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 September 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: 9,488,561 shares as of
      November 1, 1999


                               Page 1 of 14 pages


<PAGE>


PART I - FINANCIAL INFORMATION
Item 1- Financial Statements

                      PORTA SYSTEMS CORP. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                                                                       September 30,    December 31,
                                                                                           1999            1998
                                                                                       -------------    ------------
                                        Assets                                         (Unaudited)
                                        ------
Current assets:
<S>                                                                                      <C>             <C>
     Cash and cash equivalents                                                           $  2,743        $  3,044
     Accounts receivable, net                                                              12,272          19,802
     Inventories                                                                            7,148           8,944
     Prepaid expenses and other current assets                                              1,982           1,716
                                                                                         --------        --------
                     Total current assets                                                  24,145          33,506
                                                                                         --------        --------
      Property, plant and equipment, net                                                    3,876           4,213
      Deferred computer software, net                                                          22              82
      Goodwill, net                                                                        11,250          11,597
      Other assets                                                                          2,564           2,738
                                                                                         --------        --------
                     Total assets                                                        $ 41,857        $ 52,136
                                                                                         ========        ========

                                          Liabilities and Stockholders' Equity
                                          ------------------------------------
Current liabilities:
      Current portion of senior debt                                                     $  2,000        $  2,000
      12% subordinated notes                                                                5,921            --
      Accounts payable                                                                      4,687           6,893
      Accrued expenses                                                                      5,972           6,266
      Accrued interest payable                                                                426             545
      Accrued commissions                                                                   1,887           2,438
      Income taxes payable                                                                    513             762
      Accrued deferred compensation                                                           196             196
      Short-term loans                                                                         45             144
                                                                                         --------        --------
                     Total current liabilities                                             21,647          19,244
                                                                                         --------        --------

Senior debt net of current maturities                                                      13,118          11,188
12% subordinated notes                                                                       --             5,685
6% convertible subordinate debentures                                                         369             365
Deferred compensation                                                                         987           1,021
Income taxes payable                                                                          400             719
Other long-term liabilities                                                                   960             776
Minority interest                                                                             999           1,154
                                                                                         --------        --------
                     Total long-term liabilities                                           16,833          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 9,488,692 and 9,484,742 shares at September 30, 1999 and December 31,
         1998, respectively                                                                    95              95
      Additional paid-in capital                                                           75,143          75,135
      Accumulated other comprehensive loss:
               Foreign currency translation adjustment                                     (3,932)         (3,754)
      Accumulated deficit                                                                 (65,955)        (57,273)
                                                                                         --------        --------
                                                                                            5,351          14,203
      Treasury stock, at cost                                                              (1,938)         (1,938)
      Receivable for employee stock purchases                                                 (36)           (281)
                                                                                         --------        --------
                     Total stockholders' equity                                             3,377          11,984
                                                                                         --------        --------
                     Total liabilities and stockholders' equity                          $ 41,857        $ 52,136
                                                                                         ========        ========
</TABLE>




     See accompanying notes to unaudited 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)

<TABLE>
<CAPTION>

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

<S>                                                                <C>             <C>
Sales                                                              $ 27,032        $ 45,160
Cost of sales                                                        19,704          26,247
                                                                   --------        --------
     Gross profit                                                     7,328          18,913
                                                                   --------        --------

Selling, general and administrative expenses                          9,226          10,089
Research and development expenses                                     4,575           4,807
                                                                   --------        --------
           Total expenses                                            13,801          14,896
                                                                   --------        --------

     Operating income (loss)                                         (6,473)          4,017

Interest expense                                                     (2,608)         (2,663)
Interest income                                                         138             205
Other income                                                            158             981
Debt conversion expense                                                 ---            (945)
                                                                   --------        --------

       Income (loss) before income taxes, minority interest,
       and extraordinary item                                        (8,785)          1,595

Income tax expense                                                      (53)           (209)
Minority interest                                                       155            (133)
                                                                   --------        --------

       Income (loss) before extraordinary item                       (8,683)          1,253

