FORM 10--Q

                      SECURITIES AND EXCHANGE COMMISSION

                           Washington, D.C.  20549

(Mark One)

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

For the quarterly period ended September 30, 1998
                               ------------------

                                    OR

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

For the transition period from           to 
                               ---------    ---------

Commission file number 0-14659
                       -------

                              TECHDYNE, INC.
         ------------------------------------------------------
         (Exact name of registrant as specified in its charter)

                  Florida                                  59-1709103
---------------------------------------------          -------------------
(State or other jurisdiction of incorporation           (I.R.S. Employer 
or organization)                                       Identification No.)

2230 West 77th Street, Hialeah, Florida                        33016
---------------------------------------                     ----------
(Address of principal executive offices)                    (Zip Code)

                              (305) 556-9210
            ----------------------------------------------------
            (Registrant's telephone number, including area code)

                              NOT APPLICABLE
       ---------------------------------------------------------------
       (Former name, former address and former fiscal year, if changed
                            since last report)

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

Yes [x] or No [ ]

Common Stock Outstanding

     Common Stock, $.01 par value - 5,250,167 shares as of October 31, 
1998.

<PAGE>

                     TECHDYNE, INC. AND SUBSIDIARIES
                     -------------------------------

                                  INDEX

PART I  --  FINANCIAL INFORMATION
------      ---------------------

     The Consolidated Condensed Statements of Income (Unaudited) for the 
three months and nine months ended September 30, 1998 and September 30, 
1997 include the accounts of the Registrant and its subsidiaries.

Item 1. Financial Statements
------  --------------------

     1)  Consolidated Condensed Statements of Income for the three months
         and nine months ended September 30, 1998 and September 30, 1997.

     2)  Consolidated Condensed Balance Sheets as of September 30, 1998 
         and December 31, 1997.

     3)  Consolidated Condensed Statements of Cash Flows for the nine 
         months ended September 30, 1998 and September 30, 1997.

     4)  Notes to Consolidated Condensed Financial Statements as of 
         September 30, 1998.

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

PART II  --  OTHER INFORMATION
-------      -----------------

Item 6. Exhibits and Reports on Form 8-K
------  --------------------------------

<PAGE>

                    PART I  --  FINANCIAL INFORMATION
                    ------      ---------------------

Item 1. Financial Statements
------  --------------------


                     TECHDYNE, INC. AND SUBSIDIARIES

                CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                (UNAUDITED)

<TABLE>
<CAPTION>
                                   Three Months Ended       Nine Months Ended
                                      September 30,           September 30, 
                                -----------------------  ------------------------
                                    1998        1997         1998         1997
                                    ----        ----         ----         ----
<S>                             <C>          <C>         <C>          <C>
Revenues:
  Sales                         $10,972,849  $8,978,315  $34,458,947  $21,962,802
  Interest and other income         147,082      43,722      218,178      120,346
                                -----------  ----------  -----------  -----------
                                 11,119,931   9,022,037   34,677,125   22,083,148
Cost and expenses:
  Cost of goods sold              9,560,778   7,897,931   29,829,518   18,904,430
  Selling, general and 
    administrative expenses       1,185,861     823,938    3,046,513    2,180,240
  Interest expense                  169,586     139,517      490,435      281,772
                                -----------  ----------  -----------  -----------
                                 10,916,225   8,861,386   33,366,466   21,366,442
                                -----------  ----------  -----------  -----------

Income before income taxes          203,706     160,651    1,310,659      716,706

Income tax provision (benefit)       25,034     (13,998)      76,607      (63,027)
                                -----------  ----------  -----------  -----------

  Net income                    $   178,672  $  174,649  $ 1,234,052  $   779,733
                                ===========  ==========  ===========  ===========

Earnings per share:

   Basic                           $.03         $.04        $.24          $.18
                                   ====         ====        ====          ====
   Diluted                         $.03         $.03        $.19          $.14
                                   ====         ====        ====          ====
</TABLE>

See notes to consolidated condensed financial statements.

<PAGE>

                     TECHDYNE, INC. AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                      September 30,  December 31,
                                                          1998         1997(A)
                                                          ----         ------
                                                       (Unaudited)
                     ASSETS
<S>                                                    <C>           <C>
Current Assets:
  Cash and cash equivalents                            $ 1,720,431   $ 1,451,564
  Accounts receivable, less allowances of 
    $55,000 at September 30, 1998
    and $54,000 at December 31, 1997                     5,685,641     5,707,471
  Inventories, less allowances for obsolescence 
    of $477,000 at September 30, 1998
    and $223,000 at December 31, 1997                    8,535,631     8,325,309
  Prepaid expenses and other current assets                214,484       574,250
  Deferred tax asset                                     1,010,558     1,010,558
                                                       -----------   -----------
          Total current assets                          17,166,745    17,069,152

Property and Equipment:
  Land and improvements                                    204,000       198,000
  Buildings and building improvements                      787,739       764,571
  Machinery and equipment                                6,629,700     6,176,733
  Tools and dies                                           846,412       844,132
  Leasehold improvements                                   303,727       241,934
                                                       -----------   -----------
                                                         8,771,578     8,225,370
  Less accumulated depreciation                          3,727,656     2,984,825
                                                       -----------   -----------
                                                         5,043,922     5,240,545
Deferred expenses and other assets                          77,845        79,707
Costs in excess of net tangible assets acquired, less
  accumulated amortization of $163,000 at September
  30, 1998 and $85,000 at December 31, 1997              2,712,065     2,235,743
                                                       -----------   -----------
                                                       $25,000,577   $24,625,147
                                                       ===========   ===========

        LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Short-term bank borrowings                           $   286,194   $   548,698
  Accounts payable                                       3,723,291     4,214,639
  Accrued expenses                                       1,635,964     1,745,926
  Current portion of long-term debt                        856,738       909,080
  Income taxes payable                                     220,272       103,559
                                                       -----------   -----------
          Total current liabilities                      6,722,459     7,521,902
Deferred gain on sale of real estate                       161,047       161,047
Deferred income taxes                                      414,203       507,003
Long-term debt, less current portion                     4,650,434     4,619,066
Advances from parent                                     3,096,417     2,307,221

Commitments and Contingencies

Stockholders' Equity:
  Common stock, $.01 par value, authorized 
    10,000,000 shares; issued and outstanding
    5,250,167 shares at September 30, 1998
    and 5,135,167 at December 31, 1997                      52,501        51,351
  Capital in excess of par value                        11,139,291    10,612,691
  Retained earnings (deficit)                              128,404    (1,105,648)
  Accumulated other comprehensive income-
    foreign currency translation adjustments                27,382       (49,486)
  Notes receivable from options exercise                  (113,850)
  Advance receivable toward subsidiary 
    acquisition price guarantee                         (1,277,711)
                                                       -----------   -----------
          Total stockholders' equity                     9,956,017     9,508,908
                                                       -----------   -----------
                                                       $25,000,577   $24,625,147
                                                       ===========   ===========
</TABLE>

(A) Reference is made to the Company's Annual Report on Form 10-K for 
    the year ended December 31, 1997 filed with the Securities and 
    Exchange Commission in March 1998. 

