SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                  FORM 10-K

   (Mark One)
X  ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
   EXCHANGE ACT OF 1934 (FEE REQUIRED)

   For the Fiscal Year Ended June 30, 1996

                                     OR

_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

  For the transition period from               to

                         Commission File No. 0-12942

                             PARLEX CORPORATION
           (Exact Name of Registrant as Specified in its Charter)
            Massachusetts                            04-2464749
   (State or other jurisdiction of      (IRS Employer Identification Number)
    incorporation or organization)

145 Milk Street, Methuen, Massachusetts                 01844
(Address of principal executive offices)             (Zip Code)

Registrant's telephone number, including area code:  508-685-4341
Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:

                                                 Name of exchange on
         Title of each Class                      which registered
         -------------------                     -------------------
    Common Stock ($.10 par value)                      NASDAQ

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

                             YES   X     NO
                                 -----      -----

      Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, 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-K or any amendment to this Form 10-K.  (X)

      The aggregate market value of shares of the Registrant's Common Stock, 
par value $.10 per share, held by non-affiliates of the Registrant at 
September 1, 1996 as computed by reference to the closing price of such 
stock was approximately $13,910,530.

   The number of shares of the Registrant's Common Stock, par value $.10 per 
share, outstanding at September 1, 1996 was 2,372,034 shares.

Documents Incorporated By Reference

      Portions of the definitive proxy statement to be filed with the 
Commission within 120 days after the close of the fiscal year are 
incorporated by reference into Part III of this report.
Page 1 of 


                                   Part I
Item 1.  Business
-----------------

        Parlex Corporation ("Parlex" or the "Company") designs and 
fabricates products for use in the interconnection of components in 
electronic equipment.  The product line includes a wide range of flexible 
circuits and laminated cable including circuit and cable assemblies 
incorporating a variety of components.  Flexible circuits consist of   
copper conductive patterns on flexible substrate materials while laminated 
cables are a series of interconnect wires laminated between flexible 
material.  The interconnects may incorporate any number of components 
(integrated circuits, connectors, stiffeners, resistors, capacitors, etc.) 
and may be a single layer or up to 24 layers of circuitry.

        These products are designed into a wide variety of electronic 
markets; automotive, computer, telecommunication, medical, aerospace and 
consumer applications.  Specific products that include flexible circuits 
and laminated cable include notebook computers, disk drives, automotive 
engine controllers, automotive audio systems, cellular telephones, 
telephone switching equipment, printers, postage meters, electronic scales,   
pagers, and a variety of military electronics.

        The Company is a recognized industry leader and utilizes proprietary 
technology in order to market its product.  Parlex holds a variety of 
patents and will continue to protect its intellectual property in order to 
enhance its market position worldwide.  The thrust of Parlex's 
technology is to allow customers to achieve smaller, lighter, more 
technologically advanced products at lower overall costs.  This is achieved 
through three dimensional packaging, which eliminates costly connectors and 
jumpers between more traditional rigid circuits. 

        The flexible circuit and laminated cable industry is estimated to be 
over $2 billion worldwide.  Parlex supports the North American market 
directly while the Asian and European markets are addressed through 
strategic alliances.  In September 1995, Parlex commenced operations of a 
joint venture company in China, Parlex (Shanghai) Circuits Co., Ltd.  The 
joint venture will eventually become the main avenue for pursuing the 
market in Asia.

        The Company has adopted a strategy of growth through partnerships 
with a number of major customers.  Parlex's goal is to provide total 
customer satisfaction to these companies and the Company expects to 
receive the dominant share of their flexible circuit and laminated cable 
business.  These customers enjoy leadership positions throughout all of 
the previously mentioned markets thus providing some insulation from   
fluctuating demand cycles in any one segment.

Flexible Printed Circuits
-------------------------

       Printed circuits are etched copper patterns made on or bonded 
within insulating material, which conduct electrical current between 
electronic components.  Flexible circuits can bend or fold, without damage 
to the metallic pattern or the insulating material, thus permitting 
interconnection and assembly of components and subsystems in almost any 
geometric arrangement.  The Company attempts to focus upon those   
applications requiring state-of-the-art technology.  Therefore, the Company 
depends on technical innovation and engineering expertise in order to 
obtain business.  A major initiative is to protect intellectual property 
in order to ensure the Company maintains its leadership position in the 
industry.  To this end, the Company has been awarded 5 patents over the 
past several years.  These patents are summarized below:

U.S. Patent  # 5,362,534-2  -   PALCore multilayer flexible and multilayer
                                rigid flex circuits for low cost, high volume
                                application.

