U.S. 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 (Fee required)

                    For the fiscal year ended March 30, 2001
                                              --------------

[   ]   Transition report under Section 13 or 15(d) of the Securities Exchange
        Act of 1934 (No fee required)

         For the transition period from ______________ to ______________


                          Commission file number 0-5278


                                 IEH CORPORATION
                  ---------------------------------------------
                 (Name of Small Business Issuer in Its Charter)


          New York                                      13-5549348
--------------------------------                    -------------------
(State or Other Jurisdiction of                      (I.R.S. Employer
Incorporation or Organization)                       Identification No.)


140 58th Street, Suite 8E, Brooklyn, New York                11220
---------------------------------------------        -----------------------
(Address of Principal Executive Offices)                   (Zip Code)

                                 (718) 492-9673
                                ----------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:


                                    Name of Each Exchange on Which
    Title of Each Class                      Registered
    -------------------                      ----------
           None                                 None
----------------------------        ------------------------------
           None                                 None
----------------------------        ------------------------------

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


                          Common Stock, $.50 Par Value
--------------------------------------------------------------------------------
                                (Title of Class)

            Indicated by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 past 90 days.

                             Yes [ X ]     No  [   ]

<PAGE>



            Indicate by check mark if disclosure of delinquent filers in
response to Item 405 of Regulation S-B is not contained in this form, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

                             Yes [ X ]     No  [   ]


            The Registrant's revenues for its most recent fiscal year ended
March 30, 2001 were $4,593,840.

            On June 04, 2001, the aggregate market value of the voting stock of
Registrant held by non-affiliates of Registrant (consisting of Common Stock,
$.50 par value) computed by reference to the closing price at which the stock
was sold on such date ($.20) was approximately $206,836.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

            On June 23, 2001, there were 2,303,468 shares of Common Stock, $.50
par value, issued and outstanding.



<PAGE>

                                 IEH CORPORATION

                                     PART I

Item 1. Business

            IEH Corporation (hereinafter referred to as the "Company") was
organized under the laws of the State of New York on March 22, 1943 under the
name Industrial Heat Treating Company, Inc. On March 15, 1989, the Company
changed its name to its current name. The Company's executive offices and
manufacturing facilities are located at 140 58th Street, Suite 8E, Brooklyn, New
York 11220. The Company's telephone number is (718) 492-4448; its email address
is ieh@iehcorp.com.

            The Industry in Which the Company is Engaged

            The Company is engaged in the design, development, manufacture and
distribution of high performance electronic printed circuit connectors and
specialized interconnection devices. Electronic connectors and interconnection
devices are used to provide connections between electronic component assemblies.
The Company develops and manufactures connectors which are designed for a
variety of high technological and high performance applications. These
connectors are primarily utilized by those users who require highly efficient
and dense (the space between connection pins within the connector) electrical
connections.

            Printed circuit boards in computers contain the components necessary
to perform specific system sub-functions. These functions require connections
which relay information between electronic components and circuit boards,
enabling the commands that are input by the user to be performed. Electronic
connectors, in essence, enable circuit boards and electronic components to
communicate with each other, via direct electrical connection. Connectors also
are fundamental to modular construction of electronic assemblies enabling the
disconnection and removal of circuit boards and other electronic components for
testing, repair, and replacement.

            Connectors may be designed and manufactured in various shapes, sizes
and specifications to meet specific customer requirements and applications. High
performance connectors are designed to meet various density and pin count (the
number of individual connection points within each connector) criteria and to
provide low forces (the amount of pressure needed to make the connection) and
electrically efficient connections.

            Constant advances in the design of solid state devices have resulted
in significantly denser component packaging configurations on circuit boards.
Historically, a 5" X 8" circuit board may have consisted of thousands of
circuits with 10 to 30 lines of communication. Under those conditions, an
insertion force of one pound per contact for each of the communication lines
formed a common and acceptable standard in connection devices. As a result of
technological developments in recent years, the same 5" X 8" circuit board may
contain hundreds of thousands of circuits with hundreds of communication lines,
and an insertion force of one (1) ounce per contact as the standard in the
industry.

            The Company's Product Line

            The Company primarily manufactures printed circuit board connectors
that meet military or individual customer specifications. Certain of the
Company's manufacturing and sales involve the competitive bidding process
because of the military and/or government status of customers. The Company also
manufactures a line of standard universal connectors which have common usage in
the high technology and commercial electronics industries. The Company

                                        1

<PAGE>



serves both the commercial and military marketplace, manufacturing connectors
for avionics, electronics, satellite, radar systems, test equipment, medical
electronic and related industries.

            The Company is continuously redesigning and adapting its connectors
to keep pace with developments in the electronics industry, and has, for
example, developed connectors for use with flex-circuits which are used in
aerospace programs, computers, air-borne communication systems, testing systems
and other areas. The Company also provides engineering services to its customers
to assist in the development and design of connectors to meet specific product
requirements.

            The Company's electronic printed circuit connectors are sold to
original equipment manufacturers and distributors. The Company supplies its
connectors to manufacturers who principally produce and distribute finished
products as well as to distributors who resell the Company's products. Prior to
the decrease in military and government spending which occurred during the last
decade, the Company's sales were made primarily to the government, military
defense contractors and aerospace companies. However, since the decrease in
military and government spending, the Company has modified its product line so
as to concentrate its sales efforts to commercial electronics companies. The
Company still continues to market its connectors for use in government and
military computers; military defense equipment and information systems;
terrestrial, airborne and aerospace communications products; avionics and
guidance systems and instrumental and electronic testing equipment.

            With the continuing downturn in government contracts over the last
few years, the Company has been striving the past several years to develop
commercial accounts.

            Management has instituted several steps to increase productivity and
increase sales such as downsizing the labor force, implementing material changes
to make the Company's products more competitive and developing machinery and
equipment to increase production rates. Management believes these initiatives
have decreased costs and will continue to do so in the near future.

            For the fiscal year ended March 30, 2001, the Company's principal
customers included manufacturers of commercial electronics products, military
defense contractors and distributors who service these markets. Sales to the
commercial electronics and military defense markets comprised 26% and 73%,
respectively, of the Company's net sales for the year ended March 30, 2001.
Approximately 1% of the Company's net sales for the year March 30, 2001, were
made internationally.

            New Product Development

            The Company maintains a program to increase the efficiency and
performance of its connectors to meet anticipated and specific market needs.
Computer and electronics technology is continuously changing and requires the
redesign and development of connectors to adapt to these changes. Primarily, new
technology has dictated a decrease in the size of solid state electronic
components and smaller and denser high performance connectors. Management
believes that a key ingredient to the Company's success is its ability to assist
customers with a new design effort and prepare necessary drawing packages in a
short period of time. After the customer approves the design, prototypes are
built, approved by the customer and production is released. As an example, six
new connectors have been introduced to a major commercial account. The Company's
design effort on this product line began mid-year 1994 and was recently
completed. The new development process with this commercial client has led to
substantial repeat business in the past fiscal year. The Company now has the
ability to introduce this line to other commercial accounts.

                                        2

<PAGE>



            Several years ago, the Company designed and developed a form of
compliant termination connector, which is named, "COMTAC". This product, which
utilizes technology known as "Solderless Pin Technology", does not require the
soldering of connector pins, but instead utilizes a spring type locking system
in attaching the connector to the printed circuit board. This technology was
patented in the United States under patent No. 4,720,268 and assigned to the
Company on January 19, 1988. During the fiscal year ended March 30, 2001 sales
of the COMTAC connectors accounted for over 12% of the Company's total sales.
The Company has sent pre-production units for evaluation to certain customers
and potential customers. Although there can be no assurance of future sales, the
Company is optimistic that this new technology will lead to an increase in
sales.

            Marketing and Sales

            The market for connectors and interconnection devices, domestic and
worldwide, is highly fragmented as a result of the manufacture by many companies
of a multitude of different types and varieties of connectors. For example,
connectors include: printed circuit, rectangular I/O, circular, planar (IOC) RF
coax, IC socket and fiber optic. The Company has been servicing a niche in the
market by manufacturing HYPERTAC (TM) connectors and innovative Company-
designed printed circuit connectors such as the COMTAC connectors. Previously,
the Company was one of only three licensed manufacturers of the HYPERTAC (TM)
design in the United States. In the fiscal year 1996, the Company learned that
the other two licensees had merged. Moreover, the Company, based upon advice of
counsel, determined that the HYPERTAC technology was no longer protected by a
patent, and therefore was in the public domain. As a result, the Company
notified the licensor that it would no longer be bound by the terms of its
license agreement and the Company ceased making license payments. See Financial
Statements and Notes thereto. The Company has received a brief notice from the
licensor that it disputed the Company's interpretations and demanded return of
certain equipment. No legal proceedings have been instituted by the licensor and
the Company has not received any further notices. The Company does not
anticipate manufacturing other types of connectors in the immediate future. The
Company is continuously experimenting with innovative connection designs, which
may cause it to alter its marketing plans in the future if a market should
develop for any of its current or future innovative designs.

            The Company's products are marketed to original equipment
manufacturers directly and through distributors serving primarily the
government, military, aerospace and commercial electronics markets. The Company
is also involved in developing new connectors for specific uses which result
from changes in technology. This includes the COMTAC connectors. The Company
assists customers in the development and design of connectors for specific
customer applications. This service is marketed to customers who require the
development of connectors and interconnection devices specially designed to
accommodate the customers own products.

            The Company is primarily a manufacturer and its products are
essentially basic components of larger assemblies of finished goods.
Approximately 95% of the Company's net sales for the years ended March 30, 2001
and March 31, 2000, respectively, were made directly to manufacturers of
finished products with the balance of the Company's products sold to
distributors. Distributors often purchase connectors for customers who do not
require large quantities of connectors over a short period of time but rather
require small allotments of connectors over an extended period of time.

