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, 1999

                               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 14, 1999 -
3,653,521 (Excluding 412,200 Shares of Treasury Stock).


<PAGE>

<TABLE>
<CAPTION>

FORM 10-Q                                                                       March 31, 1999
Page  2



PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS


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

                                                                March 31,                June 30,
                                                                  1999                     1998    
                                                               ----------               ---------- 
ASSETS

Current Assets

<S>                                                           <C>                       <C>        
         Cash                                                 $   604,977               $   562,556
         Marketable securities                                    824,539                   764,810
         Accounts receivable, net                              25,906,750                21,887,618
         Inventories                                           33,538,231                35,737,288
         Prepaid expenses and other                             1,810,165                 1,203,198
         Prepaid income taxes                                     795,127                   610,132
         Deferred income taxes                                    759,000                   772,500
                                                              -----------               -----------

                  Total current assets                         64,238,789                61,538,102


Property, plant and equipment, net                              7,157,482                 6,102,445

Deferred income taxes                                             336,000                   333,000

Excess of cost over net assets acquired, net                    3,635,564                 3,776,912

Other assets                                                    1,716,466                 1,668,830
                                                              -----------               -----------


                                                              $77,084,301               $73,419,289
                                                              ===========               ===========


                          See accompanying notes to condensed consolidated financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

FORM 10-Q                                                                       March 31, 1999
Page 3



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


                                                                       March 31,             June 30,
                                                                         1999                  1998    
                                                                      -----------           ----------
LIABILITIES & SHAREHOLDERS' EQUITY

Current Liabilities

<S>                                                                 <C>                 <C>         
         Accounts payable and accrued expenses                      $ 19,012,327        $ 18,394,251
         Current maturities of long term debt and
           capitalized lease obligations                                 804,975             663,198
                                                                   -------------        ------------


         Total current liabilities                                    19,817,302          19,057,449

Long term debt and capitalized lease obligations                      20,811,144          17,036,593

Deferred compensation                                                    737,500             700,000


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 shares
            and 3,653,521 and 3,866,221
           shares outstanding, respectively                              406,572             406,572
         Additional paid in capital, net                              22,497,545          22,396,295
         Accumulated other comprehensive income                          179,317             164,385
         Retained earnings                                            14,839,436          15,077,957
         Treasury stock                                               (2,204,515)         (1,419,962)
                                                                     ------------        ------------

         Total shareholders' equity                                   35,718,355          36,625,247
                                                                      ----------          ----------


                                                                     $77,084,301         $73,419,289
                                                                     ===========         =========== 


                         See accompanying notes to condensed consolidated financial statements.


</TABLE>

<PAGE>

<TABLE>
<CAPTION>


FORM 10-Q                                                                       March 31, 1999
Page 4



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



                                                                   1999                 1998     
                                                               --------------       -------------


<S>                                                               <C>                 <C>        
NET SALES                                                         $36,187,676         $38,334,936


COST AND EXPENSES

Cost of goods sold                                                 29,193,984          30,421,293
                                                                   ----------          ----------

         Gross profit                                               6,993,692           7,913,643

Selling, general and administrative expenses                        6,538,685           7,190,963
                                                                 ------------        ------------

         Operating  profit                                            455,007             722,680

Interest expense                                                      335,630             280,821
                                                                 ------------        ------------

          Earnings before income taxes                                119,377             441,859

Income tax provision                                                   48,000             179,000
                                                                 ------------        ------------


         NET EARNINGS                                            $     71,377        $    262,859
                                                                 ============        ============

Net earnings per common share

Basic and diluted                                                $       0.02        $       0.07
                                                                 ============        ============

Weighted average common shares outstanding

         Basic                                                      3,653,521           3,798,010
                                                                 ============        ============
         Diluted                                                    3,663,882           3,920,838
                                                                 ============        ============




                     See accompanying notes to condensed consolidated financial statements.
</TABLE>


<PAGE>

<TABLE>
<CAPTION>


FORM 10-Q                                                                       March 31, 1999
Page 5



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



                                                                   1999                 1998     
                                                               --------------       -------------


