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**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

**PORTA      SYSTEMS CORP. **

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

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**PART      I.- FINANCIAL INFORMATION**

**Item      1- **
**Financial      Statements**

|                                                                                                                                              |   |                    |    |                        |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------|-----------------------------|--------|
|                                                                                                                                                   |   | Unaudited               |    |                        |   |
|                                                                                                                                              |   | June                30, |    | December                31, |   |
| Assets                                                                                                                                            |   | 2007                    |    | 2006                        |   |
| Current                assets                                                                                                                     |   |                    |    |                        |   |
| Cash                and cash equivalents                                                                                                          |   | $                       | 669     |                        | $      | 2,102 |   |
| Accounts                receivable - trade, less allowance for doubtful accounts of $23 in                2007                and $13 in 2006     |   |                    | 6,068   |                        |   | 5,417 |   |
| Inventories                                                                                                                                       |   |                    | 5,550   |                        |   | 4,591 |   |
| Prepaid                expenses and other current assets                                                                                          |   |                    | 610     |                        |   | 697 |   |
| Assets                of discontinued operations                                                                                                  |   |                    | — |                        |   | 383 |   |
| Total                current assets                                                                                                               |   |                    | 12,897  |                        |   | 13,190 |   |
|                                                                                                                                              |   |                    |    |                        |   |   |   |
| Property,                plant and equipment, net                                                                                                 |   |                    | 1,557   |                        |   | 1,571 |   |
| Goodwill,                net                                                                                                                      |   |                    | 2,961   |                        |   | 2,961 |   |
| Other                assets                                                                                                                       |   |                    | 54      |                        |   | 51 |   |
| Long                term assets of discontinued operations                                                                                        |   |                    | — |                        |   | 11 |   |
| Total                assets                                                                                                                       |   | $                       | 17,469  |                        | $      | 17,784 |   |
|                                                                                                                                              |   |                    |    |                        |   |   |   |
| Liabilities                and Stockholders’ Deficit                                                                                        |   |                    |    |                        |   |   |   |
| Current                liabilities:                                                                                                               |   |                    |    |                        |   |   |   |
| Senior                debt, principal amount                                                                                                      |   | $                       | 23,373  |                        | $      | 23,513 |   |
| Subordinated                notes, principal amount                                                                                               |   |                    | 6,144   |                        |   | 6,144 |   |
| 6%                convertible subordinated debentures, principal amount                                                                           |   |                    | 385     |                        |   | 385 |   |
| Accounts                payable                                                                                                                   |   |                    | 5,453   |                        |   | 6,106 |   |
| Accrued                expenses and other                                                                                                         |   |                    | 2,760   |                        |   | 2,136 |   |
| Accrued                interest payable                                                                                                           |   |                    | 6,917   |                        |   | 6,127 |   |
| Liabilities                of discontinued operations                                                                                             |   |                    | — |                        |   | 425 |   |
|  Total                current liabilities                                                                                                    |   |                    | 45,032  |                        |   | 44,836 |   |
|                                                                                                                                              |   |                    |    |                        |   |   |   |
| Deferred                compensation, net of current portion                                                                                      |   |                    | 739     |                        |   | 771 |   |
| Total                long-term liabilities                                                                                                        |   |                    | 739     |                        |   | 771 |   |
| Total                liabilities                                                                                                                  |   |                    | 45,771  |                        |   | 45,607 |   |
|                                                                                                                                              |   |                    |    |                        |   |   |   |
| Stockholders’                deficit:                                                                                                       |   |                    |    |                        |   |   |   |
| Preferred                stock, no par value; authorized 1,000,000 shares, none issued                                                            |   |                    | — |                        |   | — |   |
| Common                stock, par value $.01; authorized 20,000,000 shares, issued 10,106,501                shares in 2007 and 10,106,480 in 2006 |   |                    | 101     |                        |   | 101 |   |
| Additional                paid-in capital                                                                                                         |   |                    | 76,125  |                        |   | 76,125 |   |
| Accumulated                deficit                                                                                                                |   |                    | (98,339 | )                           |   | (97,713 | ) |
| Accumulated                other comprehensive loss:                                                                                              |   |                    |    |                        |   |   |   |
| Foreign                currency translation adjustment                                                                                            |   |                    | (4,251  | )                           |   | (4,398 | ) |
|                                                                                                                                              |   |                    | (26,364 | )                           |   | (25,885 | ) |
| Treasury                stock, at cost, 30,940 shares                                                                                             |   |                    | (1,938  | )                           |   | (                1,938 | ) |
| Total                stockholders’ deficit                                                                                                  |   |                    | (28,302 | )                           |   | (27,823 | ) |
| Total                liabilities and stockholders’ deficit                                                                                  |   | $                       | 17,469  |                        | $      | 17,784 |   |
|                                                                                                                                                   |   |                    |    |                        |   |   |   |
|                                                                                                                                                   |   |                    |    |                        |   |   |   |