            One (1) of the Company's customers accounted for 19% and 25% of the
Company's net sales for the years ended March 30, 2001 and March 31, 2000,
respectively.

            The Company currently employs 16 independent sales representatives
to market its products in all regions in the United States. These independent
sales representatives also

                                        3

<PAGE>



promote the product lines of other electronics manufacturers; however, they do
not promote the product lines of competitors which compete directly with the
Company's products. These sales representatives accounted for approximately 94%
of Company sales (with the balance of Company sales being generated via direct
customer contact) for the year ended March 30, 2001.

            International sales accounted for less than 1% of sales for the
years ended March 30, 2001 and March 31, 2000.

            Backlog of Orders/Capital Requirements

            The backlog of orders for the Company's products amounted to
approximately $1,500,000 at March 30, 2001, as compared to $1,700,000 at March
31, 2000. A significant portion of these orders are subject to cancellation or
postponement of delivery dates and, therefore, no assurance can be given that
actual sales will result from these orders. The estimated funds required to
manufacture the current backlog of orders is estimated at $580,000. The Company
does not foresee any problems which would prevent it from fulfilling its orders.

            Competition

            The design, development, manufacture and distribution of electrical
connectors and interconnection devices is a highly competitive field. The
Company principally competes with companies who produce high performance
connectors in printed circuits and wireboards for high technology application.
The Company competes with respect to their abilities to adapt certain
technologies to meet specific product applications; in producing connectors
cost-effectively; and in production capabilities. In addition, there are many
companies who offer connectors with designs similar to those utilized by the
Company and are direct competitors of the Company.

            The primary basis upon which the Company competes is product
performance and production capabilities. The Company usually receives job orders
after submitting bids pursuant to customer-issued specifications. The Company
also offers engineering services to its customers in designing and developing
connectors for specialized products and specific customer applications. This
enables the Company to receive a competitive advantage over those companies who
basically manufacture connectors based solely or primarily on cataloged
specifications. Many of the Company's competitors have greater financial
resources, market penetration and experience than the Company and no assurances
can be given that the Company will be able to compete effectively with these
companies in the future.

            Suppliers of Raw Materials and Component Parts

            The Company utilizes a variety of raw materials and manufactured
component parts which it purchases from various suppliers. These materials and
components are available from numerous sources and the Company does not believe
that it will have a problem obtaining such materials in the future. However, any
delay in the Company's ability to obtain necessary raw materials and component
parts may affect its ability to meet customer production needs. In anticipation
of such delays, the Company carries an inventory of raw materials and component
parts to avoid shortages and to insure continued production.

            Engineering/Research & Development

            The Company provides personalized engineering services to its
customers by designing connectors for specific customer applications. The
employment of electromechanical engineers is the anticipated cornerstone of the
Company's future growth. The Company maintains a testing laboratory where its
engineers experiment with new connector designs based on changes in

                                        4

<PAGE>



technology and in an attempt to create innovative, more efficient connector
designs.

            The Company expended $32,800 and $69,600 for the years ended March
30, 2001 and March 31, 2000, respectively, on Company sponsored research and
development activities relating to the development of new designs, techniques
and the improvement of existing designs. In addition, the Company received no
revenues for the year ended March 30, 2001 and $96,000 for the year ended March
31, 2000, respectively, pursuant to customer sponsored research activities.

            Employees

            The Company presently employs approximately 70 people, three (3) of
whom are executive officers; three (3) are engaged in management activities;
four (4) provide general and administrative services and approximately 60 are
employed in manufacturing and testing activities. The employees engaged in
manufacturing and testing activities are covered by a collective bargaining
agreement with the United Auto Workers of America, Local 259 (the "Union") which
expires on March 31, 2002. The Company believes that it has a good relationship
with its employees and the Union.

            Patents and Licenses

            Electrical connectors and interconnection devices are usually the
subject of standard designs; therefore, only innovations of standards designs or
the discovery of a new form of connector are patentable. The Company is
continuously attempting to develop new forms of connectors or adaptations of
current connector designs in an attempt to increase performance and decrease per
unit costs. The Company has developed and designed the COMTAC connector which
was patented on January 19, 1988, at which time the patent was assigned to the
Company.

            Governmental Regulations

            The Company is subject to federal regulations under the Occupational
Safety and Health Act ("OSHA") and the Defense Electrical Supply Command
("DESC"). OSHA provides federal guidelines and specifications to companies in
order to insure the health and safety of employees. DESC oversees the quality
and specifications of products and components manufactured and sold to the
government and the defense industry. Although DESC continuously requires
suppliers to meet changing specifications, the Company has not encountered any
significant problems meeting such specifications and its products have, in the
past, been approved. The Company is unaware of any changes in the government's
regulations which are expected to materially affect the Company's business.

Item 2.  Properties

            On December 1, 1998 the Company amended its lease on its premises by
surrendering a portion of its rented premises back to the landlord. Accordingly,
the base monthly rent was reduced to $ 10,397 or $121,765 per annum through
December 1999 and to $9,397 or $112,765 per annum through the conclusion of the
lease which ends August 23, 2001.



                                       5

<PAGE>



            The Company is obligated under this lease through August 23, 2001,
at minimum annual rentals as follows:


Fiscal year ending:

            2002                $46,985
                                =======

            The Company leases approximately 20,400 feet of space, of which it
estimates; 6,000 square feet are used as executive, sales and administrative
offices, 14,400 square feet are used for its manufacturing and plating.

            The rental expense for the year ended March 30, 2001 for this lease
was $109,559. In addition to the base rent, the Company pays real estate taxes,
insurance premiums and utility charges relating to the use of the premises. The
Company considers its present facilities to be adequate for its present and
anticipated future needs. See "Legal Proceedings" for certain matters involving
the Company's operating facility and offices.

            The Company has an option to renew its lease for an additional ten
years. The terms of the renewal are presently being negotiated by the Company
and its landlord, Apple Industrial Development Corp.

Item 3.   Legal Proceedings

            The Company is not a party to or aware of any pending or threatened
legal proceedings which would result in any material adverse effect on its
operations or its financial condition.

            As previously reported, the Company reached an agreement with its
landlord, Apple Industrial Development Corp. to settle certain matters related
to the lease of its principal offices located in Brooklyn, New York, including a
lawsuit brought by the landlord against the Company. The landlord claimed that
IEH had not paid the proper rent due under its lease for the period from
September 1, 1992 through April 1997. The landlord claimed damages of $236,000
plus interest of approximately $41,000.

            The Company determined it was in its best interest to settle the
lawsuit. The parties agreed to a settlement, effective as of May, 1997 whereby
the Company agreed to a repayment schedule for the amount due payable with
interest at 8.25% per year. The monthly installments equal approximately $5,790
per month. The settlement provides for the entity, following notice and a cure
period, of a default judgement by the landlord in the event the Company fails to
pay amounts due under the lease and the settlement in a timely fashion.

            Proposed Settlement with PBGC

            On June 30, 1995, the Company applied to the Pension Benefit
Guaranty Corporation ("PBGC") to have the PBGC assume all of the Company's
responsibilities and liabilities under its Salaried Pension Plan. On April 26,
1996, the PBGC determined that the Salaried Pension Plan did not have sufficient
assets available to pay benefits which were and are currently due under the
terms of the Plan.

            The PBGC further determined that pursuant to the provisions of the
Employment Retirement Income Security Act of 1974, as amended ("ERISA") that the
Plan must be terminated in order to protect the interests of the Plan's
participants. Accordingly, the PBGC proceeded pursuant to ERISA to have the Plan
terminated and the PBGC appointed as statutory trustee, and to have July 31,
1995 established as the Plan's termination date. In August 1998, the

                                        6

<PAGE>



Company was notified by the PBGC that the Company is liable to the PBGC for the
following amounts as of September 1, 1998:

            $ 456,418 representing the amount of unfunded benefit liabilities of
                      the Plan
            $ 242,097 representing funding liability
            $   2,230 representing the premium liability

Since 1998 the Company has been negotiating with the PBGC on the matter

            The Company and the PBGC have tentatively agreed to the terms of a
settlement of the matter. Under the proposed agreement, the Company and PBGC
agreed on a total sum of $244,000. Assuming the settlement is consummated, the
Company has agreed to make payments as follows:

            September 1, 2003 to August 1, 2004           $2,000 per month
            September 1, 2004 to August 1, 2006           $3,000 per month
            September 1, 2006 to August 1, 2007           $4,000 per month

            In addition, on January1, 2004, May 1, 2004 , May 1, 2005 and
January 1, 2006, the Company will make balloon payments of $25,000.

            The Company will also grant PBGC a lien on the Company's machinery
and equipment, subject to the preexisting liens in favor of UDC.


Item 4.   Submission of Matters to Vote of Security Holders

            No matters were submitted to shareholders during the fourth quarter
for the fiscal year ended March 30, 2001.



                                        7

<PAGE>

                                     PART II

Item 5.   Market for Common Equity and Related Stockholder Matters

            Principal Market

            The Common Stock of the Registrant (the "Common Stock") is traded in
the Over-The- Counter Market and is quoted on the National Association of
Securities Dealers Automated Quotation ("NASDAQ") System Bulletin Board under
the symbol "IEHC.OB"). On January 11, 1993, the Company's Common Stock was
deleted from listing on the NASDAQ SmallCap Market System because of the
Company's failure to maintain the minimum asset and shareholders equity
requirements.

            Market Information

            The range of high and low bid prices for the Company's Common Stock,
for the periods indicated as set forth below. The Company's Common Stock is
quoted over the Electronic Bulletin Board (OTCBB). Set forth below is a table
indicating the high and low prices of the Common Stock during the periods
indicated.


