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 September 30, 2001

                                       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:   (631) 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 November 9, 2001
- 5,707,459 (Excluding 618,300 Shares of Treasury Stock).


<PAGE>



FORM 10-Q                                                     September 30, 2001
Page 2


PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS

<TABLE>

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

                                                               September 30,            June 30,
                                                                  2001                    2001
                                                              ---------------          -----------
ASSETS

Current Assets

<S>                                                           <C>                       <C>
         Cash                                                 $   517,940               $    89,523
         Marketable securities                                    664,360                   771,406
         Accounts receivable - net                             30,409,274                37,820,946
         Inventories                                           55,462,996                62,212,121
         Prepaid expenses and other                             1,668,973                   824,121
         Prepaid and refundable income taxes                    1,429,839                   486,325
         Deferred income taxes                                  2,171,000                 2,190,000
                                                                ---------                 ---------

                  Total current assets                         92,324,382               104,394,442


Property, plant and equipment - net                             8,268,463                 8,389,651

Deferred income taxes                                             453,000                   436,000

Excess of cost over net assets acquired - net                  20,095,844                20,095,844

Other assets                                                    3,294,194                 2,998,902
                                                              -----------               -----------


                                                             $124,435,883              $136,314,839
                                                             ============              ============



                See accompanying notes to condensed consolidated financial statements.

</TABLE>




                                       2
<PAGE>




FORM 10-Q                                                     September 30, 2001
Page 3



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


                                                                      September 30,          June 30,
                                                                         2001                  2001
                                                                         ----                  ----

LIABILITIES & SHAREHOLDERS' EQUITY

Current Liabilities

<S>                                                                 <C>                 <C>
         Accounts payable and accrued expenses                      $ 17,976,291        $ 25,004,058
         Current maturities of long term debt and
           capitalized lease obligations                               1,027,823           1,081,905
                                                                   -------------        ------------


         Total current liabilities                                    19,004,114          26,085,963

Long term debt and capitalized lease obligations                      52,866,185          56,128,243

Deferred compensation                                                    862,500             850,000


SHAREHOLDERS' EQUITY


         Preferred stock - authorized, 100,000 shares,
           $10 par value; none issued
         Common stock - authorized, 20,000,000,
            $.10 par value; issued 6,325,759 and
           6,315,759 shares, respectively, and 5,707,459
           and 5,697,459 shares outstanding, respectively                632,576             631,576
         Additional paid-in capital                                   24,639,866          24,615,866
         Retained earnings                                            28,644,051          30,146,599
         Accumulated other comprehensive (loss) income                   (8,894)              61,107
         Treasury stock                                               (2,204,515)         (2,204,515)
                                                                     ------------        ------------

         Total shareholders' equity                                   51,703,084          53,250,633
                                                                      ----------          ----------


                                                                    $124,435,883        $136,314,839
                                                                    ============        ============




                  See accompanying notes to condensed consolidated financial statements.

</TABLE>


                                       3
<PAGE>



FORM 10-Q                                                     September 30, 2001
Page 4

<TABLE>


                     JACO ELECTRONICS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                   (UNAUDITED)



                                                                   2001                 2000
                                                               --------------       -------------


<S>                                                               <C>                 <C>
NET SALES                                                         $49,430,523         $94,158,828


COST AND EXPENSES

Cost of goods sold                                                 41,415,022          73,541,170
                                                                   ----------          ----------

         Gross profit                                               8,015,501          20,617,658

Selling, general and administrative expenses                        9,392,345          11,834,056
                                                                 ------------        ------------

         Operating (loss) profit                                  (1,376,844)           8,783,602

Interest expense                                                      769,704             888,735
                                                                 ------------        ------------

         (Loss) earnings before income taxes                      (2,146,548)           7,894,867

Income tax (benefit) provision                                      (644,000)           3,237,000
                                                                 ------------        ------------


         NET (LOSS) EARNINGS                                     $(1,502,548)        $  4,657,867
                                                                 ============        ============

Net (loss) earnings per common share:

Basic                                                            $     (0.26)        $       0.83
                                                                 ============        ============
Diluted                                                          $     (0.26)        $       0.75
                                                                 ============        ============


