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

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

                  For the quarterly period ended June 30, 2000

           [ ] 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) 9,797,648 shares as of August 7, 2000

<PAGE>


PART I.- FINANCIAL INFORMATION
Item 1- Financial Statements

                      PORTA SYSTEMS CORP. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                June 30,    December 31,
                                                                                  2000          1999
                                                                              -----------   ------------
                        Assets                                                (Unaudited)
                        ------
<S>                                                                            <C>           <C>
Current assets:
  Cash and cash equivalents                                                    $  2,959      $  3,245
  Accounts receivable, net                                                       12,354        12,137
  Inventories                                                                     8,645         8,893
  Prepaid expenses                                                                1,450         1,373
                                                                               --------      --------
               Total current assets                                              25,408        25,648
                                                                               --------      --------
   Property, plant and equipment, net                                             5,088         4,193
   Goodwill, net                                                                 10,728        11,076
   Other assets                                                                   2,510         2,531
                                                                               --------      --------
               Total assets                                                    $ 43,734      $ 43,448
                                                                               ========      ========

                        Liabilities and Stockholders' Deficit
                        -------------------------------------
Current liabilities:
   Current portion of senior debt                                              $  3,500      $  2,000
   Subordinated notes                                                               900            --
   Accounts payable                                                               7,121         8,831
   Accrued expenses                                                               7,306         5,723
   Accrued interest payable                                                         740           588
   Accrued commissions                                                            1,621         1,864
   Income taxes payable                                                             240           267
   Accrued deferred compensation                                                    196           196
   Short-term loans                                                                   5            44
                                                                               --------      --------
                  Total current liabilities                                      21,629        19,513
                                                                               --------      --------

Senior debt net of current maturities                                            17,526        15,518
Subordinated notes                                                                5,139         6,013
6% convertible subordinated debentures                                              373           371
Deferred Compensation                                                               925         1,004
Income taxes payable                                                                254           352
Other long-term liabilities                                                         876           971
Minority interest                                                                   937         1,093
                                                                               --------      --------
                  Total long-term liabilities                                    26,030        25,322
                                                                               --------      --------

                  Total liabilities                                              47,659        44,835
                                                                               --------      --------

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
   9,786,349 shares at June 30, 2000 and 9,638,861 shares at
         December 31, 1999                                                           98            96
    Additional paid-in capital                                                   75,448        75,310
    Accumulated other comprehensive loss:
           Foreign currency translation adjustment                               (3,994)       (3,896)
    Accumulated deficit                                                         (73,539)      (70,959)
                                                                               --------      --------
                                                                                 (1,987)          551
     Treasury stock, at cost                                                     (1,938)       (1,938)
                                                                               --------      --------
                  Total stockholders' deficit                                    (3,925)       (1,387)
                                                                               --------      --------
                  Total liabilities and stockholders' deficit                  $ 43,734      $ 43,448
                                                                               ========      ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                  Page 2 of 14
<PAGE>

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

                                                          Six Months Ended
                                                       June 30,     June 30,
                                                         2000         1999
                                                       --------     --------

Sales                                                  $29,756      $18,635
Cost of sales                                           20,470       13,185
                                                       -------      -------
     Gross profit                                        9,286        5,450

Selling, general and administrative expenses             6,998        6,023
Research and development expenses                        3,067        2,747
                                                       -------      -------
         Total expenses                                 10,065        8,770
                                                       -------      -------

         Operating loss                                   (779)      (3,320)

Interest expense                                        (1,965)      (1,720)
Interest income                                             56          104
Other income                                                12          158
                                                       -------      -------

     Loss before income taxes and minority interest     (2,676)      (4,778)

Income tax expense                                         (61)         (15)
Minority interest                                          156          110
                                                       -------      -------

Net loss                                               $(2,581)     $(4,683)
                                                       =======      =======

Other comprehensive loss, net of tax:

        Foreign currency translation adjustments           (98)         (68)
                                                       -------      -------


Comprehensive loss                                     $(2,679)     $(4,751)
                                                       =======      =======

Per share data:

Basic per share amounts:

         Net loss per share of common stock            $ (0.27)     $ (0.49)
                                                       =======      =======

         Weighted average shares outstanding             9,722        9,485
                                                       =======      =======

Diluted per share amounts:

         Net loss per share of common stock            $ (0.27)     $ (0.49)
                                                       =======      =======

         Weighted average shares outstanding             9,722        9,485
                                                       =======      =======

     See accompanying notes to unaudited consolidated financial statements.