U.S. Patent # 5,362,534-1   -   Double treated epoxy coated copper foil for
                                low cost, high volume multilayer flexible
                                circuits, rigid flex circuits and rigid circuit
                                boards.

U.S. Patent # 5,334,800     -   A low cost, impedance matched shielding process
                                for high speed circuits which provides maximum
                                clarity of electronic signals while meeting FCC
                                and customer shielding requirements for
                                commercial applications.

U.S. Patent # 5,450,286     -   A low cost process for attaching flexible 
                                circuits to a metalized plate used to dissipate
                                heat generated by components assembled on
                                flexible circuits and to facilitate customer
                                manufacturing requirements.

U.S. Patent # 5,376,232     -   A process to manufacture flexible and rigid
                                circuits that would substantially reduce the
                                amount of waste which must be environmentally
                                treated.

                                Additionally, a number of these patents have
                                been awarded recognition in Asia and Europe.

Custom Laminated Cable
----------------------

      These products consist of multiple conductive metallic round wires 
or flat strips laminated in parallel between layers of insulation 
material.  Custom laminated cable is sold in rolls, usually of 100 feet or 
more, as well as in assemblies.  Technology plays a vital role since this 
product line utilizes proprietary manufacturing processes, which reduce 
cost and provide technical advantages to the customer.  Examples are listed 
below:

U Flex[REGISTERED TRADEMARK] is a technique of injection molding plastic to
              the exposed end of a laminated cable thus eliminating the
              requirement for connectors.

Pemacs -      A low cost laminated cable process which meets all FCC and 
              customer shielding requirements without compromising flexibility.

      In all of its product lines, Parlex continues to jointly develop 
advanced technologies by working closely with its core customers and key 
suppliers.  These relationships, combined with an aggressive approach to 
removing cost from the production process, has enabled the Company to become 
more competitive in all segments of its available market.

Raw Materials
-------------

      The Company has multiple sources for most materials used in its 
production processes.  The Company believes that alternate sources are 
available for all materials used by it.

Sales and Marketing
-------------------

      The Company's products are sold to electronic equipment manufacturers 
both in the United States and in certain foreign countries.  Sales in most 
parts of the United States are made through a network of independent 
manufacturers' representative organizations, complemented by the efforts of 
sales, engineering, and management employees of the Company.  In addition, 
certain customers are handled directly as "house accounts".  In fiscal 1996, 
sales through manufacturers' representative organizations accounted for 
approximately 42% of sales, and sales to "house accounts" were approximately 
58% of sales. Approximately 5%, 7%, and 4% of product sales in fiscal years 
1996, 1995, and 1994, respectively, consisted of foreign sales to Canada, 
parts of Europe, and the Middle East.

      As part of its marketing efforts, the Company conducts technical 
seminars at major customer or potential customer locations, at industry 
trade meetings, and its own offices.  The Company also publishes technical 
papers in addition to utilizing conventional advertising and promotional 
methods.

      The Company's products are custom-made to a user's specifications. 
These specifications are developed either solely by the customer or through 
the design efforts of the customer working together with the Company's 
design and engineering staff.  The Company's application engineers do a 
feasibility study and provide cost estimates to prepare a quotation in 
response to a customer's request.  Sales are made pursuant to purchase 
orders. 

Customers
---------

      In fiscal 1996, the Company's products were sold to approximately 350 
customers, including as separate customers different divisions of certain 
major companies. In 1996, 1995, and 1994, sales to several divisions of 
Motorola comprised 29%, 12%, and 11% of the Company's overall shipments, 
respectively.  In 1994, AST Research Inc. also accounted for 10% of the 
overall sales of the Company's overall shipments. The top twenty (20) 
customers (including Alliant Tech Systems, Lockheed Sanders, Motorola, Texas 
Instruments, and Pitney Bowes) accounted for approximately 66% of sales in 
fiscal year 1996.

      In fiscal 1996, the Company's sales for military and aerospace 
applications accounted for approximately 26% of sales, while sales for 
industrial applications, primarily for computer, computer peripheral, 
automotive and communications applications, accounted for 74% of sales.  
This compares to 32% and 68% of sales in fiscal 1995 for military/aerospace 
and industrial applications, respectively.  See Management's Discussion and 
Analysis of Financial Condition and Results of Operations.

