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


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

                  For the quarterly period ended June 30, 1999

          [ ] 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 1-8191


                               PORTA SYSTEMS CORP.
                               -------------------
             (Exact name of registrant as specified in its charter)

    Delaware                                      11-2203988
    --------                                      ----------
(State or other jurisdiction of                (I.R.S. Employer
incorporation or organization)                Identification No.)


                   575 Underhill Boulevard, Syosset, New York
                   ------------------------------------------
                    (Address of principal executive offices)

                                      11791
                                      -----
                                   (Zip Code)

                                  516-364-9300
                                  ------------
                (Company's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 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  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                     Yes X      No ___


Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock as of the latest practicable date:

      Common Stock (par value $0.01) 9,488,661 shares as of August 6, 1999


                               Page 1 of 14 pages


<PAGE>

PART I.- FINANCIAL INFORMATION

Item 1- Financial Statements

<TABLE>
<CAPTION>
                                   PORTA SYSTEMS CORP. AND SUBSIDIARIES
                                        Consolidated Balance Sheets
                                           (Dollars in thousands)
                                                                                       June 30,         December 31,
                                                                                         1999               1998
                                                                                      ---------         ------------
<S>                                                                                     <C>                <C>
                                                  Assets                             (Unaudited)
                                                  ------
Current assets:
     Cash and cash equivalents                                                          $ 3,399            $ 3,044
     Accounts receivable, net                                                            11,784             19,802
     Inventories                                                                          8,524              8,944
     Prepaid expenses                                                                     1,932              1,716
                                                                                        -------            -------
                  Total current assets                                                   25,639             33,506
                                                                                        -------            -------
      Property, plant and equipment, net                                                  3,774              4,213
      Deferred computer software, net                                                        42                 82
      Goodwill, net                                                                      11,366             11,597
      Other assets                                                                        2,615              2,738
                                                                                        -------            -------
                  Total assets                                                          $43,436            $52,136
                                                                                        =======            =======
                                                  Liabilities and Stockholders' Equity
                                                  ------------------------------------
Current liabilities:
      Current portion of senior debt                                                    $ 2,000              2,000
      12% subordination debentures                                                        5,843                 --
      Accounts payable                                                                    3,349              6,893
      Accrued expenses                                                                    5,688              6,266
      Accrued interest payable                                                              615                545
      Accrued commissions                                                                 1,966              2,438
      Income taxes payable                                                                  498                762
      Accrued deferred compensation                                                         196                196
      Short-term loans                                                                       82                144
                                                                                        -------            -------
                  Total current liabilities                                              20,237             19,244
                                                                                        -------            -------

Senior debt net of current maturities                                                    11,968             11,188
12% subordinated debentures                                                                  --              5,685
6% convertible subordinated debentures                                                      368                365
Deferred Compensation                                                                       942              1,021
Income taxes payable                                                                        445                719
Other long-term liabilities                                                               1,017                776
Minority interest                                                                         1,044              1,154
                                                                                        -------            -------
                  Total long-term liabilities                                            15,784             20,908
                                                                                        =======            =======


Stockholders' equity:
      Preferred stock, no par value; authorized 1,000,000 shares, none issued                --                 --
      Common stock, par value $.01; authorized 20,000,000 shares, issued
       9,484,742 shares at June 30, 1999
          and December 31, 1998                                                              95                 95
       Additional paid-in capital                                                        75,135             75,135
       Accumulated other comprehensive loss:
              Foreign currency translation adjustment                                    (3,822)            (3,754)
       Accumulated deficit                                                              (61,956)           (57,273)
                                                                                        -------            -------
                                                                                          9,452             14,203
        Treasury stock, at cost                                                          (1,938)            (1,938)
        Receivable for employee stock purchases                                             (99)              (281)
                                                                                        -------            -------
                  Total stockholders' equity                                              7,415             11,984
                                                                                        -------            -------
                  Total liabilities and stockholders' equity                            $43,436            $52,136
                                                                                        =======            =======
</TABLE>

          See accompanying notes to consolidated financial statements.