<S>                                                              <C>                 <C>         
NET SALES                                                        $104,410,230        $115,001,364


COST AND EXPENSES

Cost of goods sold                                                 84,019,054          91,071,936
                                                                   ----------          ----------

         Gross profit                                              20,391,176          23,929,428

Selling, general and administrative expenses                       19,801,603          21,217,183
                                                                 ------------        ------------

         Operating  profit                                            589,573           2,712,245

Interest expense                                                      990,094             823,173
                                                                 ------------        ------------

         (Loss) earnings before income taxes                        (400,521)           1,889,072

Income tax benefit (provision)                                        162,000           (765,000)
                                                                 ------------        ------------


         NET (LOSS) EARNINGS                                     $  (238,521)        $  1,124,072
                                                                 ============        ============

Net (loss) earnings per common share

Basic and diluted                                                $     (0.06)        $       0.29
                                                                 ============        ============

Weighted average common shares outstanding

         Basic                                                      3,713,132           3,856,787
                                                                 ============        ============
         Diluted                                                    3,713,132           3,932,061
                                                                 ============        ============




                     See accompanying notes to condensed consolidated financial statements.

</TABLE>


<PAGE>
<TABLE>
<CAPTION>

FORM 10-Q                                                                                        March 31, 1999
Page 6



                                                   JACO ELECTRONICS, INC. AND SUBSIDIARIES
                                                      CONSOLIDATED STATEMENT OF CHANGES
                                                            IN SHAREHOLDERS' EQUITY
                                                   FOR THE NINE MONTHS ENDED MARCH 31, 1999
                                                                  (UNAUDITED)




                                                                                     Accumulated
                                                                    Additional          Other                           
                                           Common Stock               Paid-In       Comprehensive      Retained         
                                        Shares       Amount           Capital          Income          Earnings           
                                   --------------- -------------- ----------------  -------------- ----------------- 


<S>             <C>                     <C>            <C>           <C>                <C>            <C>              
Balance at July 1, 1998                 4,065,721      $ 406,572     $ 22,801,295       $ 164,385      $ 15,077,957     

Deferred compensation expense                                                                                             

Purchase of treasury stock                                                                                                 

Unrealized gain on marketable
  securities, net                                                                          14,932       

Net loss                                                                                                   (238,521)
                                   --------------- -------------- ----------------  -------------- -----------------  
Balance at March 31, 1999               4,065,721      $ 406,572     $ 22,801,295       $ 179,317      $ 14,839,436  
                                   =============== ============== ================  ============== =================

</TABLE>
<TABLE>
<CAPTION>


                                                                            Total
                                        Treasury         Deferred       Shareholders'
                                         Stock         Compensation        Equity
                                     ---------------- ---------------- -----------------
                                  
<S>             <C>                  <C>                <C>             <C>         
Balance at July 1, 1998              $ (1,419,962)      $ (405,000)     $ 36,625,247

Deferred compensation expense                              101,250           101,250

Purchase of treasury stock               (784,553)                          (784,553)

Unrealized gain on marketable
  securities, net                                                             14,932

Net loss                                                                    (238,521)
                                   ---------------     --------------     ----------------  

Balance at March 31, 1999           $ (2,204,515)      $ (303,750)      $ 35,718,355
                                   ===============    ==============    ===============  
 

                         See accompanying notes to condensed consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

FORM 10-Q                                                                                      March 31, 1999
Page 7


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

                                                                                   1999                 1998
                                                                             -----------------    -----------------
Cash flows from operating activities
<S>                                                                                <C>                 <C>        
      Net (loss) earnings                                                          $ (238,521)         $ 1,124,072

Adjustments to reconcile net (loss) earnings to net
     cash provided by (used in) operating activities
          Depreciation and amortization                                              1,192,647              993,183
          Deferred compensation                                                        138,750              110,625
          Deferred income tax expense (benefit)                                          1,000             (215,000)
          Provision for doubtful accounts                                              347,255              364,965
          Gain on sale of equipment                                                     (1,655)
          Changes in operating assets and liabilities,
          Increase in operating assets, net                                         (2,959,292)          (3,741,708)
          Increase in operating liabilities, net                                       618,076            2,401,338
                                                                             -----------------    -----------------