Extraordinary gain                                                      ---              76
                                                                   --------        --------

Net income (loss)                                                  $ (8,683)       $  1,329
                                                                   ========        ========

Per share data:

Basic per share amounts:

        Income (loss) before extraordinary item                    $  (0.92)       $   0.14
        Extraordinary item                                              ---            0.00
                                                                   --------        --------
           Net income (loss) per share of common stock             $  (0.92)       $   0.14
                                                                   ========        ========

         Weighted average shares outstanding                          9,487           9,247
                                                                   ========        ========

Diluted per share amounts:

        Income (loss) before extraordinary item                    $  (0.92)       $   0.13
        Extraordinary item                                              ---            0.00
                                                                   --------        --------
           Net income (loss) per share of common stock             $  (0.92)       $   0.13
                                                                   ========        ========

        Weighted average shares outstanding                           9,487           9,977
                                                                   ========        ========

</TABLE>



     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)


<TABLE>
<CAPTION>

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

<S>                                                                <C>           <C>
Sales                                                              $  8,397      $ 14,217
Cost of sales                                                         6,519         8,625
                                                                   --------      --------
     Gross profit                                                     1,878         5,592
                                                                   --------      --------

Selling, general and administrative expenses                          3,203         3,122
Research and development expenses                                     1,828         1,794
                                                                   --------      --------
           Total expenses                                             5,031         4,916
                                                                   --------      --------

     Operating income (loss)                                         (3,153)          676

Interest expense                                                       (888)         (881)
Interest income                                                          34            48
Other income                                                              1           269
                                                                   --------      --------

       Income (loss) before income taxes and minority interest       (4,006)          112

Income tax expense                                                      (38)           (9)
Minority interest                                                        45           (57)
                                                                   --------      --------

Net income (loss)                                                  $ (3,999)     $     46
                                                                   ========      ========

Per share data:

Basic per share amounts:

           Net income (loss) per share of common stock             $  (0.42)     $   0.01
                                                                   ========      ========

         Weighted average shares outstanding                          9,489         9,299
                                                                   ========      ========

Diluted per share amounts:

           Net income (loss) per share of common stock             $  (0.42)     $   0.01
                                                                   ========      ========

         Weighted average shares outstanding                          9,489         9,734
                                                                   ========      ========
</TABLE>





     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


<TABLE>
<CAPTION>

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

<S>                                                     <C>          <C>
Net income (loss)                                       $(8,683)     $ 1,329

Other comprehensive income (loss), net of tax:

           Foreign currency translation adjustments        (178)         204
                                                        -------      -------


Comprehensive income (loss)                             $(8,861)     $ 1,533
                                                        =======      =======
</TABLE>


<TABLE>
<CAPTION>


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

<S>                                                     <C>          <C>
Net income (loss)                                       $(3,999)     $    46

Other comprehensive income (loss), net of tax:

           Foreign currency translation adjustments        (110)          77
                                                        -------      -------


Comprehensive income (loss)                             $(4,109)     $   123
                                                        =======      =======
</TABLE>









     See accompanying notes to unaudited consolidated financial statements.
                               Page 5 of 14 pages



<PAGE>


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

<TABLE>
<CAPTION>

                                                                                Nine Months Ended
                                                                          September 30,   September 30,
                                                                              1999            1998
                                                                          -------------   -------------
Cash flows from operating activities:
<S>                                                                         <C>             <C>
Net income (loss)                                                           $(8,683)        $ 1,329
Adjustments to reconcile net income (loss)
     to net cash used in operating activities:
      Extraordinary gain                                                         --             (76)
      Non-cash debt conversion expense                                           --             945
      Non-cash financing expenses                                                18             311
      Non-cash interest charges                                                  --             304
      Non-cash employee stock bonuses                                             8              --
      Depreciation and amortization                                           1,144           1,631
      Amortization of debt discounts                                            240             189
      Minority interest                                                        (155)            131
     Changes in assets and liabilities:
      Accounts receivable                                                     7,530          (3,732)
      Inventories                                                             1,796               5
      Prepaid expenses                                                         (266)           (622)
      Other assets                                                               99             215
      Accounts payable, accrued expenses and other liabilities               (3,588)         (1,383)
                                                                             ------         -------
           Net cash used in operating activities                             (1,857)           (753)
                                                                             ------         -------