             Year                        High Bid       Low Bid

Fiscal Year ended March 30, 2001

1st Quarter                               $.6875        $.1562
2nd Quarter                                 .875           .25
3rd Quarter                                .2812         .0938
4th Quarter                                .2031         .1094

Fiscal Year ended March 31, 2000

1st Quarter                               $.3125        $.2500
2nd Quarter                                .3438         .2500
3rd Quarter                                .2500         .1250
4th Quarter                                .6875         .1250


            The above quotations, as reported, represent prices between dealers
and do not include retail mark-ups, mark-downs or commissions. Such quotations
do not necessarily represent actual transactions. There is only sporadic trading
in the Company's Common Stock.

            On June 04, 2001, the last date of a trade prior to the filing of
this Form 10KSB, the closing sale price for the Common Stock was $.20.

            The Company has not paid any cash dividends on its Common Stock
during the last five (5) fiscal years. At present, the Company does not
anticipate issuing any cash dividends on its Common Stock in the foreseeable
future by reason of its contemplated future financial requirements and business
plans. The Company will retain earnings, to the extent that there are any, to
finance the development of its business.


                                        8

<PAGE>



            Approximated Number of Equity Security Holders

            The number of record holders of the Company's Common Stock as of
June 23, 2001 was approximately 1,208. Such number of record owners was
determined from the Company's stockholder records, and does not include the
beneficial owners of the Company's Common Stock whose shares are held in the
names of various security holders, dealers and clearing agencies.




                                        9

<PAGE>



Item 6. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Results of Operations

            The following table sets forth for the periods indicated,
percentages for certain items reflected in the financial data as such items bear
to the revenues of the Company:



Relationship to Total Revenues
                                                 March 30,          March 31,
                                                   2001               2000
                                                  ------             ------


Operating Revenues (in thousands)                $   4,594          $  4,487
                                                 ---------          --------

Operating Expenses:
  (as a percentage of Operating Revenues)
  Costs of Products Sold                             71.0%             71.8%
  Selling, General and Administrative                19.0%             17.2%
  Interest Expense                                    3.4%              3.1%
  Depreciation and amortization                       6.0%              6.7%
                                                 ---------          --------

TOTAL COSTS AND EXPENSES                             99.4%             98.8%
                                                  --------          --------

  Operating Income (loss)                              .6%              1.2%
  Other Income                                         .1%                0%
                                                 ---------          --------
  Income (loss) before Income Taxes                    .7%              1.2%
  Income Taxes                                       (.1%)             (.2%)
                                                 ---------          --------
  Net Income (loss)                                    .6%              1.0%
                                                 =========          ========


Year End Results: March 30, 2001 vs. March 31, 2000

            Operating revenues for the year ended March 30, 2001 amounted to
$4,593,840 reflecting a 2.4% increase versus prior year 2000 revenues of
$4,486,573. The increase in revenues is a direct result of the Company's
continuing efforts to redirect its sales efforts to the commercial and
international electronic markets and away from the governmental and military
procurement sector.

            The Company is primarily a manufacturer and its products are
essentially basic components of larger assemblies of finished goods.
Approximately 95% of the Company's net sales for the fiscal year ended March 30,
2001 and March 31, 2000 respectively were made directly to manufacturers of
finished products with the balance of the Company's products sold to
distributors. Distributors often purchase connectors for customers who do not
require large quantities of connectors over a short period of time but rather
require small allotments of connectors over an extended period of time.

            For the fiscal year ended March 30, 2001, one of the Company's
customers accounted for approximately 19% of total sales. The same customer
accounted for approximately 25% of sales in the fiscal year ended March 31,
2000.

The Company currently employs 16 independent sales representatives to market its

                                       10

<PAGE>



products in all regions of the United States. These sales representatives
accounted for approximately 94% of the Company's sales, with the balance of
sales being generated by direct customer contact.

            For the fiscal year ended March 30, 2001, the Company's principal
customers included manufacturers of commercial electronic products, military
defense contractors and distributors who service these markets. Sales to the
commercial electronic and military defense markets comprised 26% and 73% of the
Company's net sales for the years ended March 30, 2001 and March 31, 2000
respectively. Approximately 1% of net sales were made to international
customers.

            Cost of products sold amounted to $3,261,193 for the fiscal year
ended March 30, 2001, or 71.0% of operating revenues. This reflected a $41,395
or 1.3% increase in the cost of products sold from $3,219,798 or 71.8% of
operating revenues for the fiscal year ended March 31, 2000. This marginal
increase is due primarily to increased labor costs in the current fiscal year.

            Selling, general and administrative expenses were $871,844 and
$772,715 or 19.0% and 17.2% of operating revenues for the fiscal years ended
March 30, 2001 and March 31, 2000, respectively. This category of expense
increased by $99,129 or 13% from the prior year. The increase can be attributed
to an increase in sales commissions paid in the current fiscal year.

            Interest expense was $154,874 for the fiscal year ended March 30,
2001 or 3.4% of operating revenues. For the fiscal year ended March 31, 2000,
interest expense was $141,159 or 3.1% of operating revenues. The increase of
$13,715 or 9.7% reflects additional equipment financing costs incurred during
the current fiscal year.

            Depreciation and amortization of $275,737 or 6.0% of operating
revenues was reported for the fiscal year ended March 30, 2001. This reflects a
decrease of $22,821 or 7.6% from the prior year ended March 31, 2000 of $298,558
or 6.7% of operating revenues. The decrease is the result of several fixed
assets being fully depreciated by the beginning of the current fiscal year.

            The Company reported a net income of $26,826 for the year ended
March 30, 2001 representing basic earnings of $.012 per share as compared to a
net income of $43,854 or $.019 per share for the year ended March 31, 2000. The
net income decrease for the current year can, in part, be attributed to an
increase in selling, general and administrative expenses.

Year End Results: March 31, 2000 Compared to April 2, 1999

            Operating revenues for the year ended March 31, 2000 amounted to
$4,486,573 reflecting a 3.5% increase versus prior year 1999 revenues of
$4,334,477. The increase in revenues is a direct result of the Company's
continuing efforts to redirect its sales efforts to the commercial and
international electronic markets and away from the governmental and military
procurement sector.

            Cost of products sold amounted to $3,219,798 for the fiscal year
ended March 31, 2000, or 71.8% of operating revenues. This reflected a
negligible increase in the cost of products sold from $3,214,927 or 74.2% of
operating revenues for the fiscal year ended April 2, 1999. This marginal
increase is primarily due to management's efforts to control manufacturing
costs.

            Selling, general and administrative expenses were $772,715 and
$847,358 or 17.2% and 19.5% of operating revenues for the fiscal years ended
March 31, 2000 and April 2, 1999, respectively. This category of expense
decreased 8.8% from the prior year. The decrease can be

                                       11

<PAGE>



primarily attributed to management's continuing efforts to control expenses.

            Interest expense was $141,159 for the fiscal year ended March 31,
2000 or 3.1% of operating revenues. For the fiscal year ended April 2, 1999,
interest expense was $137,766 or 3.2% of operating revenues. The increase of
2.5% reflects additional equipment loans obtained during the year.

            Depreciation and amortization of $298,558 or 6.7% of operating
revenues was reported for the fiscal year ended March 31, 2000. This reflects an
increase of 9.4 % from the prior year ended April 2, 1999 of $273,029 or 6.3% of
operating revenues. The increase is a result of additional acquisitions of new
equipment and computers.

            The Company reported a net income of $43,854 for the year ended
March 31, 2000 representing basic earnings of $.019 per share as compared to a
net loss of $152,824 or $.066 per share for the year ended April 2, 1999. The
net income increase for the current year can, in part, be attributed to an
increase in revenues from the commercial and international sectors, as well as
management's efforts to better control costs and expenses.

Liquidity and Capital Resources

            The Company reported working capital deficit of $92,356 as of March
30, 2001 compared to a working capital deficit of $148,222. The increase in
working capital of $55,866 was attributable to the following items:


Net income (loss)  (excluding depreciation and amortization)         302,563
Capital expenditures                                                (209,499)
Other transactions                                                   (37,198)


            As a result of the above, the current ratio (current assets to
current liabilities) was .95 to 1 at March 30, 2001 as compared to .94 to 1 at
March 31, 2000. Current liabilities at March 30, 2001 were $1,857,344 compared
to $1,917,282 at March 31, 2000. This increase in the current ratio is primarily
reflective of an increase in inventory as well as a decrease in accounts
payable.

            The Company reported $209,499 in capital expenditures in fiscal 2001
and reported depreciation of $275,737 for the year ended March 30, 2001.

            The net income of $26,826 for the year ended March 30, 2001
increased stockholders' equity to $572,872 as compared to stockholders' equity
of $546,046 at March 31, 2000.

            The Company has an accounts receivable financing agreement with a
factor which bears interest at 2.5% above prime with a maximum of 12% per annum.
At March 30, 2001 the amount outstanding and the factor was $759,937 as compared
to $689,775 at March 31, 2000.

            On July 22, 1992, the Company obtained a loan of $435,000 from the
New York State Urban Development Corporation ("UDC"), collateralized by
machinery and equipment. The loan is payable over ten years, with interest rates
progressively increasing from 4% to 8% per annum. The balance remaining at March
30, 2001 was $83,130.


                                       12

<PAGE>



            Aggregate future principal payments are as follows:


Fiscal Year Ending March:

            2002                       $   58,405
            2003                           24,725
                                       ----------
                                       $   83,130
                                       ==========

            In April 1997, the Company was informed by the UDC that the loan was
sold and conveyed to WAMCO XXIV, Ltd. All the terms and conditions of the loan
remained in effect.

            As of March 30, 2001, the Company had failed to meet one of the
financial covenants of the loan agreement; namely that the "Company shall be
obligated to maintain a tangible net worth of not less than $1,300,000 and the
Company shall be obligated to maintain a ratio of current assets to current
liabilities of 1.1 to 1.0.

            The Company reported tangible net worth of $572,872. The ratio of
current assets to current liabilities was .95 to 1.0.