Backlog of Orders
-----------------

      The backlog at June 30, 1996 was $23 million, as compared to $22 
million at June 30, 1995.  The current backlog is scheduled for shipment during
fiscal year 1997.  Customers may cancel unfilled orders, subject to
cancellation charges (unless waived by the Company).

Competition
-----------

      The fields in which the Company operates are highly competitive and 
are characterized by rapid change due to technological developments.  The 
Company competes with a number of other companies in each of its product 
areas.  Some of these competitors are larger, more established companies 
with greater financial resources than the Company.

      The principal elements of competition are price, quality, engineering 
capability, service, and timeliness of delivery.  The Company believes that 
it is reasonably competitive in each of these areas.

Research and Development
------------------------

      Virtually all the Company's products are designed and manufactured to 
customers' specifications.  The Company's research and development 
activities are related to advancing its design and manufacturing technology 
as well as developing new materials to be used. Historically, the Company 
has supported such activities, in part, by selectively accepting orders 
which require the Company to advance its design or manufacturing expertise.  
The Company finances on its own the development and implementation of new 
process techniques that allow for the undertaking of more complex,
state-of-the-art product applications, or processes that will reduce cost.
The total cost of research and development activities in fiscal 1996, 1995,
and 1994 was approximately $2,380,000, $2,215,000, and $1,767,000,
respectively.  These amounts are reflected in the Company's cost of sales
and not as separate research and development expenses.  The Company 
anticipates that it will continue to support research and development 
activities at current levels.

Employees
---------

      As of June 30, 1996 the Company had approximately 500 employees.  The 
Company considers its employee relations to be good.  None of the Company's 
employees is covered by a collective bargaining agreement.

Environmental Quality
---------------------

      The Company believes that it is in compliance with all federal, state 
and local laws relating to the protection of the environment.

Item 2. Properties
------------------

      The Company's offices and principal manufacturing facilities are 
located in a 120,000 square foot building in Methuen, Massachusetts.  The 
first portion of the building was constructed in 1970; the most recent 
addition (70,000 square feet) was built in 1982.  The building is owned by 
the Company.  Approximately 105,000 square feet are used for manufacturing, 
and approximately 15,000 square feet are used for engineering, sales, 
executive and other administrative activities.  The Company leases 
approximately 34,000 square feet of additional space in Salem, New Hampshire 
which is being used primarily for manufacturing by the Laminated Cable 
Division.  The joint venture company leases a 28,000 square foot facility in 
Shanghai which is used for all manufacturing and administrative functions.

      The Company believes that its property and equipment are in good 
operating condition and are adequate for existing and immediately 
foreseeable needs.

Item 3. Legal Proceedings
-------------------------

      The Company has no material pending legal proceedings.

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

        This item is inapplicable.

                                   PART II

Item 5. Market for Registrant's Common Equity
---------------------------------------------
        and Related Stockholder Matters
        -------------------------------

(a) Price Range of Common Stock

      The Company's Common Stock is traded in the over-the-counter market 
and is quoted on NASDAQ-NMS (National Market System), which provides 
transactional price quotations on the same basis as a stock exchange.

<TABLE>
<CAPTION>
                                                 1996
                                                 ----
      Quarter                      High                          Low
      -------
      <S>                         <C>                            <C>
      First                       13 1/2                         9 1/4
      Second                      11 1/4                         7 1/4
      Third                       10                             7 1/2
      Fourth                      15 1/4                         8 1/4
                                                 1995
                                                 ----
      Quarter                      High                          Low
      -------
      First                        9 1/4                         5 1/2
      Second                      15 1/2                         8 1/4
      Third                       18 3/4                        11 1/4
      Fourth                      16 1/4                         9 1/2

</TABLE>

(b) Approximate Number of Holders of Common Stock

<TABLE>
<CAPTION>
                                       Approximate Number of Holders of Record
Title Of Class                                  (as of June 30, 1996)
--------------                         ---------------------------------------

<S>                                                     <C>
Common Stock, $.10 par value                            102 *

<F1> * Beneficial holders approximate 800

</TABLE>

(c) Dividends

      The Company has never paid cash dividends on its Common Stock. Payment 
of dividends is solely within the discretion of the Company's Board of 
Directors.  Under the terms of the Industrial Revenue Bond and the Revolving 
Credit Agreement, there are covenants regarding the amount available for 
dividends; the amount at June 30, 1996 was limited to $2,745,000.  The 
Company does not intend to pay any cash dividends in the foreseeable future.