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|                                                                                                  |   |                            |                  |                    |   |
|-------------------------------------------------------------------------------------------------------|--------|---------------------------------|-----------------------|-------------------------|--------|
|                                                                                                  |   | Six                Months Ended |                  |
|                                                                                                  |   | June                30**,**     |                  | June                30, |   |
|                                                                                                  |   | 2007                            |                  | 2006                    |   |
|                                                                                                  |   |                            |                  |                    |   |
| Sales                                                                                                 |   | $                               | 15,271                |                    | $      | 16,021 |   |
| Cost                of sales                                                                          |   |                            | 10,576                |                    |   | 10,556 |   |
| Gross                profit                                                                           |   |                            | 4,695                 |                    |   | 5,465 |   |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Selling,                general and administrative expenses                                           |   |                            | 2,993                 |                    |   | 2,704 |   |
| Research                and development expenses                                                      |   |                            | 778                   |                    |   | 756 |   |
| Total                expenses                                                                         |   |                            | 3,771                 |                    |   | 3,460 |   |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Operating                income                                                                       |   |                            | 924                   |                    |   | 2,005 |   |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Interest                expense, net                                                                  |   |                            | (990                  | )                       |   | (587 | ) |
| Other                income (expense), net                                                            |   |                            | —               |                    |   | 2 |   |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Income                (loss) from continuing operations before income taxes                           |   |                            | (66                   | )                       |   | 1,420 |   |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Income                tax expense                                                                     |   |                            | (39                   | )                       |   | (70 | ) |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Income                (loss) from continuing operations before discontinued                operations |   |                            | (105                  | )                       |   | 1,350 |   |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Discontinued                operations:                                                               |   |                            |                  |                    |   |   |   |
| Loss                from discontinued operations (net of taxes of zero)                               |   |                            | (87                   | )                       |   | (159 | ) |
| Write                off of net assets of discontinued operations                                     |   |                            | (434                  | )                       |   | — |   |
| Total                loss from discontinued operations                                                |   |                            | (521                  | )                       |   | (159 | ) |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Net                income (loss)                                                                      |   | $                               | (626                  | )                       | $      | 1,191 |   |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Other                comprehensive (loss):                                                            |   |                            |                  |                    |   |   |   |
| Foreign                currency translation adjustments                                               |   |                            | (61                   | )                       |   | (126 | ) |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Comprehensive                income (loss)                                                            |   | $                               | (687                  | )                       | $      | 1,065 |   |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Basic                income (loss) per share of common stock:                                         |   |                            |                  |                    |   |   |   |
| Continuing                operations                                                                  |   | $                               | (0.01                 | )                       | $      | 0.13 |   |
| Discontinued                operations                                                                |   |                            | (0.05                 | )                       |   | (0.01 | ) |
|                                                                                                  |   | $                               | (0.06                 | )                       | $      | 0.12 |   |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Weighted                average shares outstanding                                                    |   |                            | 10,076                |                    |   | 10,076 |   |
|                                                                                                  |   |                            |                  |                    |   |   |   |
| Diluted                income (loss) per share of common stock:                                       |   |                            |                  |                    |   |   |   |
| Continuing                operations                                                                  |   | $                               | (0.01                 | )                       | $      | 0.13 |   |
| Discontinued                operations                                                                |   |                            | (0.05                 | )                       |   | (0.01 | ) |
|                                                                                                  |   | $                               | (                0.06 | )                       | $      | 0.12 |   |
|                                                                                                       |   |                            |                  |                    |   |   |   |
| Weighted                average shares outstanding                                                    |   |                            | 10,076                |                    |   | 10,105 |   |
|                                                                                                       |   |                            |                  |                    |   |   |   |
|                                                                                                       |   |                            |                  |                    |   |   |   |