Cash flows from investing activities:
      Proceeds from disposal of assets                                          243              --
      Capital expenditures                                                     (588)           (503)
      Repayments of employee loans                                              245              --
                                                                             ------          ------
           Net cash used in investing activities                               (100)           (503)
                                                                             ------          ------

Cash flows from financing activities:
      Proceeds from senior debt                                               3,350               6
      Repayments of senior debt                                              (1,420)         (4,455)
      Proceeds from 12% subordinated debentures and warrants                     --           6,000
      Repayment of Zero coupon senior subordinated convertible notes             --          (2,796)
      Repayments of short term loans                                            (99)            (93)
                                                                             ------          ------
           Net cash provided by (used in) financing activities                1,831          (1,338)
                                                                             ------          ------

Effect of exchange rates on cash                                               (175)            202
                                                                             ------          ------

Decrease in cash and cash equivalents                                          (301)         (2,392)

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

Cash and equivalents - end of the period                                    $ 2,743         $ 2,699
                                                                            =======         =======


Supplemental cash flow disclosures:
      Cash paid for interest expense                                        $ 2,007         $ 1,857
                                                                            =======         =======

      Cash paid for income taxes                                            $   364         $   188
                                                                            =======         =======
</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, 1998. Results for the first nine 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  at
September  30,  1999  has  been  computed  using a  standard  cost  system.  The
composition of inventories at the end of the respective periods is as follows:

<TABLE>
<CAPTION>

                      September 30, 1999   December 31,1998
                      ------------------   ----------------
                                  (in thousands)
<S>                         <C>                 <C>
Parts and components        $3,586              $4,959
Work-in-process              1,240                 743
Finished goods               2,322               3,242
                            ------              ------
                            $7,148              $8,944
                            ======              ======
</TABLE>

Note 3: Senior Debt

           On September 30, 1999,  the  Company's  debt to its senior lender was
$15,118,000.  During the nine and three months  ended  September  30, 1999,  the
Company repaid principal of $1,420,000 and $400,000,  respectively.  The Company
borrowed $3,350,000 and $1,550,000 during the nine and three-month periods ended
September 30, 1999, respectively.  Subsequent to September 30, 1999, the Company
borrowed an additional  $1,250,000 and repaid  $400,000,  resulting in a balance
owed of  approximately  $16,000,000.  Based on anticipated  principal  payments,
$2,000,000 has been classified as a current liability at September 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 September 30, 1999, the Company was
not in compliance with the interest  coverage covenant and has obtained a waiver
of such non-compliance from its senior lender.

Note 4: 12% Subordinated Notes

           As of September 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 September 30,
1999 is $5,921,000 which is net of related issuance discount. During the quarter
ended March 31, 1999, pursuant to the terms of the 12% Notes, the Company issued
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
September 30, 1999 primarily 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>

                              Nine Months Ended                                               Three Months Ended
                September 30, 1999            September 30, 1998             September 30, 1999              September 30, 1998
                ------------------            ------------------             ------------------              ------------------
Revenue:
<S>             <C>                           <C>                            <C>                             <C>
Line               $14,633,000                    $17,503,000                    $ 5,472,000                    $ 6,906,000
OSS                  7,690,000                     21,263,000                      1,424,000                      5,519,000
Signal               4,544,000                      6,246,000                      1,435,000                      1,726,000
                   -----------                    -----------                    -----------                    -----------
                   $26,867,000                    $45,012,000                    $ 8,331,000                    $14,151,000
                   ===========                    ===========                    ===========                    ===========