See notes to consolidated condensed financial statements.

<PAGE>  

                     TECHDYNE, INC. AND SUBSIDIARIES

             CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                               (UNAUDITED)

<TABLE>
<CAPTION>
                                                           Nine Months Ended
                                                             September 30,
                                                       ------------------------
                                                          1998          1997
                                                          ----          ----
<S>                                                    <C>           <C>
Operating activities:
  Net income                                           $1,234,052    $  779,733
  Adjustments to reconcile net income to net cash
       provided by (used in) operating activities:
     Depreciation                                         742,740       389,047
     Amortization                                          86,093        20,245
     Provision for inventory obsolescence                 368,472        91,423
     Bad debt expense                                         551
     Deferred income taxes                                (92,983)        2,934
     Consultant stock option expense                       12,750
     Increase (decrease) relating to operating 
       activities from:
        Accounts receivable                                48,029      (915,082)
        Inventories                                      (556,854)   (2,253,669)
        Prepaid expenses and other current assets         364,772      (357,835)
        Accounts payable                                 (502,269)      994,659
        Accrued expenses                                 (119,240)      (27,271)
        Income taxes payable                              116,713      (237,513)
                                                       ----------    ----------
          Net cash provided by (used in) 
            operating activities                        1,702,826    (1,513,329)

Investing activities:
  Additions to property and equipment, net of 
    minor disposals                                      (503,914)   (1,066,475)
  Subsidiary acquisition payments                        (153,818)   (2,166,011)
  Advance toward subsidiary acquisition 
    price guarantee                                    (1,277,711)
  Deferred expenses and other assets                       (6,489)      (85,181)
                                                       ----------    ----------
          Net cash used in investing activities        (1,941,932)   (3,317,667)

Financing activities:
  Line of credit funding for subsidiary acquisition                  $2,500,000
  Line of credit funding towards subsidiary 
    acquisition price guarantee                           600,000
  Short-term line of credit (payments) borrowings        (262,504)      373,889
  Payments on long-term debt                             (637,724)     (141,873)
  Exercise of stock options and warrants                    1,150       194,328
  Increase (decrease) in advances from parent             789,196       364,801
  Deferred financing costs                                    374        (2,979)
                                                       ----------    ----------
          Net cash provided by financing activities       490,492     3,288,166

Effect of exchange rate fluctuations on cash               17,481      (129,169)
                                                       ----------    ----------

Increase (decrease) in cash and cash equivalents          268,867    (1,671,999)

Cash and cash equivalents at beginning of year          1,451,564     3,954,047
                                                       ----------    ----------

Cash and cash equivalents at end of period             $1,720,431    $2,282,048
                                                       ==========    ==========
</TABLE>

See notes to consolidated condensed financial statements.

<PAGE>

                      TECHDYNE, INC. AND SUBSIDIARIES

          NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                             September 30, 1998
                                (Unaudited)

NOTE 1--Summary of Significant Accounting Policies

Consolidation

     The consolidated financial statements include the accounts of 
Techdyne, Inc. ("Techdyne") and its subsidiaries, including Lytton 
Incorporated ("Lytton"), Techdyne (Scotland) Limited ("Techdyne 
(Scotland)"), and Techdyne (Livingston) Limited which is a subsidiary 
of Techdyne (Scotland), collectively referred to as the "Company."  All
material intercompany accounts and transactions have been eliminated in
consolidation.  The Company is a 61.5% owned subsidiary of Medicore, 
Inc. (the "Parent").  See Note 5.

Major Customers

     A majority of the Company's sales are to certain major customers.  
The loss of or substantially reduced sales to any of these customers 
would have an adverse effect on the Company's operations if such sales 
were not replaced.

Inventories

     Inventories, which consist primarily of raw materials used in the 
production of electronic components, are valued at the lower of cost 
(first-in, first-out method) or market value.  The cost of finished 
goods and work in process consists of direct materials, direct labor 
and an appropriate portion of fixed and variable manufacturing over-
head.  Inventories are comprised of following:


                                          September 30,   December 31,
                                               1998            1997
                                           -----------     -----------
     Finished goods                        $   772,372     $   554,903
     Work in process                         2,207,956       1,772,724
     Raw materials and supplies              5,555,303       5,997,682
                                           -----------     -----------
                                           $ 8,535,631     $ 8,325,309
                                           ===========     ===========

Prepaid Expenses and Other Current Assets

     Prepaid expenses and other current assets is comprised as follows:

                                          September 30,   December 31,
                                               1998            1997
                                           -----------     -----------
     United Kingdom VAT tax receivable     $    70,995     $   283,106
     Other                                     143,489         291,144
                                           -----------     -----------
                                           $   214,484     $   574,250
                                           ===========     ===========

Accrued Expenses and Other Current Liabilities

     Accrued expenses and other current liabilities is comprised as 
follows:

                                          September 30,   December 31,
                                               1998            1997
                                           -----------     -----------
     United Kingdom VAT tax payable        $   179,585     $   342,112
     Accrued compensation                      597,706         493,660
     Other                                     858,673         910,154
                                           -----------     -----------
                                           $ 1,635,964     $ 1,745,926
                                           ===========     ===========

<PAGE>  

                      TECHDYNE, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(Continued)
                            September 30, 1998
                                (Unaudited)

NOTE 1--Summary of Significant Accounting Policies--(Continued)

Earnings per Share

     In February 1997, the Financial Accounting Standards Board issued 
FAS 128, "Earnings Per Share," which was adopted on December 31, 1997 
requiring a change in the method previously used to compute earnings 
per share and restatement of all prior periods.  The new requirements 
for calculating basic earnings per share exclude the dilutive effect 
of stock options and warrants.  Earnings per share under the diluted 
computation required under FAS 128 includes the dilutive effect of stock
options and warrants using the treasury stock method and average market 
price, shares assumed to be converted on the conversion of the con-
vertible promissory note to the Company's Parent with earnings adjusted 
for interest expense related to the convertible promissory note which 
is assumed to be converted, and contingent shares for the stock price 
guarantee for the acquisition of Lytton.