                               Page 2 of 14 pages


<PAGE>


                      PORTA SYSTEMS CORP. AND SUBSIDIARIES
                 Unaudited Consolidated Statements of Operations
                      (In thousands, except per share data)


                                                             Six Months Ended
                                                           June 30,    June 30,
                                                            1999        1998
                                                         ----------   ---------

Sales                                                     $ 18,635    $ 30,943
Cost of sales                                               13,185      17,622
                                                          --------    --------
     Gross profit                                            5,450      13,321

Selling, general and administrative expenses                 6,023       6,967
Research and development expenses                            2,747       3,013
                                                          --------    --------
         Total expenses                                      8,770       9,980
                                                          --------    --------

         Operating income (loss)                            (3,320)      3,341

Interest expense                                            (1,720)     (1,782)
Interest income                                                104         157
Other income                                                   158         712
Debt conversion expense                                         --        (945)
                                                          --------    --------

       Income (loss) before income taxes, minority
       interest and extraordinary item                      (4,778)      1,483

Income tax expense                                             (15)       (200)
Minority interest                                              110         (76)
                                                          --------    --------

       Income (loss) before extraordinary item              (4,683)      1,207


Extraordinary item                                              --          76
                                                          --------    --------

Net income (loss)                                         $ (4,683)   $  1,283
                                                          ========    ========

Per share data:

Basic per share amounts:

        Income (loss) before extraordinary item           $  (0.49)   $   0.13
        Extraordinary item                                      --        0.01
                                                          --------    --------
          Net income (loss) per share of common stock     $  (0.49)   $   0.14
                                                          ========    ========

        Weighted average shares outstanding                  9,485       9,220
                                                          ========    ========

Diluted per share amounts:

        Income (loss) before extraordinary item           $  (0.49)   $   0.12
        Extraordinary item                                      --        0.01
                                                          --------    --------
          Net income (loss) per share of common stock     $  (0.49)   $   0.13
                                                          ========    ========

        Weighted average shares outstanding                  9,485      10,075
                                                          ========    ========

     See accompanying notes to unaudited consolidated financial statements.

                               Page 3 of 14 pages


<PAGE>

                      PORTA SYSTEMS CORP. AND SUBSIDIARIES
                 Unaudited Consolidated Statements of Operations
                      (In thousands, except per share data)


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


Sales                                                      $  9,109    $ 14,651
Cost of sales                                                 6,470       8,017
                                                           --------    --------
     Gross profit                                             2,639       6,634

Selling, general and administrative expenses                  3,269       3,500
Research and development expenses                             1,477       1,683
                                                           --------    --------
         Total expenses                                       4,746       5,183
                                                           --------    --------

         Operating income (loss)                             (2,107)      1,451

Interest expense                                               (927)       (925)
Interest income                                                  36          79
Other income                                                     21         203
                                                           --------    --------

       Income (loss) before income taxes, minority
       interest and extraordinary item                       (2,977)        808

Income tax expense                                               (7)       (184)
Minority interest                                                44        (121)
                                                           --------    --------

Net income (loss)                                          $ (2,940)   $    503
                                                           ========    ========


Per share data:

Basic per share amounts:
         Net income per share of common stock              $  (0.31)   $   0.05
                                                           ========    ========

         Weighted average shares outstanding                  9,485       9,299
                                                           ========    ========

Diluted per share amounts:
         Net income per share of common stock              $  (0.31)   $   0.05
                                                           ========    ========

         Weighted average shares outstanding                  9,485      10,345
                                                           ========    ========

     See accompanying notes to unaudited consolidated financial statements.