            The Company has applied for additional waivers of this covenant.
Neither the UDC or WAMCO XXIV has acted on these requests. There are no
assurances that the Company will receive any additional waivers of this
covenant. Should the Company not receive any additional waivers, then it will be
deemed to be in default of this loan obligation and the loan plus interest will
become due and payable, accordingly the entire balance has been classified as a
current liability in the accompanying balance sheet.

            The Company has a collective bargaining multi-employer pension plan
with the United Auto Workers of America, Local 259. Contributions are made in
accordance with a negotiated labor contract and are based on the number of
covered employees employed per month. With the passage of the Multi-Employer
Pension Plan Amendments Act of 1990 ("The Act"), the Company may become subject
to liabilities in excess of contributions made under the collective bargaining
agreement. Generally, these liabilities are contingent upon the termination,
withdrawal, or partial withdrawal from the Plan. The Company has not taken any
action to terminate, withdraw or partially withdraw from the Plan nor does it
intend to do so in the future. Under the Act, liabilities would be based upon
the Company's proportional share of the Plan's unfunded vested benefits which is
currently not available. The amount of accumulated benefits and net assets of
such Plan also is not currently available to the Company. The total
contributions charged to operations under this pension plan were $35,707 for the
year ended March 30, 2001 and $32,120 for the year ended March 31, 2000.

            As of March 31, 2001, the Company reported arrears with respect to
its contributions to the Union's health and welfare and pension plans. The
amount due the health and welfare plan was $102,689.

            The total amount due of $102,689 is reported on the accompanying
balance sheet in two components; $96,000 reported as a current liability and
$6,689 as a long-term liability.

            In December 1993, the Company and Local 259 entered into a verbal
agreement whereby the Company would satisfy this debt by the following payment
schedule:

            The sum of $8,000 will be paid by the Company each month in
satisfaction of the current arrears until this total debt has been paid. Under
this agreement, the projected payment schedule

                                       13

<PAGE>



for arrears will satisfy the total debt in 13 months. Additionally, both parties
have agreed that current obligatory funding for the Pension Plan will be made on
a timely current basis.

            On June 30, 1995, the Company applied to the Pension Benefit
Guaranty Corporation ("PBGC") to have the PBGC assume all of the Company's
responsibilities and liabilities under its Salaried Pension Plan. On April 26,
1996, the PBGC determined that the Salaried Pension Plan did not have sufficient
assets available to pay benefits which were and are currently due under the
terms of the Plan. The PBGC further determined that pursuant to the provisions
of the Employment Retirement Income Security Act of 1974, as amended ("ERISA")
that the Plan must be terminated in order to protect the interests of the Plan's
participants. Accordingly, the PBGC proceeded pursuant to ERISA to have the Plan
terminated and the PBGC appointed as statutory trustee, and to have July 31,
1995 established as the Plan's termination date.

            At March 30, 2001 and March 31, 2000, $21,540 of the pension
liability is included in other current liabilities, with the balance of $516,966
shown as a long-term liability.

            On those dates, the long-term portion includes $226,041, which
represents the recognition of the additional minimum liability to comply with
the requirements of Statement of Financial Accounting Standards No. 87.

            The Company and the PBGC have tentatively agreed to the terms of a
settlement of the matter. Under the proposed agreement, the Company and PBGC
agreed on a total sum of $244,000. Assuming the settlement is consummated, the
Company has agreed to make payments as follows:

            September 1, 2003 to August 1, 2004             $2,000 per month
            September 1, 2004 to August 1, 2006             $3,000 per month
            September 1, 2006 to August 1, 2007             $4,000 per month

            In addition, on January1, 2004, May 1, 2004 , May 1, 2005 and
January 1, 2006, the Company will make balloon payments of $25,000. The Company
will also grant PBGC a lien on the Company's machinery and equipment, subject to
the preexisting liens in favor of UDC.

Effects of Inflation

            The Company does not view the effects of inflation to have a
material effect upon its business. Increases in costs of raw materials and labor
costs have been offset by increases in the price of the Company's products, as
well as reductions in costs of production, reflecting management's efforts in
this area. While the Company has in the past increased its prices to customers,
it has maintained its relatively competitive price position. However,
significant decreases in government, military subcontractor spending has
provided excess production capacity in the industry which in turn has tightened
pricing margins.

Item 7. Financial Statements

            See Index to Financial Statements attached hereto.

Item 8. Changes in and Disagreements with Accountants on Accounting Financial
        Disclosure

            The Company had no disagreements with its accountants during the
last two fiscal years.


                                       14

<PAGE>


Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16 (a) of the Exchange Act

             The executive officers and directors of the Company are as follows:


           Name           Age                       Office

      Michael Offerman    60    Chairman of the Board of Directors and President
      Robert Knoth        59    Secretary and Treasurer
      Murray Sennet       78    Director
      Allen Gottlieb      60    Director
      Robert Pittman      76    Director
      Joan Prideaux       68    Vice-President - Sales and Marketing


            All directors serve for a term of two years and until their
successors are duly elected. All officers serve at the discretion of the Board
of Directors.

Executive Officers and Directors

            Michael Offerman has been a member of the Board of Directors since
1973. In May, 1987, Mr. Offerman was elected President of the Company and has
held that position since that date. Prior to his becoming President, Mr.
Offerman served as Executive Vice-President of the Company.

            Robert Knoth joined the Company as Controller in January, 1990 and
was elected treasurer of the Company in March, 1990. Mr. Knoth was elected as
Secretary of the Company in September 1992 and Mr. Knoth has held these
positions since said dates. From 1986 to January, 1990, Mr. Knoth was employed
as controller by G&R Preuss, Inc., a company engaged in the business of
manufacturing truck bodies and accessories.

            Murray Sennet has been a member of the Company's  Board of Directors
since 1970. Mr. Sennet was the Secretary and the Treasurer of the Company at the
time of his retirement in April, 1986.

            Allen Gottlieb has been a member of the Company's Board of Directors
since 1992. Mr. Gottlieb has been an attorney in private  practice for over five
(5) years.

            Robert  Pittman  has been a member of the Board of  Directors  since
1987.  Mr.  Pittman  retired  in  October  1992,  at which  time he had held the
position of Vice-President of Engineering and Secretary of the Company.

            Joan Prideaux joined the Company in July, 1995 as National Sales
Manager. Prior to such time Ms. Prideaux was employed as an account executive of
Viking Connectors for the previous five years.

Significant Employees

            Thomas Hunt is the director of Quality Control, a position he has
held since October, 1992. Mr. Hunt joined the Company in 1987 as the laboratory
director and senior inspector and held said positions until his promotion in
October, 1992.


                                       15

<PAGE>



            Mark Iskin is the Director of Purchasing, a position he has held
since September 2000. Prior to joining the Company, Mr. Iskin worked as a
materials and purchasing specialist in manufacturing and distribution companies.
In his last position with an industrial distributor, Mr. Iskin was responsible
for purchasing and managing vendors for the cutting tool section of the catalog.
In addition he participated in setting up and developing the company's
forecasting/planning software related to that department procedures.

            Jeff (Yefim) Berenstein is the quality control manager, a position
he started on April 16, 2001. Prior to joining the Company Mr. Berenstein worked
as a quality assurance specialist for various manufacturing companies where he
was responsible for the implementation of quality systems - ISI-9000,
Mil-I-45208A writing quality manuals, quality procedures, work instructions,
design special gigs, testing equipment to improve quality of the manufacturing
products, maintaining and supervising calibration and calibration recall
systems.

Certain Reports

            Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers and persons who own, directly or indirectly,
more than 10% of a registered class of the Corporation's equity securities, to
file with the Securities and Exchange Commission ("SEC") reports of ownership
and reports of changes in ownership of Common Stock of the Corporation.

            Officers, directors and greater than 10% shareholders are required
to furnish the Company with copies of all Section 16(a) reports that they file.
Based solely on review of the copies of such reports received by the Company,
the Company believes that filing requirements applicable to officers, directors
and 10% shareholders were complied with during the fiscal year.


Item 10.                Executive Compensation

            The following table sets forth below the summary compensation paid
or accrued by the Corporation during the fiscal years ended March 30, 2001,
March 31, 2000 and April 2, 1999 for the Corporation's Chief Executive Officer:

<TABLE>
<CAPTION>

                                                                           Other Annual
 Name and Principal Position          Year           Salary      Bonus     Compensation

Michael Offerman, Chief
<S>                               <C>               <C>            <C>          <C>
Executive officer, President(1)   March 30, 2001    $ 91,431       -            0
                                  March 31, 2000      77,788       -            0
                                  April 2, 1999       97,961       -            0
</TABLE>


            During the years ended March 30, 2001, March 31, 2000 and April 2,
1999, the Corporation provided automobile allowances to Mr. Offerman. This does
not include the aggregate incremental cost to the Corporation of such automobile
or automobile allowances. The Corporation is unable to determine without
unreasonable effort and expense the specific amount of such benefit, however,
the Corporation has concluded that the aggregate amounts of such personal
benefit for Mr. Offerman does not exceed $25,000 or 10% of the compensation
reported as total salary and bonus reported. Effective January 1, 1995, Mr.
Offerman entered into an employment agreement with the Company to increase his
salary to $100,000 per annum. The employment agreement has expired. The Company
and Mr. Offerman agreed that his salary shall remain at the rate of $91,431 for
fiscal 2001.


                                       16

<PAGE>



            No other officer of the Corporation received compensation (salary
and bonus) in excess of $100,000 during the fiscal years ended March 30, 2001 or
March 31, 2000.

            There are no employment agreements currently in effect between the
Company and its executive officers.

