                     |      |                                               |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Effect                    of dilutive securities                                                                                                          |   |                                                     | -         |                                               |                                      |   | - |   |   |   | - |   |   |   | 94,665 |   |
|                                                                                                                                                      |   |                                                     |      |                                               |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                    average common shares outstanding for diluted earnings per                    share                                           |   |                                                     | 6,294,332 |                                               |                                      |   | 6,278,705 |   |   |   | 6,294,332 |   |   |   | 6,387,780 |   |

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*Fair Value Measurements*

**Item      2. Management’s Discussion and Analysis of Financial Condition and Results of      Operations.**

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**Critical      Accounting Policies and Estimates**

**New      Accounting Standards**

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*Fair Value Measurements*

|                                                                                                          |   | Three                      Months EndedMarch                      31, |   |   | Nine                      Months EndedMarch                      31, |
|---------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------|
|                                                                                                          |   |  2007                                                            |   |   |  2006                                                           |   |   |  2007 |   |   |  2006 |
| Net                      sales                                                                                |   |                                                                  | 100.0  | %      |                                                                 |   | 100.0 | % |   |   | 100.0 | % |   |                                100.0% |
| Cost                      of goods sold                                                                       |   |                                                                  | 84.4   |   |                                                                 |   | 87.2 |   |   |   | 86.5 |   |   |   | 86.6 |   |
| Gross                      profit                                                                             |   |                                                                  | 15.6   |   |                                                                 |   | 12.8 |   |   |   | 13.5 |   |   |   | 13.4 |   |
| Selling,                      general and    administrative                      expenses |   |                                                                  | 15.9   |   |                                                                 |   | 11.6 |   |   |   | 12.5 |   |   |   | 12.9 |   |
| Operating                      (loss) profit                                                                  |   |                                                                  | (0.3   | )      |                                                                 |   | 1.2 |   |   |   | 1.0 |   |   |   | 0.5 |   |
| Interest                      expense                                                                         |   |                                                                  | 1.2    |   |                                                                 |   | 1.0 |   |   |   | 1.2 |   |   |   | 1.1 |   |
| (Loss)                      earnings before income taxes                                                      |   |                                                                  | (1.5   | )      |                                                                 |   | 0.2 |   |   |   | (0.2 | ) |   |   | (0.6 | ) |
| Income                      tax provision                                                                     |   |                                                                  | 0.0    |   |                                                                 |   | 0.0 |   |   |   | 0.0 |   |   |   | 4.0 |   |
| Net                      (loss) earnings                                                                      |   |                                                                  | (1.5   | )%     |                                                                 |   | 0.2 | % |   |   | (0.2 | )% |   |   | (4.6 | )% |

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**Comparison      of the three and nine months ended March 31, 2007 and March 31,      2006**

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----

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

|                                                                           |   | **Total** |                         |   | **<                    1 Year** |   |             | **1                    to 3 Years** |   |   | **3                    to 5 Years** |   |   | **>                    5 Years** |            |
|--------------------------------------------------------------------------------|--------|-----------|------------------------------|--------|------------------------------------|--------|------------------|-------------------------------------|--------|--------|-------------------------------------|--------|--------|-------------------------------------|-----------------|
|         Bank                    debt   |   | $         | 34,870,612                   |   |                               | $      | 34,870,612       |                                |   |   |                                |   |   |                                |            |   |   |
|     Capital                    lease                       |   |      | 100,176                      |   |                               |   |  51,153     |                                |   | $      |  49,023                        |   |   |                                |            |   |   |   |
|                            Operating leases |   |      | 6,478,863                    |   |                               |   | 1,320,290        |                                |   |   | 1,893,999                           |   |   | $                                   | 1,668,922       |   |   | $ | 1,595,652 |   |
|          Total                    |   | $         |    41,449,651 |   |                               | $      |  36,242,055 |                                |   | $      |  1,943,022                     |   |   | $                                   |  1,668,922 |   |   | $ |  1,595,652 |   |

**Inflation      and Seasonality**

** **

|   | **Item                3. Quantitative and Qualitative Disclosures About Market                Risk.** |
|--------|-------------------------------------------------------------------------------------------------------|

**Item      4. Controls and Procedures.**

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**PART      II – OTHER INFORMATION**

**Item      6.                     Exhibits.**

Exhibit      10.1

Exhibit      10.2 

Exhibit      31.1

Exhibit      31.2 

Exhibit      32.1

Exhibit      32.2 

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**S      I G N A T U R E**

**JACO      ELECTRONICS,      INC.**