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, 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 November 12,1999
- 3,653,521 (Excluding 412,200 Shares of Treasury Stock).


<PAGE>

<TABLE>
<CAPTION>

FORM 10-Q                                                                       September 30, 1999
Page  2



PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS


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


                                                              September 30,             June 30,
                                                                  1999                    1999
                                                              ------------            ------------
ASSETS

Current Assets

<S>                                                           <C>                       <C>
         Cash                                                 $   936,178               $   922,247
         Marketable securities                                    817,869                   881,622
         Accounts receivable - net                             25,668,271                23,408,900
         Inventories                                           33,229,723                33,224,719
         Prepaid expenses and other                               776,773                   660,782
         Prepaid and refundable income taxes                      741,778                   990,855
         Deferred income taxes                                    465,000                   336,000
                                                              -----------               -----------

                  Total current assets                         62,635,592                60,425,125


Property, plant and equipment - net                             6,841,773                 6,983,761

Deferred income taxes                                             395,000                   390,000

Excess of cost over net assets acquired - net                   3,541,333                 3,588,449

Other assets                                                    1,509,222                 1,543,328
                                                              -----------               -----------
                                                              $74,922,920               $72,930,663
                                                              ===========               ===========

</TABLE>



     See accompanying notes to condensed consolidated financial statements.






                                       2
<PAGE>





<TABLE>
<CAPTION>

FORM 10-Q                                                                       September 30, 1999
Page 3



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


                                                                      September 30,          June 30,
                                                                         1999                  1999
                                                                     -------------         -----------

LIABILITIES & SHAREHOLDERS' EQUITY

Current Liabilities

<S>                                                                 <C>                 <C>
         Accounts payable and accrued expenses                      $ 19,547,947        $ 17,635,319
         Current maturities of long term debt and
           capitalized lease obligations                                 944,910             791,814
                                                                   -------------        ------------

         Total current liabilities                                    20,492,857          18,427,133

Long term debt and capitalized lease obligations                      18,593,489          18,885,664

Deferred compensation                                                    762,500             750,000


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 shares outstanding                             406,572             406,572
         Additional paid-in capital - net                             22,565,045          22,531,295
         Retained earnings                                            14,134,882          13,920,807
         Accumulated other comprehensive income                          172,090             213,707
         Treasury stock                                               (2,204,515)         (2,204,515)
                                                                     ------------        ------------

         Total shareholders' equity                                   35,074,074          34,867,866
                                                                      ----------          ----------


                                                                     $74,922,920         $72,930,663
                                                                     ===========         ============
</TABLE>




      See accompanying notes to condensed consolidatedfinancial statements.






                                       3
<PAGE>






<TABLE>
<CAPTION>

FORM 10-Q                                                                       September 30, 1999
Page 4



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



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

<S>                                                               <C>                 <C>
NET SALES                                                         $42,017,363         $33,256,456

COST AND EXPENSES

Cost of goods sold                                                 34,081,758          26,554,068
                                                                   ----------          ----------
         Gross profit                                               7,935,605           6,702,388

Selling, general and administrative expenses                        7,248,597           6,795,052
                                                                 ------------        ------------
         Operating profit (loss)                                      687,008            (92,664)

Interest expense                                                      322,933             313,442
                                                                 ------------        ------------
         Earnings (Loss) before income taxes                          364,075           (406,106)

Income tax provision (benefit)                                        150,000           (164,000)
                                                                 ------------        ------------

         NET EARNINGS (LOSS)                                     $    214,075        $  (242,106)
                                                                 ============        ============
Net earnings (loss) per common share

Basic and diluted                                                $       0.06        $     (0.06)
                                                                 ============        ============
Weighted average common shares outstanding

         Basic                                                      3,653,521           3,830,397
         Diluted                                                    3,709,450           3,830,397
                                                                 ============        ============

     See accompanying notes to condensed consolidated financial statements.