Pension/Benefit Incentive Plan

            In 1964, the Corporation's Shareholders and Board of Directors
adopted a contributory pension plan (the "Salaried Pension Plan") effective
April 1, 1964, for salaried employees of the Corporation. The Salaried Pension
Plan as revised on April 1, 1987, provides for retirement benefits for qualified
employees upon or prior to retirement.

            For early retirement, employees are eligible to receive a portion of
their retirement benefits, starting 10 years prior to the employees anticipated
normal retirement age (age 65), if the employee has completed 15 years of
service to the Corporation. The employee is eligible to receive reduced
retirement benefits based on an actuarial table for a period not exceeding ten
(10) years of his lifetime. In no event would benefits exceed $12,000 per year.

            For normal retirement at the age of sixty-five (65) the employee is
entitled to receive full retirement benefits for a period not exceeding ten (10)
years of his lifetime. If the employee should die prior to the ten-year period,
his beneficiaries will continue to receive the full benefit for the remainder of
the ten-year term. In no event will benefits exceed $12,000 per year.

            If payment is made on the "joint and survivor basis" as elected by
the employee, benefits will be provided to both the employee and spouse on a
reduced basis over the life of both the employee and his spouse. If the employee
should die prior to the guaranteed ten year period, the spouse will receive the
employee benefit for the remainder of the term, after which, the spouse will
received the reduced spousal benefit for the life of the spouse. In no event
will the benefits pursuant to the joint and survivor basis exceed $12,000 per
year.

            On June 30, 1995, the Company applied to the Pension Benefit
Guaranty Corporation ("PBGC") to have the PBGC assume all of the Company's
responsibilities and liabilities under its Salaried Pension Plan. On April 26,
1996, the PBGC determined that the Salaried Pension Plan did not have sufficient
assets available to pay benefits which were and are currently due under the
terms of the Plan. The PBGC further determined that pursuant to the provisions
of the Employment Retirement Income Security Act of 1974, as amended ("ERISA"),
that the Plan must be terminated in order to protect the interests of the Plan's
participants. Accordingly, the PBGC proceeded pursuant to ERISA to have the Plan
terminated and the PBGC appointed as statutory trustee, and to have July 31,
1995 established as the Plan's termination date.

            At March 30, 2001 and March 31, 2000, $21,540 of the pension
liability is included in other current liabilities, with the balance of $516,966
shown as a long-term liability. On those dates, the long-term portion includes
$226,041, which represents the recognition of the additional minimum liability
to comply with the requirements of Statement of Financial Accounting Standards
No. 87.

            In August 1998, the Company was notified by the PBGC that the
Company is liable to the PBGC for the following amounts as of September 1, 1998:

            $ 456,418 representing the amount of unfunded benefit liabilities of
                      the Plan
            $ 242,097 representing funding liability


                                       17

<PAGE>


            The total amount claimed by the PBGC amounted to $698,515.

            The Company and the PBGC have tentatively agreed to the terms of a
settlement of the matter. Under the proposed agreement, the Company and PBGC
agreed on a total sum of $244,000. Assuming the settlement is consummated, the
Company has agreed to make payments as follows:

            September 1, 2003 to August 1, 2004                $2,000 per month
            September 1, 2004 to August 1, 2006                $3,000 per month
            September 1, 2006 to August 1, 2007                $4,000 per month

            In addition, on January1, 2004, May 1, 2004 , May 1, 2005 and
January 1, 2006, the Company will make balloon payments of $25,000.

            The Company will also grant PBGC a lien on the Company's machinery
and equipment, subject to the preexisting liens in favor of UDC.

Cash Bonus Plan

            In 1987, the Company adopted a cash bonus plan ("Cash Bonus Plan")
for Executive Officers. Contributions to the Bonus Plan are made by the Company
only after pre-tax operating profits exceed $150,000 for a fiscal year, and then
to the extent of 10% of the excess of the greater of $150,000 of 25% of pre-tax
operating profits. There were no contributions to the Bonus Plan for the fiscal
years ended March 30, 2001, March 31, 2000, and April 2, 1999.

Board Meetings, Committees and Compensation

            The Corporation does not have any nominating, audit or compensation
committee of the Board of Directors. Each Director receives an annual fee of
$l,000 for serving as a member of the Board of Directors each fiscal year. The
Board of Directors were not paid in fiscal years 1999, 2000 or 2001.

            During the fiscal year ended March 30, 2001, three (3) meetings of
the Board of Directors by telephone conference were held.

Independent Public Accountants; Fees Paid

            The Board of Directors of the Corporation selected Jerome Rosenberg,
P.C., Certified Public Accountant, as the independent auditor of the Corporation
for the fiscal year ending March 30, 2000. The audit services provided by Jerome
Rosenberg, P.C. consist of examination of financial statements, services
relative to filings with the Securities and Exchange Commission, and
consultation in regard to various accounting matters.

            For the fiscal year ended March 30, 2001, the Company paid its
auditor the sum of $30,000 in connection with its audit of the financial
statements contained in this Report on Form 10KSB and for assistance in
preparation of certain tax filings. No other fees were paid.



                                       18

<PAGE>



                                    PART III

Item 11. Security Ownership of Certain Beneficial Owners and Management

            The following table sets forth certain information as of June 20,
2000 with respect to (i) the persons (including any "group" as that term is used
in Section 13(d)(3) of the Securities Exchange Act of 1934), known by the
Company to be the beneficial owner of more than five percent (5%) of any class
of the Company's voting securities; (ii) each Executive Officer and Director who
owns Common Stock in the Company; and (iii) all Executive Officers and Directors
as a group. As of June 23, 2000, there were 2,303,468 shares of Common Stock
issued and outstanding.


                                              Amount of
                                             and Nature
                  Name and Address of       of Beneficial    Percentage of Class
Title of Class    Beneficial Owner            Ownership

Common Stock      Michael Offerman            946,784                41%
$.50 Par Value    140 58th Street
                  Brooklyn, NY 11220(1)
                  Murray Sennet                24,500               1.1%
                  1900 Manor Lane
                  Plano, TX 75093
                  Allen Gottlieb                    0                 0
                  325 Coral Way
                  Ft. Lauderdale, FL 33301
                  Robert Pittman               20,000                 *
                  45 Ocean Avenue
                  Monmouth Beach
                  NJ 07750
                  David Lopez and Nancy       278,000              12.1%
                  Lopez
                  Edge of Woods
                  P.O. Box 323
                  Southampton, NY 11968

All Officers & Directors as a Group
(4 in number)                                 991,284                43%
----------------------
            *  Less than 1%.

1.          43,600 shares of Common Stock are jointly owned by Mr. Offerman and
            his wife, Gail Offerman.

All shares set forth above are directly by the named individual unless otherwise
stated.


                                       19

<PAGE>



Item 12. Certain Relationships and Related Transactions

            None.

Item 13. Exhibits, Lists and Reports on Form 8-K

            (a) Exhibits filed with Form 10-KSB:

            The following Exhibits have previously been filed with the
Securities and Exchange Commission and, pursuant to 17 C.F.R. Secs. 201.24 and
240.12b-32, are incorporated by reference to the document referenced in brackets
following the descriptions of such Exhibits. Those Exhibits designated by an
asterisk (*) are filed herewith.

Exhibit No.                          Description

3.1                      Amended and Restated  Certificate of  Incorporation  of
                         the Company  [Exhibit  C-4 to Current  Report  filed on
                         From 8-K, dated February 27, 1991].

3.2                      By-Laws of the  Company  Filed as Exhibit 3.2 on Report
                         on Form  10-KSB  for the fiscal  year  ended  March 27,
                         1994.

4.1                      Form of Common Stock  Certificate of Company.  Filed as
                         Exhibit  4.1 on Report on Form  10-KSB  for the  fiscal
                         year ended March 27, 1994.

4.2                      Form of Secured Promissory Note payable, New York State
                         Urban Development  Corporation  [Exhibit 10B to Current
                         Report on Form 8-K, dated July 22, 1992].

10.1                     License  Agreement  between the Company and  Brevetron,
                         S.A., Lugano, Switzerland, dated January 1, 1979. Filed
                         as Exhibit 10.1 on Report on Form 10-KSB for the fiscal
                         year ended March 27, 1994.

10.2                     Amendment to License  Agreement between the Company and
                         Brevetron,  S.A.  dated  September  28, 1982.  Filed as
                         Exhibit  10.2 on Report on Form  10-KSB  for the fiscal
                         year ended March 27, 1994.

10.3                     Amendment to License  Agreement between the Company and
                         Brevetron,  S.A.  dated  September  20, 1991.  Filed as
                         Exhibit  10.3 on Report on Form  10-KSB  for the fiscal
                         year ended March 27, 1994.

10.4                     Lease for premises 140 58th Street,  Brooklyn, New York
                         11220  [Exhibit A to Current  Report filed on Form 8-K,
                         dated August 23, 1991].

10.5                     Form of Loan Agreement  between the Company and the New
                         York State Urban Development  Corporation  [Exhibit 10A
                         to  Current  Report  filed on Form 8-K,  dated July 22,
                         1992].

10.6                     Form of Security  Agreement  between the Registrant and
                         New York State Urban Development  Corporation  [Exhibit
                         10C to Current Report filed on Form 8-K, dated July 22,
                         1992].


                                       20

<PAGE>



10.7                     Form of  financing  agreement  between  the Company and
                         Milberg  Factors,  Inc.  [Exhibit  C-1 to  the  Current
                         Report filed on Form 8-K, dated March 1, 1990].

10.8                     Form of Collective Bargaining Agreement between Company
                         and Local 259 of the United Auto Workers  Union,  dated
                         October 1, 1991.

