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, 1997

          [ ] 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: 2,231,929
          shares as of November 6, 1997


                               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)

                                                      September 30, December 31,
                                                           1997        1996   
                                                       -----------  ------------
                             Assets                     (Unaudited)

Current assets:
     Cash and cash equivalents                            $  3,046    $  2,584
     Accounts receivable, net                               18,388      16,034
     Inventories                                             7,850       7,424
     Prepaid expenses                                        1,112         782
     Other receivable                                         --           531
                                                          --------    --------
                  Total current assets                      30,396      27,355
                                                          --------    --------
      Property, plant and equipment, net                     4,793       5,422
      Deferred computer software, net                          826       1,676
      Goodwill, net                                         11,217      11,555
      Other assets                                           3,606       4,650
                                                          --------    --------
                  Total assets                            $ 50,838    $ 50,658
                                                          ========    ========

                     Liabilities and Stockholders' Deficit
Current liabilities:
      Convertible subordinated debentures                 $  1,771    $  2,096
      Zero coupon senior subordinated 
         convertible notes                                  26,180        --
      Current portion of senior debt                         2,063         750
      Accounts payable                                       5,893       6,056
      Accrued expenses                                       9,249       9,004
      Accrued interest payable                                 719         583
      Accrued commissions                                    2,472       2,708
      Income taxes payable                                     780         780
      Accrual deferred compensation                          1,205       1,232
      Short-term loans                                         123          31
                                                          --------    --------
                  Total current liabilities                 50,455      23,240
                                                          --------    --------

Senior debt                                                 13,903      16,835
Zero coupon senior subordinated convertible notes             --        25,885
Notes payable net of current maturities                      3,084       3,084
Income taxes payable                                           685         802
Other long-term liabilities                                    430         653
Minority interest                                            1,027         863
                                                          --------    --------
                  Total long-term liabilities               19,129      48,122
                                                          --------    --------
Stockholders' deficit:
      Preferred stock, no par value; authorized               --          --
      1,000,000 shares, none issued 
      Common stock, par value $.01; authorized 
      40,000,000 and 20,000,000 shares, issued 
      2,231,929 and 2,223,861 shares at 
      September 30, 1997 and December 31, 1996, 
         respectively                                           22          22
       Additional paid-in capital                           36,737      36,561
       Foreign currency translation adjustment              (4,433)     (4,014)
       Accumulated deficit                                 (48,699)    (50,900)
                                                          --------    --------
                                                           (16,373)    (18,331)
        Treasury stock, at cost                             (2,066)     (2,066)
        Receivable for employee stock purchases               (307)       (307)
                                                          --------    --------
                  Total stockholders' deficit              (18,746)    (20,704)
                                                          --------    --------
                  Total liabilities and 
                    stockholders' deficit                 $ 50,838    $ 50,658
                                                          ========    ========

          See accompanying notes to consolidated financial statements.


                               Page 2 of 14 pages

<PAGE>

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

                                                         Nine Months Ended
                                                     September 30, September 30,
                                                         1997          1996
                                                     ------------  -------------

Sales                                                  $ 45,934      $ 41,476
Cost of sales                                            28,043        27,087
                                                       --------      --------
     Gross profit                                        17,891        14,389
                                                       --------      --------

Selling, general and administrative expenses              9,542         9,578
Research and development expenses                         3,756         2,681
                                                       --------      --------
         Total expenses                                  13,298        12,259
                                                       --------      --------

     Operating income                                     4,593         2,130

Interest expense                                         (2,729)       (4,209)
Interest income                                             174            73
Gain on sale of assets                                     --           2,264
Other income                                                244            62
                                                       --------      --------

       Income before income taxes,
       minority interest, and
       extraordinary item                                 2,282           320

Income tax expense                                          (31)          (28)
Minority interest                                          (164)          (44)
                                                       --------      --------

       Income before extraordinary item                   2,087           248

Extraordinary gain                                          115         3,922
                                                       --------      --------

Net income                                             $  2,202      $  4,170
                                                       ========      ========

Per share data:

        Income before extraordinary item               $   0.33      $   0.05
        Extraordinary item                                 0.02          0.85
                                                       --------      --------
         Net income                                    $   0.35      $   0.90
                                                       ========      ========

         Weighted average shares outstanding              6,367         4,618
                                                       ========      ========

     See accompanying notes to unaudited consolidated financial statements.