Weighted average common shares outstanding:

         Basic                                                      5,700,937           5,633,959
                                                                 ============        ============
         Diluted                                                    5,700,937           6,234,768
                                                                 ============        ============




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



                                       4
<PAGE>



<TABLE>

FORM 10-Q                                                                         September 30, 2001
Page 5




                                                   JACO ELECTRONICS, INC. AND SUBSIDIARIES
                                                  CONSOLIDATED STATEMENT OF CHANGES
                                                        IN SHAREHOLDERS' EQUITY
                                                 FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001
                                                                 (UNAUDITED)





                                                                    Additional
                                                                      paid-in            Retained
                                        Shares       Amount           capital            earnings
                                   --------------- -------------- ----------------  -------------------

<S>             <C>                     <C>            <C>           <C>                  <C>
Balance at July 1, 2001                 6,315,759      $ 631,576     $ 24,615,866         $ 30,146,599

Net loss                                                                                    (1,502,548)

Unrealized loss on marketable
  securities, net of deferred taxes

Exercise of stock options                  10,000          1,000           24,000
                                   --------------- -------------- ----------------  --------------------

Balance at September 30, 2001           6,325,759      $ 632,576     $ 24,639,866         $ 28,644,051
                                   =============== ============== ================  ====================




                                      Accumulated
                                         other                             Total
                                     comprehensive      Treasury       shareholders'
                                     income (loss)         stock           equity
                                     --------------- ---------------- -----------------

 Balance at July 1, 2001
                                           $ 61,107     $ (2,204,515)     $ 53,250,633
 Net loss
                                                                            (1,502,548)
 Unrealized loss on marketable
   securities, net of deferred taxes       (70,001)                            (70,001)

 Exercise of stock options
                                                                                25,000
                                     --------------- ---------------- -----------------
 Balance at September 30, 2001             $ (8,894)    $ (2,204,515)     $ 51,703,084
                                     =============== ================ =================



                                See accompanying notes to condensed consolidated financial statements.


</TABLE>



                                       5
<PAGE>


<TABLE>

FORM 10-Q
Page 6                                                                          September 30, 2001







                                                        JACO ELECTRONICS, INC. AND SUBSIDIARIES
                                                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                         FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                                                          (UNAUDITED)

                                                                                       2001                 2000
                                                                                 ------------------   -----------------

Cash flows from operating activities
<S>                                                                                   <C>                  <C>
      Net (loss) earnings                                                             $ (1,502,548)        $ 4,657,867

Adjustments to reconcile net (loss) earnings to net
     cash provided by (used in) operating activities
          Depreciation  and amortization                                                   592,139             735,220
          Deferred compensation                                                             12,500              46,250
          Deferred income tax expense (benefit)                                             41,032            (113,600)
          Provision for doubtful accounts                                                  176,900             360,703
          Changes in operating assets and liabilities,
          Decrease (increase) in operating assets - net                                 12,225,238         (25,517,995)
          (Decrease) increase in operating liabilities - net                            (7,027,767)          7,588,449
                                                                                 ------------------   -----------------

          Net cash provided by (used in) operating activities                            4,517,494         (12,243,106)
                                                                                 ------------------   -----------------

Cash flows from investing activities
Capital expenditures                                                                       (69,723)         (1,133,573)
Increase in marketable securities                                                           (1,987)             (1,969)
Increase in other assets                                                                  (329,542)            (21,362)
                                                                                 ------------------   -----------------

         Net cash used in investing activities                                            (401,252)         (1,156,904)
                                                                                 ------------------   -----------------

Cash flows from financing activities
Borrowings under line of credit                                                         44,782,170          87,922,848
Payments under line of credit                                                          (48,241,778)        (73,943,121)
Principal payments under equipment financing
and term loans                                                                            (253,217)           (211,427)
Payment of fractional shares                                                                                      (559)
Proceeds from exercise of stock options                                                     25,000
                                                                                 ------------------   -----------------

Net cash (used in) provided by financing activities                                     (3,687,825)         13,767,741
                                                                                 ------------------   -----------------

NET INCREASE IN CASH                                                                       428,417             367,731
                                                                                 ------------------   -----------------

Cash at beginning of period                                                                 89,523             617,603
                                                                                 ------------------   -----------------

Cash at end of period                                                                    $ 517,940           $ 985,334
                                                                                 ==================   =================

Supplemental schedule of non-cash financing and
    investing activities:
Equipment acquired under capital lease obligations                                       $ 396,685


                                See accompanying notes to condensed consolidated financial statements.