10.9                     Form  of  Employment   Agreement  between  Company  and
                         Michael  Offerman  together with  Amendment No. 1 dated
                         November 27,1997.  [filed as Exhibit 10.9 to Form 10KSB
                         for the fiscal year ended March 28, 1997]

10.10                    Form of  Employment  Agreement  between the Company and
                         Ralph  Acello  together  with  Amendment  No.  1  dated
                         November  27,1997.[filed as Exhibit 10.10 to Form 10KSB
                         for the fiscal year ended March 28, 1997]

10.11                    Form of  Employment  Agreement  between the Company and
                         Robert  Knoth  together  with  Amendment  No.  1  dated
                         November  27,1997.[filed as Exhibit 10.11 to Form 10KSB
                         for the fiscal year ended March 28, 1997]

10.12                    Form of  Employment  Agreement  between the Company and
                         Joan  Prideaux.  [filed as Exhibit  10.12 to Form 10KSB
                         for the fiscal year ended March 28, 1997]

21                       Subsidiaries: None

23.1*                    Consent of Jerome Rosenberg CPA, independent auditor of
                         the Company


            (b) Reports on Form 8-K

            The Company did not file any Reports on Form 8-K during the last
quarter of the period covered by this Report.


                                       21

<PAGE>



                                   SIGNATURES


            Pursuant to the requirements of Section 13 or 15(d) 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.

                                           IEH CORPORATION

                                           By: /s/ Michael Offerman
                                               ---------------------------------
                                               Michael Offerman, President
Dated: June 25, 2001

            Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


/s/ Michael Offerman                                 June 25, 2001
------------------------------------
Michael Offerman, Chairman of the
 Board and President

/s/ Robert Knoth                                     June 25, 2001
------------------------------------
Robert Knoth, Secretary and
 Treasurer

/s/ Murray Sennet                                    June 25, 2001
------------------------------------
Murray Sennet, Director

/s/ Robert Pittman                                   June 25, 2001
------------------------------------
Robert Pittman, Director

/s/ Alan Gottlieb                                    June 25, 2001
------------------------------------
Alan Gottlieb, Director


                                       22

<PAGE>



                                 IEH CORPORATION

          Financial Statements as of March 30, 2001 and March 31, 2000
             Together with Report of Independent Public Accountants


<TABLE>
<CAPTION>

Contents                                                                         Page
                                                                                  No.
                                                                                 ----
<S>                                                                                 <C>
Report of Independent Certified Public Accountant                                 F-2

Financial Statements:

Balance Sheets as of March 30, 2001 and March 31, 2000                            F-3

Statement of Operations for the twelve months ended March 30, 2001
and March 31, 2000                                                                F-5

Statement of Stockholders' Equity as of March 30, 2001 and March 31, 2000         F-6

Statement of Cash Flows for the years ended March 30, 2001 and March 31, 2000     F-7

Notes to Financial Statements                                                     F-9
</TABLE>




                                       F-1

<PAGE>



                Report of Independent Certified Public Accountant
               ---------------------------------------------------




Board of Directors
IEH Corporation


            We have audited the accompanying balance sheets of IEH Corporation
as of March 30, 2001 and March 31, 2000 and the related statements of
operations, stockholders' equity, and cash flows for each of the two years in
the period ended March 30, 2001 and March 31, 2000. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based upon our audit.

            We conducted our audit in accordance with generally accepted
auditing standards. 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 audit provides 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 IEH Corporation as
of March 30, 2001 and March 31, 2000 and the results of its operations and its
cash flows for each of the two years ended March 30, 2001 and March 31, 2000 in
conformity with generally accepted accounting principles.




                                                /s/ Jerome Rosenberg, CPA, P.C.
                                                -------------------------------
                                                Jerome Rosenberg, CPA, P.C.


Melville, New York
May 24, 2001


                                       F-2

<PAGE>


                                 IEH CORPORATION

                                 BALANCE SHEETS
                     As of March 30, 2001 and March 31, 2000


<TABLE>
<CAPTION>
                                     ASSETS
                                                             March 30,            March 31,
                                                               2001                 2000
                                                              ------               -----
<S>                                                         <C>                  <C>
CURRENT ASSETS:
Cash                                                        $    11,833          $     4,045
Accounts receivable, less allowances for doubtful
accounts of $10,062 at March 30, 2001 and March 31,             732,150              772,634
2000
Inventories (Note 2)                                            990,420              976,169
Prepaid expenses and other current assets (Note 3)               30,585               16,212
                                                            -----------          -----------
          Total current assets                                1,764,988            1,769,060
                                                            -----------          -----------

PROPERTY, PLANT AND EQUIPMENT, less
accumulated depreciation and amortization of
$5,351,591 at March 30, 2001 and $5,075,854 at March 31,
2000 (Note 4)                                                 1,191,915            1,258,153
                                                            -----------          -----------
OTHER ASSETS
  Other assets                                                   47,075               46,378
                                                            -----------          -----------


Total assets                                                $ 3,003,978          $ 3,073,591
                                                            ===========          ===========
</TABLE>


                 See accompanying notes to financial statements


                                       F-3

<PAGE>



                                 IEH CORPORATION

                                 BALANCE SHEETS
                     As of March 30, 2001 and March 31, 2000

<TABLE>
<CAPTION>

                                                                March 30,         March 31,
                                                                  2001              2000
                                                                 ------            ------
<S>                                                           <C>              <C>
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts receivable financing (Note 5)                        $  759,937       $   689,775
Notes payable, equipment, current portion (Note 8)                25,355            19,555
Notes payable, current portion (Note 7)                            5,750            66,009
Loans payable, current portion (Note 9)                           83,130           135,056
Accrued corporate income taxes                                     4,912            16,020
Union pension and health & welfare, current portion               96,000            96,000
(Note 12)
Accounts payable                                                 719,309           779,686
Other current liabilities (Note 6)                               162,951           115,181
                                                             -----------       -----------

            Total current liabilities                          1,857,344         1,917,282
                                                              ----------        ----------

LONG-TERM LIABILITIES:
Pension Plan payable (Note 11)                                   516,966           516,966
Notes payable, equipment, less current portion (Note 8)           50,107            50,858
Notes payable, less current portion (Note 7)                           -             5,750
Union pension & health & welfare, less current
   portion (Note 12)                                               6,689            36,689
                                                             -----------       -----------
            Total long-term liabilities                          573,762           610,263
                                                             -----------       -----------

            Total liabilities                                  2,431,106         2,527,545
                                                              ----------        ----------

STOCKHOLDERS' EQUITY:
Common stock, $.50 par value; 10,000,000 shares
authorized, 2,303,468 shares issued and outstanding at         1,151,734         1,151,734
March 30, 2001 and at March 31, 2000
Capital in excess of par value                                 1,615,874         1,615,874
Retained earnings (Deficit)                                  (2,194,736)       (2,221,562)
                                                             -----------       -----------
            Total stockholders' equity                           572,872           546,046
                                                             -----------       -----------

            Total liabilities and stockholders' equity        $3,003,978        $3,073,591
                                                              ==========        ==========
</TABLE>



                 See accompanying notes to financial statements


                                       F-4

<PAGE>



                                 IEH CORPORATION

                             STATEMENT OF OPERATIONS
          For the Twelve Months Ended March 30, 2001 and March 31, 2000


<TABLE>
<CAPTION>
                                                             March 30,             March 31,
                                                               2001                  2000
                                                              ------                ------
<S>                                                       <C>                   <C>
REVENUE, net sales (Note 14)                              $  4,593,840          $  4,486,573
                                                          ------------          ------------
COSTS AND EXPENSES:

  Cost of products sold                                      3,261,193             3,219,798
  Selling, general and administrative                          871,844               772,715
  Interest expense                                             154,874               141,159
  Depreciation and amortization                                275,737               298,558
                                                          ------------          ------------
                                                             4,563,648             4,432,230
                                                           -----------           -----------

OPERATING INCOME (LOSS)                                         30,192                54,343

OTHER INCOME                                                       734                   711
                                                          ------------          ------------

INCOME (LOSS) BEFORE INCOME TAXES                               30,926                55,054

PROVISION FOR INCOME TAXES                                     (4,100)               (11,200)
                                                          ------------          ------------

NET INCOME (LOSS)                                         $     26,826          $     43,854
                                                          ============          ============

Basic and Diluted Earnings per common share (Note 1)      $       .012          $       .019
                                                          ============          ============

Weighted average number of  common shares
  outstanding (in thousands)                                     2,303                 2,303
                                                          ============          ============
</TABLE>

                 See accompanying notes to financial statements


                                       F-5

<PAGE>

                                 IEH CORPORATION

                        STATEMENT OF STOCKHOLDERS' EQUITY
                      For the Twelve Months Ended March 30,
                             2001 and March 31, 2000

<TABLE>
<CAPTION>
                                      Common Stock
                                 ----------------------         Capital in        Retained
                                                                Excess of         Earnings
                                 Shares          Amount         Par Value         (Deficit)
                                 ------          ------         ---------         ---------

<S>                             <C>            <C>              <C>              <C>
Balances, April 2, 1999         2,303,468      $ 1,151,734      $ 1,615,874      $(2,265,416)

Net Income: Year ended
 March 31, 2000                                                                       43,854
                              -----------      -----------      -----------      -----------
Balances, March 31, 2000        2,303,468        1,151,734        1,615,874       (2,221,562)

Net Income; Year ended
 March 30, 2001                                                                       26,826
                              -----------      -----------      -----------      -----------

Balances, March 30, 2001        2,303,468      $ 1,151,734      $ 1,615,874      $(2,194,736)

</TABLE>



                 See accompanying notes to financial statements


                                       F-6

<PAGE>




                                 IEH CORPORATION

                             STATEMENT OF CASH FLOWS
                           Increase (Decrease) in Cash
          For the Twelve Months Ended March 30, 2001 and March 31, 2000

<TABLE>
<CAPTION>

                                                                    March 30,         March 31,
                                                                      2001              2000
                                                                     ------            ------
<S>                                                                <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                $  26,826         $  43,854
                                                                   ---------         ---------

  Adjustments to reconcile net income to net cash used in
    operating activities

  Depreciation and amortization                                      275,737           298,558