                                  Page 3 of 14


<PAGE>

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

                                                            Three Months Ended
                                                          June 30,     June 30,
                                                            2000         1999
                                                          -------      --------

Sales                                                     $13,828      $ 9,109
Cost of sales                                              10,258        6,470
                                                          -------      -------
     Gross profit                                           3,570        2,639

Selling, general and administrative expenses                3,863        3,269
Research and development expenses                           1,659        1,477
                                                          -------      -------
         Total expenses                                     5,522        4,746
                                                          -------      -------

         Operating loss                                    (1,952)      (2,107)

Interest expense                                           (1,031)        (927)
Interest income                                                29           36
Other income                                                    7           21
                                                          -------      -------

     Loss before income taxes and minority interest        (2,947)      (2,977)

Income tax expense                                            (31)          (7)
Minority interest                                              91           44
                                                          -------      -------

Net loss                                                  $(2,887)     $(2,940)
                                                          =======      =======

Other comprehensive loss, net of tax:

        Foreign currency translation adjustments             (135)         (27)
                                                          -------      -------

Comprehensive loss                                        $(3,022)     $(2,967)
                                                          =======      =======


Per share data:

Basic per share amounts:
         Net loss per share of common stock               $ (0.30)     $ (0.31)
                                                          =======      =======

         Weighted average shares outstanding                9,782        9,485
                                                          =======      =======

Diluted per share amounts:
         Net loss per share of common stock               $ (0.30)     $ (0.31)
                                                          =======      =======

         Weighted average shares outstanding                9,782        9,485
                                                          =======      =======

     See accompanying notes to unaudited consolidated financial statements.


                                  Page 4 of 14
<PAGE>

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

                                                                                Six Months Ended
                                                                             June 30,     June 30,
                                                                               2000         1999
                                                                             --------     ---------
<S>                                                                          <C>          <C>
Cash flows from operating activities:
     Net loss                                                                $(2,581)     $(4,683)
     Adjustments to reconcile net loss to net cash provided by
       operating activities:
         Non-cash financing expenses                                              15           14
         Depreciation and amortization                                           776          723
         Amortization of discount on convertible subordinated debentures          13          161
         Minority interest                                                      (156)        (110)
Changes in assets and liabilities:
         Accounts receivable                                                    (217)       8,018
         Inventories                                                             248          420
         Prepaid expenses                                                        (77)        (216)
         Other assets                                                              3           71
         Accounts payable, accrued expenses and other liabilities               (517)      (4,900)
                                                                             -------      -------
            Net cash used in operating activities                             (2,493)        (502)
                                                                             -------      -------

     Cash flows from investing activities:
         Proceeds from disposal of assets                                         --          243
         Capital expenditures, net                                            (1,285)        (226)
         Proceeds from exercised options and warrants                            140           --
         Repayment of employee loans                                              --          182
                                                                             -------      -------
            Net cash provided by (used in) investing activities               (1,145)         199
                                                                             -------      -------

     Cash flows from financing activities:
         Proceeds from senior debt                                             4,490        1,800
         Repayments of senior debt                                              (982)      (1,020)
         Repayments of short term loans                                          (39)         (62)
                                                                             -------      -------
            Net cash provided by financing activities                          3,469          718
                                                                             -------      -------

     Effect of exchange rate changes on cash                                    (117)         (60)
                                                                             -------      -------

     Increase (decrease) in cash and cash equivalents                           (286)         355

     Cash and equivalents - beginning of the year                              3,245        3,044
                                                                             -------      -------

     Cash and equivalents - end of the period                                $ 2,959      $ 3,399
                                                                             =======      =======

     Supplemental cash flow disclosures:
         Cash paid for interest expense                                      $ 1,853      $ 1,381
                                                                             =======      =======

         Cash paid for income taxes                                          $   109      $   306
                                                                             =======      =======
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.