</TABLE>


                                       4
<PAGE>



<TABLE>
<CAPTION>

FORM 10-Q                                                                       September 30, 1999
Page 5



                                         JACO ELECTRONICS, INC. AND SUBSIDIARIES
                                            CONSOLIDATED STATEMENT OF CHANGES
                                                 IN SHAREHOLDERS' EQUITY
                                   FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
                                                       (UNAUDITED)




                                                                                 Accumulated
                                                         Additional                other
                                                          paid-in     Retained   comprehensive
                                    Shares     Amount      capital    earnings     income
                                  ----------- ---------- ----------- -----------  ----------

<S>             <C>                <C>       <C>        <C>          <C>          <C>
Balance at July 1, 1999            4,065,721 $ 406,572  $ 22,801,295 $13,920,807  $ 213,707

Net earnings                                                             214,075

Unrealized loss on marketable
  securities - net                                                                 (41,617)

Comprehensive income

Deferred compensation
                                 ----------- ----------  -----------  -----------  ---------

Balance at September 30, 1999      4,065,721 $ 406,572  $ 22,801,295 $14,134,882  $ 172,090
                                  =========== ========== =========== ===========   ==========




                                                                          Total
                                      Treasury          Deferred       shareholders'
                                       stock          compensation       equity
                                    -----------       ----------      -----------

<S>             <C>                <C>                <C>              <C>
Balance at July 1, 1999            $ (2,204,515)      $ (270,000)      $ 34,867,866
                                                                       ------------
Net earnings                                                                214,075

Unrealized loss on marketable
  securities - net                                                          (41,617)
                                                                            --------
Comprehensive income                                                        172,458
                                                                            --------
Deferred compensation                                     33,750             33,750
                                     -------------   -------------        -----------

Balance at September 30, 1999       $ (2,204,515)      $ (236,250)       $ 35,074,074
                                      ===========     ============       ============


     See accompanying notes to condensed consolidated financial statements.





                                       5
<PAGE>





FORM 10-Q                                                    September 30, 1999
Page 6


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

                                                        1999           1998
                                                     ------------   -----------
Cash flows from operating activities
      Net earnings (loss)                              $ 214,075    $ (242,106)

Adjustments to reconcile net earnings (loss) to net
     cash provided by (used in) operating activities
          Depreciation  and amortization                 438,686       375,299
          Deferred compensation                           46,250        46,250
          Deferred income tax benefit                   (110,000)      (29,000)
          Provision for doubtful accounts                119,950       120,814
          Changes in operating assets and liabilities,
          (Increase) decrease in operating assets- net(2,251,239)      392,090
          Increase (decrease) in operating
          liabilities - net                            1,912,628      (381,717)
                                                     ------------   -----------

          Net cash provided by operating activities      370,350       281,630
                                                     ------------   -----------

Cash flows from investing activities
       Capital expenditures                            (112,242)     (742,538)
       Increase in marketable securities, net            (1,864)
       Decrease in other assets                          22,995        46,071
                                                     ------------   -----------

         Net cash used in investing activities           (91,111)     (696,467)
                                                     ------------   -----------

Cash flows from financing activities
       Borrowings under line of credit                12,795,589    15,987,250
       Payments under line of credit                 (12,860,157)  (13,656,102)
       Principal payments under equipment financing
       and term loans                                   (200,740)     (188,075)
       Purchase of treasury stock                                     (771,250)
                                                     ------------   -----------

Net cash (used in) provided by financing activities     (265,308)    1,371,823
                                                     ------------   -----------

NET INCREASE IN CASH                                      13,931       956,986
                                                     ------------   -----------

Cash at beginning of period                              922,247       562,556
                                                     ------------   -----------

Cash at end of period                                  $ 936,178    $ 1,519,542
                                                     ============   ===========

Supplemental schedule of non-cash financing and
    investing activities
Equipment under capital leases                         $ 126,229     $ 552,544



</TABLE>



     See accompanying notes to condensed consolidated financial statements.






                                       6
<PAGE>






FORM 10-Q                                                     September 30, 1999
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, 1999 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 extend the
maturity date to September  13, 2001.  The interest rate 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.  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 from July
31, 1996 through November 8, 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

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.





                                       7
<PAGE>





<TABLE>
<CAPTION>


FORM 10-Q                                                                       September 30, 1999
Page 8

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


                                                                   Three Months Ended
                                                                      September 30,
                                                       --------------------------------------------
                                                             1999                      1998
                                                       -----------------         ------------------

Weighted average common shares
  outstanding net of treasury shares,
<S>                                                           <C>                        <C>
  for basic earnings per share                                3,653,521                  3,830,397

Common stock equivalents for
  stock options                                                  55,929
                                                       -----------------         ------------------

Weighted average common shares
  outstanding for diluted earnings per share                  3,709,450                  3,830,397
                                                       =================         ==================