<CAPTION>

Segment profit (loss):
<S>             <C>                           <C>                            <C>                             <C>
Line               $ 3,218,000                    $ 4,513,000                    $ 1,011,000                    $ 1,950,000
OSS                 (7,176,000)                     1,039,000                     (3,186,000)                    (1,045,000)
Signal               1,071,000                      1,823,000                        262,000                        527,000
                   -----------                    -----------                    -----------                    -----------
                   $(2,887,000)                   $ 7,375,000                    $(1,913,000)                   $ 1.432,000
                   ===========                    ===========                    ===========                    ===========
</TABLE>

The following table reconciles segment totals to consolidated totals:

<TABLE>
<CAPTION>

                                Nine Months Ended                                           Three Months Ended
                September 30, 1999            September 30, 1998              September 30, 1999            September 30, 1998
                ------------------            ------------------              ------------------            ------------------
Revenue:
<S>             <C>                           <C>                            <C>                            <C>
Total revenue
for reportable
segments           $26,867,000                    $45,012,000                    $ 8,331,000                    $14,151,000
Other
Revenue                165,000                        148,000                         66,000                         66,000
                   -----------                    -----------                    -----------                    -----------
Consolidated
total revenue      $27,032,000                    $45,160,000                    $ 8,397,000                    $14,217,000
                   ===========                    ===========                    ===========                    ===========

<CAPTION>

Operating income (loss):
<S>             <C>                           <C>                            <C>                            <C>
Total segment
profit (loss) for
reportable
segments           $(2,887,000)                   $ 7,375,000                    $(1,913,000)                   $ 1,432,000
Corporate and
unallocated         (3,586,000)                    (3,358,000)                    (1,240,000)                      (756,000)
                   -----------                    -----------                    -----------                    -----------
Consolidated
total operating
income (loss)      $(6,473,000)                   $ 4,017,000                    $(3,153,000)                   $   676,000
                   ===========                    ===========                    ===========                    ===========
</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>

                                                     Nine Months Ended       Three Months Ended
                                                     -----------------       ------------------
                                                       September 30,            September 30,
                                                       -------------            -------------
                                                    1999         1998         1999         1998
                                                    ----         ----         ----         ----
<S>                                                 <C>          <C>          <C>          <C>
Sales                                               100%         100%         100%         100%
Cost of sales                                        73%          58%          78%          61%
Gross profit                                         27%          42%          22%          39%
Selling, general and administrative expenses         34%          22%          38%          22%
Research and development expenses                    17%          11%          22%          12%
     Operating income (loss)                        (24%)          9%         (38%)          5%
Interest expense - net                               (9%)         (5%)        (10%)         (6%)
Other income                                          1%           2%           0%           1%
Debt conversion expense                               0%          (2%)          0%           0%
Minority interest                                     0%           0%           0%           0%
Income taxes                                          0%          (1%)          0%           0%
Extraordinary item                                    0%           0%           0%           0%
Net income (loss)                                   (32%)          3%         (48%)          0%
</TABLE>

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

<TABLE>
<CAPTION>

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

<S>                                                       <C>        <C>       <C>          <C>
Line connection/protection
       equipment ("Line")                                 $ 14,633   54%       $  17,503    39%
Operations Support Systems ("OSS")                           7,690   28%          21,263    47%
Signal Processing ("Signal")                                 4,544   17%           6,246    14%
Other                                                          165    1%             148     0%
                                                          --------------       ----------------
                                                          $ 27,032  100%       $  45,160   100%
                                                          ==============       ================

<CAPTION>

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

<S>                                                       <C>         <C>      <C>         <C>
Line                                                      $  5,472    65%      $  6,906    49%
OSS                                                          1,424    17%         5,519    39%
Signal                                                       1,435    17%         1,726    12%
Other                                                           66     1%            66     0%
                                                          ---------------      ---------------
                                                          $  8,397   100%      $ 14,217   100%
                                                          ===============      ===============
</TABLE>



                               Page 9 of 14 pages


<PAGE>


Results of Operations
---------------------

           The  Company's  sales for the nine months  ended  September  30, 1999
compared to the nine months ended September 30, 1998 decreased $18,128,000 (40%)
from  $45,160,000 in 1998 to  $27,032,000  in 1999.  Sales for the quarter ended
September  30, 1999 of  $8,397,000  decreased by  $5,820,000  (41%)  compared to
$14,217,000  for the quarter ended  September 30, 1998. The decreased  sales for
the three and nine  months  are due  primarily  to a decline in sales by the OSS
division although sales from all divisions  declined from the comparable periods
of 1998.  The Company  expects to strengthen  sales during the fourth quarter of
1999 and such trends such continue into 2000.