     Following is a reconciliation of amounts used in the basic and 
diluted computations:

<TABLE>
<CAPTION>
                                  Three Months Ended       Nine Months Ended
                                      September 30,           September 30,
                                -----------------------  -----------------------
                                   1998         1997        1998         1997
                                   ----         ----        ----         ----
<S>                             <C>          <C>         <C>          <C>
Net income - numerator 
  basic computation             $  178,672   $  174,649  $1,234,052   $  779,733
Effect of dilutive securities:
Interest adjustment on 
  convertible note                  33,843       44,256     100,104      130,905
                                ----------   ----------  ----------   ----------
Net income, as adjusted for 
  assumed conversion-
  numerator diluted 
  computation                   $  212,515   $  218,905  $1,334,156   $  910,638
                                ==========   ==========  ==========   ==========

Weighted average shares - 
  denominator basic 
  computation                    5,250,167    4,534,080   5,173,922    4,389,859
Effect of dilutive securities:
Warrants                                                                 116,989
Stock options                      210,680      204,898     287,811      240,840
Contingent stock - acquisition     319,355      142,862     269,844       48,144
Convertible note                 1,357,119    1,774,682   1,338,069    1,749,770
                                ----------   ----------  ----------   ----------
Weighted average shares, 
  as adjusted - denominator      7,137,321    6,656,522   7,069,646    6,545,602
                                ==========   ==========  ==========   ==========

Earnings per share:
   Basic                           $.03         $.04        $.24         $.18
                                   ====         ====        ====         ====
   Diluted                         $.03         $.03        $.19         $.14
                                   ====         ====        ====         ====
</TABLE>

     In addition to the dilutive stock options and warrants included in
the reconciliation above, neither the 1995 publicly offered warrants 
exercisable at $5.00 per share nor underwriter warrants to purchase 
100,000 shares of common stock and/or 100,000 warrants exercisable at 
$6.60 per share and $.25 per warrant with each warrant exercisable into 
common stock at $8.25 per share have been included since they were anti-
dilutive.

Comprehensive Income

     The Company has adopted the provisions of Financial Accounting 
Standards Board Statement No. 130, "Reporting Comprehensive Income" 
(FAS 130) in 1998 which is required by FAS 130 for fiscal years 
beginning after December 15, 1997.  FAS 130 requires the presentation 
of comprehensive income and its components in the financial statements
and the accumulated balance of other comprehensive income separately 
from retained earnings and additional paid in capital in the equity 
section of the balance sheet.  The adoption of FAS 130 has no impact 
on the Company's net income or stockholders' equity.  The only com-
ponent of other comprehensive income in the Company's balance sheet 
is foreign currency translation adjustments which prior to adoption of
FAS 130 has been separately reported in stock-holders' equity.

<PAGE>  

                      TECHDYNE, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(Continued)
                            September 30, 1998
                                (Unaudited)

NOTE 1--Summary of Significant Accounting Policies--(Continued)

     Below is a detail of comprehensive income for the three months 
and nine months ended September 30, 1998 and September 30, 1997:

<TABLE>
<CAPTION>
                                  Three Months Ended       Nine Months Ended
                                      September 30,           September 30,
                                -----------------------  -----------------------
                                   1998         1997        1998         1997
                                   ----         ----        ----         ----
<S>                             <C>          <C>         <C>          <C>
Net income                      $  178,672   $  174,649  $1,234,052   $  779,733
Other comprehensive 
  income (loss):
Foreign currency translation        44,831      (83,942)     76,868     (202,024)
                                ----------   ----------  ----------   ----------
Comprehensive income            $  223,503   $   90,707  $1,310,920   $  577,709
                                ==========   ==========  ==========   ==========
</TABLE>

Segment Reporting

     The Company has adopted the provisions of Financial Accounting 
Standards Board Statement No. 131, "Disclosures About Segments of an 
Enterprise and Related Information" (FAS 131) in 1998 which is required 
by FAS 131 for fiscal years beginning after December 15, 1997.  FAS 131 
establishes standards for reporting information about operating segments
in annual financial statements with operating segments representing 
components of an enterprise evaluated by the enterprise's chief operating
decision maker for purposes of making decisions regarding resource 
allocation and performance evaluation.  FAS 131 also requires that 
certain segment information be presented in interim financial state-
ments.  Interim information is not required in the first year of 
implementation; however, in subsequent years in which the first year 
of implementation is a comparative year, any required interim informa-
tion for the initial year of implementation must be presented.  The 
Company does not believe that adoption of FAS 131 will significantly 
change its segment reporting disclosures.

Reclassifications

     Certain reclassifications have been made to the 1997 financial 
statements to conform to the 1998 presentation.

NOTE 2--Interim Adjustments

     The financial summaries for the three months and nine months ended
September 30, 1998 and September 30, 1997 are unaudited and include, in
the opinion of management of the Company, all adjustments (consisting 
of normal recurring accruals) necessary to present fairly the earnings 
for such periods.  Operating results for the three months and nine 
months ended September  30, 1998 are not necessarily indicative of the 
results that may be expected for the entire year ending December 31, 
1998.

     While the Company believes that the disclosures presented are 
adequate to make the information not misleading, it is suggested that 
these Consolidated Condensed Financial Statements be read in conjunc-
tion with the financial statements and notes included in the Company's
latest audited annual report for the year ended December 31, 1997.

NOTE 3--Long-term Debt

     The Company's $1,600,000 line of credit effective December 29, 
1997 had an outstanding balance of $1,600,000 at September 30, 1998 
and $1,000,000 at December 31, 1997.  This line matures May 1, 2000 
and has monthly payments of interest at prime.  The commercial term 
loan effective December 29, 1997 with an initial principal balance 
of $1,500,000 had an outstanding balance of $1,275,000 at September 
30, 1998 and $1,500,000 at December 31, 1997, matures December 15, 
2002 with monthly principal payments of $25,000 plus interest.  In 
connection with the term loan, the Company entered into an interest 
rate swap agreement with the bank to manage the 

<PAGE>  

                      TECHDYNE, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(Continued)
                            September 30, 1998
                                (Unaudited)

NOTE 3--Long-term Debt--(Continued)

Company's exposure to interest rates by effectively converting a 
variable rate obligation with an interest rate of LIBOR plus 2.25% to 
a fixed rate of 8.60%.