</TABLE>


                                       6
<PAGE>




FORM 10-Q                                                     September 30, 2001
Page 7


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

NOTE A - BASIS OF PRESENTATION

1) The accompanying condensed consolidated financial statements reflect all
adjustments, consisting only of normal recurring accrual adjustments, which are
in the opinion of management, necessary for a fair presentation of the
consolidated financial position and the results of operations at and for the
periods presented. Such financial statements do not include all the information
or footnotes necessary for a complete presentation. Therefore, they should be
read in conjunction with the Company's audited consolidated statements for the
year ended June 30, 2001 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 $70,000,000 term loan and revolving line of credit facility
with its banks, which is based principally on eligible accounts  receivables and
inventories  as  defined  in the  loan  agreement.  The  agreement  was  amended
effective  September 30, 2001  to (i) extend the maturity  date to September 14,
2003,  and (ii) change the  requirements  of certain  financial  covenants.  The
interest rate is based on the average  30-day LIBOR plus 1% to 2-1/4%  depending
on the Company's  performance for the immediately preceding four fiscal quarters
measured by a certain  financial  ratio.  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) For interim financial reporting purposes, the Company uses the gross profit
method for computing inventories, which consists of goods held for resale.

4) On September 18, 2001, the Company announced that its Board of Directors
authorized the repurchase of up to 250,000 shares of its outstanding common
stock. Purchases may be made from time to time in market or private transactions
at prevailing market prices.

5) On July 20, 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141 ("SFAS No. 141"), "Business
Combinations," and Statement of Financial Accounting Standards No. 142 ("SFAS
No. 142"), "Goodwill and Other Intangible Assets." SFAS No. 141 is effective for
all business combinations completed after June 30, 2001. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001. However, certain
provisions of this statement apply to goodwill and other intangible assets
acquired between July 1, 2001 and the effective date of SFAS No. 142. The new
standards require that all business combinations initiated after June 30, 2001
be accounted for under the purchase method. In addition, all intangible assets
acquired that are obtained through contractual or legal right, or are capable of
being separately sold, transferred, licensed, rented or exchanged shall be
recognized as an asset apart from goodwill. Goodwill and intangibles with
indefinite lives will no longer be subject to amortization, but will be subject
to at least an annual assessment for impairment by applying a fair value-based
test.

         The Company has adopted, as of July 1, 2001, the provisions of SFAS
Nos. 141 and 142. Accordingly, the results for the three months ended September
30, 2001 excludes approximately $279,000 of such amortization, as compared to
approximately $222,000, which was included in the comparable period last year.
By December 31, 2001, the Company will have completed a transitional fair
value-based impairment test of goodwill to determine if the fair value is less
than the recorded value at July 1, 2001. Impairment losses, if any, resulting
from the transitional testing will be recognized in the quarter ended December
31, 2001 as a cumulative effect of a change in accounting principle.





                                       7
<PAGE>



FORM 10-Q                                                     September 30, 2001
Page 8



         The following table presents a reconciliation of net (loss) earnings
and net (loss) earnings per common share amounts, as reported in the Company's
statement of operations, to those amounts adjusted for goodwill and intangible
asset amortization determined in accordance with the provisions of SFAS No. 142.