</TABLE>


         For the three  months  ended  September  30,  1999  options to purchase
574,796  shares of common stock 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) In fiscal  1999,  the  Company  adopted  Statement  of  Financial  Accounting
Standards No. 130 ("SFAS No. 130"),  "Reporting  Comprehensive Income." SFAS No.
130 establishes new rules for the reporting and display of comprehensive  income
and its components;  however,  the adoption of SFAS No. 130 has had no impact on
the Company's earnings or stockholders' equity. SFAS No. 130 requires unrealized
holding gains or losses on debt and equity securities  available for sale, which
prior to adoption were only reported  separately in stockholders'  equity, to be
included in comprehensive  income and accumulated  other  comprehensive  income.
Prior  year  financial  statements  have been  reclassified  to  conform  to the
requirements of SFAS No. 130.





                                       8
<PAGE>





FORM 10-Q                                                     September 30, 1999
Page 9

7) The Company  adopted  Statement of Financial  Accounting  Standards  No. 131,
"Disclosures About Segments of an Enterprise and Related  Information." SFAS No.
131 requires that the Company disclose certain  information  about its operating
segments defined as "components of an enterprise about which separate  financial
information  is  available  that is evaluated  regularly by the chief  operating
decision  maker  in  deciding  how  to  allocate   resources  and  in  assessing
performance." Generally, financial information is required to be reported on the
basis that it is used internally for evaluating segment performance and deciding
how to allocate resources to segments.

           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, 1999 and 1998 is not considered material to the
financial statements.

           The Company's chief  operating  decision maker utilizes net sales and
net earnings  (loss)  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. Information about the Company's segments is as follows:

<TABLE>
<CAPTION>

                                                                                  Three Months Ended,
                                                                                     September 30,
                                                                        ---------------------------------------
                                                                               1999               1998
                                                                                    (in thousands)

     Net sales from external customers
<S>                                                                           <C>                <C>
         Electronics components distribution                                  $39,224            $30,043
         Contract manufacturing                                                 2,793              3,213
                                                                              -------            -------

                                                                              $42,017            $33,256
                                                                               ======             ======
     Intersegment net sales
         Electronics components distribution                                $      68          $      71
         Contract manufacturing                                                     _                 60
                                                                              -------            -------

                                                                            $      68           $    131
                                                                             ========            =======
     Operating profit (loss)
         Electronics components distribution                                 $    582           $   (226)
         Contract manufacturing                                                   105                133
                                                                              -------            -------

                                                                             $    687          $     (93)
                                                                              =======            ========
     Interest expense
         Electronics components distribution                                 $    192          $     185
         Contract manufacturing                                                   131                128
                                                                             --------           --------

                                                                             $    323           $    313
                                                                             ========            =======


</TABLE>




                                       9
<PAGE>




<TABLE>
<CAPTION>


FORM 10-Q                                                                       September 30, 1999
Page 10



                                                                                 Three Months Ended
                                                                                    September 30,
                                                                        -------------------------------------
                                                                               1999               1998
                                                                                   (in thousands)
     Income tax provision (benefit)
<S>                                                                          <C>              <C>
         Electronics components distribution                                 $    161         $     (166)
         Contract manufacturing                                                   (11)                 2
                                                                              --------            ------

                                                                             $    150         $     (164)
                                                                              =======           =========

     Identifiable assets
         Electronics components distribution                                $  64,699          $  62,533
         Contract manufacturing                                                10,224             12,187
                                                                           ----------           --------

                                                                            $  74,923          $  74,720
                                                                             ========           ========

     Capital expenditures
         Electronics components distribution                              $        66         $      220
         Contract manufacturing                                                    46                523
                                                                            ---------         ----------

                                                                           $      112         $      743
                                                                            =========          =========

     Depreciation and amortization
         Electronics components distribution                               $      288        $       247
         Contract manufacturing                                                   151                128
                                                                           ----------         ----------

                                                                           $      439        $       375
                                                                            =========         ==========



</TABLE>





                                       10
<PAGE>




FORM 10-Q                                                    September 30, 1999
Page 11


                     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
seek to  capitalize  on this trend toward  outsourcing  by  increasing  sales of
products  enhanced  by  value-added  services.  Value-added  services  currently
provided by Jaco consist of configuring  complete  computer  systems to customer
specifications both in tower and desktop configurations, kitting (e.g. supplying
sets of specified  quantities of products to a customer that are prepackaged for
ease of feeding the customer's  production  lines),  and contract  manufacturing
through Nexus Custom Electronics,Inc., a wholly owned subsidiary of the Company.