                               Page 3 of 14 pages

<PAGE>

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

                                                         Three Months Ended
                                                    September 30,  September 30,
                                                        1997           1996
                                                    -------------  -------------

Sales                                                  $ 17,060      $ 14,613
Cost of sales                                             9,948         9,343
                                                       --------      --------
     Gross profit                                         7,112         5,270
                                                       --------      --------

Selling, general and administrative expenses              3,650         3,391
Research and development expenses                         1,268           877
                                                       --------      --------
         Total expenses                                   4,918         4,268
                                                       --------      --------

     Operating income                                     2,194         1,002

Interest expense                                           (889)         (983)
Interest income                                              82            31
Other income                                                 42            44
                                                       --------      --------

       Income before income taxes,
       minority interest and
       extraordinary item                                 1,429            94

Income tax expense                                           (8)          (22)
Minority interest                                          (179)         (277)
                                                       --------      --------

       Income (loss) before
          extraordinary item                              1,242          (205)

Extraordinary gain                                          104           532
                                                       --------      --------

Net income                                             $  1,346      $    327
                                                       ========      ========

Per share data:

        Income (loss) before
           extraordinary item                          $   0.19      $  (0.04)
        Extraordinary item                                 0.01          0.10
                                                       --------      --------
         Net income                                    $   0.20      $   0.06
                                                       ========      ========

         Weighted average shares outstanding              6,632         5,225
                                                       ========      ========

     See accompanying notes to unaudited consolidated financial statements.


                               Page 4 of 14 pages

<PAGE>

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

                                                         Nine  Months Ended
                                                     September 30  September 30,
                                                         1997          1996
                                                     -----------   ------------
Cash flows from operating activities:
     Net income                                        $  2,202      $  4,170
     Adjustments to reconcile net income                            
          to net cash used in operating                             
          activities:                                               
         Gain on sale of assets                            --          (2,264)
         Extraordinary gain                                (115)       (3,922)
         Non-cash financing expenses                        279         2,089
         Realized gain on litigation settlement            --            (174)
         Depreciation and amortization                    2,381         3,177
         Amortization of discount on convertible                    
          subordinated debentures                            30            94
         Minority interest                                 (164)           44
          Changes in assets and liabilities:                        
         Accounts receivable                             (2,354)       (2,074)
         Inventories                                       (426)        1,579
         Prepaid expenses                                  (330)          131
         Other receivables                                   31          --
         Deferred computer software                        --             (38)
         Other assets                                       628          (184)
         Accounts payable, accrued expenses                         
           and other liabilities                           (309)       (2,696)
                                                       --------      --------
              Net cash provided by (used in)                        
                 operating activities                     1,853           (68)
                                                       --------      --------
                                                                    
     Cash flows from investing activities:                          
         Proceeds from disposal of assets                           
           held for sale, net                               500         6,793
         Proceeds from sale of assets                      --           3,456
         Capital expenditures                              (434)         (246)
                                                       --------      --------
              Net cash provided by investing                        
                 activities                                  66        10,003
                                                       --------      --------
                                                                    
     Cash flows from financing activities:                          
         Proceeds from long-term debt                       314         1,340
         Repayments of long-term debt                    (1,933)      (10,157)
         (Repayments of) proceeds from notes                        
            payable and short term loans                     92          (118)
                                                       --------      --------
              Net cash used in financing activities      (1,527)       (8,935)
                                                       --------      --------
                                                                    
     Effect of exchange rates on cash                        70          (394)
                                                       --------      --------
                                                                    
     Increase in cash and cash equivalents                  462           606
                                                                    
     Cash and equivalents - beginning of the year         2,584         1,109
                                                       --------      --------
                                                                    
     Cash and equivalents - end of the period          $  3,046      $  1,715
                                                       ========      ========
                                                                    
                                                                    
     Supplemental cash flow disclosures:                            
         Cash paid for interest expense                $  2,298      $  2,022
                                                       ========      ========
                                                                  
         Cash paid for income taxes                    $     74      $     66
                                                       ========      ========
                                                                  
     See accompanying notes to unaudited consolidated financial statements.


                               Page 5 of 14 pages

<PAGE>

             NOTES TO UNAUDITIED 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, 1996. Results for the first nine months of 1997 are not necessarily
indicative of results for the year.

