UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                                  ______________

                                   Form 10-KSB

                                   (Mark One)
        [ X ] Annual report under Section 13 or 15 (d) of the Securities
                              Exchange Act of 1934

                 For the fiscal year ended December 30, 2000, or

[ ] Transition report under Section 13 or 15 (d) of the Securities Exchange Act
                                    of 1934


             For the transition period from _________ to __________


                         Commission file number 0-11880

                            HYTEK MICROSYSTEMS, INC.
                 (Name of small business issuer in its charter)

                              California 94-2234140
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)

                 400 Hot Springs Road, Carson City, Nevada 89706
               (Address of principal executive offices) (Zip Code)

         Issuer's telephone number, including area code: (775) 883-0820

    Securities registered pursuant to Section 12(b) of the Exchange Act: None

      Securities registered pursuant to Section 12(g) of the Exchange Act:

                           Common Stock, no par value
                                (Title of Class)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 ______

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the best of registrant's  knowledge,  in the definitive  proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

     Revenues of the Issuer for the most recent  fiscal year ended  December 30,
2000 were: $7,939,000.

     The aggregate  market value of the common stock held by  non-affiliates  of
the registrant (based on the average of the bid and asked prices reported on the
National  Association of Securities Dealers Automated  Quotation (NASDAQ) system
on  March  26,  2001)  was  approximately  $8,885,000.   For  purposes  of  such
calculation,  shares of Common Stock held by each executive officer and director
and by each person who owns more than 5% of the  outstanding  Common  Stock have
been  excluded  in that  such  persons  may be  deemed  to be  affiliates.  This
determination of affiliate status is not necessarily a conclusive  determination
for other purposes.

     As of March 26, 2001, the issuer had outstanding 3,238,508 shares of Common
Stock, no par value.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Parts of the Company's definitive Proxy Statement for its Annual Meeting of
Shareholders to be held on May 18, 2001 (the "Proxy Statement") are incorporated
by reference into Part III of this Annual Report on Form 10-KSB.

     Transitional Small Business Disclosure Format (check one): Yes___ No X

<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

     Hytek Microsystems,  Inc. ("Hytek" or the "Company") designs, manufactures,
markets and sells custom and standard hybrid microcircuits.  These microcircuits
utilize thick film technology and consist of conductive and non-conductive  inks
that are bonded onto a substrate and  interconnected  with various  subminiature
electronic components to form a hybrid microcircuit. The Company also uses other
technologies  such as Low  Temperature  Co-fired  Ceramic  substrates  (LTCC) to
produce hybrid circuits. In addition to custom hybrid microcircuits, the Company
also  manufactures  delay lines,  thermo-electric  cooler  controllers and laser
diode driver standard products.

     Hytek was  incorporated  as a  California  corporation  on January 4, 1974.
Unless the context otherwise requires, the terms "Hytek" and the "Company" refer
to Hytek Microsystems, Inc. See Note 1 of Notes to Financial Statements.

     Net  revenues  in 2000  increased  52% from 1999  levels  as the  result of
increases in new orders and  increased  sales of the Company's  optical  support
products.  The  Company  had net income of $560,000 in 2000 as compared to a net
loss of $1,139,000  during 1999.  See  "Management's  Discussion and Analysis or
Plan of Operation" in Part II, Item 6 hereof.

     This  Annual  Report on Form  10-KSB  contains  forward-looking  statements
within the meaning of Section 27A of the  Securities Act of 1933 and Section 21E
of the Securities  Exchange Act of 1934.  Actual results could differ materially
from those projected in the  forward-looking  statements as a result of a number
of risks and uncertainties,  including, but not limited to, the risk factors set
forth in  "Management's  Discussion  and Analysis or Plan of  Operation--Factors
Affecting  Future  Results"  and  elsewhere  in this  report.  The  Company  has
attempted  to  identify  forward-looking   statements  by  placing  an  asterisk
immediately  following  the sentence or phrase  containing  the  forward-looking
statement(s).  Statements  made  herein are as of the date of the filing of this
Form 10-KSB  with the  Securities  and  Exchange  Commission,  and should not be
relied upon as of any  subsequent  date.  The Company  expressly  disclaims  any
obligation to update information presented herein, except as required by law.

Products and Markets

     Products  manufactured  by the  Company  are  sold  primarily  to  original
equipment  manufacturers (OEMs) serving the medical, oil exploration,  military,
satellite  systems,   industrial   electronics  and   opto-electronic   markets.
Approximately  76% of the  Company's  net  revenues  in 2000 were  derived  from
products   designed   and   manufactured   to  meet  a   particular   customer's
specifications.  The  remaining  24% of net  revenues in 2000 were  derived from
standard products designed by the Company's engineering staff.

     During 2000,  approximately 59% of the Company's revenues were derived from
commercial and industrial  private sector programs as compared to  approximately
27% in 1999.  Sales to the military,  aerospace and government  sector accounted
for 41% of total revenues in 2000 and accounted for 63% of 1999 total  revenues.
2000 sales to the military,  aerospace and government sector were  approximately
equal in absolute dollars to 1999 levels.

Military

     The Company maintains its military  certification under MIL-PRF-38534,  and
is also certified to the  international  quality  standard ISO 9001. The Company
continues to pursue business in the military  market and is actively  seeking to
expand its customer base in this area.*  Offshore  producers with  significantly
lower  costs have in the past been  precluded  from  participating  in many U.S.
military  applications;  however,  it is not certain that this  preclusion  will
remain in effect in the  future.  Military  products  are  subject  to much more
stringent  manufacturing  criteria than commercial products and have in the past
commanded  significantly  higher  prices.  However,  there is a growing trend in
military  procurement to buy to the "best  commercial  standards" or "commercial
off the shelf" (COTS)  products,  which may have a negative impact on margins in
future military business.  The Company intends to continue its efforts to remain
competitive in this market. *

     While domestic  defense and  military-related  spending  programs have been
reduced over the past several  years,  there  remains a large global  market for
these  products  and systems.  U. S. defense  contractors  are  supplying  these
products to "allied"  nations who continue to build their defense  capabilities.
The Company intends to continue to be an active participant in this market.*

Custom Commercial Hybrids

     Segments of the commercial  custom hybrid market have  historically been an
extremely competitive,  low margin arena. In many commercial applications,  such
as automotive, audio and video products and certain communications applications,
U.S.   manufacturers  are  competing   against  offshore   producers  that  have
significantly  lower costs.  However,  there are certain segments of this market
that  require  high  reliability   custom  hybrid  products,   such  as  medical
instrumentation,  oil exploration and certain industrial applications. Such high
reliability products command higher prices and margins. It is in this segment of
the commercial market where the Company has been successful during recent years.

     During  2000,  the Company has expanded  its  participation  in the medical
device and medical  instrumentation  markets and is currently  producing  custom
hybrid devices for a major medical instrument manufacturer.  The Company intends
to increase its efforts to further expand in this market.*

Standard Products

     In February 1993, the Company announced a new standard  commercial product,
the  Thermo-Electric  Cooler Controller (TECC),  which has applications in fiber
optic  communications and various  "detector" product markets.  During 1994, and
subsequently  through  2000,  additional  TECC  devices  have been  designed and
introduced. These products have received favorable response from the marketplace
and have been shipped to a wide variety of customers. During 2000, sales of TECC
products increased by 250% over the prior year.

     Further,  during 1995,  the Company  introduced  its High Speed Laser Diode
Driver  (HSLDD).  The Company has  subsequently  introduced  several  additional
design  versions of the Laser Diode Driver.  The Company  expects the market for
these products to grow as new communications  technologies develop.* The Company
believes  the  market  for  these  standard   opto-electronic   products  offers
significant  potential  for growth and intends to devote  additional  effort and
resources to expanding its presence in this market.*

Hybrid Circuit Technology

     Complex electrical  circuits require the integration,  in a single package,
of various resistors,  transistors and other components. The principal packaging
technologies  used in producing  electrical  circuits  include  printed  circuit
boards,  integrated  circuits,  thick film  hybrid  circuits,  thin film  hybrid
circuits  and co-fired  ceramic  hybrid  circuits.  These  technologies  are not
interchangeable  in  all  applications,   and  the  extent  to  which  they  are
interchangeable depends on such requirements as size,  performance,  reliability
and cost.

     Thick film hybrid circuit technology,  the Company's primary  manufacturing
technology,  is a subminiature electronic packaging method. The term "thick film
network"  describes  a method  for screen  printing  conductors,  resistors  and
capacitors  onto a ceramic  substrate.  This thick film network becomes a hybrid
circuit when components such as integrated circuits, semiconductors,  capacitors
and inductors are added to the network in order to form a functioning electrical
circuit.

     Theoretically,  hybrid  circuit  packaging  techniques  can be  employed in
virtually  any  electronic  application,  but they have various  advantages  and
disadvantages in any given application as compared with alternative  techniques.
In general, the alternative  techniques are printed circuit designs,  integrated
circuits and thin film hybrid technology.

     In those  applications  in which either hybrid  circuits or printed circuit
boards  can be  used,  hybrid  circuits  often  offer  the  advantages  of  size
reduction, increased performance, reduced cost and proprietary design.

     Hybrid circuit  packaging  techniques are generally  chosen over integrated
circuit  designs if the circuits are  difficult to  integrate,  or if the higher
cost  of  an  integrated  circuit  is  not  warranted.   For  example,   circuit
applications  requiring  inductors,  large  capacitors  or devices  from several
semiconductor  technologies  cannot currently be integrated into a silicon chip.
However,  as integrated  circuit  technology  advances  rapidly,  integration is
improving  and the  advantages  of hybrid  technology  have been  eroding  away.
Despite this erosion,  not all applications  have proven adaptable to integrated
circuit technology; therefore; the Company believes that hybrid technology is an
attractive alternative for certain applications.

     While thin film hybrid  technology  allows for greater size  reductions and
more  compact  circuits  than does thick film  hybrid  technology,  it is a more
expensive  process and  requires a much  larger  initial  investment  in process
equipment. As a result of these cost differences, there continues to be a market
for hybrid circuits produced with thick film technology.

     In past years, all of the microcircuits produced by Hytek were manufactured
using thick film  hybrid  circuit  packaging  techniques,  including  thick film
screen print, firing and laser trimming,  chip and wire assembly,  and automatic
testing.  During 1998,  the Company  began to produce a small number of circuits
utilizing Low Temperature  Co-fired Ceramic (LTCC)  substrates.  This technology
increases the  uniformity of the substrate  layers,  yielding a higher number of
conductive  layers on a  substrate.  As a result,  LTCC  technology  can produce
higher  density,  more  complex  circuits  than  standard  thick-film  substrate
technology.  The Company will  continue to seek and develop  additional  process
technologies  in the  future  that  could  enable  the  Company  to  offer  more
sophisticated circuits than those currently provided by Hytek. *

Product Applications

     Custom products  accounted for  approximately 76% of the Company's sales in
2000.  These  products  serve a variety  of  applications  in the  medical,  oil
exploration,   military,   satellite   systems,   industrial   electronics   and
opto-electronic  markets.  In the  production  of custom  products,  the Company
generally  accepts  full  responsibility  for product  design,  having  received
blueprints and/or input and output  specifications  from the potential customer.
In many cases,  prototypes are developed and delivered to the customer,  and are
evaluated by the  customer,  before a firm order for  production  quantities  is
placed.  In the case of a new custom product,  a typical  production  cycle time
from  initial  customer  contact  to  shipment  of  the  product  in  commercial
quantities  would be 20 to 30 weeks.  The  Company  places a strong  emphasis on
developing  a working  relationship  between its own  engineering  staff and the
engineering staff of a potential customer during the product development phase.