                               Page 4 of 14 pages


<PAGE>

                      PORTA SYSTEMS CORP. AND SUBSIDIARIES
        Unaudited Consolidated Statements of Comprehensive Income (Loss)


                                                      Six Months Ended
                                                    June 30,   June 30,
                                                      1999       1998
                                                    --------   --------

Net income (loss)                                   $(4,683)   $ 1,283

Other comprehensive income (loss), net of tax:

         Foreign currency translation adjustments       (68)       127
                                                    -------    -------


Comprehensive income (loss)                         $(4,751)   $ 1,410
                                                    =======    =======


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

Net income (loss)                                   $(2,940)   $   503

Other comprehensive income (loss), net of tax:

         Foreign currency translation adjustments       (27)       (15)
                                                    -------    -------


Comprehensive income (loss)                         $(2,967)   $   488
                                                    =======    =======

     See accompanying notes to unaudited consolidated financial statements.

                               Page 5 of 14 pages


<PAGE>

<TABLE>
<CAPTION>
                                   PORTA SYSTEMS CORP. AND SUBSIDIARIES
                              Unaudited Consolidated Statements of Cash Flows
                                             (In thousands)

                                                                                          Six  Months Ended
                                                                                     June 30,           June 30,
                                                                                       1999               1998
                                                                                    --------            --------
<S>                                                                                  <C>                <C>
Cash flows from operating activities:
     Net income (loss)                                                               $(4,683)           $ 1,283
     Adjustments to reconcile net income to net cash provided by
       operating activities:
         Extraordinary gain                                                               --                (76)
         Non-cash debt conversion expense                                                 --                945
         Non-cash financing expenses                                                      14                228
         Write off of interest expense                                                    --                304
         Depreciation and amortization                                                   723              1,080
         Amortization of discount on convertible subordinated debentures                 161                108
         Minority interest                                                              (110)                76
Changes in assets and liabilities:
         Accounts receivable                                                           8,018               (940)
         Inventories                                                                     420                 56
         Prepaid expenses                                                               (216)              (437)
         Other assets                                                                     71                (68)
         Accounts payable, accrued expenses and other liabilities                     (4,900)            (1,873)
                                                                                     -------            -------
              Net cash provided by (used in ) operating activities                      (502)               686
                                                                                     -------            -------

     Cash flows from investing activities:
         Proceeds from disposal of assets                                                243                 --
         Capital expenditures                                                           (226)              (297)
         Repayment of employee loans                                                     182                 --
                                                                                     -------            -------
              Net cash provided by (used in) investing activities                        199               (297)
                                                                                     -------            -------


     Cash flows from financing activities:
         Proceeds from senior debt                                                     1,800                  6
         Repayments of senior debt                                                    (1,020)            (3,883)
         Proceeds from 12% subordinated debentures and warrants                           --              6,000
         Repayment of Zero coupon senior subordinated convertible notes                   --             (2,796)
         (Repayments of) proceeds from short term loans                                  (62)               (57)
                                                                                     -------            -------
              Net cash provided by (used in) financing activities                        718               (730)
                                                                                     -------            -------

     Effect of exchange rate changes on cash                                             (60)               127
                                                                                     -------            -------


     Increase (decrease) in cash and cash equivalents                                    355               (214)

     Cash and equivalents - beginning of the year                                      3,044              5,091
                                                                                     -------            -------

     Cash and equivalents - end of the period                                        $ 3,399           $  4,877
                                                                                     =======           ========



     Supplemental cash flow disclosures:
         Cash paid for interest expense                                              $ 1,381            $ 1,219
                                                                                     =======            =======

         Cash paid for income taxes                                                  $   306            $    82
                                                                                     =======            =======
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                               Page 6 of 14 pages


<PAGE>

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Management's  Responsibility For Interim Financial  Statements Including
        All Adjustments Necessary For Fair Presentation

      Management  acknowledges  its  responsibility  for the  preparation of the
accompanying  interim  consolidated   financial  statements  which  reflect  all
adjustments, consisting of normal recurring adjustments, considered necessary in
its opinion for a fair statement of its consolidated  financial position and the
results of its operations for the interim periods presented.  These consolidated
financial  statements  should  be  read  in  conjunction  with  the  summary  of
significant  accounting policies and notes to consolidated  financial statements
included  in the  Company's  annual  report to  stockholders  for the year ended
December 31, 1999.  Results for the first six months of 1999 are not necessarily
indicative of results for the year.