Item 6. Selected Consolidated Financial Data
--------------------------------------------

<TABLE>
<CAPTION>
                                           Years Ended June 30,
                               1996      1995      1994      1993      1992
                                   (In thousands, except per share date)

<S>                            <C>       <C>       <C>       <C>       <C>
Income Statement Data:

Total Revenues                 $47,257   $40,251   $34,926   $31,392   $28,703
                               -------   -------   -------   -------   -------

Costs and Expenses:

Costs of Sales                  40,308    32,946    29,150    26,636    24,980
Selling, General and
 Administrative Expenses         5,518     4,998     4,637     4,432     4,376
Interest Expense                   351       155       110       134       124
Other (Income) Expense             (90)      (88)       22       (62)     (208)
                               -------   -------   -------   -------   -------
                                46,087    38,011    33,919    31,140    29,272
                               -------   -------   -------   -------   -------

Income (Loss) before
 Income Taxes                    1,170     2,240     1,007       252      (569)
Credit (Provision) for
 Income Taxes                     (387)     (754)        -        50       184
                               -------   -------   -------   -------   -------
Income (Loss) before 
 Minority Interest                 783     1,486     1,007       302      (385)
          
Minority Interest                   13         -         -         -         -
                               -------   -------   -------   -------   -------
Net Income (Loss)              $   770   $ 1,486   $ 1,007   $   302   $  (385)
                               =======   =======   =======   =======   =======
Net Income (Loss)per share
 of Common Stock (based
 on weighted average
 number of common and
 common equivalent shares
 outstanding)                  $   .31   $   .61   $   .44   $   .13    $  (.17)
                               -------   -------   -------   -------    -------

Balance Sheet Data:
  Working Capital              $ 9,148   $ 8,466   $  6,704   $5,257   $ 5,148
  Total Assets                  29,662    24,517     20,845   18,906    18,370
  Long-Term Debt                 3,650     2,300        950      500     1,250
  Stockholders' Equity          15,455    14,667     12,880   11,848    11,586

</TABLE>

Item 7.  Management's Discussion and Analysis of
------------------------------------------------
         Financial Condition and Results of Operations
         ---------------------------------------------

Results of Operations For the Past Three Fiscal Years
-----------------------------------------------------

      Total revenue in fiscal year 1996 was $47,257,025, or 17% higher than 
the $40,251,299 reported in the prior year.  Revenues were generated 
principally from product sales, while some were derived from licensing and 
royalty fees.  The increase in revenue resulted principally from the 
Company's further penetration into the various commercial markets, as 
evidenced by the fact that commercial sales constituted 74% of the Company's 
overall sales in fiscal year 1996, as compared to 68% and 61% in fiscal 
years 1995 and 1994, respectively.  Several years ago, the Company, by 
design, altered its sales and marketing strategies for the express purpose 
of broadening its commercial customer base, and becoming less dependent on 
the vagaries and pricing pressures of the military-aerospace sector.  In 
concert with this objective, the Company began developing products that 
would be more compatible with the requirements of the markets it is 
attempting to serve.  

      In September 1995, Parlex (Shanghai) Circuit Co., Ltd., the Chinese 
joint venture, commenced operations (see Notes 1 and 2 to Consolidated 
Financial Statements).  The sales from this venture, while not significant, 
also contributed to the increase over the previous year.

      In fiscal year 1995, sales were $40,251,299, or 15% greater than the 
$34,926,468 reported in fiscal year 1994.  Again, the improvement resulted 
from additional commercial sales, which more than offset the softness in 
demand in the military-aerospace sector.

      The revenue in 1996 included income of $155,000 that was earned 
through licensing and royalty fees; these monies were associated with the 
transfer of technical know-how for a limited variation of the Company's 
flexible circuit product line with a firm situated in Taiwan.  All 
agreements are structured in a manner whereby the Company is adequately 
protected from the licensee competing in the markets or for customers which 
Parlex wishes to serve.  In 1995, $494,500 of income was derived through 
these sources.  The monies were associated with the transfer of technology 
with two firms in Asia and a payment from a prior agreement with a firm 
located in Israel.  In 1994, no funds were generated from these sources.