     Standard products accounted for approximately 24% of the Company's sales in
2000. These products consist of delay lines,  thermo-electric cooler controllers
and laser diode driver  products  produced  for  applications  in the  military,
industrial electronic systems and communications markets.

     Within the primary markets served by the Company's customers, the following
are some  applications in which the Company's  custom and standard  products are
currently being used:

     Medical -- Instrument motor controls and diagnostic devices.

     Oil Exploration -- seismic data  acquisition  and  geophysical  measurement
equipment.

     Military  --  communications,   guidance  systems,  control  circuitry  and
avionics.

     Satellite Systems -- power monitoring and control circuits.

     Industrial  Electronic  Systems -- measurement  and diagnostics on rotating
machinery.

     Opto-Electronics -  sub-miniature  temperature  controls  and laser  diode
drivers for data transmission.



Marketing

     The Company markets its products in the United States through its own sales
staff and through independent sales  representatives.  At December 30, 2000, the
Company's  direct sales staff  consisted of four  employees  operating  from the
Company's principal office in Carson City. In addition, at such date the Company
had 11 independent sales  representatives  located  throughout the United States
and one  independent  representative  located in Israel.  The  Company  also has
distributors in France, Germany, Japan and Sweden.

     In addition to this marketing organization,  the Company uses its technical
engineering  staff to assist in its marketing  effort. In this marketing effort,
the Company first seeks to identify product types with component  functions that
can be  well  served  utilizing  hybrid  circuit  packaging.  The  Company  then
identifies  and  contacts the  manufacturers  or proposed  manufacturers  of the
particular  product  types.  The  initial  contact  is  usually  made by a sales
representative  for the geographic  area. If the proposed sale involves a custom
product,  the Company's in-house design and engineering staff supports the sales
effort.  In addition,  senior  members of management of the Company are directly
involved in the marketing and sales activities of the Company.

     The Company  continues  to identify  certain  existing  and  potential  new
customers  who it feels offer greater  potential for increased  levels of future
business. The Company strives to maintain a higher level of contact and customer
support for these "key accounts".

     The Company's  Carson City,  Nevada  facility is certified and qualified to
MIL-PRF-38534,   Class  H  and  Class  K   (previously   Mil-Std-1772)   .  This
certification  is a prerequisite to participate in certain  military  contracts,
and is  subject  to  periodic  audits  by the  U.S.  government.  Loss  of  this
certification  would have a material  adverse  impact on the Company's  business
prospects  and  financial  condition.  Further,  the Company is certified to the
international quality standard ISO 9001.

Customers

     During 2000, the Company's five largest customers accounted for 47 % of the
Company's  net  revenues.  In 2000,  K-Byte Corp.,  Eaton Corp.  and  Chesapeake
Sciences  Corp.  accounted  for  12%,  11% and 11% of net  sales,  respectively.
(K-Byte Corp. is a contract manufacturer for Stryker Instruments.)

Manufacturing

     Each hybrid  product  produced by the  Company  passes  through a number of
complex processes,  each of which requires a high degree of skill and precision.
Occasionally  in the  past,  the  Company  has  experienced  isolated  technical
manufacturing  problems  that have  resulted  in a material  negative  impact on
quarterly   results.   While  the   Company  has  taken  steps  to  improve  its
manufacturing  processes and  equipment,  any future  manufacturing  problems on
major  customer  programs  could have a  material  adverse  effect on  operating
results.

     The thick-film hybrid manufacturing process begins with a blueprint, which,
in the case of a custom product,  is produced by, or with the assistance of, the
customer.  This blueprint is the basis for an engineering print that the Company
produces, which in turn serves to provide a set of artwork for each product. The
artwork  consists  of up to 20  photographic  negatives,  one for each  layer of
imprint on the substrate  described below. The artwork is then  photographically
reduced  and used to generate  stainless  steel  screens,  which are used in the
printing process.

     The screens are used to print on substrates,  which are generally miniature
ceramic wafers.  Metallic  conductive and non-conductive  inks (thick films) are
printed on the substrates.  Those films, when fired, will conduct and resist the
flow of  electric  current.  The  drying or firing  process  is  achieved  using
temperature-controlled furnaces, typically operating in the range of 525 degrees
Celsius to 935 degrees Celsius.  Each printing must be fired before the next one
is started.

     After  printing,  resistance  values are adjusted by high  precision  laser
trimming.  Laser cuts are made in the  resistive  films to alter the  resistance
value, using computer-controlled  laser equipment.  During the trimming process,
the   electrical    characteristics   are   simultaneously   re-tested   against
specification before the substrate is passed to assembly.

     In assembly,  which is a  combination  of manual and  automated  processes,
other  electronic  components,  such  as  integrated  circuits,  semiconductors,
capacitors and inductors, are added to the thick film substrate,  thus resulting
in a hybrid  circuit.  Positioning  is critical,  and the work is primarily done
under  microscopes.  Wire bonding,  using  miniaturized wire, is also done under
microscopes.  Wire bonding provides the electrical  connection from the attached
components to the printed  substrate.  The wire bonding process is very critical
to the overall  yield and  efficiency  of the  manufacturing  cycle.  The hybrid
circuit is then packaged and hermetically sealed in metal, ceramic or plastic.

     Much of the Company's test equipment is automated and computer  controlled,
each unit being  subjected to tests at various points in the production  process
as well as to a final test by the  quality  assurance  staff.  Product  yield is
dependent on environmental  control as well as stringent  process and production
controls.

     The  primary  materials  from  which the  Company  manufactures  its hybrid
products are  resistive  materials  (wire,  alloys and inks),  ceramic bases and
electronic components (primarily integrated circuits, capacitors and inductors).
The raw materials and components  that Hytek  purchases are generally  available
from several sources. Some of the Company's major suppliers include Aegis, Inc.,
E. I. DuPont,  Electro Science Laboratories,  Hi-Rel Products,  Inc., Semi-Films
Inc., Semi Dice, Inc. and Micross  Components,  Inc. Although the Company has at
times  experienced  long lead times with respect to deliveries from its vendors,
the Company believes that adequate  alternative  sources of supply are currently
available for a majority of the Company's materials requirements.  Nevertheless,
any major disruption in the delivery of raw materials from these suppliers would
have a material adverse impact on the Company's future operations.

     Government   regulations  impose  various  environmental  controls  on  the
chemicals  used  in  electronics  manufacturing.  The  Company  employs  various
safeguards to avoid the discharge of harmful  materials into the environment and
believes that its activities conform to present state and federal  environmental
regulations. However, there can be no assurance that the Company will not in the
future be exposed to increased costs relating to required clean-up or compliance
with  ever-tightening  regulations.  The Company  complies with federal labeling
regulations, which took effect in May 1993, regarding the use of Ozone Depleting
Chemicals  (ODCs)  as set forth in the  Clean  Air Act of 1990.  These  labeling
requirements  have had only a minor cost  impact on  operations.  At the present
time,  the  Company is not aware of any other  proposed  or  pending  government
regulation  that would have a material  impact on the  operations  or  financial
condition of the  Company.  However,  there can be no assurance  that any future
government  regulation  would  not  have a  material  impact  on  the Company's
operations or financial condition.

Engineering and Development

     During  2000  and  1999,   the  Company   spent   $902,000  and   $853,000,
respectively, on its total engineering efforts. Of these amounts,  approximately
$151,000  and  $171,000  were  spent on new  product  or  process  research  and
development  in 2000 and 1999,  respectively.  All amounts spent on research and
development were internally funded.

     During 2000, the Company introduced six new versions of its optical support
products. Three new Thermo-Electric Cooler Controllers,  two Laser Diode Drivers
and a DC Heater were brought to market during the year.

Competition

     Because of the  variety of  applications  in the  markets it serves,  and a
military market that has been diminishing in size, the Company faces significant
competition  from a variety of sources.  Many of the Company's  competitors have
substantially  greater  financial,  marketing,  manufacturing,  engineering  and
management  resources than the Company.  However,  the Company believes that its
smaller size, in some  instances,  provides for greater  flexibility  in meeting
customer  requirements,  and is not  necessarily  detrimental  to the  Company's
competitive position.

     The Company believes that the hybrid circuit industry  includes large OEMs,
such as IBM, TRW, Inc. and others,  that  manufacture  exclusively for their own
use (so  called  "captive"  manufacturers),  and other  OEMs,  such as  Teledyne
Industries,  Inc.,  that  manufacture  for  both  their  own use and for sale to
others.  Some of  these  large  "captive"  and  OEM  hybrid  manufacturers  have
curtailed or reduced their internal hybrid operations and begun to procure their
hybrid requirements from outside sources. The Company believes that this has led
to increased opportunities for the entire hybrid circuit industry.

     In  addition,  there exists a large number of  independent  hybrid  circuit
manufacturers,  such as the Company,  that  manufacture  exclusively for sale to
others. In past years certain of these manufacturers have left the custom hybrid
arena to specialize in defined markets such as medical or memory hybrids.  These
changes  have  created  additional  opportunities  for  the  Company.   Further,
approximately  50 of  the  known  independent  manufacturers  are  certified  to
MIL-PRF-38534,  as is the Company.  The  Company's  current share of the overall
hybrid circuit market remains small.

     In those  applications  where hybrid  circuits and integrated  circuits are
interchangeable,   hybrid  circuit   manufacturers   often  compete  with  major
integrated circuit manufacturers.

     The primary factors of competition in the markets served by the Company are
product reliability,  timely delivery,  price,  performance and stability of the
manufacturer.  The Company  believes that it generally  competes  favorably with
respect  to all of these  factors;  however,  stability  has been a  concern  to
certain of the Company's customers in past years.

Trademarks, Patents and Licenses

     The Company, at this time, has one registered patent (No. 5,521,933) on its
Back-matched  Laser  Diode  Driver,  which  will  expire  in 2013.  As other new
products are developed,  the Company intends to pursue  trademarks or patents as
appropriate.  The Company  currently  has no  registered  trademarks or licenses
material to the conduct of its business.

Employees

     As of  December  30,  2000,  the Company  employed a total of 93  full-time
employees and 1 part-time employee, of whom 73 were in manufacturing,  4 were in
marketing  and  sales,  14 were in  engineering  and  development  and 3 were in
administration.  The Company's success depends in part on its ability to attract
and  retain  skilled  personnel,  for whom there is strong  demand.  None of the
Company's employees are covered under a collective bargaining agreement, and the
Company has not experienced any labor strike or related work stoppage.