                                       11
<PAGE>





<TABLE>
<CAPTION>

FORM 10-Q                                                                       September 30, 1999
Page 12


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


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

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

<S>                                                         <C>                            <C>
Net sales                                                   100.0%                         100.0%
Cost of goods sold                                           81.1                           79.8
                                                      ------------                   ------------
 Gross profit                                                18.9                           20.2
Selling, general and
  administrative expenses                                    17.3                           20.4
                                                      ------------                   ------------

Operating profit (loss)                                       1.6                           (0.2)
Interest expense                                              0.7                            1.0
                                                      ------------                   ------------

Earnings (Loss) before income taxes                           0.9                           (1.2)
Income tax provision (benefit)                                0.4                           (0.5)
                                                      ------------                   ------------
NET EARNINGS (LOSS)                                           0.5%                          (0.7)%
                                                      ============                   =============

</TABLE>

COMPARISON OF THE THREE MONTHS ENDED  SEPTEMBER  30, 1999  ("FISCAL  2000") WITH
THREE MONTHS ENDED SEPTEMBER 30, 1998 ("FISCAL 1999")

         Net sales for the first  quarter of Fiscal 2000  increased 26% to $42.0
million as compared to $33.3 million for the first  quarter of Fiscal 1999.  The
increase in net sales was  attributed to an improving  demand for  components in
all product segments.  The Company continues to experience growth in the sale of
flat panel  displays  division  and has seen  strong  demand  for its  inventory
management  systems  with  targeted  small to mid-size  customers.  This program
enables  the  Company to increase  the level of sales  generated  at these focus
accounts.

     Gross profit  margin as a  percentage  of net sales was 18.9% for the three
months ended  September 30, 1999 compared to 20.2% for the comparable  period in
the last fiscal year. The decrease was  attributable  to industry wide pressures
on  pricing  and a shift in  product  mix  toward a  greater  amount  of  active
components, including flat panel devices, which historically, have a lower gross
profit margin  compared to passive  components.  Prior to the end of the current
quarter,  the Company experienced an increase in demand for products,  resulting
in a stabilizing of resale pricing.



                                       12
<PAGE>




FORM 10-Q                                                    September 30, 1999
Page 13


         Selling, General and Administrative expenses ("SG&A") were $7.3 million
during the first  quarter of Fiscal 2000,  an increase of $.5 million, or 6.7%,
compared to $6.8 million  during the first quarter of Fiscal 1999.  The increase
in SG&A was attributable to higher commissions paid due to the increase in gross
profit  dollars,  the  additional  staffing of sales,  marketing  and  corporate
personnel in anticipation of an improvement in demand for electronic  components
and to provide  the  services  required  to  support  the  inventory  management
programs and technical support offered to customers.
         Interest expense  increased  slightly to approximately  $323,000 during
the first quarter of Fiscal 2000, as compared to $313,000  during the comparable
quarter of Fiscal 1999. The 3.0% increase in interest  expense was  attributable
to an increase in the Company's borrowing rate.
     Net earnings for the three months ended September 30, 1999 was $214,000, or
$.06 per share  diluted  compared to a net loss for Fiscal 1999 of $242,000,  or
$.06 per share  diluted.  The  increase  in  earnings  was  attributable  to the
increase  in  net  sales.  The  Company  is  cautiously  optimistic  that  it is
positioned to see increased performance based on the continued  strengthening of
the  electronics  component  industry in addition to the Company's  expenditures
during prior periods in the flat panel division,  automated inventory management
programs and field application engineers.