          Net cash (used in) provided by operating activities                        (901,740)           1,037,475
                                                                             -----------------    -----------------
Cash flows from investing activities
          Capital expenditures                                                      (1,461,827)            (783,323)
          Increase in marketable securities, net                                       (35,298)             (62,696)
          Proceeds from sale of equipment                                                9,689
          Increase in other assets                                                    (147,634)            (171,073)
                                                                             -----------------    -----------------

          Net cash used in investing activities                                     (1,635,070)          (1,017,092)
                                                                             -----------------    -----------------
Cash flows from financing activities
          Borrowings under line of credit                                           40,346,052          112,863,510
          Payments under line of credit                                            (36,954,685)        (111,670,859)
          Principal payments under equipment financing
               and term loans                                                         (602,583)            (670,683)
          Borrowings under term loan                                                   575,000
          Purchase of treasury stock                                                  (784,553)            (719,962)
                                                                             -----------------    -----------------
 
          Net cash provided by (used in) financing activities                        2,579,231             (197,994)
                                                                             -----------------    -----------------
 
          NET INCREASE (DECREASE) IN CASH                                               42,421             (177,611)
                                                                             -----------------    -----------------
  
Cash at beginning of period                                                            562,556              463,352
                                                                             -----------------    -----------------
 
Cash at end of period                                                                $ 604,977            $ 285,741
                                                                             =================    =================

Supplemental schedule of non-cash financing and
    investing activities
Equipment under capital leases                                                       $ 552,544            $ 614,620


                     See accompanying notes to condensed consolidated financial statements.
</TABLE>


<PAGE>



FORM 10-Q                                                         March 31, 1999
 Page 8


                     JACO ELECTRONICS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1999
                                   (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, 1998 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  for the  immediately  preceding four fiscal quarters
measured by a certain  financial  ratio,  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
650,000 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 412,200  shares of its common stock as of May
14, 1999 for aggregate consideration of $2,204,515.

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

5) In fiscal 1998, the Company  adopted the provisions of Statement of Financial
Accounting  Standards No. 128 ("SFAS No.  128"),  "Earnings per Share." SFAS No.
128 replaces the  calculation  of primary and fully  diluted  earnings per share
with basic and diluted  earnings per share.  Unlike primary  earnings per share,
basic earnings per share excludes any dilutive effects of options,  warrants and
convertible  securities.  Diluted  earnings  per  share is very  similar  to the
previously  reported  fully diluted  earnings per share.  All earnings per share
amounts  for all  periods  have been  presented  to  conform to the SFAS No. 128
computation.


<PAGE>

<TABLE>
<CAPTION>

FORM 10-Q                                                                        March 31, 1999
Page 9

           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,
                                                ------------------------------   ------------------------------
                                                   1999              1998              1999             1998
                                               --------------   ----------------   -------------     ------------
Weighted average common shares
  outstanding net of treasury shares,
<S>                                                <C>                <C>             <C>              <C>      
  for basic earnings per share                     3,653,521          3,798,010       3,713,132        3,856,787

Common stock equivalents for
  stock options                                       10,361            122,828                           75,274
                                               --------------   ----------------   -------------     ------------
                                                                                 
Weighted average common shares
  outstanding for diluted earnings per share       3,663,882          3,920,838       3,713,132        3,932,061
                                               ==============   ================   =============     ============
 
</TABLE>

         The diluted  loss per common  share for the nine months ended March 31,
1999 is based only on the weighted  average number of common shares  outstanding
during the period, as the inclusion of 3,656 common share equivalents would have
been antidilutive.

         For the three and nine months  ended March 31, 1999 options to purchase
584,230 and 613,564  shares of common stock,  respectively,  at a price range of
$2.69 to $12.75 and warrants to purchase 70,000 shares of common stock at $22.95
were outstanding  during the period. The stock options and warrants not included
in the computation of diluted  earnings per share was due to the exercise prices
being greater than the average market price of the common shares.