Government Contracts

     During 2000, the Company  derived  approximately  41% of its total revenues
from military or  government-funded  contracts and subcontracts.  Such contracts
and  subcontracts  generally  contain  provisions  allowing  termination for the
convenience of the  government.  In the event of such  termination,  the Company
would  generally be entitled to receive a termination  settlement  consisting of
(i) the contract  price for completed  items accepted by the government or prime
contractor  and (ii) the Company's  costs  incurred in the  performance  of work
completed prior to termination,  together with a reasonable profit on such work.
During  2000,  the  Company  experienced  no  such  termination  for  government
convenience.

ITEM 2.  DESCRIPTION OF PROPERTY.

     The Company currently leases a total of approximately 25,000 square feet of
manufacturing,  engineering and support  facilities in two adjacent buildings in
Carson City, Nevada. The main building,  consisting of 23,800 square feet, has a
lease term through June 2005,  with an option to extend for an  additional  five
years.  The  main  facility  is  currently  operating  at  approximately  50% of
capacity.  The Company  believes  that this facility has  sufficient  additional
manufacturing  capacity to significantly  increase  production  levels with only
minor increases in manufacturing overhead costs. *

     The second adjacent facility consists of approximately 1,200 square feet of
office  space  utilized  by the  Company's  Engineering  Department.  This lease
expires  March 31, 2003 and has no option to extend.  This  property is standard
commercial  office space and the Company does not  anticipate  any difficulty in
retaining this or other suitable space after the lease expires.*


ITEM 3.  LEGAL PROCEEDINGS.

     At December 30, 2000, there were no material legal proceedings pending.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     The Company did not submit any matters to a vote of security holders during
the fourth quarter of the fiscal year ended December 30, 2000.


EXECUTIVE OFFICERS OF THE COMPANY

     Information  concerning  the executive  officers of the Company who are not
also directors of the Company is set forth below:

     Jon B.  Presnell,  age 50, was promoted to the  position of  President  and
Chief  Operating   Officer  in  February  2001.  Prior  to  that  he  served  as
Vice-President and Chief Operating Officer from May 1998 to February 2001 and as
Vice-President  and General  Manager of Custom  Products  for the  Company  from
October 1993 to May 1998. Mr. Presnell has been an employee of the Company since
1980,  and served as General  Manager of the Carson City  facility from May 1987
through December 1988. From January 1989 until October 1993, Mr. Presnell served
as Director of Sales and Marketing of the Company.  Prior to joining Hytek,  Mr.
Presnell was employed as an Electrical Engineer for Texas Instruments, Inc.

     Sally B. Chapman, age 45, re-joined the Company in May 1998, as Controller.
In July 1998,  Ms.  Chapman  was  promoted to the  position  of Chief  Financial
Officer and  Corporate  Secretary.  Ms.  Chapman has 20 years  experience  as an
accountant and chief financial officer in various  industries and was previously
employed as Accounting  Manager for Hytek from June 1995 to June 1996. From 1997
until April 1998, Ms. Chapman was Chief Financial Officer for Four Corner Paper,
a paper  manufacturing  and  distribution  company.  From 1990 through 1994, Ms.
Chapman was Controller  for Sun Bird Security  Systems,  a security  systems and
service provider.



                                     PART II

ITEM 5.       MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Incorporated  by  reference  to the table on page F-2 of this  Form  10-KSB
entitled "Selected  Quarterly Financial Data (unaudited)" and the text following
such table.



ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

     For purposes of this  discussion,  all dollar  amounts have been rounded to
the nearest $1,000 and all percentages have been rounded to the nearest 1%.

     This Management's  Discussion and Analysis contains certain forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933 and
Section 21E of the Securities  Exchange Act of 1934. Actual results could differ
materially from those projected in the forward-looking statements as a result of
a number of risks and  uncertainties,  including  the risk  factors set forth in
"Factors  Affecting  Future  Results"  below and  elsewhere in this Report.  The
Company has  attempted  to  identify  forward-looking  statements  by placing an
asterisk   immediately   following  the  sentence  or  phrase   containing   the
forward-looking  statement(s).  Statements  made  herein  are as of the  date of
filing of this Form 10-KSB with the  Securities  and  Exchange  Commission,  and
should not be relied  upon as of any  subsequent  date.  The  Company  expressly
disclaims  any  obligation to update  information  presented  herein,  except as
required by law.

Results of Operations

     Net sales in 2000 were  $7,939,000,  a 52% increase  from 1999 net sales of
$5,215,000.  The increase in net sales is the result of higher  customer  demand
and  increasing  unit volume for both  custom and  standard  products.  Sales of
custom and standard products  increased by 37% and 227%  respectively,  over the
prior year.  The large  increase in standard  product  sales  results from heavy
demand for the Company's  Thermo-Electric  Cooler  Controllers.  This  increased
demand is the result of growth in the fiber optic communications market.

     Cost of sales was  $5,353,000,  or 67% of net revenues in 2000, as compared
to $4,620,000,  or 89% of net revenues in 1999.  During fiscal 2000, the Company
recouped  $200,000 of inventory  reserves  previously  taken for the  Chesapeake
Sciences  program which  contributed  to gross  margin.  The decrease in cost of
sales as a percentage of net revenues is primarily the result of spreading fixed
costs over a significantly larger revenue base.

     Engineering and  development  expenses were $902,000 in 2000, or 11% of net
revenues, as compared to $853,000, or 16% of net revenues, in 1999. The decrease
in these  expenses  as a  percentage  of net  sales in 2000  was the  result  of
spreading these costs over a much larger revenue base.

     Selling, general and administrative expenses were $1,374,000, or 17% of net
revenues,  in 2000, as compared to $1,050,000,  or 20% of net revenues, in 1999.
This  increase  in  dollar  amount  is  primarily   attributable   to  increased
expenditures  for   compensation,   advertising  and  sales   promotion,   sales
commission, data processing and investor and shareholder-related expenses.

     Net interest income was $250,000 for 2000, as compared to $170,000 in 1999,
as a result of increased cash and cash equivalents in interest-bearing  accounts
and instruments during the year.

     In 2000 and 1999,  the Company  had no federal  income tax  provision.  The
Company had California minimum income tax expense of $800 in both years.

Factors Affecting Future Results

     There are a number of factors  that could  significantly  affect the future
results  of  operations  of the  Company,  including,  but not  limited  to, the
following.

     Unlike previous years,  the Company  currently is no longer  dependent on a
single large  customer.  While it is to our  long-term  advantage to continue to
broaden our customer base, this effort is not without cost.  Sales and marketing
expenses increased significantly during 2000 and are expected to remain at these
levels or higher for the  foreseeable  future.*  The  Company  must  become more
efficient in the future in order to maintain positive cash flow and profits. The
current "downturn" in the domestic economy could have negative effects on future
operating results if such general economic conditions prevail over a significant
period of time.

     The Company's  current 2001 revenue  estimate shows growth for the year and
is based on a  combination  of firm  backlog  and a forecast  of various  orders
anticipated  to "book"  during  the first  half of the  year.* In the event that
forecast  orders do not become firm business,  or are "booked" later in the year
than  anticipated,  the 2001 estimated revenue range could be subject to further
downward revision.

     During  2000,   the  Company   realized  41%  of  its  net  revenues   from
government-funded or military/aerospace-funded sources. A significant portion of
this  business  is  dependent  on the Company  maintaining  its  MIL-PRF-  38534
certification  and  qualification.  While the Company  fully expects to maintain
this certification and qualification (*), the loss of same would have a material
adverse impact on the Company's ability to capture this type of business.


     The  Company is  currently  dependent  on the custom  product  market for a
substantial majority of its revenue.  Custom products accounted for 76% of total
revenues in 2000.  This market is  generally  more  volatile  than the  standard
product  market,  requiring  longer product lead time and greater  investment in
product  design and  manufacturing  in  advance  of  shipment  and  payment.  In
addition,  the high  concentration  in the custom  market  requires  significant
investment  in  inventories,  which could be a financial  risk in the event of a
major  customer  cancellation  such  as the  Chesapeake  cancellation  in  1999.
Further,  the custom product market is considerably  more  competitive  than the
market  for the  Company's  standard  products.  The  Company  must  maintain  a
cost-effective  structure  and  operations to remain  competitive  in the custom
product market.  Any failure of the Company to remain  competitive in the custom
product market would have a material adverse effect on the Company's  results of
operations and financial condition.

     The Company's  standard products accounted for 24% of net revenues in 2000.
This was a significant  percentage and dollar  increase over the prior year. Our
opto-electronic support products,  primarily  Thermo-Electric Cooler Controllers
(TECCs),  showed a significant gain in revenues for the year. Any major downturn
in the optical  communications  market could have a negative impact on operating
results. Shipments of theses products in the first quarter of 2001 are currently
not up to the Company's original expectations.

     The locally  continuing high employment levels still support a heavy demand
for skilled  employees.  The  Company's  ability to meet  varying  demand and to
develop new products that  contribute  to future sales growth is dependent  upon
the attraction and retention of qualified technical employees, for whom there is
strong  demand.  Any  failure of the  Company to  attract  and retain  qualified
personnel  could  have a material  adverse  effect on the  Company's  results of
operations and financial condition. Any severe lack of technical personnel could
limit the Company's potential future growth.

     The Company is dependent on certain key  suppliers  of raw  materials.  See
"Manufacturing"  in Part I, Item 1 hereof.  Any major  disruption  in production
capability  by these  suppliers  would have an adverse  impact on the  Company's
future operations.


Liquidity and Capital Resources

     During 2000,  total assets  increased by $2.3 million and the net effect of
changes in current  assets and  current  liabilities  resulted  in a net working
capital increase of $984,000.

     The Company had  $3,589,000  in cash and cash  equivalents  at December 30,
2000 as compared to $2,515,000 at the 1999 fiscal year end. This increase is the
net result of $1,004,000 generated by operating  activities  (primarily customer
deposits, net income, depreciation,  partially offset by an increase in accounts
receivable, inventories and prepaid expenses), $337,000 generated by issuance of
stock upon exercise of employee stock options, partially offset by $227,000 used
for the purchase of capital equipment and $39,000 used for principal payments on
capital lease obligations.

     Accounts  receivable  increased  during 2000 to  $1,502,000 at December 30,
2000,  as compared to $728,000 at 1999 fiscal year end.  The primary  reason for
this large  increase was a  significantly  higher level of shipments  during the
entire year. At December 30, 2000,  accounts in excess of 60 days totaled 15% of
total receivables, as compared to 3% at January 1, 2000. The percentage increase
in  receivables  over 60 days  results  from cash flow  problems  at one  larger
customer and slower payments by new standard product  customers.  The Company is
increasing its reserves as a result of this change.

     Total inventories  increased slightly to $2,980,000 at December 30, 2000 as
compared to $2,606,000 at January 1, 2000.  Raw materials  increased in response
to higher backlog and forecast demand and finished goods decreased primarily due
to  additional  shipments to  Chesapeake  Sciences.  Work-in  -process  remained
stable. See Notes 2 and 11 of Notes to Financial  Statements for a comparison of
inventory  components.  The  increase in  inventory  primarily  results  from an
increased level of customer  orders and increased  production of optical support
products.