      The Company's products are manufactured on a job order basis to 
customer specifications.  Customers submit requests for quotations on each 
job, and the Company prepares bids based on its own cost estimates.  The 
Company attempts to reflect the impact on changing costs when establishing 
prices.  The cost of sales as a percentage of revenue was 85% in 1996 versus 
82% and 83% in fiscal years 1995 and 1994, respectively.

      The increase in the cost of sales percentage was substantially 
attributable to a previously reported major contract for a flexible circuit 
utilized in the automotive market.  This contract, which commenced 
manufacturing in the fourth quarter of fiscal year 1995, also represented 
the largest production order in the Company's history.  Although the Company 
was making consistent progress in reducing costs throughout most of last 
year, it wasn't until the month of March 1996 when the Company overcame a 
number of the technical issues that were impacting upon the yields and costs 
in this program, thus enabling the Company to realize a nominal profit from 
this contract during the last four months of the year.

      It is believed, with the introduction of new equipment and production 
processes scheduled to be completed near the end of the first half of fiscal 
year 1997, that improved margins should follow.

      The ratio of selling, general and administrative expenses to revenue 
was 12% for fiscal years 1996 and 1995, and 13% in fiscal year 1994.

      Interest expense for 1996, 1995, and 1994 was $351,125, $154,974, and 
$109,621, respectively.  The increase in expense the past two years was due 
primarily to finance capital expenditures that aggregated nearly $3,000,000 
in 1996 and $2,900,000 in 1995.  In 1996, the Company also expended over 
$700,000 in the Chinese joint venture that commenced operations in September 
1995.  In 1996 and 1995, the working capital needs of the Company also 
increased due to the additional sales being achieved.

      Other income of $90,588 this year and $88,288 last year was comprised 
entirely of items of a miscellaneous nature.  In 1994, the Company incurred 
$21,870 in miscellaneous expenses that resulted primarily from incurred 
losses on the disposition of various pieces of equipment.

      In 1996, the effective tax rate was 33% versus 34% in 1995.  In 1994, 
the effective tax rate was 0% since the Company was able to recognize the 
benefit of available net operating loss carryforwards.

Liquidity and Capital Resources
-------------------------------

      Although the Company was successful in generating nearly $1,500,000 in 
positive cash flow from operating activities, the Company, during 1996, 
borrowed an additional $1,450,000, and guaranteed an additional $400,000 in 
borrowings by the Chinese joint venture, to satisfy obligations associated 
with the capital expenditures of $2,968,713, the commencement of operations 
of the Chinese joint venture, Parlex (Shanghai) Circuit Co., Ltd., and the 
need for additional working capital requirements.

      In December 1995, the Company negotiated a $5,000,000 unsecured line 
of credit under its revolving credit facility that expires December 31, 
1997.  At June 30, 1996, the unused commitment amounted to $1,350,000.

      The Company is presently in the process of negotiating a $2,000,000 
line of credit that will be used to finance additional capital equipment 
requirements.

      The two lines of credit, together with the anticipated positive cash 
flow from operations, should be adequate to satisfy the Company's 
foreseeable needs.

      Deferred compensation payments cannot presently be determined.  
Amounts, if any, which may be paid within one year are not material and 
should have little impact upon the Company's cash position.

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act
--------------------------------------------------------------------------
 of 1995
 -------

      This report contains certain forward-looking statements.  The 
Company's actual results of operations may differ significantly from those 
contemplated by such forward-looking statements as a result of various 
factors beyond its control, including, but not limited to, economic 
conditions in the electronics industry, particularly in the principal 
industry sectors served by the Company, changes in customer requirements and 
in the volume of sales to principal customers, competition and technological 
change.

Item 8. Financial Statements and Supplementary Data
---------------------------------------------------

See the table of contents to the Consolidated Financial Statements included 
in this report; also see Note 11 to Consolidated Financial Statements.

Item 9. Changes in and Disagreements with Accountants on Accounting
-------------------------------------------------------------------
        and Financial Disclosure                                   
        ------------------------

      This item is inapplicable.

                                  Part III
                                  --------

Item 10. thru Item 13.
----------------------
To be incorporated by reference to Registrant's definitive proxy statement 
which will be filed with the Commission within 120 days after the end of the 
Registrant's fiscal year ended June 30, 1996.