Note 2: Inventories

     Inventories  are  valued  at lower of cost or  market.  Inventory  costs at
September  30,  1997  have been  computed  using a  standard  cost  system.  The
composition of inventories at the end of the respective periods is as follows:

                                      September 30, 1997    December 31,1996
                                      ------------------    ----------------
                                                  (in thousands)
          Parts and components              $5,583              $4,557
          Work-in-process                    1,149                 515
          Finished goods                     1,118               2,352
                                            ------              ------
                                            $7,850              $7,424
                                            ======              ======
                                                          
Note 3: 6% Convertible Subordinated Debentures and
        Zero Coupon Senior Subordinated Notes

     As of September 30, 1997, the Company had outstanding  $1,771,000 of its 6%
Convertible Subordinated Debentures due July 1, 2002 ("the Debentures"),  net of
original issue  discount  amortized to principal over the term of the debt using
the  effective  interest  rate  method,  of  $149,000.  The face  amount  of the
outstanding Debentures was $1,920,000 at September 30, 1997.

     Interest on the  Debentures is payable on July 1 of each year. The interest
accrued as of September 30, 1997 amounted to $539,000.  As of September 30, 1997
the Company is in default under the provisions of the Debentures.

     As  of  September  30,  1997,  the  Company  had  exchanged   approximately
$34,180,000 principal amount of the Debentures,  net of unamortized discount and
accrued  interest  expense for 722,650 shares of the Company's  common stock and
$26,204,000 of Zero Coupon Senior Subordinated  Convertible Notes ("the Notes").
As of  September  30,  1997,  $26,180,000  of Notes  are  outstanding  after the
conversion of $24,000 of principal Notes to common stock.


                               Page 6 of 14 pages

<PAGE>

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

     The exchange of the Debentures for the Notes and common stock was accounted
for as a troubled debt  restructuring  in accordance with Statement of Financial
Accounting  Standards No. 15. Since the future  principal and interest  payments
under the Notes is less than the  carrying  value of the  Debentures,  the Notes
were recorded for the amount of the future cash payments, and not discounted. In
addition, no future interest expense will be recorded on the exchanged Notes. As
a result of the  exchange,  the  Company  recognized  an  extraordinary  gain of
$104,000 and $532,000  for the three months ended  September  30, 1997 and 1996,
and $115,000 and  $3,922,000  for the nine months ended  September  30, 1997 and
1996, receptively.

Note 4: Senior Debt

     On September 30, 1997, the Company's  senior debt under its credit facility
consisted of $15,966,000. 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% per annum.
The Company incurs an annual 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.  The loan  agreement
requires a minimum  quarterly  amortized  payment  of  $250,000,  increasing  to
$325,000 for the quarter  ending March 31, 1998 and for the quarters  thereafter
during the term of the agreement,  as well as an additional principal payment if
cash flow exceeds certain amounts.  Based on these required principal  payments,
$2,063,000 has been classified as a current liability at September 30, 1997.

         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  30,1997,  the Company is
in compliance with the above covenants.


                               Page 7 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:

                                   Nine Months Ended       Three Months Ended
                                   -----------------       ------------------
                                     September 30,            September 30,
                                     -------------            -------------
                                    1997       1996          1997      1996
                                    ----       ----          ----      ----
Sales                               100%       100%          100%       100%
Cost of Sales                        61%        65%           58%        64%
Gross Profit                         39%        35%           42%        36%
Selling, general and                                     
   administrative expenses           21%        23%           21%        24%
Research and development                                 
   expenses                           8%         7%            8%         6%
     Operating income                10%         5%           13%         6%
Interest expense - net               (6%)       (9%)          (5%)       (7%)
Other income                          1%         5%            0%         0%
Minority interest                     0%         0%           (1%)       (2%)
Extraordinary item                    0%         9%            1%         4%
Net income                            5%        10%            8%         1%
                                                      
     The  Company's  sales by product line for the periods  ended  September 30,
1997 and 1996 are as follows:

                                                     Nine Months Ended  
                                                     -----------------  
                                                        September 30,
                                                        -------------
                                                 1997                  1996
                                                 ----                  ----
                                                   (Dollars in thousands)
                             
Line connection/protection equipment*        $18,204   40%        $18,710   45%
OSS systems                                   21,093   46%         17,077   41%
Signal Processing                              6,203   13%          5,495   13%
Other                                            434    1%            194    1%
                                             ------------         ------------
                                             $45,934  100%        $41,476  100%
                                             ============         ============
                                                                             
                               Three Months Ended
                                  September 30,
                                    1997 1996
                             (Dollars in thousands)

Line connection/protection equipment*        $ 4,857   29%        $ 6,004   41%
OSS systems                                    9,790   57%          6,445   44%
Signal Processing                              2,261   13%          2,118   15%
Other                                            152    1%             46    0%
                                             ------------         ------------
                                             $17,060  100%        $14,613  100%
                                             ============         ============
                                                               
*    Includes  sales of fiber  optics  products of $0 and  $452,000 for the nine
     months  ended  September  30,  1997 and 1996.  There were no sales of fiber
     optic  products  for either the three months  ended  September  30, 1997 or
     1996.