     Prepaid  expenses and deposits  increased  by  approximately  $200,000 as a
result of purchase  deposits on new production  machinery to be delivered in the
first quarter of 2001.

     Property,   plant  and  equipment,  net  of  accumulated  depreciation  and
amortization,  decreased  by $88,000  during  2000 as a result of  additions  to
machinery  and  equipment  during the year of  $227,000,  offset by fiscal  2000
depreciation and amortization of $315,000.

     Accrued employee compensation and benefits increased by $93,000 to $227,000
from the prior  fiscal year end.  This  increase  results  from higher  year-end
employment levels and the resumption of profit sharing accruals. At December 30,
2000,  there a $57,000  accrual for the employee profit sharing plan as compared
to no such accrual at January 1, 2000.

     Customer  deposits  were  $1,509,000  at  December  30, 2000 as compared to
$32,000 at January 1, 2000. This very large increase  results from receiving all
payments due for inventory from Chesapeake Sciences Corp. under the terms of the
"Final Settlement agreement". The Chesapeake deposit will be taken to revenue as
product is shipped to them in the future.

     Accrued warranty,  commissions and other accrued  liabilities were $201,000
at December  30, 2000,  as compared to $285,000 at January 1, 2000.  The current
year amount reflects normal ongoing accruals.

     At December  30,  2000,  the Company had no capital  lease  obligations  or
long-term debt.

     The Company did not recognize any federal income tax expense during 2000 or
1999.  The Company has  remaining  future tax credit  carryforwards  for Federal
income  tax  purposes  at  January  1,  2000 of  approximately  $134,000.  These
carryforwards will not expire.

     On May 16,  2000,  the Company  renewed its line of credit with Bank of the
West in the  amount  of  $1,000,000.  This  line of  credit  is for a term of 12
months,  expiring in May 15,  2001,  and bears  interest at the prime rate.  The
Company  intends to renew this line of credit upon  expiration.  At December 30,
2000,  the  Company  was in  compliance  with all of the  covenants  of the loan
agreement and no amounts were outstanding. This line of credit is collateralized
by  substantially  all of the Company's  assets.  Management  believes that cash
generated from operations  during 2001,  together with its line of credit,  will
provide  sufficient  cash to meet  normal  operating  needs  without  additional
financing  activity  through 2001. * The Company may pursue  additional  debt or
equity for capacity or technology  expansion  should an  attractive  opportunity
arise;  however,  there is no certainty that such financing could be obtained or
that the terms on which it might be obtained would be favorable.


Future Outlook

     Fiscal  2000  represented  a  significant  turnaround  from the prior year.
Investments  made in 1999 and 2000 in expanded  sales  efforts and retaining our
technical talent have provided a positive return in 2000.

     The playing  field has changed  since the loss of the  Chesapeake  Sciences
program.  We are no longer  producing  hundreds to thousands of the same devices
week after week, year after year. We now produce many more and varied devices in
smaller quantities.  This situation puts a premium on production efficiency.  In
the ensuing year,  we will be focused on improving  efficiency in all aspects of
the production cycle, from order entry to shipping product.*

     Currently,  more than mid way through the first quarter,  customer activity
remains  strong.  We have no real  indication  at this  point  that the  current
"economic slowdown" is seriously affecting our major customers, or potential new
opportunities,  in the  military/aerospace,  medical or industrial  markets.  We
intend to continue with a strong sales and marketing  effort to further  broaden
our customer base and increase our overall stability.*

     The  strong  growth  (250%)  in  our  opto-electronic   standard  products,
particularly Thermo-electric Cooler Controllers (TECCs), was a positive note for
fiscal  2000.  While the rate of growth in the  overall  optical  communications
market  may be  slowing  from the past  year,  recent  published  articles  (WDM
Solutions,  November  2000) site compound  annual growth of 30% and over through
2005 in the "long  haul"(temperature  controlled) segment of this market.  Hytek
intends to vigorously  pursue growth in this market through expanding the output
of  current   products   and  the   development   of  new  products  for  future
applications.*

     Although  first  quarter  2001  operating  results  may be  below  original
expectations,  the outlook  for the entire  ensuing  fiscal year is  optimistic.
Management believes there are significant opportunities for growth and increased
shareholder value in fiscal 2001.*

ITEM 7.  FINANCIAL STATEMENTS

     The financial  statements of the Company  (including  the notes thereto) at
December  30,  2000 and  January 1, 2000 and for the years then  ended,  and the
report  of  independent  auditors  thereon,  are  included  herein on pages F- 3
through F-20 of this Form 10-KSB.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE.

     Not applicable.



                                    PART III

ITEM 9.    DIRECTORS,  EXECUTIVE OFFICERS,  PROMOTERS AND CONTROL
              PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

     Information regarding directors of the Company is to be set forth under the
heading  "Election of Directors - Nominees for Director" in the Company's  Proxy
Statement and is hereby incorporated herein by reference.

     Information  regarding  the  executive  officers of the Company who are not
also  directors  of the Company is included in Part I of this Form 10-KSB  under
the heading  "Executive  Officers  of the  Company"  and is hereby  incorporated
herein by reference.

     Information  regarding  compliance  with  Section  16(a) of the  Securities
Exchange Act of 1934 is to be set forth under the heading "Election of Directors
- Section 16(a)  Beneficial  Ownership  Reporting  Compliance"  in the Company's
Proxy Statement and is hereby incorporated herein by reference.

ITEM 10.  EXECUTIVE COMPENSATION.

     Information regarding the Company's  remuneration of its executive officers
and   directors   is  to  be  set  forth  under  the   headings   "Election   of
Directors-Executive    Compensation",    "Election    of    Directors-Directors'
Compensation"  and  "Election  of  Directors--Directors'  Option  Plan"  in  the
Company's  Proxy  Statement,   which  information  is  incorporated   herein  by
reference.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     Information  regarding the security  ownership of certain beneficial owners
and  management  is to be set forth under the heading  "Election  of Directors -
Security  Ownership" in the Company's  Proxy  Statement,  which  information  is
incorporated herein by reference.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Not applicable.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

     (a) Exhibits The exhibit  index at page X-1,  which  follows the  signature
pages, is hereby incorporated by reference into this Item 13 (a).

     (b) Reports on Form 8-K There  were no  Current  Reports on Form 8-K filed
during the fourth quarter of the Company's fiscal year ended December 30, 2000.

                            HYTEK MICROSYSTEMS, INC.

       Index to Selected Quarterly Financial Data and Financial Statements



                                 Reference Page
                                 in Form 10-KSB

Selected Quarterly Financial Data (unaudited)  .  .  .  .  .  .  .  .  .   F-2

Balance Sheet, December 30, 2000
    and January 1, 2000         .  .  .  .  .  .  .  .  .  .  .  .  .  .   F-3

Statement of Operations for the Years ended
     December 30, 2000 and January 1, 2000 .  .  .  .  .  .  . .  .  .   . F-4

Statement of Shareholders' Equity for the
    Years ended December 30, 2000 and January 1, 2000  .  .  .  .  .  .  . F-5

Statement of Cash Flows for the Years Ended
    December 30, 2000 and January 1, 2000        .  .  .  .  .  .  .  .  . F-6

Notes to Financial Statements   .  .  .  .  .  .  .  .  .  .  .  .  .  .   F-7

Report of Independent Auditors   .  .  .  .  .  .  .  .  .  .  .  .  .  .  F-20

Consent of Ernst & Young LLP, Independent Auditors .  .  .  .  .  .  .  .  F-21









                                       F-1

<PAGE>

                            HYTEK MICROSYSTEMS, INC.

                  Selected Quarterly Financial Data (unaudited)

                      (In thousands, except per share data)

<TABLE>
                             ------------------------------------------------------------------------------------------------------
                                                                         Quarter Ended
                             ------------------------------------------------------------------------------------------------------
                                            FISCAL          2000                                 FISCAL        1999
                             ------------------------------------------------        ----------------------------------------------

                                      Dec.30,00  Sep. 30,00  Jul. 1,00  Apr. 1,00  Jan. 1,00  Oct. 2,99     Jul. 3,99  Apr. 3,99
                                     ----------  ----------  ---------- ---------- ----------  ----------  ----------  ----------
<S>                                  <C>         <C>         <C>         <C>       <C>        <C>          <C>         <C>

Net revenues                          $  2,111 $  1,728     $   2,172   $  1,928  $  1,212 $     1,015   $   1,271   $   1,717

Gross profit                          $    567 $    617     $     759   $    643  $    208 $        47    $     47   $     293

Net income (loss)                     $     21 $    118     $     252   $    169  $   (136)$      (396)   $   (372)  $    (234)

Net income (loss) per share - basic   $   0.01     0.04     $    0.08   $   0.05  $  (0.04)$     (0.13)   $  (0.12)  $   (0.08)

Net income (loss) per share - diluted $   0.00 $   0.04     $    0.08   $   0.05  $  (0.04)$     (0.13)   $  (0.12)  $   (0.08)

Market price range per share     High $  14.44 $  18.50     $   10.94   $  13.38  $     2.25    $   1.78  $   1.94   $    3.69
                                 Low  $   3.50 $   7.13     $    2.06   $   1.53  $     1.50    $   1.28  $   1.38   $    1.38

----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     From March 26, 1992 through July 24, 1998,  the Company's  Common Stock was
traded on the OTC Bulletin Board.  Since July 27, 1998, Hytek's Common Stock has
been  quoted  and  traded on the NASDAQ  Small Cap  Market.  The range of prices
reported  above  indicates  the high and low bid  quotations  as provided by the
National  Quotation Bureau,  Inc. Such quotations reflect  inter-dealer  prices,
without retail mark-ups,  mark-downs or commissions and may not represent actual
transactionss.

     As of March 9, 2001, there were  approximately 135 holders of record of the
Company's Common Stock.

     The Company has never paid any cash  dividends  on its Common Stock and has
no intention of paying cash dividends in the foreseeable  future.  Per the terms
of its loan  agreement  with  SierraWest  Bank,  the Company is prohibited  from
paying cash dividends at this time.



















                                      F-2
<PAGE>




                            Hytek Microsystems, Inc.