    The bank also extended two commercial term loans to the Company in 
February 1996, one for $712,500 for five years expiring on February 7, 
2001 at an annual rate of interest equal to 8.28% with a monthly 
payment of principal and interest of $6,925 based on a 15-year amorti-
zation schedule with the unpaid principal and accrued interest due on 
the expiration date.  This term loan had an outstanding balance of 
approximately $644,000 at September 30, 1998 and $663,000 at December 
31, 1997 and is secured by a mortgage on properties in Hialeah, Florida
owned by the Company's Parent.  The second commercial term loan was for 
the principal amount of $200,000 for a period of five years bearing 
interest at a per annum rate of 1.25% over the bank's prime rate and 
requiring monthly principal payments with accrued interest of $3,333 
through expiration on February 7, 2001.  This $200,000 term loan which 
had a balance of approximately $97,000 at September 30, 1998 and 
$127,000 at December 31, 1997 is secured by all of Techdyne's tangible 
personal property, goods and equipment, and all cash or noncash proceeds
of such collateral.

     The Parent has unconditionally guaranteed the payment and performance
by the Company of the revolving loan and the three commercial term loans 
and has subordinated the Company's intercompany indebtedness to the Parent
to the bank's position.

     Lytton has a $1,500,000 revolving bank line of credit requiring 
monthly interest payments at prime plus 1/2% which matured August 1, 1998 
and was renewed under the same terms and conditions through June 30, 1999.
The interest rate on this loan was 9% at September 30, 1998 and December 
31, 1997.  There was an outstanding balance on this loan of $286,000 as of
September 30, 1998 with $549,000 outstanding at December 31, 1997.  
Lytton has a $1,000,000 installment loan with the same bank maturing 
August 1, 2002, at an annual rate of 9% until July 1999, with monthly 
payments of $16,667 plus interest, at which time Lytton will have an 
option to convert the note to a variable rate.  The balance outstanding 
on this loan was approximately $783,000 at September 30, 1998 and $933,000
as of December 31, 1997. Lytton also has a $500,000 equipment loan 
agreement with the same bank payable through August 1, 2003 with the 
interest rate at prime plus 1%.  There was no outstanding balance on 
this loan as of September 30, 1998 or December 31, 1997.  All of these 
bank loans are secured by the business assets of Lytton.

     The prime rate was 8.5% as of September 30, 1998 and December 31, 
1997.

     Lytton conducts a portion of its operations with equipment acquired
under equipment financing obligations which extend through July 1999 with
interest rates ranging from 8.55% to 10.09%.  The remaining principal 
balance under these financing obligations amounted to $231,000 at Septem-
ber 30, 1998 and $390,000 at December 31, 1997.  Lytton has an equipment 
loan at an annual interest rate of 5.5% maturing in April 2001 with 
monthly payments of principal and interest of $4,298.  This loan has a 
balance of approximately $167,000 at September 30, 1998 and $198,000 at 
December 31, 1997 and is secured by equipment.

     Techdyne (Scotland) had a line of credit with a Scottish bank with a
U.S. dollar equivalency of approximately $330,000 at December 31, 1997 
which was not renewed.  No amounts were drawn on this line of credit 
during 1998 and no amounts were outstanding under the line as of 
December 31, 1997.  Techdyne (Scotland) has a mortgage on its facility 
which had a principal balance with a U.S. dollar equivalency of $565,000 
at September 30, 1998 and $569,000 at December 31, 1997.

     Interest payments on long-term debt amounted to approximately 
$130,000 and $389,000 for the three months and nine months ended Sep-
tember 30, 1998 and $93,000 and $160,000 for the same periods of the 
preceding year.

<PAGE>  

                      TECHDYNE, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(Continued)
                            September 30, 1998
                                (Unaudited)

NOTE 4--Income Taxes

     The Company files separate federal and state income tax
returns from its Parent, with its income tax liability reflected on a 
separate return basis.

     Deferred income taxes reflect the net tax effect of temporary dif-
ferences between the carrying amounts of assets and liabilities for 
financial reporting purposes and the amounts used for income tax pur-
poses. For financial reporting purposes a valuation allowance of 
approximately $850,000 has been recognized to offset the deferred tax 
assets.

     The Company had domestic income tax expense of approximately $54,000
and $169,000 for the three months and nine months ended September 30, 
1998 and $22,000 and $37,000 for the same periods of the preceding year.

     Techdyne (Scotland) had an income tax benefit of approximately 
$29,000 and $93,000 for the three months and nine months ended September
30, 1998 and $36,000 and $100,000 for the same periods of the preceding 
year.

     Income tax payments (refunds) for the three months and nine months 
ended September 30, 1998 amounted to ($2,000) and $51,000, and $265,000 
for the three months and nine months ended September 30, 1997.

NOTE 5--Transactions with Parent

     The Parent provides certain administrative services to the Company 
including providing office space and general accounting assistance.  
Effective October 1, 1996, the services provided to the Company by the 
Parent were formalized under a service agreement for $408,000 per year.
The amount of expenses covered under the service agreement totaled 
$102,000 and $306,000 for the three months and nine months ended 
September 30, 1998 and for the same period of the preceding year.

     The Company's demand convertible promissory note payable to the 
Parent which bears interest at 5.7% had a balance including accrued 
interest of approximately $2,392,000 at September 30, 1998 and 
$2,292,000 at December 31, 1997, and may be converted into common stock
of the Company at the option of the Parent at a conversion price of 
$1.75 per share.  Advances from the Parent on the balance sheet includes
the convertible note balance and an advance payable to the Parent of 
approximately $704,000 at September 30, 1998 and $15,000 at December 
31, 1997 with interest at 5.7%.  Interest on the advances amounted to 
$43,000 and $112,000 for the three months and nine months ended September
30, 1998 and $40,000 and $114,000 for the same periods of the preceding 
year and is included in the net balance due the Parent.  The Parent has 
agreed not to require repayment of the intercompany advances prior to 
October 1, 1999 and, therefore, the advances have been classified as 
long-term at September 30, 1998.

     The Company manufactures certain products for the Parent.  Sales of
the products were $41,000 and $140,000 for the three months and nine 
months ended September 30, 1998 and $55,000 and $156,000 for the same 
periods of the preceding year.