6) The Company has adopted SFAS No. 130 "Reporting  Comprehensive  Income" which
establishes  guidelines for reporting and disclosure of comprehensive income and
its  components.  The purpose of reporting  comprehensive  income is to report a
measure of all changes in equity that resulted from recognized  transactions and
other economic  events of the periods  presented  other than  transactions  with
stockholders.  Adoption of SFAS No. 130 had no economic  impact on the Company's
consolidated  financial  position,  net earnings,  stockholders'  equity or cash
flows, although the presentation of certain items has changed.

Comprehensive income and its components, net of tax, are as follows:
<TABLE>
<CAPTION>

                                                   Three Months Ended               Nine Months Ended
                                                       March 31,                        March 31,
                                                                               
                                              -----------------------------      ------------------------
                                                  1999            1998             1999          1998
                                              -------------    ------------      ----------   -----------
                                                     (in thousands)                  (in thousands)
<S>                                                    <C>            <C>           <C>           <C>   
Net earnings (loss)                                    $71            $263          $(239)        $1,124

Other comprehensive income:

   Net unrealized investments gains                      7              44              15            44
                                              -------------    ------------      ----------   -----------
 Comprehensive income (loss)                            $78            $307          $(224)        $1,168
                                              =============    ============      ==========   ===========
</TABLE>

         The components of accumulated  other  comprehensive  income included in
the  accompanying   condensed   consolidated  balance  sheets  and  consolidated
statement  of  changes  in  shareholders'  equity  consists  of  net  unrealized
investment gains on debt and equity securities  available for sale as of the end
of the period.


<PAGE>


FORM 10-Q                                                         March 31, 1999
Page 10

7) The  Financial  Accounting  Standard  Board  issued  Statement  of  Financial
Accounting  Standards No. 131  "Disclosures  about Segments of an Enterprise and
Related  Information" ( "SFAS 131").  SFAS 131  established  standards to report
information about operating segments and related  discussions about products and
services, geographic areas and major customers. SFAS 131 is effective for fiscal
years  beginning   after  December  15,  1997.  This  statement   permits  early
application  and requires  restatement  for all prior  periods.  SFAS 131 is not
required to be applied to interim  financial  statements  in the initial year of
adoption.  Management believes that the adoption of this statement will not have
any material impact on previously reported information.


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

Safe Harbor  Statement  under the Private  Securities  Litigation  Reform Act of
1995:  
     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
downturns in the  electronics  distribution  industry  which may have an adverse
economic  effect upon  manufacturers,  end-users of  electronic  components  and
electronic component distributors.

GENERAL

         Jaco is a distributor  of electronic  components,  provider of contract
manufacturing  and value-added  services.  Products  distributed by Jaco include
semiconductors,  capacitors,  resistors,  electromechanical  devices, flat panel
displays and monitors, 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
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 full  integration  solutions  with flat panel  display,  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  through the Company's
wholly-owned subsidiary, Nexus Custom Electronics, Inc.


<PAGE>


FORM 10-Q                                                         March 31, 1999
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,
                                           ------------------------------         ---------------------------

                                              1999               1998                1999             1998
                                           ----------         ----------          ----------       ----------
   
<S>                                               <C>               <C>                 <C>             <C>   
Net Sales                                      100.0%             100.0%              100.0%          100.0%
Cost of goods sold                              80.7               79.4                80.5            79.2
                                           ----------         ----------          ----------       ----------
Gross Profit                                    19.3               20.6                19.5            20.8
Selling, general and
  administrative expenses                       18.1               18.7                18.9            18.4
                                           ----------         ----------          ----------       ----------
Operating  profit                                1.2                1.9                 0.6             2.4
Interest expense                                 0.9                0.7                 1.0             0.7
                                           ----------         ----------          ----------       ----------
 
Earnings (loss) before income taxes              0.3                1.2                (0.4)            1.7
Income tax (expense) benefit                    (0.1)              (0.5)                0.2            (0.7)
                                           ----------         ----------          ----------       ----------
NET EARNINGS (LOSS)                              0.2%               0.7%               (0.2%)           1.0%
                                           ==========         ==========          ==========       ==========
</TABLE>

COMPARISON OF THE THREE AND NINE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998