                                 Balance Sheets

                      December 30, 2000 and January 1, 2000

<TABLE>

                                                                           2000               1999
                                                                   ----------------------------------------
<S>                                                                <C>                   <C>
Assets
Current assets:
   Cash and cash equivalents                                          $3,589,303          $   2,514,635
   Trade accounts receivable, net of allowance for doubtful
     accounts of $77,000 and $50,000 in 2000 and 1999, respectively
                                                                          1,502,191             727,918
   Inventories                                                            2,980,109           2,606,389
   Prepaid expenses and deposits                                            274,959              74,271
                                                                   ----------------------------------------
                                                                   ----------------------------------------
Total current assets                                                      8,346,562           5,923,213

Deferred income taxes                                                       200,000             200,000

Plant and equipment, at cost, less accumulated depreciation and
   amortization                                                             586,536             674,151

                                                                   ----------------------------------------
Total assets                                                          $   9,133,098       $   6,797,364
                                                                   ========================================
                                                                   ========================================

Liabilities and shareholders' equity
Current liabilities:
   Accounts payable                                                   $     257,502       $     265,203
   Accrued employee compensation and benefits                               227,467             134,445
   Accrued warranty, commissions, and other                                 200,761             284,913
   Customer deposits                                                      1,509,125              32,308
   Current obligations under capital leases                                       -              38,708
                                                                   ----------------------------------------
Total current liabilities                                                 2,194,855             755,577

Commitments and contingencies

Shareholders' equity:
   Common stock, no par value:
     Authorized shares - 7,500,000
     Issued and outstanding shares - 3,238,508 at December 30,
       2000 and 3,064,758 at January 1, 2000                              5,353,009           5,016,468
   Retained earnings                                                      1,585,234           1,025,319
                                                                   ----------------------------------------

Total shareholders' equity                                                6,938,243           6,041,787

                                                                   ----------------------------------------
Total liabilities and shareholders' equity                            $   9,133,098       $   6,797,364
                                                                   ========================================
</TABLE>


See accompanying notes.
                                      F-3

<PAGE>

                            Hytek Microsystems, Inc.

                            Statements of Operations

                Years ended December 30, 2000 and January 1, 2000

<TABLE>
                                                                          2000                1999
                                                                  -----------------------------------------
                                                                  -----------------------------------------
<S>                                                                <C>                   <C>
Net sales                                                           $     7,939,330      $     5,215,314

Cost of sales                                                             5,353,000            4,620,090
Engineering and development                                                 901,751              852,841
Selling, general and administrative expenses                              1,373,580            1,050,448
                                                                  -----------------------------------------
                                                                  -----------------------------------------
                                                                          7,628,331            6,523,379
                                                                  -----------------------------------------
                                                                  -----------------------------------------

Operating income (loss)                                                     310,999           (1,308,065)

Other income
   Interest income, net                                                     249,716              169,995
                                                                  -----------------------------------------

Income (loss) before provision for income taxes                             560,715           (1,138,070)

Income tax provision                                                            800                  800
                                                                  -----------------------------------------

Net income (loss)                                                    $      559,915       $   (1,138,870)
                                                                  =========================================

Basic earnings (loss) per share                                       $         .18       $       (0.37)
                                                                   ========================================

Diluted earnings (loss) per share                                     $         .17       $       (0.37)
                                                                   ========================================

Shares used in calculating basic earnings
   (loss) per share                                                        3,178,730           3,061,128
                                                                   ========================================

Shares used in calculating diluted earnings
   (loss) per share                                                        3,320,600           3,061,128
                                                                   ========================================


</TABLE>



See accompanying notes.
                                       F-4

<PAGE>


                            Hytek Microsystems, Inc.

                       Statements of Shareholders' Equity

                Years ended December 30, 2000 and January 1, 2000
<TABLE>

                                               Common Stock
                                       -------------------------------
                                                                           Retained
                                           Shares          Amount          Earnings            Total
                                       --------------- --------------- ------------------ -----------------
<S>                                    <C>             <C>             <C>                <C>

Balance at January 2, 1999                 3,039,758   $    5,007,093  $       2,164,189  $    7,171,282

   Net loss                                        -                -         (1,138,870)     (1,138,870)

   Issuance of stock                          25,000            9,375                 -           9,375
                                       --------------- --------------- ------------------ -----------------

Balance at January 1, 2000                 3,064,758        5,016,468          1,025,319       6,041,787

   Net income                                     -                -            559,915         559,915

   Issuance of stock                         173,750          336,541                  -         336,541
                                       --------------- --------------- ------------------ -----------------

Balance at December 30, 2000
                                           3,238,508   $    5,353,009    $     1,585,234  $    6,938,243
                                       =============== =============== ================== =================



</TABLE>




See accompanying notes.
                                      F-5

<PAGE>


                            Hytek Microsystems, Inc.

                            Statements of Cash Flows

                Increase (Decrease) in Cash and Cash Equivalents

                Years ended December 30, 2000 and January 1, 2000

<TABLE>
                                                                             2000             1999
                                                                       ------------------------------------
<S>                                                                     <C>                <C>
Operating activities
Net income (loss)                                                        $      559,915   $   (1,138,870)
Adjustments  to  reconcile  net income  (loss) to net cash  provided by
    operating activities:
     Depreciation and amortization                                              314,679          353,755
     Changes in operating assets and liabilities:
       Trade accounts receivable, net                                          (774,273)       1,190,347
       Inventories                                                             (373,720)        (124,682)
       Prepaid expenses and deposits                                           (200,688)         (35,339)
       Accounts payable                                                          (7,701)         (47,227)
       Accrued employee compensation and benefits                                93,022         (269,839)
       Accrued warranty, commissions, and other                                 (84,152)          91,404
       Customer deposits                                                      1,476,817           32,308
                                                                       ------------------------------------
                                                                       ------------------------------------
Net cash provided by operating activities                                     1,003,899           51,857

Investing activities
Purchases of equipment                                                         (227,064)         (28,879)
                                                                       ------------------------------------
Net cash used in investing activities                                          (227,064)         (28,879)

Financing activities
Principal payments on long-term debt                                                  -         (101,049)
Principal payments on capital lease obligations                                 (38,708)         (53,851)
Proceeds from issuance of common stock                                          336,541            9,375
                                                                       ------------------------------------
Net cash provided by (used in) financing activities                             297,833         (145,525)
                                                                       ------------------------------------

Net increase (decrease) in cash and cash equivalents                          1,074,668         (122,547)
Cash and cash equivalents at beginning of year                                2,514,635        2,637,182
                                                                       ------------------------------------
                                                                       ------------------------------------
Cash and cash equivalents at end of year                                 $    3,589,303   $    2,514,635
                                                                       ====================================
</TABLE>







See accompanying notes.
                                      F-6
<PAGE>


                            Hytek Microsystems, Inc.

                          Notes to Financial Statements

                Years ended December 30, 2000 and January 1, 2000


1.   Accounting Policies

Description of Business

     The principal business of Hytek  Microsystems,  Inc. (the "Company") is the
engineering,   manufacturing   and  sale  of  hybrid   microcircuits.   Products
manufactured   by  the  Company  are  sold   primarily  to  original   equipment
manufacturers (OEMs) serving the oil exploration,  military,  satellite systems,
industrial  electronic  system,  opto-electronics  and automatic  test equipment
markets.  The  Company  markets  its  products  through  its own sales staff and
through independent sales representatives.

Basis of Presentation

     The  Company  operates  under a 52/53 week fiscal  year,  with the year end
being the  Saturday  nearest  December  31st.  The year ended  December 30, 2000
("fiscal  2000") was a 52-week year, and the year ended January 1, 2000 ("fiscal
1999") was also a 52-week year.

Concentration of Credit Risk (Note 11)

     The Company performs ongoing credit evaluations of its customers' financial
condition,   and   generally   requires  no  collateral   from  its   customers.
Non-performance  by these  parties  would  result in  losses up to the  recorded
amount of the related  receivables.  Management does not anticipate  significant
non-performance,   and  believes  the  Company  has   adequately   provided  for
uncollectible receivables in the Company's allowance for doubtful accounts.

     In fiscal 2000, the Company had sales to Stryker,  Chesapeake  Sciences and
Eaton that accounted for 12%, 11% and 11%, respectively, of net sales. In fiscal
1999,  the Company had sales to Chesapeake  Sciences and TRW that  accounted for
11% and  10%,  respectively,  of net  sales.  The  products  sold to  Chesapeake
Sciences  are used in the  eventual  production  of  off-shore  geophysical  oil
exploration  equipment.   During  fiscal  1999,  sales  to  Chesapeake  Sciences
decreased  significantly  from 64% of net sales in the prior year as a result of
depressed  crude oil prices and an  over-abundance  of the world oil supply (see
Note 11).



                                       F-7
<PAGE>


                            Hytek Microsystems, Inc.

                    Notes to Financial Statements (continued)


1.   Accounting Policies (continued)

Cash and Cash Equivalents

     Cash and cash  equivalents  consist  of cash and money  market  funds  with
original  maturities  of less  than 90  days.  The fair  value of the  Company's
financial instruments approximated their carrying value at December 30, 2000 and
January  1,  2000.  The  Company  maintains  the  majority  of its cash and cash
equivalents in one financial institution.

     During  fiscal 2000 and 1999,  the Company paid income taxes of $22,000 and
$31,000, respectively, and interest of $3,000 and $12,000, respectively.

Inventories (Notes 2 and 11)

     Inventories are stated at the lower of cost (determined using the first-in,
first-out  method),  or market.  Due to its  nature,  certain  of the  Company's
inventory at December  30, 2000 and January 1, 2000 is subject to  technological
change and potential obsolescence.  Management does not anticipate these amounts
to be material,  and believes that the Company has  adequately  provided for any
losses that may result.

Plant and Equipment

     Plant and  equipment  are stated at cost.  Depreciation  is  provided  on a
straight-line  basis over the  estimated  useful lives of the assets,  generally
three to five years.  Leasehold  improvements are amortized over the term of the
lease or their estimated useful lives, whichever is shorter.

Revenue Recognition

     Sales are  recorded by the Company  upon  delivery of the product and title
transfer, net of estimated provisions for warranty and estimated returns.







                                       F-8
<PAGE>

                            Hytek Microsystems, Inc.

                    Notes to Financial Statements (continued)

1.   Accounting Policies (continued)

Stock-Based Compensation

     In  accordance  with the  provisions  of Statement of Financial  Accounting
Standards No. 123,  "Accounting for Stock-Based  Compensation" ("SFAS 123"), the
Company  has  elected to follow  Accounting  Principles  Board  Opinion  No. 25,
"Accounting   for  Stock   Issued  to   Employees"   ("APB   25")  and   related
interpretations in accounting for its employee stock option plans. Under APB 25,
if the exercise price of the Company's  employee stock options equals or exceeds
the fair value of the underlying stock on the date of grant as determined by the
Company's Board of Directors, no compensation expense is recognized (see Notes 6
and 7).

Income Taxes

     Deferred tax assets and liabilities are determined based on the differences
between  financial  reporting  and tax bases of assets and  liabilities  and are
measured  using the enacted tax rates and laws that are expected to be in effect
when the temporary differences are expected to reverse.  Additionally,  deferred
tax assets and liabilities  are separated into current and  non-current  amounts
based on the  classification of the related assets and liabilities for financial
reporting purposes.

Research and Development Costs

     Research and development  costs are charged to operations as incurred,  and
are  included  in  engineering  and  development  expenses  on the  accompanying
statement of  operations.  During fiscal 2000 and 1999,  such costs  amounted to
approximately $151,000 and $171,000, respectively.

Product Warranty Costs

     The Company has provided a liability for estimated  future product warranty
costs based upon historical experience and anticipated warranty costs.

