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 March 31, 1998

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

               For the transition period from.........to.........
                         Commission file number 1-8191

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

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

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

                                     11791
                                   (Zip Code)

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

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes  _X_      No  ___

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

Common stock (par value $0.01) 9,298,713 shares as of May 4, 1998


                               Page 1 of 12 pages

<PAGE>

PART I.- FINANCIAL INFORMATION
Item 1- Financial Statements

                      PORTA SYSTEMS CORP. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                             (Dollars in thousands)
                                                         March 31,  December 31,
                                                            1998        1997 
                                                         --------    --------
                    Assets                             (Unaudited)
Current assets:
  Cash and cash equivalents                              $  4,812    $  5,091
  Accounts receivable - trade, less allowance         
   for doubtful accounts                                   17,068      14,891
  Inventories                                               7,930       8,159
  Prepaid expenses and other current assets                 1,777       1,266
                                                         --------    --------
          Total current assets                             31,587      29,407
                                                         --------    --------
  Property, plant and equipment, net                        4,542       4,667
  Deferred computer software, net                             428         543
  Goodwill, net                                            11,943      12,059
  Other assets                                              3,585       4,324
                                                         --------    --------
          Total assets                                   $ 52,085    $ 51,000
                                                         ========    ========
                                                      
     Liabilities and Stockholders' Deficit            
Current liabilities:                                  
  Convertible subordinated debentures                    $    359    $  1,758
  Current portion of long-term debt                         1,906       1,900
  Accounts payable                                          4,414       5,796
  Accrued expenses                                          8,279       8,656
  Accrued interest payable                                    404         398
  Accrued commissions                                       2,241       2,444
  Accrued deferred compensation                             1,106       1,228
  Income taxes payable                                        838         853
  Short-term loans                                             91         120
                                                         --------    --------
          Total current liabilities                        19,638      23,153
                                                         --------    --------
                                                      
Senior debt                                                10,028      12,978
12% subordinated debentures                                 5,370        --
Zero coupon senior subordinated convertible notes            --         2,796
Notes payable net of current maturities                     3,084       3,084
Income taxes payable                                          682         649
Other long-term liabilities                                   503         487
Minority interest                                             995       1,040
                                                         --------    --------
          Total long-term liabilities                      20,662      21,034
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 9,298,742 and            
   8,644,304 shares at March 31, 1998 and             
   December 31, 1997, respectively                             93          86
  Additional paid-in capital                               74,970      70,926
  Accumulated other comprehensive loss:               
     Foreign currency translation adjustment               (3,885)     (4,027)
  Accumulated deficit                                     (57,020)    (57,799)
                                                         --------    --------
                                                           14,158       9,186
  Treasury stock, at cost                                  (2,066)     (2,066)
  Receivable for employee stock purchases                    (307)       (307)
                                                         --------    --------
          Total stockholders' equity                       11,785       6,813
                                                         --------    --------
          Total liabilities and stockholders' equity     $ 52,085    $ 51,000
                                                         ========    ========
                                                      
          See accompanying notes to consolidated financial statements.


                               Page 2 of 12 pages

<PAGE>

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


                                                            Three Months Ended
                                                           March 31,   March 31,
                                                              1998        1997
                                                           --------    --------
Sales                                                      $ 16,292    $ 12,480
Cost of sales                                                 9,605       8,466
                                                           --------    --------
   Gross profit                                               6,687       4,014

Selling, general and administrative expenses                  3,467       2,587
Research and development expenses                             1,330       1,151
                                                           --------    --------
       Total expenses                                         4,797       3,738
                                                           --------    --------
       Operating income                                       1,890         276

Interest expense                                               (857)       (916)
Interest income                                                  78          42
Other income (expense), net                                     509         135
Debt conversion expense                                        (945)       --
                                                           --------    --------
     Income (loss) before income taxes, minority
     interest and extraordinary gain                            675        (463)

Income tax expense                                              (16)        (14)
Minority interest                                                45          75
     Income (loss) before extraordinary gain                    704        (402)

Extraordinary gain on early extinguishment of debt               76           8
                                                           --------    --------
Net income (loss)                                          $    780    $   (394)
                                                           ========    ========
Per share data:

Basic per share amounts:

     Income (loss) before extraordinary gain               $   0.08    $  (0.17)
     Extraordinary gain                                        0.01        0.00
                                                           --------    --------
        Net income (loss) per share of common stock        $   0.09    $  (0.17)
                                                           ========    ========
     Weighted average shares outstanding                      9,141       2.337
                                                           ========    ========
Diluted per share amounts:

     Income (loss) before extraordinary gain               $   0.07    $  (0.17)
     Extraordinary gain                                        0.01        0.00
                                                           --------    --------
        Net income (loss) per share of common stock        $   0.08    $  (0.17)
                                                           ========    ========
     Weighted average shares outstanding                      9,774       2,337
                                                           ========    ========

     See accompanying notes to unaudited consolidated financial statements.


                               Page 3 of 12 pages

<PAGE>

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


                                                          Three Months Ended
                                                          March 31,  March 31,
                                                            1998       1997
                                                          --------   --------

Net income (loss)                                         $    780   $   (394)

Other comprehensive income (loss), net of tax:

         Foreign currency translation adjustments              142       (342)
                                                          --------   --------

Comprehensive income (loss)                               $    922   $   (736)
                                                          ========   ========

     See accompanying notes to unaudited consolidated financial statements.


                               Page 4 of 12 pages

<PAGE>

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

<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                                                         March 31,   March 31,
                                                                           1998        1997
                                                                         --------    --------
<S>                                                                      <C>         <C>      
Cash flows from operating activities:
   Net income (loss)                                                     $    780    $   (394)
   Adjustments to reconcile net income (loss) to net cash
     used in operating activities:
       Extraordinary gain                                                     (76)         (8)
       Non-cash debt conversion expense                                       945        --
       Non-cash financing expenses                                            144         241
       Depreciation and amortization                                          538         802
       Amortization of discount on convertible subordinated debentures          2          10
       Minority interest                                                       45         (75)
     Changes in operating assets and liabilities:
       Accounts receivable                                                 (2,177)      4,525
       Inventories                                                            229         802
       Prepaid expenses                                                      (511)         28
       Other receivables                                                     --          (223)
       Deferred computer software                                            --           (13)
       Other assets                                                           559         406
       Accounts payable, accrued expenses and other liabilities            (1,385)     (3,393)
                                                                         --------    --------
            Net cash provided by (used in) operating activities              (907)      2,708

   Cash flows from investing activities:
       Proceeds from disposal of assets held for sale, net                   --           500
       Capital expenditures, net                                             (112)        (27)
                                                                         --------    --------
            Net cash provided by (used in ) investing activities             (112)        473
                                                                         --------    --------

   Cash flows from financing activities:
       Proceeds from senior debt                                                6         254
       Repayments of senior debt                                           (2,950)       (369)
       Proceeds from 12% subordinated debentures                            6,000        --
       Repayment of Zero coupon senior subordinated convertible notes      (2,796)       --
       Proceeds from (repayments of) short term loans                         (29)         16
                                                                         --------    --------
            Net cash provided by (used in) financing activities               231         (99)
                                                                         --------    --------

   Effect of exchange rate changes on cash                                    509        (698)
                                                                         --------    --------

   Increase (decrease) in cash and cash equivalents                          (279)      2,384

   Cash and equivalents - beginning of the year                             5,091       2,584
                                                                         --------    --------

   Cash and equivalents - end of the period                              $  4,812    $  4,968
                                                                         ========    ========
   Supplemental cash flow disclosure:
       Cash paid for interest expense                                    $    630    $    782
                                                                         ========    ========
       Cash paid for income taxes                                        $     44    $     34
                                                                         ========    ========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.


                               Page 5 of 12 pages

<PAGE>

                      PORTA SYSTEMS CORP. AND SUBSIDIARIES
              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 period 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, 1997. Results for the interim period are not necessarily indicative
of results for the year.