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|                                                                                                  |   | Three                Months Ended |                  |
|-------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------------------|
|                                                                                                  |   | June                30**,**       |                  | June                30, |   |
|                                                                                                  |   | 2007                              |                  | 2006 |   |
| Sales                                                                                                 |   | $                                 | 7,069                 |   | $ | 8,084 |   |
| Cost                of sales                                                                          |   |                              | 4,994                 |   |   | 5,332 |   |
| Gross                profit                                                                           |   |                              | 2,075                 |   |   | 2,752 |   |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Selling,                general and administrative expenses                                           |   |                              | 1,412                 |   |   | 1,406 |   |
| Research                and development expenses                                                      |   |                              | 405                   |   |   | 347 |   |
| Total                expenses                                                                         |   |                              | 1,817                 |   |   | 1,753 |   |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Operating                income                                                                       |   |                              | 258                   |   |   | 999 |   |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Interest                expense, net                                                                  |   |                              | (550                  | ) |   | (289 | ) |
| Other                income, net                                                                      |   |                              | —               |   |   | — |   |
| Income                (loss) from continuing operations before income taxes                           |   |                              | (292                  | ) |   | 710 |   |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Income                tax expense                                                                     |   |                              | (12                   | ) |   | (47 | ) |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Income                (loss) from continuing operations before discontinued                operations |   |                              | (304                  | ) |   | 663 |   |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Discontinued                operations:                                                               |   |                              |                  |   |   |   |   |
| Loss                from discontinued operations (net of taxes of zero)                               |   |                              | (53                   | ) |   |  (76 | ) |
| Write                off of net assets of discontinued operations                                     |   |                              | (434                  | ) |   | — |   |
| Total                loss from discontinued operations                                                |   |                              | (487                  | ) |   | (76 | ) |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Net                income (loss)                                                                      |   | $                                 | (791                  | ) | $ | 587 |   |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Other                comprehensive income (loss):                                                     |   |                              |                  |   |   |   |   |
| Foreign                currency translation adjustments                                               |   |                              | (134                  | ) |   | 167 |   |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Comprehensive                (loss) income                                                            |   | $                                 | (925                  | ) | $ | 754 |   |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Basic                income (loss) per share of common stock:                                         |   |                              |                  |   |   |   |   |
| Continuing                operations                                                                  |   | $                                 | (0.03                 | ) | $ | 0.07 |   |
| Discontinued                operations                                                                |   |                              | (0.05                 | ) |   | (0.01 | ) |
|                                                                                                  |   | $                                 | (0.08                 | ) | $ | 0.06 |   |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Weighted                average shares outstanding                                                    |   |                              | 10,076                |   |   | 10,076 |   |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Diluted                income (loss) per share of common stock                                        |   |                              |                  |   |   |   |   |
| Continuing                operations                                                                  |   | $                                 | (0.03                 | ) | $ | 0.07 |   |
| Discontinued                operations                                                                |   |                              | (0.05                 | ) |   | (0.01 | ) |
|                                                                                                  |   | $                                 | (                0.08 | ) | $ | 0.06 |   |
|                                                                                                  |   |                              |                  |   |   |   |   |
| Weighted                average shares outstanding                                                    |   |                              | 10,076                |   |   | 10,098 |   |
|                                                                                                  |   |                              |                  |   |   |   |   |
|                                                                                                  |   |                              |                  |   |   |   |   |