                               Page 8 of 14 pages

<PAGE>

Results of Operations

     The Company's  sales for the nine months ended  September 30, 1997 compared
to the nine months ended  September  30, 1996  increased  $4,458,000  (11%) from
$41,476,000  in 1996 to  $45,934,000  in 1997 and  sales for the  quarter  ended
September  30, 1997 of  $17,060,000  increased by $2,447,000  (17%)  compared to
$14,613,000  for the quarter ended  September 30, 1996. The increased  sales for
both the nine and three months is due  primarily to higher  revenue from the OSS
division.

     OSS  revenue for the nine and three  months  ended  September  30, 1997 was
$21,093,000 and $9,790,000,  respectively, compared to the nine and three months
ended  September  30,  1996 of  $17,077,000  and  $6,445,000,  respectively,  an
increase of $4,016,000  (24%) and $3,345,000  (52%) for the nine and three month
periods,  respectively. The increased sales relates primarily to higher revenues
generated from the installation of the OSS systems.

     The line  connection  sales for the nine months  ended  September  30, 1997
compared to September 30, 1996  decreased  from  $18,710,000  to  $18,204,000 or
$506,000  (3%).  Sales for the three months  ended  September  30,  decreased by
$1,147,000  (19%) from  $6,004,000 in 1996 to  $4,857,000 in 1997.  The decrease
reflects the  completion of an agreement to supply  certain  products to British
Telecommunications  PLC (BT) and the  introduction  during the third  quarter of
1997 of a  replacement  product to the same  customer  which has a lower selling
price. In addition, the sales volume related to the new product were of a lesser
quantity  in the third  quarter of 1997 than the  previously  supplied  product.
Orders from BT, since the end of the third quarter, remain at the reduced level.

     Signal  processing  sales for the nine and three months ended September 30,
1997 were  $6,203,000  and  $2,261,000,  respectively,  compared to the nine and
three months ended September 30, 1996 of $5,495,000 and $2,118,000,  an increase
of  $708,000  (13%)  and  $143,000  (7%) from  1996 to 1997,  respectively.  The
increased revenue was generated from the earlier than anticipated  completion of
certain  military  orders and  non-recurring  revenue from  certain  engineering
services.

     Cost of sales for the nine months ended September 30, 1997, as a percentage
of sales was 61%  compared to the nine months ended  September  30, 1996 of 65%.
For the quarter  ended  September  30, 1997 cost of sales,  as a  percentage  of
sales,  was 58% compared to the same period of 1996 of 64%. The  improvement  in
gross  margin is  attributed  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  decreased by $36,000 (less
than 1%) from  $9,578,000 to $9,542,000 for the nine months ended  September 30,
1997  compared to the nine months ended  September  30,  1996.  For the quarters
ended September 30, 1997 and 1996 selling,  general and administration  expenses
increased by $259,000  (8%) from  $3,391,000 to  3,650,000,  respectively.  This
increase  resulted  primarily  from  higher  commissions   associated  with  the
increased  revenues  for the  quarter,  and to a lesser  extent,  the  Company's
efforts to increase  its sales and  marketing  effectiveness  in order to secure
future business.

     Research and  development  expenses  increased by  $1,075,000  (40%) and by
$391,000  (45%) for the nine and three months ended  September 30, 1997 from the
comparable  periods in 1996,  respectively.  The increased expenses results from
the  Company's  efforts to develop new  products,  primarily  related to the OSS
business. 


                               Page 9 of 14 pages
<PAGE>

Results of Operations (continued)

     As a result of the above,  for the nine  months  ended  September  30, 1997
compared to comparable nine months of 1996, the Company had operating  income of
$4,593,000 in 1997 versus  $2,130,000 in 1996. The Company had operating  income
of $2,194,000 for the quarter ended September 30, 1997 as compared to $1,002,000
for the quarter ended  September 30, 1996. The Company's  operating  improvement
for the nine months and the quarter ended  September 30, 1997,  when compared to
the comparable  periods ended  September 30, 1996, were the results of increased
revenue, the improved gross margins and its continuing efforts to maintain costs
and expenses at a level appropriate with the current level of sales.