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  expiring  September 13, 2001. 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 $16,899,007
at September 30, 1999.  The term loan,  with a remaining  balance of $321,428 at
September 30, 1999,  requires monthly  principal  payments of $17,857,  together
with  interest  through  March 1,  2001.  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 September  30, 1999,  and  prohibits  the
payment of cash dividends.
         For the three months ended  September 30, 1999,  the Company's net cash
provided by operating  activities was approximately $0.4 million, as compared to
net cash  provided by operating  activities of $0.3 million for the three months
ended  September 30, 1998. The principal  portion of cash flow resulted from the
increase  in  accounts  payable  and  accrued  expenses.  This was  offset by an
increase in accounts receivable. Net cash used in investing activities decreased
to $0.1 million for the three months ended  September  30, 1999,  as compared to
$0.7  million for the three  months ended  September  30, 1998.  The decrease is
primarily  attributable  to a reduction  in capital  expenditures.  Net payments
under the Company's line of credit was approximately  $0.1 million for the three
months ended  September 30, 1999, as compared to net  borrowings of $2.3 million
for the  three  months  ended  September  30,  1998.  The  change  is  primarily
attributable to a reduction in capital  expenditures and no additional purchases
of  treasury  stock  during the three  months  ended  September  30,  1999.  The
Company's cash expenditures may vary significantly from current levels, based on
a number of factors, including, but not limited to, future acquisitions, if any.
         For the first three  months of Fiscal 2000 and Fiscal  1999,  inventory
turnover was 4.1x and 3.0x,  respectively.  The average days  outstanding of the
Company's accounts  receivable at September 30, 1999 was 53 days, as compared to
59 days at September 30, 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 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 November 8, 1999,
the Company  has  purchased  412,200  shares of its common  stock for  aggregate
consideration of $2,204,515 under this program.



                                       13
<PAGE>



FORM 10-Q                                                     September 30, 1999
Page 14

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 late  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 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 production  as of 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 complete and fully tested by late 1999. As a  contingency  plan,
these systems can be performed manually. 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  suppliers
and vendors.  These  parties  state that they intend to be Y2K  compliant by the
year  2000.  The  Company's  management  is  in  the  process  of  developing  a
"worst-case  scenario"  with  respect  to  Y2K  non-compliance  and  to  develop
contingency  plans designed to minimize the effects of such  scenario.  Although
management  believes that it is very unlikely that the worst-case  scenario will
occur, contingency plans will be developed and will address both IT (Information
Technology)  system and non-IT system (items containing  embedded chips, such as
elevators electronic door locks, telephone, etc.) failure. In the event of Y2K -
related IT system  failure,  the Company would be unable to ship orders  because
its power system would not be functioning.  In such event,  the Company plans to
use its own  generators  as a  back-up  power  source.  In terms of  non-IT  and
third-party Y2K non compliance,  the worst - case scenario for the Company would
involve the loss of supply of  component  parts or other  materials  from one or
more of its major suppliers.  The Company believes it has made contingency plans
with its vendors to have product available.





                                       14
<PAGE>






FORM 10-Q                                                     September 30, 1999
Page 15

         There is still  uncertainty  about the  broader  scope of the Year 2000
issue as it may affect the Company and third  parties  that are  critical to the
Company's  operations.  For example,  lack of readiness by electrical  and water
utilities,  financial institutions,  governmental agencies or other providers of
general  infrastructure  could pose  significant  impediments  to the  Company's
ability  to carry on its  normal  operations.  The  Company  intends  to request
assurances of Y2K readiness from its telephone and utilities suppliers. However,
management has been informed that some suppliers have either declined to provide
the requested assurances,  or have limited the scope of assurances to which they
are  willing to permit.  If  suppliers  of  services  that are  critical  to the
Company's  operations  were to experience  business  disruptions  as a result of
their lack of Y2K readiness, their problems could have a material adverse affect
on the financial  position and results of operations of the Company.  The impact
of a failure  of  readiness  by  critical  suppliers  cannot be  estimated  with
confidence, and the effectiveness of contingency plans to mitigate the effect of
any such failure is largely  untested.  Management  cannot  provide an assurance
that there will be no material  adverse  effects to the  financial  condition or
results of operations of the Company as a result of Y2K issues.
         The Company has spent to date approximately $1.8 million to replace the
core financial and reporting software systems for its distribution business. The
Company has utilized outside consultants to undertake a portion of the work.

Inflation

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

Quantitative and Qualitative Disclosure about Market Risk.

         The Company is exposed to interest rate change market risk with respect
to its credit facility with a financial institution which is priced 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.  At October 31, 1999,
$16,187,227  was  outstanding  under the credit  facility.  Changes in the LIBOR
interest  rate  during the fiscal year ending June 30, 2000 will have a positive
or negative effect on the Company's interest expense. Each 1% fluctuation in the
LIBOR interest rate will increase or decrease  interest  expense for the Company
by approximately $162,000.






                                       15
<PAGE>







FORM 10-Q                                                     September 30, 1999
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

                             27.1     Financial Data Schedule

                             99.8.5   Amendment to Second Restated
                                      and Amended Loan and Security Agreement
                                      dated October 26, 1999

                   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, Vice President/Finance
                                       (Principal Financial Officer)




DATED:  November 12, 1999





                                       17