                                   Part IV
                                   -------

Item 14.  Exhibits, Financial   (a)       Documents filed as a part
          Statements Schedules            of this Form 10-K.
          And Reports on        1.        Financial Statements.
          Form 8-K.                       The Financial Statements listed in 
                                          the accompanying table of contents to
                                          Consolidated Financial Statements are
                                          filed as a part of this Form 10-K.
                                2.        Financial Statement Schedules.
                                          Schedules are omitted because of the
                                          absence of conditions under which
                                          they are required or because the
                                          required information is included in
                                          the Consolidated Financial Statements
                                          or notes thereto.
                                3.        Exhibits.
                                          The exhibits listed below are either
                                          filed or are deemed to be filed as
                                          part of this annual report.
                                (3)       Restated Articles of Organization
                                          (dated August 2, 1983), Articles of
                                          Amendment, and by-laws (filed as
                                          exhibits 3-A, 3-B, and 3-C to the
                                          Company's Registration Statement on
                                          Form S-1, file No. 2-85588, and
                                          incorporated herein by reference).

                                (10)(A)   Previously filed, but no longer
                                          applicable - See exhibit 10-M below.
                                (10)(B)   Previously filed, but no longer
                                          applicable.
                                (10)(C)   Previously filed, but no longer
                                          applicable - See exhibit 10-AA below.
                                (10)(D)   Previously filed, but no longer
                                          applicable - see exhibit 10-AA below.
                                (10)(E)   Previously filed, but no longer
                                          applicable - see exhibit 10-AA below.
                                (10)(F)   Employees' Profit Sharing Retirement
                                          Plan (filed as exhibit 10-F to the 
                                          Company's Registration Statement on
                                          Form S-1, file No. 2-85588, and
                                          incorporated herein by reference).
                                (10)(G)   Material Contracts in connection with
                                          industrial revenue development bond
                                          financing, including Bond Purchase
                                          and Guaranty Agreement, Loan and
                                          Security Agreement and Mortgage,
                                          Indenture of Trust, and Series A Bond
                                          Supplemental Agreement (all filed as
                                          exhibit 10-G to the Company's
                                          Registration Statement on Form S-1,
                                          file No. 2-85588, and incorporated
                                          herein by reference).
                                (10)(H)   Previously filed, but no longer 
                                          applicable - see exhibit 10-AA below.
                                (10)(I)   Amendment to Employees' Profit
                                          Sharing Retirement Plan, dated March
                                          1985; (filed as exhibit 10-I to Form
                                          10-K for the fiscal year ended June
                                          30, 1985).
                                (10)(J)   Previously filed, but no longer 
                                          applicable - see exhibit 10-AF below.
                                (10)(K)   Previously filed, but no longer 
                                          applicable.
                                (10)(L)   Nonqualified Stock Option Plan, dated
                                          December 2, 1985 (filed as exhibit
                                          10-L to Form 10-K for the fiscal year
                                          ended June 30, 1986).
                                (10)(M)   Employment Agreement between Parlex
                                          Corporation and Mr. Herbert W.
                                          Pollack, dated May 1, 1986; (filed as
                                          exhibit 10-M to Form 10-K for the
                                          fiscal year ended June 30, 1986).