Note 2: Inventories

      Inventories are valued at the lower of cost or market.  Inventory costs at
March 31, 1998 and December 31, 1997 have been  computed  using a standard  cost
system.  The composition of inventories at the end of the respective  periods is
as follows:

                                      March 31, 1998    December 31,1997
                                      --------------    ----------------
                                               (in thousands)
     Parts and components             $        5,078   $        5,349
     Work-in-process                           1,261            1,079
     Finished goods                            1,590            1,731
                                      --------------   --------------
                                      $        7,930   $        8,159
                                      ==============   ==============

Note 3: 6% Convertible Subordinated Debentures and
        Zero Coupon Senior Subordinated Convertible Notes

      During the  quarter  ended  March 31,  1998,  the  Company  (i) repaid the
remaining balance, $2,796,000, of the Zero Coupon Senior Subordinated Notes (the
"Notes") from the proceeds of the 12% Subordinated Notes (note 5) (ii) exchanged
$250,000  additional  principal  amount  of  the  6%  Convertible   Subordinated
Debentures (the  "Debentures") for  approximately  58,000 shares of common stock
and (iii) issued  approximately  330,000  shares of common stock in exchange for
$1,260,000 principal amount of its Debentures and accrued interest.  As a result
of these transactions, the Company recorded an extraordinary gain of $76,000 and
debt  conversion  expense of $945,000,  net of interest  forgiven,  in the first
quarter of 1998. After giving affect to these  transactions,  the Company has no
Notes  outstanding and $385,000  principal  amount of Debentures  outstanding as
described below.

      As of  March  31,  1998,  the  Company  had  outstanding  $359,000  of the
Debentures  due July 1,  2002,  net of  original  issue  discount  amortized  to
principal over the term of the debt using the effective interest rate method, of
$26,000. The face amount of the outstanding Debentures was $385,000 at March 31,
1998.

      Interest on the Debentures is payable on July 1 of each year. The interest
accrued as of March 31,  1998  amounted  to  $87,000.  As of March 31,  1998 the
Company is in default under the interest  payment  provisions of the Debentures.
The Company intends to remedy the default during the second quarter of 1998.


                               Page 6 of 12 pages

<PAGE>

Note 4: Senior Debt

      On March 31, 1998,  the Company's  long-term debt consisted of senior debt
under its credit facility in the amount of  $11,934,000.  The credit facility is
secured by substantially  all of the Company's  assets.  All obligations  except
undrawn  letters of credit,  letter of credit  guarantees  and the  deferred fee
notes  bear  interest  at 12%.  The  Company  incurs a fee of 2% on the  average
balance  of  undrawn   letters  of  credit  and  letter  of  credit   guarantees
outstanding. In addition, the Company is obligated to pay a monthly facility fee
of $50,000 and the loan agreement requires a minimum quarterly amortized payment
of $325,000. During the quarter the Company repaid principal of $2,950,000.

      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 March 31, 1998, the Company is in
compliance with the above covenants.

Note 5: 12% Subordinated Notes

      In January 1998, the Company raised  $6,000,000 from the private placement
of 60 units at $100,000 per unit.  Each unit consisted of (a) the Company's 12 %
Subordinated Note due January 3, 2000 (a "12% Note"), in the principal amount of
$100,000,  and (b) a  Series  B Common  Stock  Purchase  Warrant  (a  "Series  B
Warrant") to purchase  10,000  shares of Common Stock at $3.00 per share through
December 31, 2002. In the event that any 12% Note is  outstanding  one year from
the date on which such 12% Note is issued (the  "Anniversary Date of the Note"),
the Company shall issue to the holder of such 12% Note on the  Anniversary  Date
of the Note a Series C Warrant to  purchase  25 shares of Common  Stock for each
$1,000 principal amount of 12% Notes  outstanding on the Anniversary Date of the
Note.  The Series C Warrant  will have an  exercise  price  equal to the average
closing  prices of the Common Stock on each of the five  trading days  preceding
the  Anniversary  Date of the Note with respect to which the Series C Warrant is
being issued and will expire on December 31, 2003. The proceeds from the sale of
the Units was used  principally  to pay the remaining  principal  amount of Zero
Coupon Notes which had not been  converted of $2,796,000  (note 3) and to reduce
the Company's senior debt by  approximately  $2,950,000 (note 4). The balance of
such proceeds was added to working  capital.  The Series B and Series C Warrants
were valued at $630,000 and were recorded as part of additional paid in capital.
Accordingly,  the Company recorded the net 12% Note at a value of $5,370,000. In
connection with the private  placement of these units, the Company issued to its
investment banking firm 120,000 shares of common stock.