Note 2: Inventories

      Inventories are valued at lower of cost or market. Inventory costs at June
30, 1999 and December  31,1998 have been computed  using a standard cost system.
The  composition  of  inventories  at the end of the  respective  periods  is as
follows:

                                        June 30, 1999     December 31,1998
                                        -------------     ----------------
                                                 (in thousands)

Parts and components                         $4,291            $4,959
Work-in-process                                 944               743
Finished goods                                3,289             3,242
                                             ------            ------
                                             $8,524            $8,944
                                             ======            ======

Note 3: Senior Debt

      On June 30, 1999, the Company's debt to its senior lender was
$13,968,000.  During the six and three months  ended June 30, 1998,  the Company
repaid principal of $1,020,000 and $400,000,  respectively. The Company borrowed
$1,800,000 during the six and three-month  periods ended June 30, 1999. Based on
anticipated  principal  payments,  $2,000,000  has been  classified as a current
liability at June 30, 1999.

      Financial  debt  covenants  include an interest  coverage  ratio  measured
quarterly, limitations on the incurrence of indebtedness, limitations on capital
expenditures, and prohibitions on declarations of any cash or stock dividends or
the repurchase of the Company's  stock. As of June 30, 1999, the Company was not
in compliance with the interest coverage covenant and obtained a waiver from its
senior lender.

Note 4: 12% Subordinated Notes

      As of June 30,  1999,  the  Company  has  outstanding  $6,000,000  of 12 %
Subordinated  Notes due January 3, 2000 ("12% Notes") which are  classified as a
current  liability.  The carrying value of such 12% Notes as of June 30, 1999 is
$5,843,000 which is net of a related issuance discount. During the quarter ended
March 31, 1999,  pursuant to the terms of the 12% Notes,  the Company  issued to
the holders of the 12% Notes  Series C Warrants to  purchase  150,000  shares of
common  stock at an average  price of $1.94 per share to the  holders of the 12%
Notes.  The Series C  Warrants,  together  with the Series B Warrants  issued in
1998, were valued at $630,000 and recorded as part of additional paid in capital
in 1998.

                               Page 7 of 14 pages


<PAGE>

Note 5: Segments Data

      The Company has three reportable segments:  Line Connection and Protection
Equipment  ("Line")  whose  products  interconnect  copper  telephone  lines  to
switching  equipment and provides fuse elements that protect telephone equipment
and personnel from electrical  surges;  Operating  Support Systems ("OSS") whose
products automate the testing,  provisioning,  maintenance and administration of
communication  networks and the  management of support  personnel and equipment;
and Signal Processing  ("Signal") whose products are used in data  communication
devices that employ high frequency transformer technology.

      The factors used to determine the above segments focused  primarily on the
types of products and services provided,  and the type of customer served.  Each
of these  segments  is  managed  separately  from  the  others,  and  management
evaluates segment performance based on operating income.

      Total assets for the Company  declined  from December 31, 1998 to June 30,
1999  due to  decreased  accounts  receivable  primarily  from  the Line and OSS
segments.  There has been no  significant  change from  December 31, 1998 in the
basis of measurement of segment revenues and profit or loss.

<TABLE>
<CAPTION>
                                     Six Months Ended             Three Months Ended
                             June 30, 1999    June 30, 1998  June 30, 1999   June 30, 1998
                             -------------    -------------  -------------   -------------
<S>                           <C>             <C>            <C>             <C>
Revenue:
    Line                      $  9,161,000    $ 10,600,000   $  4,533,000    $  5,831,000
    OSS                          6,268,000      15,743,000      3,065,000       6,569,000
    Signal                       3,109,000       4,520,000      1,486,000       2,195,000
                              ------------    ------------   ------------    ------------
                              $ 18,538,000    $ 30,863,000   $  9,084,000    $ 14,595,000
                              ============    ============   ============    ============