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|                                                                                                                                                                     |   | Six                Months Ended |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|
|                                                                                                                                                                     |   | June                30,         |    | June                30, |   |
|                                                                                                                                                                     |   | 2007                            |    | 2006 |   |
| Cash                flows from operating activities of continuing operations:                                                                                            |   |                            |    |   |   |
| Net                income (loss)                                                                                                                                         |   | $                               | (626    | ) | $ | 1,191 |   |
| Loss                from discontinued operations                                                                                                                         |   |                            | 521     |   |   | 159 |   |
| Adjustments                to reconcile net income (loss) to net cash provided by (used in)                operating                activities of continuing operations: |   |                            |    |   |   |   |   |
| Depreciation                and amortization                                                                                                                             |   |                            | 249     |   |   | 175 |   |
| Changes                in operating assets and liabilities:                                                                                                              |   |                            |    |   |   |   |   |
| Accounts                receivable                                                                                                                                       |   |                            | (651    | ) |   | (1,459 | ) |
| Inventories                                                                                                                                                              |   |                            | (959    | ) |   | 679 |   |
| Prepaid                expenses and other current assets                                                                                                                 |   |                            | 87      |   |   | (312 | ) |
| Other                assets                                                                                                                                              |   |                            | (3      | ) |   | — |   |
| Accounts                payable, accrued expenses and other liabilities                                                                                                  |   |                            | 696     |   |   | 2,161 |   |
| Net                cash (used in) provided by continuing operations                                                                                                      |   |                            | (686    | ) |   | 2,594 |   |
|                                                                                                                                                                     |   |                            |    |   |   |   |   |
| Net                cash used in operations of discontinued operations                                                                                                    |   |                            | — |   |   | (1,480 | ) |
|                                                                                                                                                                     |   |                            |    |   |   |   |   |
| Net                cash (used in) provided by operating activities                                                                                                       |   |                            | (686    | ) |   | 1,114 |   |
|                                                                                                                                                                     |   |                            |    |   |   |   |   |
| Cash                flows from investing activities:                                                                                                                     |   |                            |    |   |   |   |   |
| Capital                expenditures                                                                                                                                      |   |                            | (236    | ) |   | (292 | ) |
| Net                cash used in investing activities                                                                                                                     |   |                            | (236    | ) |   | (292 | ) |
|                                                                                                                                                                     |   |                            |    |   |   |   |   |
| Cash                flows from financing activities:                                                                                                                     |   |                            |    |   |   |   |   |
| Repayments                of senior debt                                                                                                                                 |   |                            | (140    | ) |   | (675 | ) |
| Net                cash used in financing activities                                                                                                                     |   |                            | (140    | ) |   | (675 | ) |
|                                                                                                                                                                     |   |                            |    |   |   |   |   |
| Effect                of exchange rate changes on cash                                                                                                                   |   |                            | (371    | ) |   | 138 |   |
|                                                                                                                                                                     |   |                            |    |   |   |   |   |
| Increase                (decrease) in cash and cash equivalents                                                                                                          |   |                            | (1,433  | ) |   | 285 |   |
|                                                                                                                                                                     |   |                            |    |   |   |   |   |
| Cash                and cash equivalents - beginning of the year                                                                                                         |   |                            | 2,102   |   |   | 1,254 |   |
|                                                                                                                                                                     |   |                            |    |   |   |   |   |
| Cash                and cash equivalents - end of the period                                                                                                             |   | $                               | 669     |   | $ | 1,539 |   |
|                                                                                                                                                                     |   |                            |    |   |   |   |   |
| Supplemental                cash flow disclosure:                                                                                                                        |   |                            |    |   |   |   |   |
|                                                                                                                                                                     |   |                            |    |   |   |   |   |
| Cash                paid for interest expense                                                                                                                            |   | $                               | 181     |   | $ | 678 |   |
|                                                                                                                                                                     |   |                            |    |   |   |   |   |
| Cash                paid for income taxes                                                                                                                                |   | $                               | — |   | $ | 52 |   |
|                                                                                                                                                                          |   |                            |    |   |   |   |   |
|                                                                                                                                                                          |   |                            |    |   |   |   |   |

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

**Note      2: Inventories**

|                                |   | June                30, 2007  |   | December                31, 2006 |   |
|-------------------------------------|--------|-------------------------------|--------|----------------------------------|--------|
|                                     |   | (In                thousands) |   |
| Parts                and components |   | $                             | 3,512  |                             | $      | 3,637 |   |
| Work-in-process                     |   |                          | 1,307  |                             |   | 543 |   |
| Finished                goods       |   |                          | 731    |                             |   | 411 |   |
|                                |   | $                             | 5,550  |                             | $      | 4,591 |   |

**Note      3: Senior and Subordinated Debt**

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**Note      4: Accounting for Stock Based Compensation**