                               Page 7 of 12 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:

                                                            Three Months Ended
                                                                  March 31,
                                                             -----------------
                                                             1998         1997
                                                             ----         ----
Sales                                                         100%         100%
Cost of Sales                                                  59%          68%
Gross Profit                                                   41%          32%
Selling, general and administrative expenses                   21%          21%
Research and development expenses                               8%           9%
     Operating income                                          12%           2%
Interest expense - net                                         (5%)         (7%)
Other                                                           3%           1%
Debt conversion expense                                        (5%)         --
Minority interest                                               0%           1%
Extraordinary item                                              0%           0%
Net income (loss)                                               5%          (3%)

      The  Company's  sales by product line for the periods ended March 31, 1998
and 1997 are as follows:

                                                Three Months Ended
                                                     March 31,
                                            --------------------------
                                            1998                  1997
                                            ----                  ----

Line connection/protection equipment   $ 4,769    29%        $ 6,795    54%
OSS equipment                            9,173    57%          3,992    32%
Signal Processing                        2,325    14%          1,603    13%
Other                                       25     0%             90     1%
                                       --------------        --------------
                                       $16,292   100%        $12,480   100%
                                       ==============        ==============


                               Page 8 of 12 pages

<PAGE>

Results of Operations

      The Company's sales for the quarter ended March 31, 1998 were  $16,292,000
which increased by $3,812,000 (31%) compared to the quarter ended March 31, 1997
of $12,480,000.  The overall  increase in sales reflects  increased sales of OSS
and Signal  processing  products  which were  partially  offset by a decrease in
sales of line connection/protection products.

      Sales of line  connection/protection  equipment  decreased  by  $2,026,000
(30%)  from   $6,795,000  to  $4,769,000   for  the  1997  and  1998   quarters,
respectively. This decrease reflects changes in the product mix and reduced unit
purchases from the Company's largest customer,  British  Telecommunications  plc
("BT").  During 1997,  the Company  amended an agreement to supply  certain line
connection/protection  equipment to BT, which included certain new products. The
amended  agreement  resulted in a lower selling price for existing  products and
prices that  resulted in a reduced  gross margin for new  products.  Sales to BT
during the 1997  quarter  were made  pursuant  to the old  agreement,  while the
amended agreement  applied to sales in the 1998 period. In addition,  the number
of units  purchased  by BT declined  in the 1998  period  from the 1997  period.
Orders for line  connection/protection  equipment from BT remains at the reduced
rate.

      OSS sales  increased by $5,181,000  (130%) from $3,992,000 for the quarter
ended March  31,1997 to  $9,173,000  for the quarter  ended March  31,1998.  The
increased sales during the 1998 quarter  resulted from the attainment of certain
milestones  on OSS  contracts  which are  accounted  for using a  percentage  of
completion method. Furthermore,  OSS sales during the first quarter of 1997 were
at a reduced level since certain contract  milestones were attained later in the
year, resulting in recognition of revenue at such later time.

      Signal  processing sales increased for the quarter ended March 31, 1998 by
$722,000 (45%) from $1,603,000 in the 1997 quarter compared to $2,325,000 in the
1998 quarter.  The increase reflects  shipments on multiple year sales orders to
certain military customers which were secured during the latter part of 1997.

      Cost of sales for the quarter  ended March 31, 1998,  as a  percentage  of
sales,  was 59%  compared  with the quarter  ended  March 31, 1997 of 68%.  This
improvement in gross margin is attributable to the Company's  continuing  effort
to increase manufacturing productivity and the absorption, over a larger revenue
base, of certain fixed expenses associated with the OSS contracts.

      Selling,  general and administration  expenses increased by $880,000 (34%)
from $2,587,000 to $3,467,000.  This increase reflects higher sales commissions,
primarily  on OSS  contracts,  based upon the  increased  revenues  for the 1998
quarter.

      Research  and  development  expenses  increased  by  $179,000  (16%)  from
$1,151,000 to  $1,330,000.  This increase in research and  development  expenses
results from the Company's efforts to develop new products, primarily related to
the OSS business.