                                (10)(N)   Amendment and Restatement to
                                          Employees' Profit Sharing Retirement
                                          Plan, dated December 1, 1986; (filed
                                          as exhibit 10-N to Form 10-K for the
                                          fiscal year ended June 30, 1987).
                                (10)(O)   Previously filed, but no longer 
                                          applicable - see exhibit 10-AF below.
                                (10)(P)   Previously filed, but no longer 
                                          applicable.
                                (10)(Q)   Restated Articles of Organization,
                                          dated December 1, 1987; (filed as
                                          exhibit 10-Q to Form 10-K for the
                                          fiscal year ended June 30, 1988).
                                (10)(R)   Amendment to Employees' Profit 
                                          Sharing Retirement Plan, dated August
                                          27, 1987; (filed as exhibit 10-R to
                                          Form 10-K for the fiscal year ended
                                          June 30, 1988).
                                (10)(S)   Previously filed, but no longer 
                                          applicable. 
                                (10)(T)   Previously filed, but no longer 
                                          applicable - see exhibit 10-AF below.
                                (10)(U)   Amendments to Parlex Corporation
                                          Profit Sharing Retirement Plan; 
                                          (filed as exhibit 10-U to Form 10-K
                                          for the fiscal year ended June 30,
                                          1990).
                                (10)(V)   Amendments to Parlex Corporation
                                          Profit Sharing Retirement Plan; 
                                          (filed as exhibit 10-U to Form 10-K
                                          for the fiscal year ended June 30,
                                          1990).
                                (10)(W)   Previously filed, but no longer 
                                          applicable - see exhibit 10-AF below.
                                (10)(X)   Previously filed, but no longer 
                                          applicable.
                                (10)(Y)   Previously filed, but no longer 
                                          applicable - see exhibit 10-AA below.
                                (10)(Z)   1989 Outside Directors' Stock Option
                                          Plan; (filed as exhibit 10-Z to Form 
                                          10-K for the fiscal year ended June
                                          30, 1991).
                                (10)(AA)  1989 Employees' Stock Option Plan;
                                          (filed as exhibit 10-AA to Form 10-K
                                          for the fiscal year ended June 30,
                                          1991).
                                (10)(AB)  Previously filed, but no longer
                                          applicable.
                                (10)(AC)  Previously filed, but no longer
                                          applicable - see exhibit 10-AF below.
                                (10)(AD)  Lease agreement - Parlex Corporation
                                          dated July 8, 1992; (filed as exhibit
                                          10-AD to Form 10-K for the fiscal
                                          year ended June 30, 1993).
                                (10)(AE)  Amendment to Parlex Corporation
                                          Profit Sharing Retirement Plan dated
                                          May 26, 1993; (filed as exhibit 10-AE
                                          to Form 10-K for the fiscal year
                                          ended June 30, 1993).
                                (10)(AF)  Revolving Credit and Loan Agreement
                                          dated June 22, 1994; (filed as
                                          Exhibit 10-AF to Form 10-K for the
                                          fiscal year ended June 30, 1994).
                                (10)(AG)  Employment Agreement between Parlex
                                          Corporation and Mr. Peter J. Murphy 
                                          dated May 24, 1994; (filed as Exhibit
                                          10-AG to Form 10-K for the fiscal
                                          year ended June 30, 1994).
                                (10)(AH)  Chinese Joint Venture Contract,
                                          Articles of Association, and Transfer
                                          of Technology Agreement dated May 29,
                                          1995; (filed as Exhibit 10-AH to Form
                                          10-K fiscal year ended June 30,
                                          1995). Confidential treatment has
                                          been requested for portions of this
                                          exhibit.
                                (10)(AI)  Development and Supply Agreement
                                          between Motorola Inc. and Parlex 
                                          Corporation dated April 13, 1993;
                                          (filed as Exhibit 10-AI to Form 10-K
                                          fiscal year ended June 30, 1995).
                                          Confidential treatment has been
                                          requested for portions of this
                                          exhibit.
                                (10)(AJ)  Central Trust of China Agreement
                                          dated June 5, 1995; (filed as Exhibit
                                          10-AJ to Form 10-K for the fiscal
                                          year ended June 30, 1995).
                                          Confidential treatment has been
                                          requested for portions of this
                                          exhibit.
                                (10)(AK)  License Agreement between Samsung
                                          Electro-Mechanics Co., Ltd. and
                                          Parlex Corporation dated September
                                          29, 1994; (filed as Exhibit 10-AK to
                                          Form 10-K for the fiscal year ended
                                          June 30, 1995).
                                (10)(AL)  Employment Agreement between Parlex
                                          Corporation and Mr. Herbert W.
                                          Pollack dated July 1, 1994; (filed as
                                          Exhibit 10-AL to Form 10-K for the
                                          fiscal year ended June 30, 1995).
				(10)(AM)  Employment Agreement between Parlex
                                          Corporation and Peter J. Murphy dated
                                          June 26, 1996; see Exhibit Index.
                                (10)(AN)  License Agreement between Parlex
                                          Corporation and Polyclad Laminates, 
                                          Inc., effective June 1, 1996; see
                                          Exhibit Index. Confidential treatment
                                          has been requested for portions of
                                          this exhibit.
                                (10)(AO)  License grant between Parlex
                                          Corporation and Allied Signal
                                          Laminate Systems, Inc., effective May
                                          5, 1995; see Exhibit Index.
                                          Confidential treatment has been
                                          requested for portions of this
                                          exhibit.
                                (10)(AP)  License Agreement between Parlex
                                          Corporation and Pucka Industrial Co.,
                                          Ltd., effective July 1, 1996; see
                                          Exhibit Index.  Confidential
                                          treatment has been requested for
                                          portions of this exhibit.
                                (10)(AQ)  Revolving Credit and Loan Agreement
                                          dated December 18, 1995; See Exhibit 
                                          Index.
                                (21)      Subsidiaries of the Registrant; See
                                          Exhibit Index.
                                (23)      Independent Auditors' Consent; See
                                          Exhibit Index.
                                (24)      Powers of Attorney; See Exhibit
                                          Index.
(B) Reports on Form 8-K
The Company filed no reports
on Form 8-K with the Securities
and Exchange Commission
during the quarter ended
June 30, 1996.