                                  Page 5 of 14
<PAGE>

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

      Management  acknowledges  its  responsibility  for the  preparation of the
accompanying  interim  consolidated   financial  statements  which  reflect  all
adjustments, consisting of normal recurring adjustments, considered necessary in
its opinion for a fair statement of its consolidated  financial position and the
results of its operations for the interim periods presented.  These consolidated
financial  statements  should  be  read  in  conjunction  with  the  summary  of
significant  accounting policies and notes to consolidated  financial statements
included  in the  Company's  annual  report to  stockholders  for the year ended
December 31, 1999.  Results for the first six months of 2000 are not necessarily
indicative of results for the year.

Note 2: Inventories

      Inventories  are stated at the lower of cost (on the average or  first-in,
first-out  methods) or market.  The composition of inventories at the end of the
respective periods is as follows:

                                     June 30, 2000             December 31,1999
                                    --------------            -----------------
                                                 (in thousands)

      Parts and components              $5,901                      $5,558
      Work-in-process                      734                         584
      Finished goods                     2,010                       2,751
                                        ------                      ------
                                        $8,645                      $8,893
                                        ======                      ======

Note 3: Senior Debt

      During the quarter ended June 30, 2000,  the Company and its senior lender
agreed  to  extend  the  loan  and  security  agreement  to  July  3,  2001.  As
consideration,  Porta agreed to reduce the exercise price of 470,000 outstanding
warrants held by its senior lender to $2.00 per share.

      In addition  during the quarter  ended June 30, 2000,  the Company and its
senior lender agreed to increase the revolving  line maximum by $2,000,000  from
$9,000,000 to  $11,000,000  through  January 1, 2001.  As of June 30, 2000,  the
Company had  borrowed  $1,500,000  under the  increased  revolving  line.  As of
January  1, 2001 the  revolving  line  maximum  will  return to  $9,000,000.  As
consideration,  the  Company  issued to its senior  lender a warrant to purchase
100,000 shares of the Company's common stock at $2.00 per share  exercisable for
a period of five years.

      On June 30, 2000, the Company's debt to its senior lender was $21,026,000.
During  the six and  three  months  ended  June 30,  2000,  the  Company  repaid
principal  of  $982,000  and  $582,000,   respectively.   The  Company  borrowed
$4,490,000 and $1,940,000 during the six and three-month  periods ended June 30,
2000, respectively. Based on anticipated principal payments, $3,500,000 has been
classified as a current liability at June 30, 2000.

      Financial  debt  covenants  include an interest  coverage  ratio  measured
quarterly, limitations on the incurrence of indebtedness, limitations on capital
expenditures, and prohibitions on declarations of any cash or stock dividends or
the repurchase of the Company's  stock. As of June 30, 2000, the Company was not
in compliance with the interest coverage covenant and obtained a waiver from its
senior lender.


                                  Page 6 of 14
<PAGE>

Note 4: Subordinated Notes

      As  of  June  30,  2000,  the  Company  has   outstanding   $6,064,000  of
subordinated  notes. During the quarter ended June 30, 2000, the Company and the
holders of 85% of the  subordinated  notes agreed to eliminate  the  requirement
that Porta meet specific  financial  goals for Porta to extend the maturity date
of their subordinated notes to July 3, 2001. As a result, notes in the principal
amount of $900,000 are due January 3, 2001 and notes in the principal  amount of
$5,164,000   are  due  July  3,  2001.  The  carrying  value  of  such  combined
subordinated notes as of June 30, 2000 is $6,039,000,  which is net of a related
issuance discount of $25,000.