     Interest  expense  decreased  for the nine  months  ended  September  30 by
$1,480,000  (35%) from $4,209,000 in 1996 to $2,729,000 in 1997. For the quarter
ended September 30, interest expense decreased by $94,000 (10%) from $983,000 in
1996 to $889,000 in 1997.  The  decrease in interest  expense in both periods is
attributable primarily to the exchange of the Company's Debentures for the Notes
and common stock which  occurred  primarily in the first and second  quarters of
1996, and repayment of principal to the Company's  senior  lender.  In addition,
for the nine month  period  ended  September  30,  1996,  the  Company  incurred
additional  interest  expense as a result of the  recognition  in that period of
certain deferred borrowing costs related to its loans from its senior lender.

     The Company had income before extraordinary item of $2,087,000 and $248,000
for the nine months ended  September  30, 1997 and 1996,  respectively.  For the
three months ended  September  30, 1997 and 1996,  the Company  recorded  income
before  extraordinary item of $1,242,000 and a loss before extraordinary item of
$205,000,  respectively.  During the nine months ended  September 30, 1996,  the
Company had a gain of $2,264,000 on sale of assets.  If not for this gain, there
would  have been a loss  before  extraordinary  item for the nine  months  ended
September 30, 1996 of $2,016,000. The improvement in income before extraordinary
item reflects the increased  revenue and gross margin coupled with the reduction
of interest expense.

     During the nine  months  ended  1997 and 1996,  respectively,  the  Company
recorded  a  $115,000  and   $3,922,000   extraordinary   gain  from  the  early
extinguishment  of debt as a result of the  exchange of the  Debentures  for the
Notes and common  stock.  During the three months ended  September  30, 1997 and
1996, respectively, a $104,000 and $532,000 extraordinary gain was recorded as a
result of such conversions.

     As the  result  of the  foregoing  the  Company  generated  net  income  of
$2,202,000,  $0.35  per share  for the nine  months  ended  September  30,  1997
compared  with net income of  $4,170,000,  $0.90 per share,  for the nine months
ended September 30, 1996 and net income for the quarter ended September 30, 1997
of $1,346,000,  $0.20 per share,  compared with net income for the quarter ended
September 30, 1996 of $327,000, $0.06 per share. The calculation of the weighted
average shares, for the period and quarter ended September 30, 1997, assumes the
conversion of the Notes which are considered to be a common stock equivalent.


                              Page 10 of 14 pages

<PAGE>

Liquidity and Capital Resources

     The Company had income from  continuing  operations  for the nine and three
months ended September 30, 1997. These results notwithstanding, the Company will
be required to refinance or  restructure  certain  existing  notes payable which
become due on January 2, 1998 as  discussed  in the  following  paragraph.  This
factor  continues  to raise  substantial  doubt about the  Company's  ability to
continue as a going concern.  Furthermore,  the unaudited consolidated financial
statements do not include any  adjustments  that might result from the inability
of the Company to refinance or restructure such notes.

     At  September  30,  1997 the  Company  had cash  and  cash  equivalents  of
$3,046,000  compared with $2,584,000 at December 31, 1996. The Company's working
capital deficit at September 30, 1997, which was affected by the  classification
of the Notes as current liabilities subsequent to December 31, 1996 as discussed
below,  was  $20,059,000,  compared to working capital of $4,115,000 at December
31, 1996.

     At September 30, 1997,  $26,180,000 of the Notes,  which are due on January
2, 1998,  are  classified  as current  liabilities.  At  September  30, 1997 the
Company does not have sufficient resources to pay the Notes when they mature and
it is likely that it cannot  generate such cash from its  operations or from its
existing credit facilities.