<TABLE>

                                                                        Three Months Ended September 30,

                                                                         2001                  2000
                                                                         -----                 -----
                                                                       (Unaudited)          (Unaudited)

                                                                           Dollars in thousands except
                                                                                 per share data


<S>                                                                     <C>                   <C>
Reported net (loss) earnings                                            $ (1,503)             $ 4,658
   Add back: goodwill amortization                                                                213
   Add back: franchise agreement amortization                                                       9
                                                                        --------              -------
Adjusted net (loss) earnings                                            $ (1,503)             $ 4,880
                                                                        =========             =======


BASIC (LOSS) EARNINGS PER SHARE:
    Reported net (loss) earnings                                        $ (0.26)               $ 0.83
    Goodwill amortization                                                                        0.04
    Franchise agreement amortization                                                             0.00
                                                                        --------              -------
    Adjusted net (loss) earnings                                        $ (0.26)               $ 0.87
                                                                        ========               ======


DILUTED (LOSS) EARNINGS PER SHARE:
    Reported net (loss) earnings                                        $ (0.26)               $ 0.75
    Goodwill amortization                                                                        0.03
    Franchise agreement amortization                                                             0.00
                                                                        --------              -------
    Adjusted net (loss) earnings                                        $ (0.26)               $ 0.78
                                                                        ========               ======
</TABLE>


6) In August 2001, the Financial  Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 144 "Accounting for the Impairment or
Disposal of  Long-Lived  Assets."  This  statement is effective for fiscal years
beginning after December 15, 2001. This supercedes SFAS 121, "Accounting for the
Impairment of Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed Of,"
while  retaining  many of the  requirements  of such  statement.  The Company is
currently evaluating the impact of the statement.

7) On June 6, 2000,  the  Company  acquired  all of the  issued and  outstanding
shares  of  common  stock,  no  par  value,  of  Interface   Electronics   Corp.
("Interface"),  a distributor  of electronic  parts,  components  and equipment,
located in Massachusetts.  The purchase price was $15,400,000 payable in cash at
the  closing,  plus a  deferred  payment of  $3,960,000  provided  that  certain
conditions,  as defined in the purchase agreement, were met. As of September 30,
2001,  $3,760,000 of the deferred payment has been paid. The remaining  $200,000
has been provided for in the accompanying  balance sheet. An additional  $25,000
has been provided for in the accompanying  balance sheet due to a purchase price
adjustment.  On the second anniversary of the closing date a deferred payment of
up to $2,640,000 shall be paid if certain conditions, as defined in the purchase
agreement,  are met. When the  remaining  contingency  is resolved,  the Company
shall  record the current  fair value of the  consideration  paid as  additional
goodwill.






                                       8
<PAGE>




FORM 10-Q                                                     September 30, 2001
Page 9



      The acquisition has been accounted for as a purchase and the operations of
Interface have been included in the Company's Statement of Operations since the
date of acquisition, June 6, 2000. Included in other assets are the costs of the
identifiable intangible assets acquired, principally an employment agreement
which is being amortized on a straight-line basis over five years, and a
franchise agreement which was being amortized on a straight-line basis over
fifteen years until the Company's adoption of SFAS No. 142. The excess of the
purchase price and related expenses over the net tangible and identifiable
intangible assets acquired amounted to approximately $17,486,000 and was being
amortized on a straight-line basis over twenty years until the Company's
adoption of SFAS No. 142.


8) On February 25, 2000, the Company purchased the operating assets of PGI,
Industries, Inc., ("PGI") an exporter of electronic components, located in
Ronkonkoma, New York. The purchase price was $1,200,000 paid in cash, plus a
deferred payment of $100,000 payable over the next two years based on certain
conditions, as defined in the purchase agreement. As of September 30, 2001,
$50,000 of the deferred payment has been paid. When the remaining contingency is
resolved, the Company shall record the current fair value of the consideration
issued as additional costs of the acquired enterprise. The acquisition has been
accounted for as a purchase and the operations of PGI have been included in the
Company's Statement of Operations since the date of acquisition, February 25,
2000. The excess of the purchase price over the fair value of the assets
acquired, approximately $260,000, was being amortized on a straight-line basis
over twenty years until the Company's adoption of SFAS No. 142.


9)   Total  comprehensive  income and its  components for the three months ended
     September 30, 2001 and 2000 are as follows:

                                                       Three Months Ended
                                                         September 30,
                                                --------------------------------
                                                    2001               2000
                                                --------------     -------------

Net (loss) income                                 (1,502,548)          4,657,867

Unrealized loss
  on marketable securities                          (109,033)            (3,897)


Deferred tax benefit                                   39,032              1,400
                                                --------------     -------------


Comprehensive (loss) income                       (1,572,549)          4,655,370
                                                ==============     =============



         Accumulated other comprehensive income is comprised of unrealized gains
and losses on marketable securities, net of the related tax effect.