      In connection with the extension agreement, the Company agreed to issue to
the noteholders warrants to purchase 127,500 shares of common stock at $3.00 per
share.  The Company may issue warrants to purchase up to 22,500 shares of common
stock at  $3.00  per  share  to any  noteholders  who  agree to this  amendment.
Warrants to  purchase  150,000  shares of common  stock,  which were  previously
authorized, will be issued if the notes are extended.

Note 5: Segment 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.

      There has been no  significant  change from December 31, 1999 in the basis
of measurement of segment revenues and profit or loss, and no significant change
in the Company's assets.

<TABLE>
<CAPTION>
                                     Six Months Ended                   Three Months Ended
                              June 30, 2000   June 30, 1999       June 30, 2000    June 30, 1999
                              -------------   -------------       -------------    -------------
<S>                            <C>             <C>                 <C>             <C>
Sales:
    Line                       $10,512,000     $ 9,161,000         $ 4,418,000     $ 4,533,000
    OSS                         15,305,000       6,268,000           7,191,000       3,065,000
    Signal                       3,588,000       3,109,000           2,010,000       1,486,000
                               -----------     -----------         -----------     -----------
                               $29,405,000     $18,538,000         $13,619,000     $ 9,084,000
                               ===========     ===========         ===========     ===========

<CAPTION>

<S>                            <C>             <C>                 <C>             <C>
Segment profit (loss):
    Line                       $ 1,905,000     $ 2,207,000         $   636,000     $   839,000
    OSS                           (727,000)     (3,990,000)         (1,278,000)     (2,090,000)
    Signal                         642,000         809,000             340,000         349,000
                               -----------     -----------         ------------    -----------
                               $ 1,820,000     $  (974,000)        $  (302,000)    $  (902,000)
                               ===========     ===========         ============    ===========
</TABLE>


                                  Page 7 of 14
<PAGE>

The following table reconciles segment totals to consolidated totals:

<TABLE>
<CAPTION>
                                           Six Months Ended                           Three Months Ended
                                    June 30, 2000    June 30, 1999              June 30, 2000    June 30, 1999
                                    -------------    -------------              -------------    -------------
<S>                                 <C>               <C>                        <C>              <C>
Sales:
    Total revenue for reportable
         segments                   $29,405,000       $18,538,000                $13,619,000      $ 9,084,000
    Other revenue                       351,000            97,000                    209,000           25,000
                                    -----------       -----------                -----------      -----------
    Consolidated total revenue      $29,756,000       $18,635,000                $13,828,000      $ 9,109,000
                                    ===========       ===========                ===========      ===========

Operating income (loss):
    Total segment Profit (loss)
    for reportable segments         $ 1,820,000       $  (974,000)               $  (302,000)     $  (902,000)
    Corporate and unallocated        (2,599,000)       (2,346,000)                (1,650,000)      (1,205,000)
                                    -----------       -----------                -----------      -----------
    Consolidated total
    operating loss                  $  (779,000)      $(3,320,000)               $(1,952,000)     $(2,107,000)
                                    ===========       ===========                ===========      ===========
</TABLE>

Note 6: Legal Proceedings

      On or about  December  31,  1999,  the Porta  entered  into  four  related
agreements with a vendor concerning  updating and maintaining certain of Porta's
software.  As a result  of  disputes  with the  vendor,  in  March  2000,  Porta
terminated  these  agreements  and a related  agreement.  The  vendor  commenced
litigation and arbitration proceedings against Porta, which were settled in July
2000. Among other things,  the settlement  provided for the reinstatement of the
terminated  agreements  with  revisions  and  clarifications,   which  reflected
increased  payments by Porta,  and a new agreement  between Porta and the vendor
pursuant to which the vendor is to update and maintain certain other software of
Porta.  Porta also agreed to pay  $150,000,  plus  interest,  in twelve  monthly
installments to reimburse the vendor for certain legal expenses.