Segment profit:
    Line                      $  2,207,000    $  2,564,000   $    839,000    $  1,684,000
    OSS                         (3,990,000)      2,083,000     (2,090,000)        544,000
    Signal                         809,000       1,296,000        349,000         549,000
                              ------------    ------------   ------------    ------------
                              $   (974,000)   $  5,943,000   $   (902,000)   $  2,777,000
                              ============    ============   ============    ============
</TABLE>


The following table reconciles segment totals to consolidated totals:

<TABLE>
<CAPTION>
                                                     Six Months Ended                    Three Months Ended
                                               June 30, 1999     June 30, 1998    June 30, 1999     June 30, 1998
                                               -------------     -------------    -------------     -------------
<S>                                             <C>               <C>               <C>               <C>
Revenue:
    Total revenue for reportable
         segments                               $ 18,538,000      $ 30,863,000      $  9,084,000      $ 14,595,000
    Other revenue                                     97,000            80,000            25,000            56,000
                                                ------------      ------------      ------------      ------------
    Consolidated total revenue                  $ 18,635,000      $ 30,943,000      $  9,109,000      $ 14,651,000
                                                ============      ============      ============      ============

Operating income:
    Total segment Profit
    for reportable segments$                    $   (974,000)     $  5,943,000      $   (902,000)     $  2,777,000
    Corporate and unallocated                     (2,346,000)       (2,602,000)       (1,205,000)       (1,326,000)
                                                ------------      ------------      ------------      ------------
    Consolidated total
    operating income                            $ (3,320,000)     $  3,341,000      $ (2,107,000)     $  1,451,000
                                                ============      ============      ============      ============
</TABLE>

                               Page 8 of 14 pages


<PAGE>

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

      The  Company's  consolidated  statements  of  operations  for the  periods
indicated below, shown as a percentage of sales, are as follows:


<TABLE>
<CAPTION>
                                              Six Months Ended  Three Months Ended
                                              ----------------  ------------------
                                                   June 30,          June 30,
                                                   --------          --------
                                                1999     1998     1999     1998
                                                ----     ----     ----     ----
<S>                                             <C>      <C>      <C>      <C>
Sales                                           100%     100%     100%     100%
Cost of Sales                                    71%      57%      71%      55%
Gross Profit                                     29%      43%      29%      45%
Selling, general and administrative expenses     32%      22%      36%      24%
Research and development expenses                15%      10%      16%      11%
     Operating income                           (18%)     11%     (23%)     10%
Interest expense - net                           (9%)     (5%)    (10%)     (6%)
Other income                                      1%       2%       0%       1%
Debt conversion expense                           0%      (3%)      0%       0%
Minority interest                                 1%       0%       1%      (1%)
Income taxes                                      0%      (1%)      0%      (1%)
Extraordinary item                                0%       0%       0%       0%
Net income                                      (25%)      4%     (32%)      3%
</TABLE>

The Company's sales by product line for the periods ended June 30, 1999 and 1998
are as follows:

                                      Six Months Ended
                                      ----------------
                                         June 30,
                                         --------
                                 1999               1998
                                 ----               ----
                                   (Dollars in thousands)

Line                       $ 9,161     49%       $10,600        34%
OSS                          6,268     33%        15,743        51%
Signal                       3,109     17%         4,520        15%
Other                           97      1%            80         0%
                           --------------        ------------------
                           $18,635    100%       $30,943       100%
                           ==============        ==================

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

Line                       $ 4,533       50%       $ 5,830       40%
OSS                          3,065       34%         6,570       45%
Signal                       1,486       16%         2,195       15%
Other                           25        0%            53        0%
                           ----------------       -----------------
                           $ 9,109      100%       $14,651      100%
                           ================       =================

                               Page 9 of 14 pages


<PAGE>

Results of Operations

      The Company's sales for the six months ended June 30, 1999 compared to the
six months ended June 30, 1998 decreased by $12,308,000  (40%) from  $30,943,000
in 1998 to  $18,635,000  in 1999.  Sales for the quarter  ended June 30, 1999 of
$9,109,000 decreased by $5,542,000 (38%) compared to $14,651,000 for the quarter
ended June 30, 1998.  The decrease in sales for the six and three month  periods
are due  primarily to reduced  sales from the OSS  division  for these  periods,
although  sales from Line  Connection and Signal also decreased for both the six
and three month periods.