                                       9
<PAGE>





FORM 10-Q                                                     September 30, 2001
Page 10


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

                                                       Three Months Ended
                                                         September 30,
                                                --------------------------------
                                                    2001               2000
                                                --------------     -------------

Weighted average common shares
  outstanding net of treasury shares,
  for basic earnings per share                      5,700,937          5,633,959

Common stock equivalents for
  stock options                                                          600,809
                                                --------------     -------------

Weighted average common shares
  outstanding for diluted earnings per share        5,700,937          6,234,768
                                                ==============     =============



         The diluted loss per common share for the three months ended September
30, 2001 is based only on the weighted average number of common shares
outstanding during the period, as the inclusion of 311,753 common share
equivalents would have been antidilutive.


11) The Company has two reportable segments: electronics parts distribution and
contract manufacturing. The Company's primary business activity is conducted
with small and medium size manufacturers, located in North America, that produce
electronic equipment used in a variety of industries. Information pertaining to
the Company's operations in different geographic areas for the three months
ended September 30, 2001 and 2000 is not considered material to the financial
statements.

           The Company's chief operating decision maker utilizes net sales and
net earnings information in assessing performance and making overall operating
decisions and resource allocations. The accounting policies of the operating
segments are the same as those described in the summary of significant
accounting policies included in the Company's annual report to shareholders.
Information about the Company's segments is as follows:



                                       10
<PAGE>



FORM 10-Q                                                     September 30, 2001
Page 11

                                                        Three Months Ended
                                                            September 30,
                                                       2001             2000
                                                    ---------        -------
                                                           (in thousands)
Net sales from external customers
    Electronics components distribution               $42,438          $87,767
    Contract manufacturing                              6,993            6,392
                                                      -------          -------

                                                      $49,431          $94,159
                                                       ======           ======

Intersegment net sales
    Electronics components distribution            $      114       $      128
    Contract manufacturing                              _____            _____

                                                   $      114       $      128
                                                    =========        =========

Operating (loss) profit
    Electronics components distribution              $ (1,574)         $ 8,259
    Contract manufacturing                                197              525
                                                      -------          -------

                                                     $ (1,377)         $ 8,784
                                                       =======           =====

Interest expense
    Electronics components distribution              $    604         $    752
    Contract manufacturing                                166              137
                                                     --------         --------

                                                      $   770         $    889
                                                       ======          =======

Income tax (benefit) provision
    Electronics components distribution            $     (654)     $     3,078
    Contract manufacturing                                 10              159
                                                     --------        ---------

                                                    $    (644)      $    3,237
                                                     =========       =========

Identifiable assets
    Electronics components distribution              $107,552         $138,719
    Contract manufacturing                             16,884           13,655
                                                     --------         --------

                                                     $124,436         $152,374
                                                      =======          =======

Capital expenditures
    Electronics components distribution             $      70       $      333
    Contract manufacturing                                                 801
                                                       ------          --------


                                                      $    70       $    1,134
                                                       ======        =========

Depreciation and amortization
    Electronics components distribution              $    369         $    536
    Contract manufacturing                                223              199
                                                     --------         --------

                                                     $    592         $    735
                                                      =======          =======



                                       11
<PAGE>




FORM 10-Q                                                     September 30, 2001
Page 12


                       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:
Except   for  the   historical   information,   this   filing   includes
forward-looking statements that involve risks and uncertainties,  including, but
not  limited  to,  general  industry  and  economic  conditions,  the  impact of
competitive products,  product demand and market acceptance risks,  fluctuations
in operating  results,  delays in development of  highly-complex  products,  the
ability of the Company to continue to expand its operations,  the level of costs
incurred in connection  with the Company's  expansion  efforts and the financial
strength of the Company's  customers and suppliers and other risks detailed from
time to time in the Company's  Securities and Exchange Commission  filings.  The
forward-looking  statements in this filing involve risks and uncertainties which
could cause actual  results,  performance  or trends,  including  margins,  SG&A
expenses as a percentage of revenues and earnings per diluted  share,  to differ
materially from those expressed in the forward-looking  statements.  The Company
believes that all forward-looking statements made by it have a reasonable basis,
but  there  can be no  assurance  that  management's  expectations,  beliefs  or
projections as expressed in the  forward-looking  statements will actually occur
or  prove  to be  correct.  Actual  results  may  differ  materially  from  such
information set forth herein.