NOTE 6--Commitments and Contingencies

     Lytton sponsors a 401(k) Profit Sharing Plan covering substantially
all of its employees.  The discretionary profit sharing and matching 
expense of Lytton for the nine months ended September 30, 1998 amounted 
to approximately $33,000.  The Company has adopted this plan as a par-
ticipating employer effective July 1, 1998 with no discretionary profit 
sharing and matching expense as of September, 30, 1998 other than that 
of Lytton.  The plan has one year of service and 21 years of age 
eligibility requirements.

<PAGE>  

                      TECHDYNE, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(Continued)
                            September 30, 1998
                                (Unaudited)

NOTE 6--Commitments and Contingencies--(Continued)

     Lytton has a deferred compensation agreement with its President.  
The agreement calls for monthly payments of $8,339 provided that 
Lytton's cash flow is adequate to cover these payments with interest 
to be calculated on any unpaid balance as of August 1, 1999.  During 
the nine months ended September 30, 1998, a total of $83,000 was paid 
under this agreement, leaving an unpaid balance of approximately $83,000
as of September 30, 1998.

     Lytton leases its operating facilities from an entity owned by the 
President of Lytton and his wife, the former owner.  The lease expires 
July 31, 2002 and requires monthly lease payments of approximately 
$17,900 the first year, adjusted each year thereafter based upon the 
Consumer Price Index.

NOTE 7--Stock Options

     In May 1994, the Company adopted a stock option plan for up to 
250,000 options.  Pursuant to this plan, in May 1994, the board of 
directors granted 227,500 options to certain of its officers, directors
and employees.  These options are exercisable at $1 per share through 
May 24, 1999.  On June 30, 1998, 115,000 of these options were exercised
with a remaining balance of 56,600 outstanding as of September 30, 1998.
The Company received cash payment of the par value and the balance in 
three year promissory notes, presented in the Stockholders' Equity 
Section of the balance sheet with interest at 5.16%.

     On February 27, 1995 the Company granted stock options, not part of 
the 1994 Plan, to directors of Techdyne and its subsidiaries for 142,500 
shares exercisable at $1.75 per share through February 26, 2000.  In 
April 1995, the Company granted a stock option for 10,000 shares, not part
of the 1994 Plan, to its general counsel at the same price and terms as 
the directors' options.

     In June 1997, the Company adopted a Stock Option Plan for up to 
500,000 options, and pursuant to the plan the board granted 375,000 
options exercisable for five years through June 22, 2002 at $3.25 per 
share.

     As part of the consideration pursuant to an agreement for investor 
relations and corporate communications services, the Company granted 
options for 25,000 shares of its common stock exercisable for three years
through May 14, 2001 at $4.25 per share with the options to vest quarterly
on the basis of 25% at the end of each quarter commencing June 30, 1998.  
6,250 options vested during the quarter ended June 30, 1998 with no 
additional options to vest due to cancellation of this agreement in August 
1998. Pursuant to FAS 123, the Company recorded $13,000 expense for 
1999. options vesting under this agreement.

NOTE 8--Common Stock

     The Company completed a public offering of common stock and 
warrants on October 2, 1995 providing it with net proceeds of approxi-
mately $3,321,000.  Pursuant to the offering, 1,000,000 shares of 
common stock and 1,000,000 redeemable common stock purchase warrants 
were issued.  The warrants provided for the purchase of one common 
share, each with an exercise price of $5.00 exercisable from September
13, 1995 through September 12, 1998.  During 1997, approximately 41,000
warrants were exercised resulting in proceeds of approximately $194,000,
net of commissions.  The Company has extended the exercise period of the
remaining approximately 959,000 outstanding warrants to March 12, 1999. 
The underwriter received warrants to purchase 100,000 shares of common 
stock and/or 100,000 warrants exercisable from September 13, 1996 
through September 12, 2000 at $6.60 per share of common stock and $.25 
per warrant with each warrant exercisable into common stock at $8.25 per
share.

<PAGE>  

                     TECHDYNE, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(Continued)
                            September 30, 1998
                                (Unaudited)

NOTE 9-Acquisition

     On July 31, 1997, the Company acquired Lytton, which manufactures 
and assembles printed circuit boards and other electronic products, for 
$2,500,000 cash, and issuance of 300,000 shares of the Company's common 
stock which have been registered for the seller.  The Company has 
guaranteed that the seller will realize a minimum of $2,400,000 from the
sale of these shares of common stock based on Lytton having achieved 
certain earnings objectives resulting in an increase of $400,000 in the 
valuation of $2,000,000 originally recorded for these securities. The 
total purchase price in excess of the fair value of net assets acquired 
which originally amounted to approximately $2,230,000 is being amortized
over 25 years.  Additional contingent consideration will be due if Lytton
achieves pre-defined sales levels. Additional consideration of approxi-
mately $154,000 based on sales levels was paid in April 1998 with the 
Stock Purchase Agreement providing for possible additional sales level 
incentives over a two year period.  As the contingencies are resolved, 
if additional consideration is due, the then current fair value of the 
consideration will be recorded as goodwill, which will be amortized over
the remainder of the initial 25 year life.  The acquisition was 
accounted for under the purchase method of accounting and, accordingly, 
the results of operations of Lytton have been included in the Company's 
statement of income since August 1, 1997.

     The terms of the Guaranty in the Stock Purchase Agreement were 
modified in June, 1998 by the Company and the seller ("Modified 
Guaranty").  The modified terms provide that the seller will sell an 
amount of common stock which will provide $1,300,000 gross proceeds, 
and the Company will guarantee that, to the extent that the seller has 
less than 150,000 shares of the Company's common stock remaining, the 
Company will issue additional shares to the seller.  In July 1998, the 
Company advanced the seller approximately $1,278,000 ("Advance") toward
the $1,300,000 from the sale of the Company's common in addition to the
seller having sold 5,000 shares of common stock in July, 1998.  Proceeds
from the sale of the Company's common stock by the seller, up to 195,000
shares, would repay the Advance and to the extent proceeds from the sale
of these shares were insufficient to pay the advance, the balance of the
Advance would be forgiven.  The Advance has been presented in the Stock-
holder's Equity section of the balance sheet.  The Company has also 
guaranteed the seller aggregate proceeds of no less than $1,100,000 
from the sale of the remaining common stock if sold on or prior to July 
31, 1999 ("Extended Guaranty").

     The following pro forma consolidated condensed financial informa-
tion reflects the Lytton acquisition as if it had occurred on January 
1, 1997.  The pro forma financial information does not purport to 
represent what the Company's actual results of operations would have 
been had the acquisition occurred as of January 1, 1997 and may not 
be indicative of operating results for any future periods.