Changes in assets and liabilities:
  (Increase) decrease in accounts receivable                          40,484            37,917
  (Increase) decrease inventories                                    (14,251)          (49,698)
  (Increase) decrease in prepaid expenses and other current          (14,373)           (1,529)
assets
  (Increase) decrease in other assets                                   (697)              244

  (Decrease) increase in accounts payable                            (60,377)            9,793
  (Decrease) increase in other current liabilities                    47,770           (19,173)
  Increase in accrued corporate income taxes                         (11,108)              668
  (Decrease) in due to union pension & health & welfare              (30,000)          (26,138)
                                                                   ---------         ---------

            Total adjustments                                        233,185           250,642
                                                                   ---------         ---------

NET CASH PROVIDED BY (USED) FOR OPERATING                            260,011           294,496
                                                                   ---------         ---------
ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES:

   Acquisition of property, plant and equipment                     (209,499)         (117,978)
                                                                   ---------         ---------

NET CASH USED IN INVESTING ACTIVITIES                              $(209,499)        $(117,978)
                                                                   ---------         ---------
</TABLE>




                 See accompanying notes to financial statements


                                       F-7

<PAGE>



                                 IEH CORPORATION

                             STATEMENT OF CASH FLOWS
                           Increase (Decrease) in Cash
          For the Twelve Months Ended March 30, 2001 and March 31, 2000


                                                   March 30,          March 31,
                                                     2001               2000
                                                    ------             ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable                $ (60,960)        $ (68,654)
Proceeds from accounts receivable financing           70,162           (69,555)
Principal payments on loan payable                   (51,926)          (49,384)
                                                   ---------         ---------

NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES                                           (42,724)         (187,593)
                                                   ---------         ---------

INCREASE (DECREASE) IN CASH                            7,788           (11,075)

CASH, beginning of period                              4,045            15,120
                                                   ---------         ---------

CASH, end of period                                $  11,833         $   4,045
                                                   =========         =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION, cash paid during the year for:

     Interest                                      $ 149,273         $ 141,159
                                                   =========         =========

     Income Taxes                                  $   4,100         $  11,200
                                                   =========         =========



                 See accompanying notes to financial statements


                                       F-8

<PAGE>



                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Description of Business:

            The Company is engaged in the design, development, manufacture and
distribution of high performance electronic printed circuit connectors and
specialized interconnection devices. Electronic connectors and interconnection
devices are used in providing electrical connections between electronic
component assemblies. The Company develops and manufactures connectors which are
designed for a variety of high technology and high performance applications, and
are primarily utilized by those users who require highly efficient and dense
(the space between connection pins with the connector) electrical connections.

            The Company is continuously redesigning and adapting its connectors
to meet and keep pace with developments in the electronics industry and has, for
example, developed connectors for use with flex-circuits now being used in
aerospace programs, computers, air-borne communications systems, testing systems
and other areas. The Company also services its connectors to meet specified
product requirements.

Accounting Period:

            The Company maintains an accounting period based upon a 52-53 week
year which ends on the nearest Friday in business days to March 31st. The year
ended March 30, 2001 was comprised of 52 weeks and the year ended March 31, 2000
was comprised of 53 weeks.

Revenue Recognition:

            Revenues are recognized at the shipping date of the Company's
products.

            The Company's policy with respect to customer returns and allowances
as well as product warranty is as follows:

            The Company will accept a return of defective product within one
year from shipment for repair or replacement at the Company's option. If the
product is repairable, the Company at its own cost will repair and return to the
customer. If unrepairable, the Company will either offer an allowance against
payment or will reimburse the customer for the total cost of product.

            Most of the Company's products are custom ordered by customers for a
specific use. The Company provides engineering services as part of the
relationship with its customers in developing the custom product. The Company is
not obligated to provide such engineering service to its customers. The Company
does not charge separately for these services.

Inventories:

            Inventories are stated at cost, on a first-in, first-out basis,
which does not exceed market value.


                                       F-9

<PAGE>



                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

Concentration of Credit Risk:

            The Company maintains cash balances at one bank. Amounts on deposit
are insured by the Federal Deposit Insurance Corporation up to $200,000 in
aggregate. There were no uninsured balances at either March 30, 2001 or March
31, 2000.

Property, Plant and Equipment:

            Property, plant and equipment is stated at cost less accumulated
depreciation and amortization. The Company provides for depreciation and
amortization using the Modified Accelerated Cost Recovery System (MACRS) method
over the estimated useful lives (5-7 years) of the related assets.

            Maintenance and repair expenditures are charged to operations, and
renewals and betterments are capitalized. Items of property, plant and equipment
which are sold, retired or otherwise disposed of are removed from the asset and
accumulated depreciation or amortization account. Any gain or loss thereon is
either credited or charged to operations.

Income Taxes:

            The Company follows the policy of treating investment tax credits as
a reduction in the provision for federal income tax in the year in which the
credit arises or may be utilized. Deferred income taxes arise from temporary
differences resulting from different depreciation methods used for financial and
income tax purposes. The Company has adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes".

Net Income Per Share:

            The Company has adopted the provisions of SFAS No. 128, "Earnings
Per Share", which requires the disclosure of "basic" and "diluted" earnings
(loss) per share. Basic earnings per share is computed by dividing net income by
the weighted average number of common shares outstanding during each period.
Diluted earnings per share is similar to basic earnings per share except that
the weighted average number of common shares outstanding is increased to reflect
the dilutive effect of potential common shares, such as those issuable upon the
exercise of stock or warrants, as if they had been issued. For the years ended
March 30, 2001 and March 31, 2000, there were no items of potential dilution
that would impact on the computation of diluted earnings or loss per share.

Fair Value of Financial Instruments:

The carrying value of the Company's financial instruments, consisting of
accounts receivable, accounts payable, and borrowings, approximate their fair
value due to the relatively short maturity (three months) of these instruments.


                                      F-10

<PAGE>



                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

Use of Estimates:

            The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, revenues
and expenses, and disclosure of contingent assets and liabilities at the date of
the financial statements. Actual amounts could differ from those estimates.

Impairment of Long-Lived Assets:

            SFAS No. 121, "Accounting For The Impairment of Long-Lived Assets To
Be Disposed Of", requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. The Company has adopted SFAS No. 121. There were no
long-lived asset impairments recognized by the Company for the years ended March
30, 2001 and March 31, 2000.

Reporting Comprehensive Income:

            The Company has adopted the provisions of SFAS No. 130, "Reporting
Comprehensive Income". This statement established standards for reporting and
display of comprehensive income and its components (revenues, expenses, gains
and losses) in an entity's financial statements. This Statement requires an
entity to classify items of other comprehensive income by their nature in a
financial statement and display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in capital in the
equity section of a statement of financial position. There were no material
items of comprehensive income to report for the years ended March 30, 2001 and
March 31,2000.

Segment Information:

            The Company has adopted the provisions of SFAS No. 131, "Disclosures
About Segment of An Enterprise and Related Information." This Statement requires
public enterprises to report financial and descriptive information about its
reportable operating segments and establishes standards for related disclosures
about product and services, geographic areas, and major customers. The adoption
of SFAS No. 131 did not affect the Company's presentation of its results of
operations or financial position.

Effect of New Accounting Pronouncements:

            In December  1999, the  Securities  and Exchange  Commission  issued
Staff  Accounting  Bulletin  No.  101,  ("SAB  NO.  101"),  Revenue  Recognition
Statements,   which   summarizes   certain  of  the  staff's  views  on  revenue
recognition.  The Company's revenue recognition  policies are in accordance with
SAB NO. 101.

                                      F-11

<PAGE>



                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 2 -INVENTORIES:

            Inventories are comprised of the following:


                                                     March 30,         March 31,
                                                       2001              2000
                                                      ------            ------

Raw materials                                       $  714,634        $ 683,443
Work in progress                                       159,741          190,480
Finished goods                                         116,045          102,246
                                                   -----------       ----------
                                                    $  990,420        $ 976,169
                                                    ==========        =========


Note 3 -PREPAID EXPENSES AND OTHER CURRENT ASSETS:

            Prepaid expenses and other current assets are comprised of the
following:


                                                  March 30,           March 31,
                                                    2001                2000
                                                   ------              ------

Prepaid insurance                                $   18,571          $   14,613
Prepaid corporate taxes                               3,640                  --
Other current assets                                  8,374               1,599
                                                 ----------          ----------
                                                 $   30,585          $   16,212
                                                 ==========          ==========


Note 4 -PROPERTY, PLANT AND EQUIPMENT:

            Property, plant and equipment are as follows:


                                                  March 30,           March 31,
                                                    2001                2000
                                                   ------              ------

Computers                                        $  187,248          $  183,808
Leasehold improvements                              585,831             585,831
Machinery and equipment                           4,050,066           3,901,503
Tools and dies                                    1,554,307           1,502,849
Furniture and fixture                               154,808             148,770
Transportation equipment                             11,246              11,246
                                                 ----------          ----------
                                                  6,543,506           6,334,007
Less: accumulated
depreciation and amortization                     5,351,591           5,075,854
                                                 ----------          ----------
                                                 $1,191,915          $1,258,153
                                                 ==========          ==========


                                      F-12

<PAGE>


                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

Note 5 -ACCOUNTS RECEIVABLE FINANCING:

            The Company has an accounts receivable financing agreement whereby
it can borrow up to eighty percent of its eligible receivables (as defined in
the agreement) at an interest rate of 2 1/2 % above The Chase Manhattan Bank's
publicly announced rate (8%) at March 30, 2001, with a maximum of 12% per annum.
The agreement has an initial term of one year and will automatically renew for
successive one year terms, unless terminated by the Company or lender upon
receiving sixty days prior notice. The loan is secured by the Company's accounts
receivable and inventories.