      In March 2000, Porta suspended, with pay, two of its executives from their
positions pending  completion of Porta's  investigation of a vendor dispute,  as
noted  above,  and  certain  other  matters.  Prior  to the  completion  of this
investigation by Porta,  the two suspended  executives  accepted  positions with
another  company and thereby  voluntarily  resigned  from their  positions  with
Porta. These two executives, however, have expressed the position, through their
counsel,  that they were fired  without cause in March and not  suspended,  and,
therefore,  they claim to be entitled to certain severance  payments under their
respective  employment  agreements.  Their  counsel has  threatened  to bring an
action against Porta seeking such severance  payments.  Porta strongly  disputes
the positions taken by the two former executives.


                                  Page 8 of 14
<PAGE>

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

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

<TABLE>
<CAPTION>
                                                    Six Months Ended          Three Months Ended
                                                    ----------------          ------------------
                                                         June 30,                  June 30,
                                                         --------                  --------
                                                    2000         1999         2000         1999
                                                    ----         ----         ----         ----
<S>                                                 <C>          <C>          <C>          <C>
Sales                                               100%         100%         100%         100%
Cost of Sales                                        69%          71%          74%          71%
Gross Profit                                         31%          29%          26%          29%
Selling, general and administrative expenses         24%          32%          28%          36%
Research and development expenses                    10%          15%          12%          16%
     Operating loss                                  (3%)        (18%)        (14%)        (23%)
Interest expense - net                               (6%)         (9%)         (7%)        (10%)
Other income                                          0%           1%           0%           0%
Minority interest                                     0%           1%           0%           1%
Income taxes                                          0%           0%           0%           0%
Net loss                                             (9%)        (25%)        (21%)        (32%)
</TABLE>

      The  Company's  sales by product line for the periods  ended June 30, 2000
and 1999 are as follows:

                                          Six Months Ended
                                          ----------------
                                              June 30,
                                              --------
                                       2000             1999
                                       ----             ----
                                       (Dollars in thousands)

              Line                $10,512   35%    $ 9,161    49%
              OSS                  15,305   52%      6,268    33%
              Signal                3,588   12%      3,109    17%
              Other                   351    1%         97     1%
                                  ------------     -------------
                                  $29,756  100%    $18,635   100%
                                  ============     =============

                                         Three Months Ended
                                         ------------------
                                              June 30,
                                              --------
                                       2000              1999
                                       ----              ----
                                       (Dollars in thousands)

              Line                $ 4,418   32%    $ 4,533    50%
              OSS                   7,191   52%      3,065    34%
              Signal                2,010   15%      1,486    16%
              Other                   209    1%         25     0%
                                  ------------     -------------
                                  $13,828  100%    $ 9,109   100%
                                  ============     =============


                                  Page 9 of 14
<PAGE>

Results of Operations

      The Company's sales for the six months ended June 30, 2000 compared to the
six months ended June 30, 1999 increased by $11,121,000  (60%) from  $18,635,000
in 1999 to  $29,756,000  in 2000.  Sales for the quarter  ended June 30, 2000 of
$13,828,000 increased by $4,719,000 (52%) compared to $9,109,000 for the quarter
ended June 30, 1999.  The increases in sales for the six and three month periods
are due primarily to additional  sales from the OSS division for these  periods,
although  sales from Line  Connection and Signal also increased for both the six
and three month periods.

      Line sales for the six months ended June 30 increased  from  $9,161,000 to
$10,512,000,  or $1,351,000  (15%) from 1999 to 2000. Sales for the three months
ended June 30 decreased by $115,000  (3%) from  $4,533,000 in 1999 to $4,418,000
in  2000.  The  increase  in  sales  for  the  six  month  period  is  primarily
attributable to sales of approximately  $3,100,000  pursuant to a purchase order
from Telefonos de Mexico S.A. de C.V.  (Telmex),  which was partially  offset by
reduced sales to other customers,  primarily to customers in the United Kingdom.
The decrease for the three months  ended June 30, 2000  reflects  reduced  sales
primarily to customers in the United Kingdom.