      Line sales for the six months ended June 30 decreased from  $10,600,000 to
$9,161,000,  or $1,439,000  (14%) from 1998 to 1999.  Sales for the three months
ended  June  30  decreased  by  $1,298,000  (22%)  from  $5,831,000  in  1998 to
$4,533,000  in 1999.  The  decrease for both the six and three months ended June
30, 1999 reflects reduced unit sales primarily to customers in the United States
and Mexico.

      OSS sales for the six months ended June 30, 1999 was  $6,268,000  compared
to the six months ended June 30, 1998 of  $15,743,000,  a decrease of $9,475,000
(60%).  OSS revenue  for the three  months  ended June 30,  1999 was  $3,065,000
compared to the three  months ended June 30, 1998 of  $6,569,000,  a decrease of
$3,504,000  (53%).  The  decrease in sales during the six and three months ended
June 30, 1999 resulted from delays in the installation of certain  contracts and
delays  in  obtaining  certain  anticipated  large  new  orders  which  are  now
anticipated to be secured in the third and fourth quarters of 1999.

      Signal  sales for the six  months  ended  June 30,  1999  were  $3,109,000
compared  to the six months  ended June 30,  1998 of  $4,520,000,  a decrease of
$1,411,000 (31%). Sales for the three months ended June 30, 1999 were $1,486,000
compared to the three  months ended June 30, 1998 of  $2,195,000,  a decrease of
$709,000  (32%).  The  decrease  in sales  for the six and  three-month  periods
primarily  reflects  customer  requested  postponements  and are  anticipated to
generate  sales  beginning  in the  fourth  quarter of 1999.  Furthermore,  1998
revenue was  positively  effected by shipments on multiple  year sales orders to
certain military customers, which were secured during the latter part of 1997.

      Cost of sales for the six months and the quarter ended June 30, 1999, as a
percentage of sales compared to the same periods of 1998,  increased from 57% to
71% and from 55% to 71%, respectively.  The decline in gross margin is primarily
attributed to  inefficiency  resulting in the inability to absorb  certain fixed
expenses  associated with the OSS contracts over a  substantially  lower revenue
base.

      Selling,  general and administration  expenses decreased by $944,000 (14%)
from $6,967,000 to $6,023,000 for the six months ended June 30, 1999 compared to
1998.  For the quarter ended June 30, 1999 selling,  general and  administration
expenses  decreased by $231,000  (7%) from 1998.  The decrease from 1998 to 1999
for the six and three months primarily  reflects lower sales  commissions  based
upon the reduced revenues for the first six months of 1999.

      Research  and  development  expenses  decreased  by  $266,000  (9%) and by
$206,000  (12%)  for the six and  three  months  ended  June 30,  1999  from the
comparable periods in 1998,  respectively.  The decreased expenses resulted from
the  completion  of certain  development  projects.  This  decrease was somewhat
offset by increased  development  expenses  related to the Company's  efforts to
develop new products, primarily related to the OSS business.

                               Page 10 of 14 pages


<PAGE>

Results of Operations (continued)

      As a result of the above,  for the six months ended June 30, 1999 compared
to  1998,  the  Company  had an  operating  loss of  $3,320,000  in 1999  versus
operating  income  $3,341,000  in 1998.  The  Company had an  operating  loss of
$2,107,000  for the quarter ended June 30, 1999 as compared to operating  income
of $1,451,000 for the quarter ended June 30, 1998.

      Other income for the six months ended June 30, 1998 included $400,000 from
the settlement of litigation and $167,000 of additional  funds received from the
settlement of the sale of the Company's Israeli business.