Advertising Costs

     The Company expenses the costs of all advertising  campaigns and promotions
as they  are  incurred.  Total  advertising  expense  for  fiscal  2000 and 1999
amounted to approximately $154,000 and $76,000, respectively, and is included in
selling,  general and administrative  expenses on the accompanying  statement of
operations.

                                       F-9
<PAGE>


                            Hytek Microsystems, Inc.

                    Notes to Financial Statements (continued)


1.   Accounting Policies (continued)

Use of Estimates in Preparation of Financial Statements

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ materially from those estimates.

Recently Issued Accounting Standards

     In June 1998, the FASB issued Statement of Financial Accounting  Standards,
No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities"  (FAS
133). The Company is required to adopt FAS 133 for the year ending  December 29,
2001.  FAS 133  establishes  methods  of  accounting  for  derivative  financial
instruments and hedging activities related to those instruments as well as other
hedging  activities.   The  Company  currently  holds  no  derivative  financial
instruments and does not currently engage in hedging activities. The adoption of
FAS 133 is not expected to have any material  impact on the Company's  financial
position or results of operations.

     In March 2000, the FASB issued  Interpretation No. 44 (FIN 44), "Accounting
for Certain Transactions Involving Stock Compensation - An Interpretation of APB
Opinion No. 25". FIN 44  clarifies  the  application  of APB Opinion No. 25 and,
among other issues,  clarifies the following:  the definition of an employee for
the  purposes of  applying  APB Opinion  No. 25, the  criteria  for  determining
whether a plan qualifies as a noncompensatory  plan, the accounting  consequence
of various  modifications  to the terms of  previously  fixed  stock  options or
awards, and the accounting for an exchange of stock  compensation  awards in the
business combination.  FIN 44 is effective July 1, 2000, but certain conclusions
in FIN 44 cover specific  events that occurred after either December 15, 1998 or
January 12, 2000. The adoption of certain of the  conclusions of FIN 44 covering
events  occurring  during the period after December 15, 1998 or January 12, 2000
and the adoption of FIN 44 on July 1, 2000 did not have a material effect on the
Company's financial position or results of operations.

     In December 1999, the SEC issued Staff Accounting Bulletin 101, or SAB 101,
Revenue  Recognition,  which  outlines  the basic  criteria  that must be met to
recognize  revenue and  provides  guidance for  presentation  of revenue and for
disclosure related to revenue recognition policies in financial statements filed
with the SEC.  The  adoption  of SAB 101 did not have a  material  impact on the
Company's financial position or results of operations.

                                      F-10
<PAGE>


                            Hytek Microsystems, Inc.

                    Notes to Financial Statements (continued)


2.   Inventories (Note 11)

Inventories consist of the following:
<TABLE>

                                                                       Fiscal 2000         Fiscal 1999
                                                                   ----------------------------------------
                                                                   ----------------------------------------
<S>                                                                 <C>                  <C>
Finished goods                                                         $     308,698       $     557,689
Work-in-process                                                              779,946             781,142
Raw materials                                                              1,891,465           1,267,558
                                                                   ----------------------------------------
                                                                   ----------------------------------------
                                                                       $   2,980,109       $   2,606,389
                                                                   ========================================
</TABLE>

3.   Plant and Equipment

Plant and equipment consist of the following:
<TABLE>

                                                                       Fiscal 2000         Fiscal 1999
                                                                   ----------------------------------------
                                                                   ----------------------------------------
<S>                                                                 <C>                  <C>
Leasehold improvements                                                 $     546,651       $     519,957
Machinery and equipment                                                    3,592,493           3,393,511
Furniture and fixtures                                                        31,288              29,900
                                                                   ----------------------------------------
                                                                           4,170,432           3,943,368
Less accumulated depreciation and amortization                            (3,583,896)         (3,269,217)
                                                                   ----------------------------------------
                                                                   ----------------------------------------
                                                                       $     586,536       $     674,151
                                                                   ========================================
</TABLE>

4.   Income Taxes

The significant components of the Company's deferred tax assets are as follows:
<TABLE>

                                                                       Fiscal 2000        Fiscal 1999
                                                                   ----------------------------------------
<S>                                                                 <C>                  <C>
Deferred tax assets:
     Net operating loss carryforwards                                 $     402,109       $     381,330
     Credit carryforwards                                                   133,465             133,465
     Other                                                                  351,237             241,020
                                                                   ----------------------------------------
Total deferred tax assets                                                   886,811             755,815
Valuation allowance                                                        (686,811)           (555,815)
                                                                   ----------------------------------------
Net deferred tax assets                                               $     200,000       $     200,000
                                                                   ========================================
</TABLE>

     For the year ended December 30, 2000, the valuation allowance was increased
by $130,996 due to the Company's recent operating history.

                                      F-11
<PAGE>


                            Hytek Microsystems, Inc.

                    Notes to Financial Statements (continued)


4.   Income Taxes (continued)

     The  provision  (benefit)  for  income  taxes  differs  from the  provision
(benefit)  amount computed by applying the statutory  federal tax rate to income
before taxes due to the following:
<TABLE>

                                                                       Fiscal 2000         Fiscal 1999
                                                                   ----------------------------------------
<S>                                                                 <C>                  <C>
Computed expected tax (benefit)                                        $    190,371        $   (397,711)
Nondeductible expenses                                                        2,040               2,040
Benefit of operating loss carryforward                                     (323,407)                  -
State taxes, net                                                                800                 800
Increase in valuation allowance                                             130,996             395,671
                                                                   ----------------------------------------
                                                                       $        800        $        800
                                                                   ========================================
</TABLE>

     As of December 30, 2000,  the Company had net operating loss and tax credit
carryforwards  for federal income tax purposes of  approximately  $1,182,675 and
$133,000,  respectively.  These net operating loss  carryforwards will expire by
2021.

5.       Earnings per Share

     The  following  table  sets  forth the  computation  of basic  and  diluted
earnings per share:

<TABLE>

                                                                       Fiscal 2000         Fiscal 1999
                                                                  ----------------------------------------
<S>                                                                 <C>                  <C>
Numerator:
   Net income (loss)                                                 $      559,915      $   (1,138,870)

Denominator:
   Denominator   for  basic  earnings   (loss)  per  share  -
     weighted average shares outstanding                                  3,178,730           3,061,128
   Effect of dilutive securities:
     Employee stock options                                                 141,870                   -
                                                                   ----------------------------------------
   Denominator  for  diluted  earnings  (loss)  per  share  -
     adjusted weighted average shares and assumed conversions
                                                                          3,320,600           3,061,128
                                                                   ========================================

Basic earnings (loss) per share                                      $          .18      $         (.37)
                                                                   ========================================

Diluted earnings (loss) per share                                    $          .17      $         (.37)
                                                                   ========================================
</TABLE>

                                      F-12
<PAGE>


                            Hytek Microsystems, Inc.

                    Notes to Financial Statements (continued)


5.       Earnings per Share (continued)

     For fiscal 1999, all outstanding options were excluded from the computation
of diluted earnings per share because the Company  experienced a net loss during
fiscal 1999.  Therefore,  diluted loss per share would be the same as basic loss
per share.

6.   Stock Option Plans

1991 and 1981 Stock Option Plans

     In May 1999, the Board of Directors of the Company (the "Board"),  with the
consent of its  shareholders,  authorized  an  increase  to the number of shares
reserved  for  issuance  under the 1991 Stock  Option Plan (the "1991  Plan") to
500,000  shares of common  stock.  The 1991 Plan expires in May 2001 and 111,667
shares were  available for future grant as of December 30, 2000. The Company had
a 1981 Incentive Stock Option Plan (the "1981 Plan") that expired in August 1991
and there were no  outstanding  options to  purchase  shares  under this Plan at
December  30,  2000  (35,000  shares  were  outstanding  at  January  1,  2000).
Outstanding  stock options under the 1991 plan are  exercisable  cumulatively in
annual  increments  that  range  between  one-third  and  one-fourth  each  year
beginning  one year after the grant date.  Options  granted  under the 1991 Plan
have terms of five years.

     A summary of the Company's  1981 and 1991 Plans' stock option  activity and
related information for fiscal 2000 and 1999 are as follows:

<TABLE>
                                                   Fiscal 2000                         Fiscal 1999
                                       ------------------------------------------------------------------------
                                       ------------------------------------
                                                        Weighted-Average                    Weighted-Average
                                          Options        Exercise Price       Options        Exercise Price
                                       ------------------------------------------------------------------------
<S>                                     <C>              <C>                  <C>           <C>
Outstanding-beginning of year               245,000         $   2.46            225,000         $   2.37
Granted                                      30,000             2.375            45,000             1.76
Exercised                                  (153,750)            2.10            (25,000)            0.38
Cancelled                                    (5,000)            2.375                 -               -
                                       ------------------------------------------------------------------------
Outstanding-end of year                     116,250         $   2.92            245,000         $   2.46
                                       ========================================================================

Exercisable at end of year                   12,500         $   5.00            118,750         $   2.10

Weighted-average    fair    value   of
   options granted during the year                          $   1.54                            $   1.20

</TABLE>


                                      F-13
<PAGE>

                            Hytek Microsystems, Inc.

                    Notes to Financial Statements (continued)


6.   Stock Option Plans (continued)

     Exercise prices for options  outstanding under the 1991 Plan as of December
30, 2000 ranged from $1.56 to $5.00. The weighted-average  remaining contractual
life of those options is 3.1 years. A summary of the outstanding and exercisable
options at December  30,  2000,  segregated  by  exercise  price  ranges,  is as
follows:
<TABLE>

                           Options Outstanding                                    Exercisable Options
--------------------------------------------------------------------------- --------------------------------
                                                        Weighted-Average
                                       Weighted-           Remaining                           Weighted-
  Exercise Price                        Average           Contractual                           Average
      Range             Number       Exercise Price     Life (in years)         Number      Exercise Price
------------------- --------------- ----------------- --------------------- --------------- ----------------
<S>                   <C>              <C>               <C>                  <C>              <C>

 $1.56 -  $2.13             38,750       $  1.66                  2.8                    -        $     -
 $2.30 -  $2.44            42,500          2.38                  4.2                    -              -
 $4.88 -  $5.00             35,000          4.98                  2.2               12,500            5.00
                    ---------------                                         ---------------
                          116,250       $  2.92                  3.1               12,500         $  5.00
                    ===============                                         ===============
</TABLE>

1991 Directors' Stock Option Plan

     Under  the 1991  Directors'  Stock  Option  Plan (the  "Directors'  Plan"),
200,000  shares of the Company's  common stock had been reserved for issuance as
of December 30, 2000, of which options to purchase  140,000  shares at per share
exercise  prices that range from $.19 to $4.63 had been granted  (120,000 shares
had been granted as of January 1, 2000).  The  Directors'  Plan provides for the
automatic  grant of an option to purchase  15,000 shares upon first  becoming an
outside director (a "First Option").  In September 1997, the Directors' Plan was
amended  whereby  non-employee  directors who serve on the Board of Directors of
the Company for five years or more receive an automatic grant of 5,000 shares (a
"Subsequent Option") on the last business day of each fiscal year at an exercise
price  equaling the fair value of the  Company's  stock on such date. On each of
December 30, 2000, January 1, 2000, January 2, 1999 and January 3, 1998, options
to purchase an aggregate of 20,000 shares  (80,000 shares total) were granted to
the four outside directors under this amendment. First Options granted under the
Directors'  Plan vest and  become  exercisable  as to  one-third  of the  shares
cumulatively on each of the first,  second and third  anniversaries of the grant
date. Subsequent Options vest and become fully exercisable monthly as to 1/12 of
the shares.  The Directors' Plan expires February 2001. Options grated under the
Directors' Plan have a term of ten years.