**Note      5: Segment Data**

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|                                                |   | Six                Months Ended |       | Three                Months Ended |   |
|-----------------------------------------------------|--------|---------------------------------|------------|-----------------------------------|--------|
|                                                |   | June                30, 2007    |       | June                30, 2006      |   | June                30, 2007 |   | June                30, 2006 |   |
| **Sales:**                                          |   |                            |       |                              |   |   |   |   |   |
| Line                                                |   | $                               | 12,615,000 |                              | $      | 13,468,000 |   | $ | 5,815,000 |   | $ | 6,981,000 |   |
| Signal                                              |   |                            | 2,637,000  |                              |   | 2,407,000 |   |   | 1,249,000 |   |   | 994,000 |   |
| Total                of Continuing Operations  |   | $                               | 15,252,000 |                              | $      | 15,875,000 |   | $ | 7,064,000 |   | $ | 7,975,000 |   |
|                                                |   |                            |       |                              |   |   |   |   |   |   |   |   |   |
| **Segment                profit:**                  |   |                            |       |                              |   |   |   |   |   |   |   |   |   |
| Line                                                |   | $                               | 1,746,000  |                              | $      | 2,615,000 |   | $ | 684,000 |   | $ | 1,410,000 |   |
| Signal                                              |   |                            | 698,000    |                              |   | 606,000 |   |   | 279,000 |   |   | 222,000 |   |
| Total                of Continuing Operations       |   | $                               | 2,444,000  |                              | $      | 3,221,000 |   | $ | 963,000 |   | $ | 1,632,000 |   |

|                                                        |   | Six                Months Ended |       | Three                Months Ended |   |
|-------------------------------------------------------------|--------|---------------------------------|------------|-----------------------------------|--------|
|                                                        |   | June                30, 2007    |       | June                30, 2006      |   | June                30, 2007 |   | June                30, 2006 |   |
| **Sales:**                                                  |   |                            |       |                              |   |   |   |   |   |
| Total                revenue for reportable segments        |   | $                               | 15,252,000 |                              | $      | 15,875,000 |   | $ | 7,064,000 |   | $ | 7,975,000 |   |
| Other                revenue                                |   |                            | 19,000     |                              |   | 146,000 |   |   | 5,000 |   |   | 109,000 |   |
| Consolidated                total revenue                   |   | $                               | 15,271,000 |                              | $      | 16,021,000 |   | $ | 7,069,000 |   | $ | 8,084,000 |   |
|                                                        |   |                            |       |                              |   |   |   |   |   |   |   |   |   |
| **Operating                income (loss):**                 |   |                            |       |                              |   |   |   |   |   |   |   |   |   |
| Total                segment income for reportable segments |   | $                               | 2,444,000  |                              | $      | 3,221,000 |   | $ | 963,000 |   | $ | 1,632,000 |   |
| Corporate                and unallocated                    |   |                            | (1,520,000 | )                                 |   | (1,216,000 | ) |   | (705,000 | ) |   | (633,000 | ) |
| Consolidated                total operating income          |   | $                               | 924,000    |                              | $      | 2,005,000 |   | $ | 258,000 |   | $ | 999,000 |   |

**Note      6:  **
**New      accounting pronouncements**

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**Note      7:  **
**Discontinued      operations**

|                                                              |   | **Six                Months Ended June 30,** |     |
|-------------------------------------------------------------------|--------|----------------------------------------------|----------|
|                                                              |   | **2007**                                     |     | **2006** |   |
|                                                              |   |                                         |     |   |   |
| Revenues                                                          |   | $                                            | 100,000  |   | $ | 196,000 |   |
|                                                              |   |                                         |     |   |   |   |   |
| Loss                from discontinued operations                  |   |                                         | (87,000  | ) |   | (159,000 | ) |
| Write                off of net assets of discontinued operations |   |                                         | (434,000 | ) |   | — |   |
| Total                loss from discontinued operations            |   | $                                            | (521,000 | ) | $ | (159,000 | ) |

|                                                              |   | **Three                Months Ended June 30,** |     |
|-------------------------------------------------------------------|--------|------------------------------------------------|----------|
|                                                              |   | **2007**                                       |     | **2006** |   |
|                                                              |   |                                           |     |   |   |
| Revenues                                                          |   | $                                              | 28,000   |   | $ | 91,000 |   |
|                                                              |   |                                           |     |   |   |   |   |
| Loss                from discontinued operations                  |   |                                           | (53,000  | ) |   | (76,000 | ) |
| Write                off of net assets of discontinued operations |   |                                           | (434,000 | ) |   | — |   |
| Total                loss from discontinued operations            |   | $                                              | (487,000 | ) | $ | (76,000 | ) |