      During the six months  ended June 30,  1998,  the  Company  recorded  debt
conversion  expense of  $945,000  as a result of the  conversion  of Zero Coupon
Notes and 6% Convertible Subordinated Debentures to common stock.

      In the six months ended June 30, 1998, the Company recorded a $76,000 gain
from the early extingushment of its 6% Convertible Subordinated Debt as a result
of the exchange of the 6% Debt for Zero Coupon Notes and common stock.

      Income  tax  expense  decreased  for the six months  ended  June 30,  1999
compared to 1998 by $185,000 from $200,000 to $15,000,  and for the three months
ended June 30, 1999  compared to 1998 by $177,000 from $184,000 to $7,000 due to
the Company's losses for the respective periods.

      As the  result  of the  foregoing  the  Company  incurred  a net  loss  of
$4,683,000,  $0.49 per share  (basic and  diluted) for the six months ended June
30, 1999 compared with net income after extraordinary items of $1,283,000, $0.14
per share (basic) and $0.13 per share  (diluted),  for the six months ended June
30, 1998. The net loss for the three months ended June 30, 1999 was  $2,940,000,
$0.31 per share  (basic  and  diluted),  compared  with net income for the three
months ended June 30, 1998 of $503,000, $0.05 per share (basic and diluted).

Liquidity and Capital Resources

      At June 30, 1999 the Company had cash and cash  equivalents  of $3,399,000
compared with $3,044,000 at December 31, 1998. The Company's  working capital at
June 30, 1999 was  $5,402,000,  compared to working  capital of  $14,262,000  at
December  31,  1998.  The  decline in working  capital  reflects  (i)  decreased
accounts  receivable  and (ii)  the  shift of the 12%  Subordinated  Notes  from
long-term to current liabilities.

      As of June 30, 1999,  the Company's  loan and security  agreement with its
senior  secured  lender,  which expires  January 2, 2001,  provides the Company,
under its  revolving  line of credit  and its  letter of credit  facility,  with
combined availability totaling $9,000,000.  The combined availability is subject
to the Company's  borrowing base and amounts  outstanding under the revolver and
committed  letters  of  credit.   In  addition,   the  Company  has  $13,968,000
outstanding as of June 30, 1999 of which  $1,542,000 was a non-interest  bearing
note,  $1,750,000  was  outstanding  against the revolving  line of credit,  and
$10,676,000 was a term loan  agreement.  As discussed in Note 3, the Company was
not in compliance with the interest coverage covenant and obtained a waiver from
its senior lender for the period ended June 30, 1999.

                               Page 11 of 14 pages


<PAGE>

Liquidity and Capital Resources (continued)

      As of June 30, 1999, the Company's current liabilities include $5,843,000,
net of unamortized debt discount of $157,000,  of the principal value $6,000,000
12% Subordinated  Notes, all of which are due and payable on January 3, 2000. At
June 30, 1999, the Company does not have  sufficient  resources to pay the Notes
when they  mature and it is likely  that it cannot  generate  such cash from its
operations.  Although  the Company is seeking to refinance  or  restructure  the
Notes and believes it will be able to prior to the maturity  date,  no assurance
can be given that it will be  successful  in these  efforts.  If the  Company is
unable to refinance or  restructure  the Notes,  the  Company's  business may be
materially and adversely affected.

Year 2000 Issue

      Many existing  computer programs use only two digits to identify a year in
a date field. These programs were designed and developed without considering the
impact of the upcoming  change in the century.  If not corrected,  many computer
applications could fail or create erroneous results by or at the year 2000. This
is referred to as the "Year 2000 Issue." Management has initiated a company-wide
program to prepare the Company's computer systems and applications for year 2000
compliance.

      The  Company has  assigned a team to monitor  Year 2000  compliance.  With
respect to the  products the Company  offers for sale,  the Company has verified
that the products  are Year 2000  compliant.  The team is charged with  ensuring
Year  2000  compliance  for all  hardware  and  software  products  through  its
purchasing process, as well as assessing the Year 2000 readiness and risk to the
Company of its critical  vendors and suppliers.  The team is also responsible to
coordinate  Year 2000  compliance  for its  internal  systems  and  devices.  At
present,  Year 2000 compliance of the Company's  internal systems and devices is
scheduled to be substantially complete by September 1999.