           The line sales for the nine months ended  September 30, 1999 compared
to September 30, 1998  decreased  from  $17,503,000 to $14,633,000 or $2,870,000
(16%).  Line connection sales for the three months ended September 30, decreased
by $1,434,000  (21%) from $6,906,000 in 1998 to $5,472,000 in 1999. The decrease
for both the nine and three months ended  September  30, 1999  reflects  reduced
unit sales primarily to customers in Mexico.

           OSS sales for the nine months ended September 30, 1999 was $7,690,000
compared to the nine months ended September 30, 1998 of $21,263,000,  a decrease
of $13,573,000  (64%).  Sales for the three months ended September 30, 1999 were
$1,424,000  compared to sales for the three months ended  September  30, 1998 of
$5,519,000,  a decrease of  $4,095,000  (74%).  The decrease in sales during the
nine and three  months  ended  September  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 fourth quarter
of 1999.  Subsequent  to  September  30,  1999,  the Company has secured two OSS
contracts  totaling  approximately  $17,000,000.  The first contract is with the
Philippines  Long Distance  Telephone  Co. for  approximately  $5,000,000 and is
subject to the customer securing financing.  The second contract is with a major
European telecommunications, equipment supplier for approximately $12,000,000.

           Signal  sales  for the nine  months  ended  September  30,  1999 were
$4,544,000 compared to the nine months ended September 30, 1998 of $6,246,000, a
decrease of $1,702,000 (27%). Signal processing sales for the three months ended
September 30, 1999 were $1,435,000, compared to the three months ended September
30, 1998 of $1,726,000,  a decrease of $291,000 (17%). The decrease in sales for
the nine and three-month  periods primarily  reflects delays in deliveries which
are expected  during 2000.  Furthermore,  during the nine and three months ended
September  30, 1998,  revenue was  positively  affected 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 nine months  ended  September  30,  1999,  as a
percentage of sales was 73% compared to the nine months ended September 30, 1998
of 58%. For the quarter ended  September 30, 1999, cost of sales as a percentage
of sales was 78%  compared  to the same  period of 1998 of 61%.  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 which resulted in a negative margin for OSS of
32% for the September 30, 1999 quarter.







                               Page 10 of 14 pages


<PAGE>


Results of Operations (continued)
---------------------------------

           Selling,  general and  administrative  expenses decreased by $863,000
(9%) from $10,089,000 to $9,226,000 for the nine months ended September 30, 1999
compared to the nine months ended  September 30, 1998.  This  decrease  resulted
primarily from lower commissions  associated with the decreased revenues for the
OSS business for the period.  For the quarters ended September 30, 1999 and 1998
selling,  general and  administrative  expenses  increased  by $81,000 (3%) from
$3,122,000  to  $3,203,000,  respectively,  as a  result  of  professional  fees
incurred relating to the establishment of several new contracts.

           Research and development  expenses decreased by $232,000 (5%) for the
nine months ended September 30, 1999 and increased by $34,000 (2%) for the three
months  ended   September  30,  1999  from  the  comparable   periods  in  1998,
respectively.

           As a result of the above,  for the nine months  ended  September  30,
1999  compared  to the  comparable  nine  months  of 1998,  the  Company  had an
operating loss of $6,473,000 in 1999 and operating income of $4,017,000 in 1998.
The Company had an operating loss of $3,153,000 for the quarter ended  September
30, 1999 as  compared to  operating  income of  $676,000  for the quarter  ended
September 30, 1998.

           Other income for the nine months ended  September  30, 1998  included
$400,000  from the  settlement  of  litigation,  $167,000  of  additional  funds
received from the settlement of the sale of the Israeli  business,  and $234,000
from the settlement of outstanding liabilities.