----

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

|                                                        |   | Six                Months Ended |   | Three                Months Ended |   |
|-------------------------------------------------------------|--------|---------------------------------|--------|-----------------------------------|--------|
|                                                        |   | June                30,         |   | June                30,           |   |
|                                                        |   | 2007                            |   | 2006                              |   | 2007 |   | 2006 |   |
|                                                             |   |                            |   |                              |   |   |   |   |   |
| Sales                                                       |   |                            | 100    | %                                 |   | 100 | % |   | 100 | % |   | 100 | % |
| Cost                of sales                                |   |                            | 69     | %                                 |   | 66 | % |   | 70 | % |   | 66 | % |
| Gross                profit                                 |   |                            | 31     | %                                 |   | 34 | % |   | 30 | % |   | 34 | % |
| Selling,                general and administrative expenses |   |                            | 20     | %                                 |   | 17 | % |   | 20 | % |   | 17 | % |
| Research                and development expenses            |   |                            | 5      | %                                 |   | 5 | % |   | 6 | % |   | 5 | % |
| Operating                income                             |   |                            | 6      | %                                 |   | 12 | % |   | 4 | % |   | 12 | % |
| Interest                expense - net                       |   |                            | (7     | %)                                |   | (4 | %) |   | (8 | %) |   | (4 | %) |
| Income                (loss) from continuing operations     |   |                            | (1     | %)                                |   | 8 | % |   | (4 | %) |   | 8 | % |
| Loss                from discontinued operations            |   |                            | (3     | %)                                |   | (1 | %) |   | (7 | %) |   | (1 | %) |
| Net                (loss) income                            |   |                            | (4     | %)                                |   | 7 | % |   | (11 | %) |   | 7 | % |

|                                                |   | Six                Months Ended June 30, |   |
|-----------------------------------------------------|--------|------------------------------------------|--------|
|                                                |   | $(000)                                   |   |
|                                                     |   | 2007                                     |   | 2006 |   |
| Line                connection/protection equipment |   | $                                        | 12,615 |   |   | 82 | % | $ | 13,468 |   |   | 84 | % |
| Signal                Processing                    |   |                                     | 2,637  |   |   | 17 | % |   | 2,407 |   |   | 15 | % |
| Other                                               |   |                                     | 19     |   |   | 1 | % |   | 146 |   |   | 1 | % |
|                                                |   | $                                        | 15,271 |   |   | 100 | % | $ | 16,021 |   |   | 100 | % |

|                                                |   | Three                Months Ended June 30, |   |
|-----------------------------------------------------|--------|--------------------------------------------|--------|
|                                                |   | $(000)                                     |   |
|                                                     |   | 2007                                       |   | 2006 |   |
| Line                connection/protection equipment |   | $                                          | 5,815  |   |   | 82 | % | $ | 6,981 |   |   | 87 | % |
| Signal                Processing                    |   |                                       | 1,249  |   |   | 18 | % |   | 994 |   |   | 12 | % |
| Other                                               |   |                                       | 5      |   |   | — | % |   | 109 |   |   | 1 | % |
|                                                |   | $                                          | 7,069  |   |   | 100 | % | $ | 8,084 |   |   | 100 | % |

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**Overview**

**Results      of Continuing Operations**

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**Liquidity      and Capital Resources**

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**Forward      Looking Statements**

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**Item      3.**
**Quantitative      and Qualitative Disclosure About Market Risk.**

**Item      4.**
**        **
**Controls      and Procedures**

**Internal      Control over Financial Reporting **

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**PART      II - OTHER INFORMATION**

**Item      1A. **
**Risk      Factors**
** **

** **

**Item      3.   Defaults Upon Senior Securities.**

**Item      6.   Exhibits**

|  | 31.1 | Certificate                    of Chief Executive Officer and Chief Financial Officer pursuant                    to Section                    302 of the Sarbanes-Oxley Act of                    2002. |
|--|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 32.1 | Certificate                    of Chief Executive Officer and Chief Financial Officer pursuant                    to                    Section                    906 of the Sarbanes-Oxley Act of                    2002. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

**PORTA      SYSTEMS CORP.**

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