                                      F-14
<PAGE>



                            Hytek Microsystems, Inc.

                    Notes to Financial Statements (continued)


6.   Stock Option Plans (continued)

     A summary of the  Company's  Directors'  Plan  stock  option  activity  and
related information for fiscal 2000 and 1999 are as follows:
<TABLE>

                                                   Fiscal 2000                         Fiscal 1999
                                       ------------------------------------------------------------------------
                                                        Weighted-Average                    Weighted-Average
                                          Options        Exercise Price       Options        Exercise Price
                                       ------------------------------------------------------------------------
<S>                                    <C>              <C>                   <C>           <C>
Outstanding-beginning of year                75,000      $    1.84               55,000      $    1.86
Granted                                      20,000           4.63               20,000           1.81
Exercised                                   (20,000)           .71                   -              -
                                       ------------------------------------------------------------------------

Outstanding-end of year                      75,000     $     3.05               75,000     $     1.84
                                       ========================================================================

Exercisable at end of year                   55,000     $     2.48               55,000     $     1.86

Weighted   average   fair   value   of
   options granted during the year                      $     3.53                          $     1.33
</TABLE>


     Exercise prices per share for options outstanding under the Directors' Plan
as of  December  30,  2000  ranged  from  $1.81 to $4.63.  The  weighted-average
remaining  contractual  life of those  options  is 8.6  years.  A summary of the
outstanding and exercisable  directors' options at December 30, 2000, segregated
by exercise price ranges, is as follows:

<TABLE>
                           Options Outstanding                                    Exercisable Options
--------------------------------------------------------------------------- --------------------------------
                                                        Weighted-Average
                                       Weighted-           Remaining                           Weighted-
  Exercise Price                        Average           Contractual                           Average
      Range             Number       Exercise Price     Life (in years)         Number      Exercise Price
------------------- --------------- ----------------- --------------------- --------------- ----------------
<S>                   <C>           <C>               <C>                   <C>             <C>
     $1.81                 20,000       $  1.81                  9.0               20,000         $    1.81
     $2.28 - 2.69          35,000          2.51                  7.6               35,000              2.51
     $4.63                 20,000          4.63                 10.0                    -               -
                    ---------------                                         ---------------
                    ---------------                                         ---------------
                           75,000       $  3.05                  8.6               55,000         $    2.48
                    ---------------                                         ---------------

</TABLE>


                                      F-15
<PAGE>



                            Hytek Microsystems, Inc.

                    Notes to Financial Statements (continued)

6.       Stock Option Plans (continued)

2001 Plans

     In February  2001,  the Board of  Directors  adopted the 2001 Stock Plan to
replace the 1991 Stock  Option Plan and adopted the 2001  Director  Stock Option
Plan to replace the expired  1991  Directors'  Stock  Option  Plan.  131,000 and
30,000 shares have been reserved for the 2001 Stock Plan and 2001 Director Stock
Option Plan, respectively. Both plans are subject to shareholder approval.

7.   Stock-Based Compensation

     As of December 30,  2000,  the Company had three  stock-based  compensation
plans: The 1991 Stock Option Plan, The 1981 Incentive Stock Option Plan, and the
1991 Directors' Stock Option Plan, all of which are described in Note 6 above.

     Pro forma  information  regarding  net  income  and  earnings  per share is
required by SFAS 123, which also requires that the  information be determined as
if the Company has accounted for its employee stock options  granted  subsequent
to December  31, 1994 under the fair value  method of that  Statement.  The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following  weighted-average  assumptions  for 2000
and 1999,  respectively:  risk-free  interest  rates of 4.9% and 6.7%,  dividend
yields of 0% and 0%;  volatility  factors of the  expected  market  price of the
Company's common stock of .935 and .854 and a weighted-average  expected life of
the options of 2.4 and 3.4 years.

     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating the fair value of traded options,  which have no vesting restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions,  including  the  expected  stock price
volatility.  Because the Company's  employee stock options have  characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially  affect the fair value estimate,  in
management's  opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.





                                      F-16
<PAGE>



                            Hytek Microsystems, Inc.

                    Notes to Financial Statements (continued)


7.   Stock-Based Compensation (continued)

     For  purposes of pro forma  disclosures,  the  estimated  fair value of the
options is  amortized to expense  over the vesting  period of the  options.  The
effect of applying  SFAS 123's fair value  method to the  Company's  stock-based
awards results in pro forma information as follows:

<TABLE>
                                                                       Fiscal 2000         Fiscal 1999
                                                                   ----------------------------------------
<S>                                                                <C>                   <C>
Net income (loss) as reported                                        $      559,915      $   (1,138,870)
                                                                   ========================================

Pro forma net income (loss)                                          $      428,366      $   (1,260,585)
                                                                   ========================================

Earnings (loss) per share as reported:
     Basic                                                           $         .18       $        (.37)
                                                                   ========================================
     Diluted                                                         $         .17       $        (.37)
                                                                   ========================================

   Pro forma earnings (loss) per share:
     Basic                                                           $         .13       $        (.41)
                                                                   ========================================
     Diluted                                                         $         .13       $        (.41)
                                                                   ========================================
</TABLE>

     Because  SFAS 123 is  applicable  only to  options  granted  subsequent  to
December 15, 1994, its pro forma effect is not fully reflected until 2000.

8.   Profit Sharing Plan

     In February 1995, the Company's  Board adopted the 1995 Profit Sharing Plan
(the "Profit  Sharing  Plan"),  which is  available  to all  eligible  full-time
employees of the Company,  except executive officers of the Company, as defined.
Under the Profit Sharing Plan, the Company will distribute to employees  between
10% and 15% of the  Company's  pre-tax  income,  as  defined.  The  distribution
percentage  is at the  discretion  of  the  Company's  Board.  The  Plan,  which
terminates  by its own terms in December  2005,  may be terminated or amended at
any time by the Board. During fiscal 2000 and 1999, the Board authorized $57,000
and $0, respectively, in profit sharing distributions to employees, which amount
is included in accrued  employee  compensation  and benefits in the accompanying
balance sheet.

                                      F-17

<PAGE>

                            Hytek Microsystems, Inc.

                    Notes to Financial Statements (continued)


9.   Long-Term Debt

     In May 2000,  the  Company  renewed an  existing  revolving  business  loan
agreement  (the "Loan  Agreement")  with a bank under  which it may borrow up to
$1,000,000  at the bank's index rate  (aggregating  9.5% at December 30,  2000).
Interest is payable monthly up to the maturity date, May 15, 2001, at which time
all  unpaid   principal  and  interest   become  due.  The  Loan   Agreement  is
collateralized  by all of the  Company's  assets.  The  Loan  Agreement  imposes
certain  limitations  on the payment of dividends  and  incurrence of additional
indebtedness.  At December 30, 2000, the Company had no  outstanding  borrowings
under this Loan Agreement.

10.  Commitments and Contingencies

Leases

     The Company  leases its  administrative  and  production  facility and also
leases  certain  operating  equipment  under   non-cancelable   operating  lease
arrangements with terms in excess of one year.

     The aggregate future minimum lease payments under non-cancelable  operating
leases are as follows at December 30, 2000:

<TABLE>

                                                                                       Operating Leases
                                                                                      -------------------
          <S>                                                                          <C>
         2001                                                                           $     206,000
         2002                                                                                 212,000
         2003                                                                                 204,000
         2004                                                                                 200,000
         2005                                                                                  97,000
         Thereafter                                                                                -
                                                                                      -------------------
         Total minimum payments                                                         $     919,000
                                                                                      ===================
</TABLE>





                                      F-18
<PAGE>


                            Hytek Microsystems, Inc.

                    Notes to Financial Statements (continued)

10.  Commitments and Contingencies (continued)

     The  Company's  total  rental  expense  charged to  operations  amounted to
approximately $293,000 and $276,000 in fiscal 2000 and 1999, respectively.

Legal Proceedings

     In the course of  business,  the Company  occasionally  receives  inquiries
relating to various legal matters.  In the opinion of management,  any liability
resulting  from such  inquiries  will not have a material  adverse effect on the
Company's financial position or results of operations.

11.      Chesapeake Inventory

     On February  25, 1999,  the Company was  notified by its largest  customer,
Chesapeake  Sciences  Corp.,  to place all open orders on an  indefinite  "hold"
status,  citing  continuing  depressed crude oil prices and an over-abundance of
the world oil supply. Chesapeake subsequently canceled all remaining undelivered
items on these purchase orders.  On August 17, 1999, the Company entered into an
agreement (the "Final Settlement  Agreement") with Chesapeake whereby Chesapeake
paid to the Company $2.3  million,  plus  interest at 9.5% per year, in full and
final  settlement of all claims by the Company  related to the  cancellation  of
these  purchase  orders.  This  amount  was paid in  installments  and the final
payment of $1.4  million was  received by the Company in  September  2000.  Upon
receipt by the  Company of the final  payment,  title to the  related  inventory
vested  in  Chesapeake;  however,  the  Company  continues  to hold the  related
inventory. As the inventory is in the Company's custody, the Company assumes all
risk of loss,  destruction or damage to the inventory.  In addition, the Company
is  obligated  to build  products  ordered  by  Chesapeake  from the  Chesapeake
inventory being held by the Company at specified prices per the Final Settlement
Agreement.  The Company has recorded a liability in the amount of $1,509,125 and
$32,308 on the accompanying  balance sheet for principal  payments received from
Chesapeake  in excess of  quantities  of inventory  shipped to  Chesapeake as of
December 30, 2000 and January 1, 2000,  respectively.  At December 30, 2000, the
Company has recorded a  receivable  in the amount of $183,535 in relation to the
conversion  costs for production of finished goods shipped to Chesapeake  before
December 30, 2000.

     At December 30, 2000 and January 1, 2000,  respectively,  approximately  $1
million and $1.4 million of the Company's total inventory  balance is related to
the Chesapeake  program.  In fiscal 2000 and as a result of the Final Settlement
Agreement, the Company reversed the $300,000 inventory reserve it had previously
recorded in fiscal 1999 for the potential  write-down of inventory if Chesapeake
defaulted under the terms of the original Agreement.

                                      F-19

<PAGE>

                         Report of Independent Auditors


The Board of Directors and Shareholders
Hytek Microsystems, Inc.

     We have audited the accompanying balance sheets of Hytek Microsystems, Inc.
as of  December  30, 2000 and January 1, 2000,  and the  related  statements  of
operations, shareholders' equity, and cash flows for the years then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all material respects, the financial position of Hytek Microsystems,  Inc. at
December 30, 2000 and January 1, 2000, and the results of its operations and its
cash flows for the years then ended in  conformity  with  accounting  principles
generally accepted in the United States.