      OSS sales for the six months ended June 30, 2000 were $15,305,000 compared
to the six months ended June 30, 1999 of  $6,268,000,  an increase of $9,037,000
(144%).  OSS revenue  for the three  months  ended June 30, 2000 was  $7,191,000
compared to the three months ended June 30, 1999 of  $3,065,000,  an increase of
$4,126,000  (135%).  The increase in sales during the six and three months ended
June 30, 2000 resulted from sales of approximately $11,000,000 and $5,100,000 to
Fujitsu Telecommunications Europe Limited under a $12,000,000 supply contract.

      Signal  sales for the six  months  ended  June 30,  2000  were  $3,588,000
compared  to the six months  ended June 30, 1999 of  $3,109,000,  an increase of
$479,000  (15%).  Sales for the three months ended June 30, 2000 were $2,010,000
compared to the three months ended June 30, 1999 of  $1,486,000,  an increase of
$524,000  (35%).  The  increase  in sales  for the six and  three-month  periods
primarily  reflects an improvement in timely deliveries to meet customers orders
in the second quarter.

      Gross  margin for the six months  ended June 30, 2000 was 31%  compared to
29% for the six months ended June 30, 1999. This  improvement in gross margin is
attributable  to the  increased  level of sales,  which  enabled  the Company to
absorb  more  efficiently   certain  fixed  expenses  associated  with  the  OSS
contracts.  Gross margin for the quarter ended June 30, 2000 was 26% compared to
29% for the  quarter  ended  June 30,  1999.  This  decline  in gross  margin is
attributable  to changes in the copper product mix,  increased  costs to support
OSS customer  maintenance  contracts  which was slightly offset by the Company's
ability to absorb more  efficiently  certain fixed expenses  associated with the
OSS  contracts.  The reduced  gross margin was also affected by the terms of the
Company's  revised  agreements with a vendor who has been providing  maintenance
services since January 2000.

      Selling,  general and administrative  expenses increased by $975,000 (16%)
from $6,023,000 to $6,998,000 for the six months ended June 30, 2000 compared to
1999.  For the quarter ended June 30, 2000 selling,  general and  administrative
expenses  increased by $594,000  (18%) from 1999. The increase from 1999 to 2000
for the  six  and  three  months  primarily  reflects  higher  than  anticipated
professional  legal expenses due primarily to litigation  involving the Company,
particularly litigation and settlement of a dispute involving a vendor.


                                 Page 10 of 14
<PAGE>

Results of Operations (continued)

      Research  and  development  expenses  increased  by $320,000  (12%) and by
$182,000  (12%)  for the six and  three  months  ended  June 30,  2000  from the
comparable periods in 1999, respectively.  The increased expenses related to the
Company's efforts to develop new products, primarily for the OSS business.

      As a result of the above,  for the six months ended June 30, 2000 compared
to 1999,  the  Company  had an  operating  loss of  $779,000  in 2000  versus an
operating  loss of  $3,320,000  in 1999.  The Company had an  operating  loss of
$1,952,000  for the quarter ended June 30, 2000 as compared to an operating loss
of $2,107,000 for the quarter ended June 30, 1999.

      Interest  expense for the six months ended June 30, 2000  compared to June
30, 1999  increased by $245,000  (14%) from  $1,720,000 in 1999 to $1,965,000 in
2000.  Interest expense for the three-month period ending June 30, 2000 compared
to the same three months of 1999,  increased by $104,000  (11%) from $927,000 in
1999 to $1,031,000 in 2000. This change is  attributable  primarily to increased
levels of borrowing from the Company's senior lender.

      As the  result  of the  foregoing,  the  Company  incurred  a net  loss of
$2,581,000,  $0.27 per share  (basic and  diluted) for the six months ended June
30, 2000  compared  with a net loss of  $4,683,000,  $0.49 per share  (basic and
diluted),  for the six months  ended June 30,  1999.  The net loss for the three
months ended June 30, 2000 was $2,887,000,  $0.30 per share (basic and diluted),
compared with a net loss for the three months ended June 30, 1999 of $2,940,000,
$0.31 per share (basic and diluted).