Note 6 -OTHER CURRENT LIABILITIES:

            Other current liabilities are comprised of the following:


                                              March 30,               March 30,
                                                2001                    2000
                                               ------                  ------

Payroll and vacation accruals                $   66,448               $  63,317
Sales commissions                                10,611                   5,715
Pension plan payable                             21,540                  21,540
Other                                            64,352                  24,609
                                             ----------             -----------
                                             $  162,951                $115,181
                                             ==========                ========

Note 7 -NOTES PAYABLE:

            The Company was in arrears in the amount of $236,000 to the Apple
Industrial Development Corp. formerly New York City Economic Development
Corporation ("NYCEDC") for rent due for its offices and manufacturing
facilities. In May 1997, the Company and the NYCEDC negotiated an agreement for
the Company to pay off its indebtedness over a 48 month period, by the Company
issuing notes payable to NYCEDC. The note bears interest at the rate of 8.25%
per annum. The balance remaining at March 30, 2001 was $5,750, all being
reported as a current liability.

Note 8 -NOTES PAYABLE EQUIPMENT:

            The Company financed the acquisition of new computer equipment and
software with notes payable. The notes are payable over a sixty month period.
The balance remaining at March 30, 2001 amounted to $75,462.

            Aggregate future principal payments are as follows:


                2002                            $  25,355
                2003                               25,333
                2004                               16,978
                2005                                6,745
                Thereafter                          1,051
                                               ----------
                                               $   75,462
                                               ==========


                                      F-13

<PAGE>

                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 9 -LOAN PAYABLE:

            On July 22, 1992, the Company obtained a loan of $435,000 from the
New York State Urban Development Corporation ("UDC"), collateralized by
machinery and equipment. The loan is payable over ten years, with interest rates
progressively increasing from 4% to 8% per annum.

            The balance remaining at March 30, 2001 was $83,130.

            Aggregate future principal payments are as follows:


                 Fiscal Year Ending March:
                 2002                                 $   58,405
                 2003                                     24,725
                                                      ----------
                                                      $   83,130
                                                      ==========

            In April 1997, the Company was informed by the UDC that the loan was
sold and conveyed to WAMCO XXIV, Ltd. All the terms and conditions of the loan
remained in effect.

            As of March 30, 2001, the Company had failed to meet one of the
financial covenants of the loan agreement; namely that the "Company shall be
obligated to maintain a tangible net worth of not less than $1,300,000 and the
Company shall be obligated to maintain a ratio of current assets to current
liabilities of 1.1 to 1.0.

            The Company reported tangible net worth of $572,872. The ratio of
current assets to current liabilities was .95 to 1.0.

            The Company has applied for additional waivers of this covenant.
Neither the UDC or WAMCO XXIV has acted on these requests. There are no
assurances that the Company will receive any additional waivers of this
covenant. Should the Company not receive any additional waivers, then it will be
deemed to be in default of this loan obligation and the loan plus interest will
become due and payable, accordingly the entire balance has been classified as a
current liability in the accompanying balance sheet.



                                      F-14

<PAGE>


                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

Note 10-INCOME TAXES:

            The components of the deferred tax assets and liabilities are as
follows:


                                                  March 31,           March 31,
                                                    2001                2000
                                                   ------              ------
Deferred tax assets:

Net operating loss carryforwards                $  2,112,755        $ 2,158,000
                                                ------------        -----------
Gross deferred assets tax assets                   2,112,755          2,158,000

Deferred tax liabilities:
State income taxes                                  (83,557)           (79,111)
                                                ------------        -----------
Net deferred tax assets before valuation           2,029,198          2,078,889
allowance
Valuation allowance                              (2,029,198)        (2,078,889)
                                                ------------        -----------
Net deferred tax assets                         $         0         $        0
                                                ============        ===========

            At March 30, 2001 and March 31,2000, the Company established a 100%
valuation allowance for the net deferred tax assets, as management could not
determine that it was more likely than not that the deferred tax assets could be
realized. The change in valuation allowance amounted to $49,691 for the year
ended March 30, 2001.

            As of March 30, 2001, the Company has available Federal net
operating loss carryforwards (NOL's) totaling approximately $2,112,755 which
expire at various times through March 31, 2012, for State and Local purposes,
the company has available NOL's approximating $2,047,970 which expire at various
times through March 31, 2012.

            Utilization of the NOL's may be limited pursuant to Internal Revenue
Code Section 382 should significant changes to the existing ownership of the
Company occur.

            A reconciliation of income taxes computed at the Federal statutory
rate as compared to income tax expense at the effective income tax is as
follows:


                                                   March 30,          March 31,
                                                     2001               2000
                                                    ------             ------

Federal statutory income tax (benefit) rate        (34.0) %           (34.0) %

State tax benefit, net of Federal liability        (12.2) %           (12.2) %

Net change in valuation allowance                    46.2 %             46.2 %

Effective income tax (benefit) rate                 ( - ) %              (-) %



                                      F-15

<PAGE>



                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 11-PENSION PLAN-SALARIED PERSONNEL:

            On June 30, 1995, the Company applied to the Pension Benefit
Guaranty Corporation ("PBGC") to have the PBGC assume all of the Company's
responsibilities and liabilities under its Salaried Pension Plan. On April 26,
1996, the PBGC determined that the Salaried Pension Plan did not have sufficient
assets available to pay benefits which were and are currently due under the
terms of the Plan.

            The PBGC further determined that pursuant to the provisions of the
Employment Retirement Income Security Act of 1974, as amended ("ERISA"), that
the Plan must be terminated in order to protect the interests of the Plan's
participants. Accordingly, the PBGC proceeded pursuant to ERISA to have the Plan
terminated and the PBGC appointed as statutory trustee, and to have July 31,
1995 established as the Plan's termination date.

            At March 30, 2001 and March 31, 2000, $21,540 of the pension
liability is included in other current liabilities, with the balance of $516,966
shown as a long-term liability. On those dates, the long-term portion includes
$226,041, which represents the recognition of the additional minimum liability
to comply with the requirements of Statement of Financial Accounting Standards
No. 87.

            In August 1998, the Company was notified by the PBGC that the
Company is liable to the PBGC for the following amounts as of September 1, 1998:

            o   $456,418 representing the amount of unfunded benefit liabilities
                of the Plan
            o   $242,097 representing funding liability

            The total amount claimed by the PBGC amounted to $698,515.

            The amount claimed is being contested by the Company, and the PBGC
granted the Company an extension of time until February 22, 1999 in which to
file an appeal. The Company has made a settlement proposal to the PBGC and is
awaiting a final response. Accordingly, no determinate amount has been
recognized by the Company in the accompanying financial statements as no
agreement has been finalized.


Note 12-COMMITMENTS:

            On December 1, 1998 the Company amended its lease on its premises by
surrendering a portion of its rented premises back to the landlord. Accordingly,
the base monthly rent was reduced to $10,397 or $121,765 per annum through
December 1999 and to $9,397 or $112,765 per annum through the conclusion of the
lease which ends August 23, 2001.


                                      F-16

<PAGE>



                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

Note 12-COMMITMENTS (continued):

            The Company is obligated under this lease through August 23, 2001,
at minimum annual rentals as follows:


Fiscal year ending March:

            2002                      $   46,985
                                      ----------
                                      $   46,985

            The rental expense for the year ended March 30, 2001 for this lease
was $109,559.

            The Company has an option to renew its lease for an additional 10
years. The terms of the renewal are presently being negotiated by the Company
and its landlord, Apple Industrial Development, Corp.

            (See Note 7 - Notes Payable relating to rent arrears agreement)

            The Company has a collective bargaining multi-employer pension plan
with the United Auto Workers of America, Local 259. Contributions are made in
accordance with a negotiated labor contract and are based on the number of
covered employees employed per month. With the passage of the Multi-Employer
Pension Plan Amendments Act of 1990 ("The Act"), the Company may become subject
to liabilities in excess of contributions made under the collective bargaining
agreement. Generally, these liabilities are contingent upon the termination,
withdrawal, or partial withdrawal from the Plan.

            The Company has not taken any action to terminate, withdraw or
partially withdraw from the Plan nor does it intend to do so in the future.
Under the Act, liabilities would be based upon the Company's proportional share
of the Plan's unfunded vested benefits which is currently not available. The
amount of accumulated benefits and net assets of such Plan also is not currently
available to the Company. The total contributions charged to operations under
this pension plan were $35,707 for the year ended March 30, 2001 and $32,120 for
the year ended March 31, 2000.

            As of March 30, 2001, the Company reported arrears with respect to
its contributions to the Union's health and welfare plan. The amount due the
health and welfare plan was $102,689.

            The total amount due of $102,689 is reported on the accompanying
balance sheet in two components; $96,000 reported as a current liability and
$6,689 as a long-term liability.

            In December 1993, the Company and Local 259 entered into a verbal
agreement whereby the Company would satisfy this debt by the following payment
schedule:

            The sum of $8,000 will be paid by the Company each month in
satisfaction of the current arrears until this total debt has been paid. Under
this agreement, the projected payment schedule for arrears will satisfy the
total debt in 13 months. Additionally, both parties have agreed that current
obligatory funding for the Pension Fund will be made on a timely current basis.



                                      F-17

<PAGE>



                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 13 - CHANGES IN STOCKHOLDERS' EQUITY:

            Retained earnings (deficit) decreased by $26,826, which represents
the net income for the twelve months ended March 30, 2001.

Note 14 - REVENUES FROM MAJOR CUSTOMERS:

            In the fiscal year ended March 30, 2001, approximately 19% of the
Company's total revenues were earned from one customer. Total sales to this
customer were approximately $864,000. No other customer accounted for over 10%
of the Company's sales. Accounts receivable as of March 30, 2001, did not
include a receivable from any single customer which amounted to 10% or more of
the total accounts receivable.


                                      F-16

<PAGE>