         Net sales for the three and nine months ended March 31, 1999 were $36.2
million and $104.4 million,  respectively,  compared to $38.3 million and $115.0
million  for the three and nine  months  ended  March  31,  1998,  respectively,
representing  decreases in net sales of 5.6% and 9.2%.  The  Company's net sales
were impacted by continued  industry wide pricing  pressures,  compounded by the
softening  demand for electronic  components  which has affected the electronics
industry  for over two  years.  Sequentially,  net sales has  increased  for two
quarters.  Net sales for the fiscal third quarter grew 3.5% and 8.8% compared to
the  fiscal  second and  fiscal  first quarters,  respectively.  This  growth is
primarily attributable to an increased penetration at the Company's account base
and an increased  demand for active  components  (semiconductors  and flat panel
displays)  during the third  quarter.  Active  component  sales  increased  6.5%
compared to the fiscal 1999 second quarter and 20.9% compared to the fiscal 1999
first quarter.

         Gross profit  margins as a percentage of net sales were 19.3% and 19.5%
for the three and nine months  ended March 31, 1999,  respectively,  compared to
20.6%  and  20.8%  for  the  three  and  nine  months   ended  March  31,  1998,
respectively.  The decreases are attributable to industry wide pricing pressures
and a change in product mix toward a greater amount of active  components which,
historically, have a lower gross profit margin compared to passive components.
<PAGE>

FORM 10-Q                                                         March 31, 1999
Page 12

         Selling, general and administrative (`SG&A') expenses for the three and
nine  months  ended  March  31,  1999  were  $6.5  million  and  $19.8  million,
respectively,  representing decreases of $.7 and $1.4 million, or 9.1% and 6.7%,
when compared to the three and nine months ended March 31, 1998. The decrease in
SG&A is the result of cost saving  initiatives which the Company had implemented
in prior  periods  and a recovery  during the  quarter  ended  March 31, 1999 of
previously expensed legal fees.

         Interest  expense  increased to $336,000 and $990,000 for the three and
nine months ended March 31, 1999 compared to $281,000 and $823,000 for the three
and  nine  months  ended  March  31,  1998,  an  increase  of  19.5%  and  20.3%
respectively.   The  increases  are  primarily  attributable  to  increased  net
borrowings  due to the  Company's  purchases of its common stock under its stock
repurchase program,  fixed asset additions primarily for contract  manufacturing
and  operational  expenditures  made to upgrade the Company's core financial and
reporting software.

         Net earnings  (loss) for the three and nine months ended March 31, 1999
were  $71,000  and  $(239,000)  or $0.02 and  $(0.06)  per share,  respectively,
compared to $263,000  and  $1,124,000  or $0.07 and $0.29 per share,  during the
same periods last fiscal year.  The weighted  average  number of diluted  shares
outstanding  were  3,663,882  and  3,713,132 for the three and nine months ended
March 31, 1999,  compared to 3,920,838  and  3,932,061 for the same periods last
fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

         The  Company's  agreement  with its banks,  as  amended,  provides  the
Company with a $30,000,000 term loan and revolving line of credit facility based
principally on eligible  accounts  receivable and  inventories of the Company as
defined in the agreement which expires  September 13, 2000. The interest rate of
the  credit  facility  is based on the  average  30 day LIBOR  rate plus 3/4% to
1-1/4% depending on the Company's performance for the immediately preceding four
fiscal  quarters  measured  by a certain  financial  ratio,  and may be adjusted
quarterly.  The outstanding balance on the revolving line of credit facility was
$18,704,453  at March 31,  1999.  The term  loan,  with a  remaining  balance of
$428,571 at March 31,  1999,  requires  monthly  principal  payments of $17,857,
together  with  interest  through  September  13, 2000,  with a final payment of
$107,146  due  on  September  13,  2000.  Borrowings  under  this  facility  are
collateralized by substantially all of the assets of the Company.  The agreement
contains  provisions for maintenance of certain financial  ratios,  all of which
the Company is in compliance with at March 31, 1999 and prohibits the payment of
cash dividends.