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
seek to capitalize on this trend toward outsourcing by increasing sales of
products enhanced by value-added services. Value-added services currently
provided by Jaco consist of automated inventory management services, 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), and contract
manufacturing through Nexus Custom Electronics, Inc., a wholly owned subsidiary
of the Company. The Company is also expanding in the flat panel display
value-added market, which includes full system integration, kitting and the
implementation of touch technologies.



                                       12
<PAGE>



FORM 10-Q                                                     September 30, 2001
Page 13


Results of Operations

The following table sets forth certain items in the Company's statements of
operations as a percentage of net sales for the periods shown:



                                                   Three Months Ended
                                                      September 30,
                                           ----------------------------------

                                                 2001               2000
                                            ---------------      ------------

Net sales                                             100.0%              100.0%
Cost of goods sold                                     83.8                78.1
                                            ---------------      ---------------

Gross profit                                           16.2                21.9
Selling, general and
 administrative expenses                               19.0                12.6
                                            ---------------      ---------------

Operating (loss) profit                               (2.8)                 9.3
Interest expense                                        1.5                 0.9
                                            ---------------      ---------------

Loss (earnings) before income taxes                   (4.3)                 8.4
Income tax (benefit) provision                        (1.3)                 3.5
                                            ---------------      ---------------
NET (LOSS) EARNINGS                                   (3.0)%                4.9%
                                            ==============       ===============


COMPARISON OF THE THREE  MONTHS ENDED SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000
-------------------------------------------------------------------------------

     Net sales for the three months ended  September 30, 2001 were $49.4 million
compared to $94.2  million for the three  months  ended  September  30,  2000, a
decrease of  approximately  $44.8  million or 48%.  The decrease in net sales is
primarily  attributable to the continuing weak demand for electronic  components
throughout the electronics  industry.  Additionally,  many of our customers have
excess inventory based on current usage.

     Gross  profit was $8.0 million for the three  months  ended  September  30,
2001, a decrease of $12.6  million,  or 61%,  compared to $20.6  million for the
three months ended September 30, 2000.  Gross profit margins were 16.2% compared
to 21.9%, respectively. During the three months ended September 30, 2001, demand
for  components  continued  to weaken,  thereby resulting in  a decrease  in our
margins.  We do not foresee any material  increase in margins until such time as
the industry rebounds.

     Selling, general and administrative ("SG&A") expenses were $9.4 million for
the three months ended September 30, 2001, a decrease of $2.4 million, or 20.6%,
compared to $11.8  million for the three months ended  September  30, 2000. As a
percentage  of net sales,  SG&A  expenses  increased to 19.0% during the current
quarter,  compared to 12.6% during the same  quarter last year.  The decrease in
spending is  attributable  to lower staffing  levels required as a result of the
decrease  in demand  for  product  and a decrease  in  variable  costs,  such as
commissions  paid to sales  personnel,  as a result of the  reduction  in sales.
Management  is  continuing  to review all SG&A  expenses,  and will  continue to
reduce costs that are deemed discretionary.


                                       13
<PAGE>



FORM 10-Q                                                     September 30, 2001
Page 14


     Interest  expense  decreased  to $0.8  million for the three  months  ended
September  30,  2001,  as compared to $0.9  million for the three  months  ended
September 30, 2000, or approximately  13%. The reduction in interest expense was
primarily the result of a decrease in interest rates.  Additionally,  due to the
decrease  in sales,  there  has been a  reduction  in  Accounts  Receivable  and
management has  implemented  inventory  reduction  programs.  These factors have
resulted in a reduction in bank borrowings.