      The  Company  expects  to  incur  internal  staff  costs  as well as other
expenses necessary to prepare its systems for the year 2000. The Company expects
to both replace some systems and upgrade  others.  Maintenance  or  modification
costs will be expensed as incurred.  Management  estimates that the cost of this
program will approximate  $500,000,  with  approximately  $200,000  representing
incremental  costs to the  Company.  The  total  cost  effort  does not  include
potential  costs related to any customer or other claims or the cost of internal
hardware  or  software  replaced in the normal  course of  business.  Based upon
current  information and assessment,  the Company does not believe that the Year
2000 issue as  discussed  above will be  material to its  financial  position or
results of  operations  or that its business  will be adversely  affected in any
material respect. Nevertheless, achieving Year 2000 compliance is dependent upon
many factors,  some of which are not  completely  within the Company's  control.
Should  either the  Company's  internal  systems or one or more of its  critical
vendors or suppliers  fail due to Year 2000 issues,  the Company's  business and
its results of operations could be adversely affected.

      The Company has evaluated  the worst case  scenarios in the event that its
products,  systems,  or  business  partners  are not  Year  2000  ready  and has
formulated contingency plans to operate. If the Company's investigations suggest
that there is a significant  risk that certain  products,  systems,  or business
partners might not be Year 2000 ready,  the Company will execute its contingency
plans accordingly.

      Statements  contained in this Year 2000  disclosure are subject to certain
protection under the Year 2000 Information and Readiness Disclosure Act.

                               Page 12 of 14 pages


<PAGE>

Forward Looking Statements

      Statements contained in this Form 10-Q include forward-looking  statements
that are  subject  to risks  and  uncertainties.  Actual  results  could  differ
materially  from  those  currently  anticipated  due  to a  number  of  factors,
including  those  identified in this Form 10-Q,  the Company's  Annual Report on
From 10-K for the year ended December 31, 1998 and in other  documents  filed by
the Company with the Securities and Exchange Commission.

PART II-OTHER INFORMATION

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

      The Company's  1999 Annual  Meeting of  Stockholders  was held on June 23,
1999. At the annual meeting,  the  stockholders (i) reelected its present board,
consisting of Messrs.  William V. Carney,  Seymour  Joffe,  Michael A. Tancredi,
Warren H. Esanu, Herbert H. Feldman,  Stanley Kreitman, Lloyd I. Miller, III and
Robert Schreiber (ii) approved the 1999 Incentive and Non-Qualified Stock Option
Plan, (iii) approved the 1999 Employee Stock Purchase Plan and (iv) ratified the
appointment  of BDO  Seidman,  LLP as  independent  auditors  for the year ended
December 31, 1999.

      Each director  received at least  8,431,003  votes for his  election.  Set
forth below is the vote on the other matters approved at the meeting.

         Matter                       Votes For     Votes Against  Abstentions
         ------                       ---------     -------------  -----------
1999 Incentive and Non-Qualified
    Stock Option Plan                 4,489,138       503,048        38,389

1999 Employee Stock Purchase
    Plan                              4,511,517       385,372        37,346

Appointment of Auditors               8,421,459        77,022        24,496

Item 6. Exhibits and Reports on Form 8-K

         (a)      Exhibits
                  None

         (b)      Reports on Form 8-K
                  None

                               Page 13 of 14 pages

<PAGE>

SIGNATURES

      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.

                                           PORTA SYSTEMS CORP.

         Dated August 11, 1999             By /s/William V. Carney
                                              --------------------
                                              William V. Carney
                                              Chairman of the Board

         Dated August 11, 1999             By /s/Edward B. Kornfeld
                                              ---------------------
                                              Edward B. Kornfeld
                                              Senior Vice President
                                              and Chief Financial Officer

                               Page 14 of 14 pages