Liquidity and Capital Resources

      At June 30, 2000 the Company had cash and cash  equivalents  of $2,959,000
compared with $3,245,000 at December 31, 1999. The Company's  working capital at
June 30, 2000 was  $3,779,000,  compared  to working  capital of  $6,135,000  at
December 31, 1999.  The decline in working  capital was a result of (i) increase
in the current  portion of senior debt and (ii) the  movement of the $900,000 of
Subordinated Notes from long-term to current liabilities.

      During the first six months of 2000,  the net cash used by the  Company in
operations was $2,493,000. The principal source of cash during the quarter was a
net increase of $3,508,000 in loans from the senior lender.

      As of June 30, 2000,  the Company's  loan and security  agreement with its
senior secured lender  provides the Company,  under its revolving line of credit
and  its  letter  of  credit  facility,   with  combined  availability  totaling
$11,000,000  (See Note 3), of which  $500,000 was available as of June 30, 2000.
Of the  $11,000,000,  $2,000,000 is payable on January 1, 2001 and the remainder
expires July 3, 2001.  The  combined  availability  is subject to the  Company's
borrowing base and amounts  outstanding under the revolver and committed letters
of credit. In addition,  the Company has $21,026,000  outstanding as of June 30,
2000  of  which  $710,000  was  a  non-interest  bearing  note,  $9,640,000  was
outstanding  against the revolving line of credit,  and  $10,676,000  was a term
loan  agreement.  The Company was not in compliance  with the interest  coverage
covenant and obtained a waiver from its senior  lender for the period ended June
30, 2000.


                                 Page 11 of 14
<PAGE>

Liquidity and Capital Resources (continued)

      As  of  June  30,  2000,  the  Company  had   outstanding   $6,064,000  of
subordinated notes. As a result of an agreement with the holders of 85% of these
notes, the maturity date of the notes was extended to July 3, 2001. As a result,
notes in the  principal  amount of $900,000  are due January 3, 2001 and note in
the principal  amount of $5,164,000 is due July 3, 2001.  The carrying  value of
such combined subordinated notes as of June30, 2000 is $6,039,000,  which is net
of a related issuance discount.

      The  Company's  cash  availability  during  the  second  half of 2000  and
thereafter  may be  affected  by a number of factors.  At August 11,  2000,  the
Company  had no cash  available  under its credit  facility.  To the extent that
credit  is not  available,  the  Company  may  have  difficulty  performing  its
obligations  under its  contracts,  which  could  result in the  cancellation of
contracts  or the loss of  future  business.  In  addition,  at June  30,  2000,
$24,690,000  of senior and  subordinated  debt will become due in July 2001,  in
addition to $1,500,000 of senior debt and $900,000 of subordinated debt which is
due in January  2001.  The Company  does not  presently  have the ability to pay
these  debts and,  if the  Company  cannot  obtain  either an  extension  on the
maturity of the debts or an alternative financing source or raise funds from the
sale of one of its  divisions,  the Company may be unable to meet its  financial
obligations. Although the Company has been exploring alternatives, including the
possible sale of one of its divisions and other financing  sources,  the Company
has no formal or informal  agreement or  understanding as to an extension of its
existing loans or any  alternative  financing  source or any purchaser of one of
its  divisions,  and it cannot give any assurance that it will be able to obtain
either an extension of its existing debt or funds to enable it to pay its loans.

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  initiated a  company-wide
program  to  prepare  our  computer  systems  and  applications  for  year  2000
compliance.  To date, the Company has not experienced any significant  Year 2000
issues.