      As a  result  of the  foregoing,  the  Company  had  operating  income  of
$1,890,000 for the quarter ended March 31, 1998, as compared to operating income
of $276,000 for the quarter ended March 31, 1997.


                               Page 9 of 12 pages

<PAGE>

Results of Operations (continued)

      Interest expense decreased by $59,000 from $916,000 in 1997 to $857,000 in
1998.  This change is attributable  primarily to a decrease in interest  expense
related to the exchange of the Company's 6% Convertible  Subordinated Debentures
and reduced  levels of borrowing  from the senior  lender,  which were offset by
partially by interest on the 12% Subordinated Notes.

      Other income for the quarter ended March 31, 1998  includes  $400,000 from
the settlement of litigation.

      During  the  quarter  ended  March 31 ,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.

      For the quarter  ended  March 31,  1998,  the  Company  had income  before
extraordinary  gain of $704,000 compared to a loss before  extraordinary gain of
$402,000 for the quarter ended March 31, 1997.

      In the first  quarter  ended  March 31, 1998 and 1997,  respectively,  the
Company  recorded a $76,000 and $8,000 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.

      As the  result of the  foregoing,  the  Company  generated  net  income of
$780,000, $0.09 per share (basic) and $0.08 per share (diluted), for the quarter
ended March 31, 1998 versus a net loss of  $394,000,  $0.17 per share (basic and
diluted), for the quarter ended March 31, 1997.

Liquidity and Capital Resources

      At March 31, 1998 the Company had cash and cash  equivalents of $4,812,000
compared with $5,091,000 at December 31, 1997. The Company's  working capital at
March 31, 1998 was  $11,949,000,  compared to working  capital of  $6,254,000 at
December 31, 1997. The improved working capital reflects (i) increased  accounts
receivable (ii) reduced balance of the 6% Debentures and (iii) lower balances of
accounts payable and commissions payable.

      As of March 31, 1998, the Company's  loan and security  agreement with its
senior secured lender,  which expires August 1999,  provided the Company,  under
its revolving  line of credit and its letter of credit  facility,  with combined
availability  totaling  $9,000,000.  In  addition,  the Company has  $11,934,000
outstanding as of March 31, 1998 under a term loan  agreement.  


                               Page 10 of 12 pages

<PAGE>

Liquidity and Capital Resources (continued)

      During the quarter  ended March 31, 1998,  the Company  raised  $6,000,000
from the private  placement of its 12%  Subordinated  Notes due January 3, 2000.
The  proceeds  from  the  sale of the  Units  was  used  principally  to pay the
remaining  $2,796,000  principal  amount of Notes  which had not been  converted
(Note 3) and to reduce the  Company's  senior debt to Foothill by  approximately
$2,950,000 (Note 4). The balance of such proceeds was added to working capital.

      The Company believes that its current cash position,  internally generated
cash flow and its loan  facility  will be  sufficient  to satisfy the  Company's
anticipated operating needs for at least the ensuing twelve months.

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 the 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 including potential obligations to update its customer's systems
to the extent  required  under their  contracts.  The  Company  expects to incur
internal staff costs as well as other expenses  necessary to prepare its systems
for the year 2000. The Company  expects to both replace some systems and upgrade
others.  Maintenance  or  modification  costs will be expensed as incurred.  The
total cost of this effort is still being  evaluated,  but is not  expected to be
material to the Company.

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, 1997 and in other  documents  filed by
the Company with the Securities and Exchange Commission.

Item 6. Exhibits and Reports on Form 8-K

        (a)  Exhibits

             None

        (b)  Reports on Form 8-K

             A current report on form 8-K (Item 5), dated January 2, 1998,
             was filed.


                               Page 11 of 12 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 May 12, 1998                        By /s/William V. Carney
                                                    --------------------
                                                    William V. Carney
                                                    Chairman of the Board
                                                    and Chief Executive Officer

       Dated May 12, 1998                        By /s/Edward B. Kornfeld
                                                    ---------------------
                                                    Edward B. Kornfeld
                                                    Senior Vice President
                                                    and Chief Financial Officer


                               Page 12 of 12 pages