     On October 10, 1997, the Company announced that it had made an offer to the
holders of the Notes which  would  amend the terms of the Notes,  subject to the
tender of up to 95 % of the principal amount of the Notes for conversion.  Under
the amended terms,  the  conversion  price of the Notes will be reduced to $3.65
from  $6.55.  In  addition,  the  amended  terms  provide  for the  issuance  of
additional  shares  under  certain  conditions.  The  Company has  obtained  the
commitment  or tender of the  holders  of more than 80% of the Notes to  convert
their Notes in  accordance  with the amended  terms as of November 7, 1997.  The
Company has certain rights to reduce the  percentage of the principal  amount of
the Notes required to be tendered for conversion in order that the amended terms
become  effective  and to extend the deadline  for  obtaining  such tender.  The
tender period has been extended until November 14, 1997. If all of the Notes are
converted  on the  amended  terms,  the  Company  will  issue  an  aggregate  of
approximately  7.2 million  shares of common stock.  In addition,  under certain
conditions, a maximum of approximately 800,000 shares may be issued if the price
of the common stock  declines.  If the Notes are  successfully  converted,  such
conversion would significantly  reduce debt and increase equity and would result
in a non-cash  charge to earnings  which would by determined by the common stock
value on the date of the conversion.

     Although the Company is seeking to refinance or restructure  the Notes,  no
assurance  can be given  that it will be  successful  in these  efforts.  If the
Company is unable to  refinance or  restructure  the Notes or the holders of the
Notes do not convert such Notes to common stock, the Company's  liquidity may be
severely  impaired and the Company's  business may be  materially  and adversely
affected.


                              Page 11 of 14 pages

<PAGE>

     At September  30, 1997,  the  Company's  senior debt to its senior  secured
lender,  Foothill  Capital  Corporation  ("Foothill")  which is due November 30,
1998, was $15,966,000 of which approximately $15,106,000 and $860,000 relates to
the term loan and the  revolving  line of credit,  respectively.  The  agreement
provides for (i) the repayment of loan  principal of $750,000 in 1997,  (ii) the
repayment of loan principal of $325,000 each quarter  commencing  March 31, 1998
and  thereafter  during  the term of the  agreement,  (iii) the  Company  to pay
additional  principal  payments  if certain  "adjusted  cash flow  amounts",  as
defined,  exceed certain amounts, and (iv) the Company to pay a monthly facility
fee of  $50,000.  For the  quarter  ended  September  30,  1997  the  additional
principal payment based upon the "adjusted cash flow" amounts to $587,000. As of
September 30, 1997, the Company's  availability  under its $9,000,000  revolving
line of credit and letter of credit availability is approximately $1,557,000.

Liquidity and Capital Resources (continued)

     As of September 30, 1997, the Company had remaining outstanding  $1,771,000
of the Debentures,  net of original issue discounts  amortized to principal over
the term of the debt using the effective interest rate method, of $149,000.  The
face  amount of the  outstanding  Debentures  was  $1,920,000.  Interest  on the
Debentures  is  payable  on July 1 of each  year.  The  interest  accrued  as of
September 30, 1997 amounted to $539,000. As of September 30, 1997 the Company is
in default under the provisions of the  Debentures.  Accordingly,  such debt has
been classified as a current liability at September 30, 1997.


                              Page 12 of 14 pages

<PAGE>

PART II- OTHER INFORMATION

Item 5.  Other Information

     The Company has entered into a  Supplemental  Indenture  dated  October 10,
1997,  pursuant  to which  it  amended  the  terms  of its  Zero  Coupon  Senior
Subordinated  Notes due  January 2, 1998 (the  "Notes"),  subject  to  receiving
tender of 95% of the principal amount of the Notes for conversion by November 7,
1997. Pursuant to the Supplemental Indenture,  the conversion price of the Notes
will be reduced to $3.65 from $6.55.  The  Company has certain  rights to reduce
the percentage of the principal  amount of the Notes required to be tendered for
conversion  in order that the amended  terms become  effective and to extend the
deadline for obtaining  such tender.  The tender period has been extended  until
November 14, 1997.  As of November 7, 1997,  the holders of more than 80% of the
Notes have tendered  their Notes for  conversion in accordance  with the amended
terms provided that the amended terms become effective.

     Notes in the principal amount of approximately $26,200,000 are presently
outstanding. If all the Notes are converted on the amended terms, the Company
will issue an aggregate of approximately 7,200,000 shares of Common Stock. In
addition, under certain conditions, a maximum of approximately 800,000 shares
may be issued if the price of Common Stock declines.

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

     4.1  Supplemental Indenture dated as of October 10, 1997 between the
          Company and American Stock Transfer & Trust Company.

     (b)  Reports of 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 12, 1997            By /s/William V. Carney
                                          ---------------------------
                                             William V. Carney
                                             Chairman of the Board

    Dated November 12, 1997            By /s/Edward B. Kornfeld
                                          ---------------------------
                                             Edward B. Kornfeld
                                             Vice President and Chief 
                                               Financial Officer


                              Page 14 of 14 pages