      Porta incurred internal staff costs as well as other expenses necessary to
prepare its  systems for the year 2000,  replacing  some  systems and  upgrading
others.  The total cost of this  program,  which was incurred  during 1999,  was
approximately  $500,000, with approximately $200,000 representing internal costs
and $300,000 representing  external equipment and services.  The Company has not
incurred any expenses related to the Year 2000 Issue in 2000.

      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, 1999 and in other  documents  filed by
the Company with the Securities and Exchange Commission.


                                 Page 12 of 14
<PAGE>

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

      On or about  December  31,  1999,  the Company  entered  into four related
agreements  (the  "ANP  Agreements")  with  a  vendor  concerning  updating  and
maintaining the Company's ANP software. As a result of disputes with the vendor,
in March 2000,  the Company  terminated  the ANP  Agreements.  The Company  also
terminated  a  related  agreement  with the  vendor  (the  "Teaming  Agreement")
concerning a proposed joint bid by the Company,  the vendor and another  company
in connection with a request for certain sales proposals.

      The vendor commenced  litigation  against the Company in April 2000 in the
United States  District  Court for the Eastern  District of New York and in June
2000 in the United States  District  Court for the District of Colorado and also
commenced  arbitration  and  mediation  proceedings  in New York with respect to
these disputes.  Following discovery and motion practice in the New York federal
court action and a mediation session, the parties settled their disputes.  Among
other  things,  the  settlement  provided  for  the  reinstatement  of  the  ANP
agreements with revisions and clarifications, which reflected increased payments
by the Company,  a new agreement  between the Company and the vendor pursuant to
which the vendor is to update and maintain certain other software of the Company
and which, among other things, superseded the Teaming Agreement, and the payment
by the Company of $150,000,  plus interest,  in twelve monthly  installments  to
reimburse the vendor for certain legal expenses.

      In March 2000, the Company suspended, with pay, two of its executives from
their positions  pending  completion of the Company's  investigation of a vendor
dispute,  as noted  above,  and  certain  other  matters.  Prior to the  Company
completing  its  investigation  of these matters,  the two suspended  executives
accepted  positions with another company and thereby  voluntarily  resigned from
their positions with the Company. These two executives,  however, have expressed
the position  through  their counsel that they were fired without cause in March
and not suspended,  and, therefore, are supposedly entitled to certain severance
payments under their respective  employment  agreements with the Company.  Their
counsel has  threatened  to bring an action  against the  Company  seeking  such
severance payments. The Company strongly disputes the positions taken by the two
former executives.

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

      The  Company's  2000 Annual  Meeting of  Stockholders  was held on June 9,
2000. At the annual meeting,  the  stockholders (i) reelected its present board,
consisting of Messrs.  William V. Carney,  Seymour  Joffe,  Michael A. Tancredi,
Warren H. Esanu, Herbert H. Feldman,  Stanley Kreitman, and Robert Schreiber and
(ii) ratified the  appointment of BDO Seidman,  LLP as independent  auditors for
the year ended December 31, 2000.

      Each director  received at least  7,392,219  votes for his  election.  Set
forth below is the vote on the other matters approved at the meeting.

<TABLE>
<CAPTION>
         Matter                              Votes For        Votes Against        Abstentions      Broker Non-Votes
         ------                             ----------        -------------        -----------      ----------------
<S>                                          <C>                 <C>                  <C>                 <C>
Appointment of Auditors                      7,700,819           25,225               3,377               None
</TABLE>

Item 6. Exhibits and Reports on Form 8-K

        (a)  Exhibits
             None

        (b)  Reports on Form 8-K
             None


                                 Page 13 of 14
<PAGE>

SIGNATURES

      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                             PORTA SYSTEMS CORP.

      Dated August 11, 2000                  By /s/ William V. Carney
                                                   -----------------------------
                                                   William V. Carney
                                                   Chairman of the Board

      Dated August 11, 2000                  By /s/ Edward B. Kornfeld
                                                   -----------------------------
                                                   Edward B. Kornfeld
                                                   Senior Vice President
                                                   and Chief Financial Officer


                                 Page 14 of 14