                      SUMMARY PRO FORMA INFORMATION

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

                Total revenues                 $32,784,000
                                               ===========

                Net income                      $1,176,000
                                                ==========

                Earnings per share:
                   Basic                           $.25
                                                   ====
                   Diluted                         $.19
                                                   ====

<PAGE>

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

Forward-Looking Information

     The statements contained in this Quarterly Report on Form 10-Q that
are not historical are forward-looking statements within the meaning of 
Section 27A of the Securities Act of 1933 and Section 21E of the 
Securities Exchange Act of the 1934.  The Private Securities Litigation 
Reform Act of 1995 (the "Reform Act") contains certain safe harbors 
regarding forward-looking statements.  Certain of the forward-looking 
statements include management's expectations, intentions and beliefs 
with respect to the growth of the Company, the nature of the electronics
industry in which it is engaged as a manufacturer, the Company's 
business strategies and plans for future operations, its needs for 
capital expenditures, capital resources, liquidity and operating 
results, and similar expressions concerning matters that are not 
historical facts.  Such forward-looking statements are subject to 
risks and uncertainties that could cause actual results to materially 
differ from those expressed in the statements.  All forward-looking 
statements included in this document are based on information available 
to the Company on the date hereof, and the Company assumes no obligation
to update any such forward-looking statement.  The following cautionary 
statements are being made pursuant to the provisions of the Reform Act 
with the intention of the Company obtaining the benefits of the safe 
harbor provisions of the Reform Act.  Among the factors that could cause
actual results to differ materially are the factors detailed in the 
risks discussed in the "Risk Factors" section included in the Company's 
Registration Statements, as filed with the Securities and Exchange 
Commission ("Commission") Form SB-2 (effective September 13, 1995), and 
Forms S-3, effective November 11, 1996 and November 4, 1997, respectively,
and as amended or supplemented.

     The Company has continued to depend upon a relatively small number 
of customers for a significant percentage of its net revenue.  Signifi-
cant reductions in sales to any of the Company's large customers would 
have a material adverse effect on the Company's results of operations. 
The level and timing of orders placed by a customer vary due to, among 
other variables, attempts to balance inventory, design changes, demand 
for products, competition and general economic conditions.  Termination 
of manufacturing relationships or changes, reductions or delays in 
orders as had occurred in the past, could have an adverse effect on the 
Company's results of operations or financial condition.

     The industry segments served by the Company and the electronics 
industry as a whole, are subject to rapid technological change and 
product obsolescence.  Discontinuance or modification of products 
containing components manufactured by the Company could adversely affect
the Company's results of operations.  The electronics industry is also 
subject to economic cycles and has in the past experienced, and is likely
in the future to experience, recessionary periods.  A general recession 
in the electronics industry could have a material adverse effect on 
Techdyne's business, financial condition and results of operations.

     Due to the Company's utilization of just-in-time inventory tech-
niques, the timely availability of many components is dependent on the 
Company's ability to continuously develop accurate forecasts of 
customer volume requirements.  Component shortages could result in 
manufacturing and shipping delays or increased component prices which 
could have a material adverse effect on the Company's results of opera-
tions.  It is important for the Company, and there are significant risks
involved, to efficiently manage inventory, proper timing of expenditures
and allocations of physical and personnel resources in anticipation of 
future sales, the evaluation of economic conditions in the electronics 
industry and the mix of products, whether PCBs, wire harnesses, cables 
or turnkey products, for manufacture.

     In 1997 the Company commenced upgrading its operations software 
program by acquiring a new Visual Manufacturing software package.  It 
has been and will be integrating this new software system into all of 
its facilities.  Lytton and Techdyne (Scotland) anticipate installing 
the Visual Manufacturing software system into their operations sometime
in early 1999, most likely with more sophisticated modifications based 
upon the Company's experience with and internal technological advances 
to the system.

     It is anticipated that the Visual Manufacturing software will be 
fully integrated by 1999.  This system is anticipated to also resolve 
the "year 2000" issue which relates to computer information processing 
challenges associated with the upcoming millennium change facing public
and private corporations, businesses, and all levels of government to 
ensure continued proper operations, management and reporting.

     With respect to the year 2000 issue, the Company is communicating 
with its key vendors, customers and other third parties with whom its 
operations are essential to inquire of their assessment of their year 
2000 issue and actions being taken to resolve it.  To the extent such 
third parties are potentially adversely affected by the "year 2000" 

<PAGE>

Forward-Looking Information (continued)

issue, and such is not timely and properly resolved by such persons, 
such could disrupt the Company's operations to the extent of having 
to seek alternative vendors or customers that have resolved their year 
2000 issue.  No assurance can be given that the Company's new Visual 
Manufacturing software program, which to date has not been fully 
implemented, will be successful in its anticipated operational 
benefits or that the Company's key vendors and customers will have 
successful programs, and that any such failures, whether relating to 
the manufacturing operational efficiencies or the year 2000 issue, 
will not have a material adverse effect on the Company's business, 
results of operations or financial condition.

     Although management believes that the Company's operations utilize
the assembly and testing technologies and equipment currently required 
by the Company's customers, there can be no assurance that the Company's
process development efforts will be successful or that the emergence of 
new technologies, industry standards or customer requirements will not 
render the Company's technology, equipment or processes obsolete or 
noncompetitive.  In addition, to the extent that the Company determines
that new assembly and testing technologies and equipment are required 
to remain competitive, the acquisition and implementation of such tech-
nologies and equipment are likely to require significant capital 
investment.

     Management intends to continue the Company's expansion of its geo-
graphic and customer base within the United States by continuing to 
establish new manufacturing facilities and operations in areas to better
serve existing customers and to attract new OEMs, as well as direct 
acquisition of contract manufacturing businesses complimentary to the 
Company's operations.  The Company will be competing with much larger 
electronic manufacturing entities for such expansion opportunities.  
Further, any such transactions may result in potentially dilutive issu-
ance of equity securities, the incurrence of debt and amortization 
expenses related to goodwill and other intangible assets, and other 
costs and expenses, all of which could materially adversely affect the 
Company's financial results.  Such transactions also involve numerous 
business risks, including difficulties in successfully integrating 
acquired operations, technologies and products or formalizing antici-
pated synergies, and the diversion of management's attention from other
business concerns.  In the event that any such transaction does occur, 
there can be no assurance as to the beneficial effect on the Company's 
business and financial results.