           During the nine months ended September 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.

           During the nine months ended September 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 nine months ended September 30,
1999  compared to 1998 by $156,000 from $209,000 to $53,000 due to the Company's
losses for the period.

           As the result of the foregoing the Company  incurred a net loss after
extraordinary  items of $8,683,000,  $0.92 per share (basic and diluted) for the
nine  months  ended   September   30,  1999   compared  with  net  income  after
extraordinary  items of $1,329,000,  $0.14 per share (basic) and $0.13 per share
(diluted),  for the nine months ended  September 30, 1998.  The net loss for the
three months ended September 30, 1999 was $3,999,000, $0.42 per share (basic and
diluted), compared with net income for the three months ended September 30, 1998
of $46,000, $0.01 per share (basic and diluted).









                               Page 11 of 14 pages


<PAGE>


Liquidity and Capital Resources
-------------------------------

           At September  30, 1999 the Company had cash and cash  equivalents  of
$2,743,000  compared with $3,044,000 at December 31, 1998. The Company's working
capital at September  30, 1999 was  $2,498,000,  compared to working  capital of
$14,262,000  at December 31, 1998. The decline in working  capital  results from
the  operating  losses for the nine months ended  September  30, 1999,  which is
reflected in a reduced level of accounts receivable. In addition,  approximately
$6,000,000 of the decreased  working  capital  results from the shift of the 12%
Notes from long-term to current liabilities.

           As of September 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.   The  Company  had  $15,118,000
outstanding  as of September  30, 1999 of which  $1,592,000  was a  non-interest
bearing note,  $2,850,000 was outstanding  against the revolving line of credit,
and $10,676,000 was a term loan agreement. Subsequent to September 30, 1999, the
company borrowed an additional  $1,250,000 and repaid  $400,000,  resulting in a
balance owed of approximately  $16,000,000.  As discussed in Note 3, the Company
was not in compliance  with the interest  coverage  covenant under the agreement
and obtained a waiver from its senior lender for the period ended  September 30,
1999.  Further,  if losses continue during the fourth quarter the Company may be
in  violation of its loan  covenants at December 31, 1999.  If the Company is in
violation,  the lender may not grant a waiver,  which would result in all of the
Company's  obligations  to the senior  lender  becoming  due.  Any action by the
senior lender to force collection of the obligations  owed, could materially and
adversely affect the Company's ability to continue in business.

           As of September 30, 1999, the Company's current  liabilities  include
$5,921,000,  net of unamortized debt discount of $79,000, of the principal value
$6,000,000  12% Notes,  all of which are due and payable on January 3, 2000.  At
September 30, 1999,  the Company does not have  sufficient  resources to pay the
12% 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 12% 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 12% Notes,  the Company will
also be in  violation  of its loan  agreement  with its senior  lender,  and its
business may be materially and adversely affected.

Legal
-----

           Subsequent to September 30, 1999,  the Company  received a demand for
arbitration for commissions allegedly owed to a former sales representative. The
Company believes it has meritorious defenses against this claim.

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 to be completed prior to the end of 1999.



                               Page 12 of 14 pages


<PAGE>


Year 2000 Issue (continued)
---------------------------

           The Company has assigned a team to monitor Year 2000 compliance.  The
Company believes that its 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 December 31, 1999.

           The Company has and expects to incur  internal staff costs as well as
other  expenses  necessary to prepare its systems for the year 2000. The Company
has replaced some systems and upgraded others. Maintenance or modification costs
have been  expensed as incurred.  To date the cost of this program  approximates
$500,000, with approximately $200,000 representing internal costs to the Company
and $300,000 representing external equipment and services. 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.

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

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 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 November 10, 1999          By /s/William V. Carney
                                               --------------------
                                               William V. Carney
                                               Chairman of the Board

           Dated November 10, 1999          By /s/Edward B. Kornfeld
                                               ---------------------
                                               Edward B. Kornfeld
                                               Vice President and Chief
                                                 Financial Officer



















                               Page 14 of 14 pages