     Net loss for the three months ended  September  30, 2001 was $1.5  million,
$0.26 per share  diluted,  compared to net  earnings  for the three months ended
September 30, 2000 of $4.7 million, or $0.75 per share diluted. The loss for the
current  quarter is primarily  the result of the decrease in sales and reduction
in gross profit margin.

LIQUIDITY AND CAPITAL RESOURCES

     Our  agreement  with our banks,  as amended  effective  September 30, 2001,
expires on September 14, 2003. The agreement provides us with a $70 million term
loan and  revolving  line of  credit  facility  based  principally  on  eligible
accounts  receivable and  inventories as defined in the agreement.  The interest
rate of the  credit  facility  is based on the  average  30-day  LIBOR rate plus
1.0%-2.25%  depending on our  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
$51.1  million  at  September  30,  2001.  Borrowings  under this  facility  are
collateralized  by  substantially  all of our  assets.  The  agreement  contains
provisions for maintenance of certain financial ratios,  all of which we were in
compliance  with at  September  30,  2001,  and  prohibits  the  payment of cash
dividends.

     For the three  months  ended  September  30,  2001,  our cash  provided  by
operating  activities was  approximately  $4.5 million,  as compared to net cash
used in operating  activities  of $12.2  million for the same period last fiscal
year. The increase in net cash provided is primarily  attributable to a decrease
in accounts receivable and inventory. This was partially offset by a decrease in
accounts  payable and accrued  expenses for the three months ended September 30,
2001.  The decrease in accounts  receivable  and inventory was the result of the
decrease in net sales for the three months ended September 30, 2001, as compared
to the same period last year. Net cash used in investing activities decreased to
$0.4 million for the three months ended  September 30, 2001, as compared to $1.2
million for the three months ended September 30, 2000. The decrease is primarily
attributable to a reduction in capital expenditures.  Net cash used in financing
activities  was $3.7 million for the three months  ended  September  30, 2001 as
compared to net cash  provided by financing  activities of $13.8 million for the
comparable  period last fiscal year.  The increase in net cash used is primarily
attributable  to the  decrease  in net  borrowings  under  the line of credit of
approximately $17.4 million.

     Our cash expenditures may vary significantly from current levels,  based on
a number of factors, including, but not limited to future acquisitions, if any.

     For the three months ended  September 30, 2001 and September 30, 2000,  our
inventory turnover was 2.8x and 5.1x, respectively. The average days outstanding
of our accounts receivable at September 30, 2001 were 63 days, as compared to 46
days at September 30, 2000. We believe that cash flow from  operations and funds
available under our credit facility will be sufficient to fund our capital needs
for at least the next twelve months.


Inflation

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


                                       14
<PAGE>



FORM 10-Q                                                     September 30, 2001
Page 15





Quantitative and Qualitative Disclosure about Market Risk.

         We are exposed to interest rate changes with respect to our credit
facility which bears interest at the higher of the prime rate or the federal
funds rate plus 0.5%, or at our option, at a rate equal to the average 30-day
LIBOR rate plus 1.0% to 2.25% depending on our performance for the immediately
preceding four fiscal quarters measured by a certain financial ratio, and may be
adjusted quarterly. At October 31, 2001 $46.3 million was outstanding under the
credit facility. Changes in the LIBOR interest rate during the fiscal year will
have a positive or negative effect on our interest expense. Each 1.0%
fluctuation in the LIBOR interest rate will increase or decrease interest
expense for us by approximately $0.5 million based on outstanding borrowings at
October 31, 2001.
               The impact of interest rate fluctuations on other floating rate
debt is not material.



                                       15
<PAGE>



FORM 10-Q                                                     September 30, 2001
Page 16

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:

                            99.8.12  Amendment to Second Restated
                                     and Amended Loan and Security Agreement
                                     dated November 14, 2001

                b)          Reports on Form 8-K:  None


                                       16
<PAGE>



                                S I G N A T U R E




         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                 JACO ELECTRONICS, INC.
                                           (Registrant)



                        BY: /s/  Jeffrey D. Gash
                                 ---------------------------------------
                                 Jeffrey D. Gash, Chief Financial Officer
                                 (Principal Financial Officer)









DATED:  November 14, 2001