     The Company's results of operations are also affected by other 
factors, including price competition, the level and timing of customer 
orders, fluctuations in material costs, the overhead efficiencies 
achieved by the Company in managing the costs of its operations, the 
Company's experience in manufacturing a particular product, the timing 
of expenditures in anticipation of increased orders, and selling, 
general and administrative expenses.  Accordingly, gross margins and 
operating income margins have generally improved during periods of 
high volume and high capacity utilization.  The Company generally has 
idle capacity and reduced operating margins during periods of lower-
volume production.

     Quality control is also essential to the Company's operations, 
since customers demand strict compliance with design and product speci-
fications.  Any adverse change in the Company's excellent quality and 
process controls could adversely affect its relationship with customers
and ultimately its revenues and profitability.

Results of Operations

     Consolidated revenues increased approximately $2,098,000 (23%) and 
$12,594,000 (57%) for the three months and nine months ended September 
30, 1998 compared to the preceding year. The increase was largely 
attributable to Lytton for which sales of $5,146,000 and $14,796,000 
were included for the three months and nine months ended September 30, 
1998 compared to $2,779,000 for the same periods of the prior year 
commencing with the Company's acquisition of Lytton on July 31, 1997. 
There was an overall increase in domestic sales of $2,558,000 (34%) and 
$13,461,000 (78%), including Lytton, and a decrease in European sales of
$563,000 (36%) and $964,000(20%) compared to the same periods of the 
preceding year.  Interest and other income increased by approximately 
$103,000 and $98,000 for the three months and nine months ended Sep-
tember 30, 1998 compared to the same periods of the preceding year.

     Sales of Techdyne (Scotland) to Compaq, accounted for approximately 
28% of sales for the nine months ended September 30, 1998 compared to 45%
for the same period of the preceding year. The bidding for Compaq orders 
has become more competitive which has continued to result in substantial 
reductions in Compaq sales and lower profit margins on remaining Compaq 
sales. Techdyne (Scotland) is pursuing new business development and has 
offset some of the lost Compaq business with sales to other customers; 
however there can be no assurance as to the success of such efforts.

<PAGE>  

Results of Operations (continued)

     Approximately 46% of the Company's consolidated sales for the nine 
months ended September 30, 1998 were made to four customers. Customers 
generating at least 10% of sales included Motorola (11%) and PMI Food 
Equipment Group (18%).  PMI Food Equipment Group is Lytton's major 
customer and represented 42% of Lytton's sales for the nine months 
ended September 30, 1998.  The loss of, or substantially reduced sales 
to any major customer, would have an adverse effect on the Company's 
operations if such sales are not replaced.

     Cost of goods sold as a percentage of sales remained relatively 
stable amounting to 87% for the three months and nine months ended 
September 30, 1998 compared to 88% and 86% for the same periods of
the preceding year reflecting changes in product mix and a diversi-
fication of the Company's customer base, including changes due to 
Lytton.

     Selling, general and administrative expenses increased $362,000 and 
$866,000 for the three months and nine months ended September 30, 1998 
compared to the same periods of the preceding year. The increase 
resulted principally from inclusion of the selling, general and 
administrative expenses of Lytton.

     Interest expense increased $30,000 and $209,000 for the three months
and nine months ended September 30, 1998 compared to the same periods of 
the preceding year. The increase reflects increases in interest of 
approximately $16,000 and $122,000 for the three months and nine months 
ended September 30, 1998 associated with financing the Lytton acquisition
and increases in interest on Lytton's debt and financing agreements of 
approximately $11,000 and $89,000 for these periods with such interest 
included since Lytton's acquisition on July 31, 1997.  The prime rate 
was 8.5% at September 30, 1998 and December 31, 1997.

Liquidity and Capital Resources

     The Company had working capital of $10,444,000 at September 30, 1998,
an increase of $897,000 (9%) during the first nine months of 1998. This 
increase includes changes in components of working capital resulting from
overall increased sales levels and reflects profitability for the period.

     Included in the changes in components of working capital was an 
increase of $269,000 in cash and cash equivalents, which included net 
cash provided by operating activities of $1,703,000, net cash used in 
investing activities of $1,942,000 (including $504,000 from additions 
to property and equipment and $154,000 from additional consideration 
regarding the Lytton acquisition and $1,278,000 advanced against the 
Lytton acquisition stock price guarantee) and net cash provided by 
financing activities of $490,000 including Lytton's net payments on its 
line of credit of $263,000, a drawdown of $600,000 on the Company's line
of credit, payments on long-term debt of $638,000 and a net increase in 
advances from the Parent of $789,000).

     The Company has a five-year $1,500,000 ("notional amount under 
interest rate swap agreement") commercial term loan with monthly 
principal payments of $25,000 plus interest at 8.60%, which had an 
outstanding balance of $1,275,000 at September 30, 1998 and $1,500,000
at December 31, 1997 and a $1,600,000 commercial revolving line of 
credit with interest at prime which was fully drawn down as of September
30, 1998 with an outstanding balance of $1,000,000 as of December 31, 
1997. The commercial term loan matures December 15, 2002 and the 
commercial line of credit, no longer a demand line, matures May 1, 
2000.  See Note 3 to "Notes to Consolidated Condensed Financial State
ments."

     The Company had obtained in 1996 two other term loans from its 
Florida bank.  One is a $712,500 term loan, which had a remaining 
principal balance of $644,000 at September 30, 1998 and $663,000 at 
December 31, 1997, and is secured by two buildings and land owned by 
the Parent.  The second term loan for $200,000, which had a remaining 
principal balance of $97,000 at September 30, 1998 and $127,000 at 
December 31, 1997, is secured by the Company's tangible personal prop-
erty, goods and equipment.  The Parent has guaranteed the revolving 
line and the three term loans and subordinated the intercompany indebt-
edness due it from the Company, provided that the Company may make 
payments to the Parent on this subordinated debt from additional equity
that is injected into the Company and from earnings, so long as the 
Company is otherwise in compliance with the loan agreements.  See Note 
3 to "Notes to Consolidated Condensed Financial Statements."

     The Company has outstanding borrowings of $145,000 from a local 
bank with interest payable monthly with the note, which was renewed 
during 1997, maturing April 2000.