         For the nine months ended March 31, 1999 the Company's net cash used in
operating activities was approximately $.9 million compared to net cash provided
by operating  activities of approximately $1.0 million for the nine months ended
March 31,  1998.  The  decrease is  primarily  attributable  to the  increase in
accounts  receivable.  Net  borrowings  under the  Company's  line of credit was
approximately  $3.4 million for the nine months ended March 31, 1999 compared to
a $1.2  million  for the nine  months  ended  March  31,  1998.  The  additional
borrowings is primarily  attributable to the purchase of $.8 million of treasury
stock along with fixed asset additions primarily for the contract  manufacturing
business.  The Company's cash  expenditure may vary  significantly  from current
levels,  based on a number of factors,  including,  but not  limited to,  future
acquisitions if any.

         For the first  nine  months of fiscal  1999 and fiscal  1998  inventory
turnover was 3.2:1 and 3.5:1, respectively.  The average days outstanding of the
Company's  accounts  receivable at March 31, 1999 was 61 days, as compared to 53
days at March 31, 1998.

         The Board of Directors of the Company had authorized the purchase of up
to 250,000 shares of its common stock under a stock repurchase  program.  During
fiscal  1999,  the Board of  Directors  authorized  the  repurchase  of up to an
additional 400,000 shares of the Company's common stock. The purchases may


<PAGE>


FORM 10-Q                                                         March 31, 1999
Page 13

be made by the  Company  from time to time on the open  market at the  Company's
discretion and will be dependent on market conditions.  Through May 14, 1999 the
Company  has  purchased  412,200  shares  of  its  common  stock  for  aggregate
consideration of $2,204,515 under this program.

         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.

Year 2000 Compliance

         The year 2000 ("Y2K") issue is the result of computer  programs using a
two-digit format, as opposed to four digits, to indicate the year. Such computer
systems  will be unable to  interpret  dates  beyond the year 1999,  which could
cause a system  failure or other  computer  errors,  leading to  disruptions  in
operations.  In April 1996, the Company developed a three-phase  program for Y2K
information systems compliance. Phase I was to identify those systems with which
the  Company  has  exposure  to Y2K  issues.  Phase II was the  development  and
implementation  of action  plans to be Y2K  compliant in all areas by late 1998.
Phase  III,  to be fully  completed  by mid  1999,  is the final  major  area of
exposure to ensure  compliance.  The Company  has  identified  three major areas
determined  to be critical for  successful  Y2K  compliance:  (1)  financial and
informational system applications,  (2) manufacturing applications and (3) third
party relationships.

         As  of  September  1,  1998,   Jaco  had  completed  the  redesign  and
development of an entirely new distribution software system. All of the dates in
this new database are 8 characters,  including the century.  The system has been
tested and has been in operation  since  September 1, 1998. The systems  include
customer  order  entry,  purchase  order entry to the  Company's  manufacturers,
warehousing and inventory control.

         The financial  systems,  Accounts  Payable and General Ledger have been
Y2K compliant since April 1997. The Accounts  Receivable system is Y2K compliant
as of September 1, 1998.

     Jaco's  distribution  facilities:  warehouse,  shipping and other  physical
handling have been tested and are Y2K compliant.

         The Company, as it relates to the contract manufacturing  operations in
accordance  with Phase I of the  program,  is in the  process of  conducting  an
internal  review  of all  systems  and  contacting  all  software  suppliers  to
determine  major  areas  of  exposure  to  Y2K  issues.  In  the  financial  and
information  system area a number of  applications  have been  identified as Y2K
compliant due to their recent  implementation.  The contract  manufacturing core
financial and reporting  systems are not Y2K compliant,  but are scheduled to be
completed and fully tested by late 1999. The costs relating to Y2K compliance in
the contract  manufacturing area are not expected to be material to the Company.
In the third party  area,  the  Company  has  contacted  most of its major third
parties.  These  parties  state that they intend to be Y2K compliant by the year
2000.

         The Company believes it will cost approximately $1.8 million to replace
the core financial and reporting software systems for its distribution business.
The Company is  utilizing  outside  consultants  to  undertake a portion of such
work.

 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, 1999
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

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







DATED May 14, 1999