Reno, Nevada
February 2, 2001,
except for the final paragraph
of Note 6 as to which the date
is February 21, 2001                              /s/ Ernst & Young LLP









                                      F-20
<PAGE>
                                                                  Exhibit 23.1



               CONSENT OF Ernst & Young LLP, INDEPENDENT AUDITORS


     We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 2-90789,  33-7452,  33-28848,  33-61717,  33-42836 and 333-27899)
pertaining to the Incentive  Stock Option Plan,  the Key Employee Stock Purchase
Plan,  the 1991 Stock Option Plan and the 1991  Directors'  Stock Option Plan of
Hytek  Microsystems,  Inc. of our report dated February 2, 2001, with respect to
the financial  statements  of Hytek  Microsystems,  Inc.  included in the Annual
Report (Form 10-KSB) for the year ended December 30, 2000.

                                                           /s/Ernst & Young LLP


Reno, Nevada
March 23, 2001

























                                      F-21
<PAGE>





                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                        HYTEK MICROSYSTEMS, INC.


                                                 By:  /s/ Charles S. Byrne
                                                      Charles S. Byrne
                                                      Chairman of the Board and
                                                      Chief Executive Officer

                                                 Date:   March 24, 2001


                                POWER OF ATTORNEY

     KNOW ALL  PERSONS  BY THESE  PRESENTS,  that each  person  whose  signature
appears below constitutes and appoints Charles S. Byrne and Sally B. Chapman, or
either  of  them,  his  or  her   attorney-in-fact,   each  with  the  power  of
substitution,  for him or her in any and all capacities,  to sign any amendments
to this  Annual  Report  on Form  10-KSB,  and to file the same,  with  exhibits
thereto and other  documents in connection  therewith,  with the  Securities and
Exchange  Commission,  hereby  ratifying  and  confirming  all that each of said
attorneys-in-fact,  or his or her substitute or substitutes,  may do or cause to
be done by virtue hereof.

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.


         SIGNATURE                          TITLE                      DATE


      /s/ Charles S. Byrne         Chairman of the Board         March 24, 2001
      Charles S. Byrne              and Chief Executive Officer,
                                    Director



     /s/ Sally B. Chapman          Chief Financial Officer       March 24, 2001
     Sally B. Chapman               (Principal financial and
                                    accounting officer)











                                                              S-1
<PAGE>






         SIGNATURE                          TITLE                      DATE

     /s/ Ted E. Batchman                   Director             March 24, 2001



     /s/ Robert Boschert                   Director             March 24, 2001
     Robert Boschert


     /s/ Edward W. Moose                   Director             March 24, 2001
     Edward W. Moose


     /s/ Edward Y. Tang                    Director             March 24, 2001
     Edward Y. Tang





























                                                                S-2
<PAGE>



                            HYTEK MICROSYSTEMS, INC.

                          Annual Report on Form 10-KSB
                   for the fiscal year ended December 30, 2000

                                  EXHIBIT INDEX

     (The  Registrant  will furnish to any shareholder who so requests a copy of
this Annual Report on Form 10-KSB, including a copy of any Exhibit listed below,
provided  that the  Registrant  may require  payment of a reasonable  fee not to
exceed its expense in furnishing any such Exhibit.)

Exhibit
                           Number Exhibit Description


3.1 (1)           Amended and Restated Articles of Incorporation
                   filed on February 10, 1983.

3.2 (2)           Certificate of Amendment of Articles of Incorp-
                   oration filed June 28, 1988.

3.3 (15)          Composite Articles of Incorporation, as amended
                   through June 28, 1988.

3.4 (9)           Amended and Restated Bylaws, as amended
                   through July 27, 1992.

4.1               Reference Exhibits 3.1, 3.2, 3.3 and 3.4.

9.1 (4)           Shareholders' Agreement dated as of April 9, 1990.

10.2a (11) (*)    1991 Stock Option Plan, as amended
                   February 7, 1997.

10.2b (8)  (*)    Form of Agreement used under the 1991
                   Stock Option Plan.

10.3  (12) (*)    1991 Directors' Stock Option Plan as amended
                   September 11, 1997, and form of Agreement thereunder.

10.5   (7)  (*)   Form of Indemnification Agreement entered into
                   by the Registrant with each of its directors and
                   executive officers.






                         X-1 (Footnotes at end of index)
<PAGE>



Exhibit
                           Number Exhibit Description

10. 6  (6)        Proprietary Information Agreement dated
                  as of March 25, 1992, between James M. Phalan
                  and the Registrant.

10.7   (13)       Line of Credit Agreement dated May 16,
                  2000 between HytekMicrosystems, Inc. and
                  Bank of the West.

10.8              Lease dated October 22, 1999 for the facility at
                  400 Hot Springs Road, Carson City, Nevada.

10.9  (12)        Promissory Note and Line of Credit  Agreement dated
                  October 14, 1997 between Hytek Microsystems, Inc. and Sierra
                  West Bank.

10.10  (14)       Final Settlement Agreement with Chesapeake Sciences Corp.
                  dated August 17, 1999.

10.11 (*)         2001 Stock Plan and form of Agreement thereunder.

10.12 (*)         2001 Director Stock Option Plan and forms of Agreement
                  thereunder.

13.1              President's Letter to Shareholders dated
                  April 2, 2001, which together with
                  this Form 10-KSB comprises the Registrant's
                  2000 Annual Report to Shareholders.

21.1               The Registrant has no subsidiaries.

23.1               Consent of Independent Auditors
                    (see page F- 21).

Footnotes:

(1)               Incorporated by reference to Exhibit filed with the
                  Registration Statement on Form S-1 (File No. 2-82140).

(2)               Incorporated by reference to Exhibit filed with the
                  Quarterly Report on Form 10-Q for the quarter ended July 2,
                  1988.

(3)               Incorporated by reference to Exhibit filed with the Annual
                  Report on Form 10-K for the year ended December 29, 1990.

(4)               Incorporated by reference to Exhibit filed with the Annual
                  Report on Form 10-K for the year ended December 30, 1989.

(5)               Incorporated by reference to Exhibit filed with the Annual
                  Report on Form 10-K for the year ended December 31, 1986.


                                       X-2
<PAGE>

(6)               Incorporated by reference to Exhibit filed with the Annual
                  Report on Form 10-K for the year ended December 28, 1991.

(7)               Incorporated by reference to Exhibit filed with the Annual
                  Report on Form 10-K for the year ended December 31, 1988.

(8)               Incorporated by reference to Exhibit filed with the Quarterly
                  Report on Form 10-Q for the quarter ended September 26,
                  1992.

(9)               Incorporated by reference to the Exhibit filed with the
                  Quarterly Report on Form 10-Q for the quarter ended
                  June 27, 1992.

(10)              Incorporated by reference to Exhibit filed with the Annual
                  Report on Form 10-KSB for the year ended December 31, 1994.

(11)              Incorporated by reference to Exhibit filed with the Annual
                  Report on Form 10-KSB for the year ended December 28, 1996.

(12)              Incorporated by reference to Exhibit filed with the Quarterly
                  Report on Form 10-QSB for the quarter ended September 27,
                  1997.

(13)              Incorporated by reference to the Exhibit filed with the
                  Quarterly Report on Form 10-QSB for the quarter ended
                  October 3, 1998.

(14)              Incorporated by reference to Exhibit filed with the quarterly
                  report on Form 10-QSB for the period ended October 2, 1999.

(15)              Incorporated by reference to Exhibit filed with the Annual
                  Report on Form 10-KSB for the year ended January 2, 1999.

(*)               Management contract or compensatory plan or arrangement in
                  which any director or executive officer named in the
                  Registrant's Annual  Report on Form 10-KSB or Proxy Statement
                  has participated or participates.




                                       X-3
                                     <PAGE>
                                                                    Exhibit 13.1
                            Message To Shareholders

Dear Fellow Shareholders:                                     April 2, 2001

     The year 2000 was  characterized  by  significant  efforts to  rebuild  and
strengthen our Company on the part of all Hytek employees.  I am happy to report
that we have achieved some success in this regard in the past fiscal year.

Financial Performance

     For the fourth quarter of 2000,  Hytek  reported net income of $21,000,  or
$0.01 per diluted share,  on revenues of $2.1 million.  This compares with a net
loss of $136,000,  or $0.04 per diluted  share,  on revenues of $1.2 million for
the fourth quarter of fiscal 1999.

     For  the  year,  revenues  increased  by 52% and the  Company  returned  to
profitability.  For the year ended December 30, 2000, net income was $560,000 or
$0.17 per diluted share, on revenues of $7.9 million,  as compared to a net loss
of $1.1 million, or $0.37 per diluted share, on revenues of $5.2 million for the
prior year ended January 1, 2000.

Markets and Applications

     During  2000,  approximately  41% of Company  revenues  were  derived  from
military,  aerospace or  government-funded  programs.  The Company  continues to
maintain its  MIL-PRF-38534  military  certification.  While  revenues  from the
military-aerospace  market  remained  essentially  flat from the prior year,  we
believe there is potential for future growth in this market and will continue to
pursue new opportunities vigorously.

     A  majority  of  the  revenue  growth  during  2000  came  from  commercial
applications.  Areas of significant  growth  included  medical  instrumentation,
communications and industrial applications.

     2000 showed  significant growth in the Company's  Opto-Electronic  standard
products,  which  include  Thermo-Electric  Cooler  Controllers  and Laser Diode
Drivers.  Sales of these  products  increased  by 227% from the prior  year to a
total of  approximately  $1.6 million.  Applications  for these products include
fiber optic  networks, "free space" data  transmission  and certain  "detector"
product  markets.  The Company  introduced  several new  versions of its optical
support products during the past fiscal year. We anticipate  continued growth in
this market over the next several  years.  Overall,  during 2000,  the Company's
standard  products,  which  also  include  digital  delay-lines,  accounted  for
approximately  24% of  total  2000  revenues,  a  significant  increase  in both
percentage and real dollars over the prior year.

Processes and Technology

     The  Compan's  traditional  technology  has  utilized  thick-film  ceramic
substrates combined with "chip and wire" assembly processes and hermetic sealing
of the packaged  circuits.  We have added new processes and  technologies as new
market and customer opportunities evolve.  Currently, as we begin a new year, we
are expanding  our  capabilities  with the addition of automated  pick-and-place
equipment and additional  automated  processes to improve  efficiency and better
satisfy our customers' requirements.

Going Forward

     We begin the year 2001 with a strong cash position, an improved backlog and
an  expanded  customer  base.  We are no  longer  in the  position  of  critical
dependency  on one very large  customer and are  continually  working to further
expand our  customers and markets  served.  Our focus for the ensuing year is on
improving  production  efficiency and bottom line results.  With the loyalty and
support of our shareholders,  customers and employees, we believe that increased
long-term gains can be achieved for all.



                             Sincerely yours,


                             Charles S. (Chuck) Byrne
                             Chairman of the Board and Chief Executive Officer