<PAGE>  

Liquidity and Capital Resources (continued)

     Techdyne (Scotland) had a line of credit with a Scottish bank, with 
a U.S. dollar equivalency of approximately $330,000 at December 31, 1997
that was secured by assets of Techdyne (Scotland) and guaranteed by the 
Company.  This line of credit, which was not renewed, operated as an 
overdraft facility.  No amounts were drawn on this line of credit during 
1998 and no amounts were outstanding as of December 31, 1997.  In July, 
1994 Techdyne (Scotland) purchased the facility housing its operations 
for approximately $730,000, obtaining a 15-year mortgage which had a U.S.
dollar equivalency of approximately $565,000 at September 30, 1998 and 
$569,000 at December 31, 1997, based on exchange rates in effect at each
of these dates.  See Note 3 to "Notes to Consolidated Condensed Financial
Statements."

     On July 31, 1997, the Company acquired Lytton which is engaged in 
the manufacture and assembly of PCBs and other electronic products for 
commercial customers. This acquisition required $2,500,000 cash, funded 
by the modified bank line of credit, as well as 300,000 shares of the 
Company's common stock which had a fair value of approximately $1,031,000
based on the closing price of the Company's common stock on the date of 
acquisition.  The Company guaranteed $2,400,000 minimum proceeds from 
the sale of these securities based on Lytton having achieved certain 
earnings objectives. The Stock Purchase Agreement also provides for 
incentive consideration to be paid in cash based on specific sales 
levels of Lytton for each of three successive specified years, 
resulting in additional consideration of approximately $154,000 for the
first year of sales levels paid in April 1998.  Based upon the closing 
price of the Company's common stock on September 30, 1998, the shares 
issued in the Lytton acquisition had a fair value of $1,164,000 which 
could result in additional consideration of approximately $1,236,000 
payable in either cash or in approximately 319,000 shares of the 
Company's stock.  The Lytton acquisition has expanded the Company's 
customer base, broadened its product line, enhanced its manufacturing 
capabilities and provided a new geographic area to better serve the 
Company's existing customer base with opportunities to attract new 
customers. See Note 9 to "Notes to Consolidated Condensed Financial 
Statements."

     The Guaranty in the Stock Purchase Agreement was modified by the 
Company and the seller.  The Company advanced approximately $1,280,000 
to the seller.  In addition to the seller having sold 5,000 shares of the 
Company's common stock in July 1998, the seller is to sell sufficient 
shares to yield aggregate proceeds of no more than $1,300,000 toward the 
Modified Guaranty.  Upon the sale of seller's remaining shares up to 
195,000 shares, she will repay the advance.  The Company funded the 
advance to the seller largely through a drawdown of the previously 
unused $600,000 of its line of credit and advances from its Parent.  To 
the extent that seller does not have 150,000 shares remaining the Company
would make up the difference.  If the sale of shares is insufficient to
repay the advance, the balance would be forgiven.  Pursuant to the 
Extended Guaranty, sale of the remaining shares is guaranteed to yield 
no less that $1,100,000 if sold on or prior to July 1, 1999 or else the 
Company will make up the difference in either cash or additional common 
stock or a combination of both.  See Note 9 to "Notes to Consolidated 
Financial Statements."

     Lytton has a $1,500,000 revolving bank line of credit requiring 
monthly interest payments at prime plus 1/2% which matured August 1, 1998
and was renewed on the same terms and conditions.  There was an out-
standing balance on this loan of $286,000 as of September 30, 1998 with
$549,000 outstanding at December 31, 1997.  Lytton has a $1,000,000 
installment loan with the same bank maturing August 1, 2002, at an 
annual rate of 9% until July 1999, with monthly payments of $16,667 
plus interest, at which time Lytton will have an option to convert the 
note to a variable rate.  The balance outstanding on this loan was 
approximately $783,000 at September 30, 1998 and $933,000 as of December
31, 1997. Lytton also has a $500,000 equipment loan agreement with the 
same bank payable over four years through August 1, 2003 with interest at
prime plus 1%.  There was no outstanding balance on this loan as of 
September 30, 1998 or December 31, 1997.  All of these bank loans are 
secured by the business assets of Lytton.  See Note 3 to "Notes to 
Consolidated Condensed Financial Statements."

     Lytton conducts a portion of its operations with equipment acquired 
under equipment financing obligations which extend through July 1999 with
interest rates ranging from 8.55% to 10.09%.  The remaining principal 
balance under these financing obligations amounted to $231,000 at 
September 30, 1998 and $390,000 at December 31, 1997.  Lytton has an 
equipment loan at an annual interest rate of 5.5% maturing in April 2001 
with monthly payments of principal and interest of $4,298.  This loan has
a balance of approximately $167,000 at September 30, 1998 and $198,000 at
December 31, 1997 and is secured by equipment.  See Note 3 to "Notes to 
Consolidated Condensed Financial Statements."

<PAGE>  

Liquidity and Capital Resources (continued)

     The Company anticipates that current levels of working capital and
working capital from operations, including those of Lytton, will be 
adequate to successfully meet liquidity demands for at least the next 
twelve months, including the financing obligations incurred in the 
acquisition of Lytton.

Inflation

     Inflationary factors have not had a significant effect on the 
Company's operations.  The Company attempts to pass on increased costs
and expenses by increasing selling prices when and where possible and 
by developing different and improved products for its customers that 
can be sold at targeted profit margins.

<PAGE>

                       PART II -- OTHER INFORMATION
                       ----------------------------


Item 6. Exhibits and Reports on Form 8-K
------  --------------------------------

     (a)  Exhibits

          Part I Exhibits

               (27)  Financial Data Schedule (for SEC use only)

          Part II Exhibits

               None

     (b)  Reports on Form 8-K

          Two Form 8-K Current Reports were filed re: Item 5, "Other 
          Events" as follows:

               (i)   July 6, 1998 relating to (a) the modified guaranty 
                     to the selling shareholder of Lytton, Incorporated; 
                     and (b) exercise of options by certain officers and 
                     directors of the Company.

               (ii)  July 13, 1998 relating to extension of exercise 
                     period of publicly traded Warrants.

          No financial statements were filed with respect to the Form 8-K 
          Current Reports.

                                SIGNATURES

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


                                TECHDYNE, Inc.

                                  /s/ Daniel R. Ouzts

                                By----------------------------------
                                  DANIEL R. OUZTS, Vice President/
                                  Finance, Controller and Chief
                                  Financial Officer

Dated: November 13, 1998

<PAGE>

                              EXHIBIT INDEX

Exhibit
   No.
-------

Part I Exhibits

     (27)  Financial Data Schedule (for SEC use only)