                                 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.

Parlex Corporation

*/S/  Herbert W. Pollack
-----------------------------------------------------------
Herbert W. Pollack, Chairman and Chief Executive Officer

Date: September 27, 1996
-----------------------------------------------------------

      Pursuant to the requirements of the Securities 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/  Steven M. Millstein
-----------------------------------------------------------
Steven M. Millstein, Principal Accounting
and Financial Officer

Date: September 27, 1996
      -----------------------------------------------------

*/s/  Sheldon A. Buckler
-----------------------------------------------------------
Sheldon A. Buckler, Director

*/s/  Richard W. Hale
-----------------------------------------------------------
Richard W. Hale, Director

*/s/  M. Joel Kosheff
-----------------------------------------------------------
M. Joel Kosheff, Director 

*/s/  Peter J. Murphy
-----------------------------------------------------------
Peter J. Murphy, Director

*/s/  Lester Pollack
-----------------------------------------------------------
Lester Pollack, Director

*/s/  Benjamin M. Rabinovici
-----------------------------------------------------------
Benjamin M. Rabinovici, Director

*/S/  Steven M. Millstein
-----------------------------------------------------------
* by Steven M. Millstein, Attorney-in-Fact

Date: September 27, 1996
      -----------------------------------------------------

      As of the date of submission of this filing, no annual report or proxy 
material with respect to the fiscal year ended June 30, 1996 has been sent 
to the security holders.  Such annual report and proxy material will be 
submitted to the Commission at the time it is furnished to the security 
holders.



                                EXHIBIT INDEX

<TABLE>
<CAPTION>

Exhibit                          Description                      Page
-------                          -----------                      ----

<C>               <S>                                             <C>
10-AM             Employment Agreement between Parlex             30
                  Corporation and Peter J. Murphy dated  
                  June 26, 1996.


10-AN             License Agreement between Parlex Corporation    37
                  and Polyclad Laminates, Inc., effective 
                  June 1, 1996.    


10-AO             License grant between Parlex Corporation        45
                  and Allied Signal Laminate Systems, Inc., 
                  effective May 5, 1995.


10-AP             License Agreement between Parlex Corporation    60
                  and Pucka Industrial Co., Ltd., effective 
                  July 1, 1996.


10-AQ             Revolving Credit and Loan Agreement dated       72
                  December 18, 1995.


21                Subsidiaries of the Registrant                  95

23                Independent Auditors' Consent                   96

24                Powers of Attorney                              97

27                Financial Data Schedule                         98

</TABLE>


INDEPENDENT AUDITORS' REPORT


To the Stockholders and Directors
  of Parlex Corporation:

We have audited the accompanying consolidated balance sheets of Parlex 
Corporation and its Subsidiaries as of June 30, 1996 and 1995, and the 
related consolidated statements of income, stockholders' equity, and cash 
flows for each of the three years in the period ended June 30, 1996.  
These financial statements are the responsibility of the Company's 
management.  Our responsibility is to express an opinion on these 
financial statements based on our audits.

We conducted our audits in accordance with 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 audits 
provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in 
all material respects, the financial position of Parlex Corporation and 
its Subsidiaries at June 30, 1996 and 1995, and the results of their 
operations and their cash flows for each of the three years in the period 
ended June 30, 1996, in conformity with generally accepted accounting 
principles.




/s/ Deloitte & Touche LLP

Boston, Massachusetts
August 2, 1996



PARLEX CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS --
ANNUAL REPORT (FORM 10-K)
YEAR ENDED JUNE 30, 1996
------------------------------------------------------------------------------

CONSOLIDATED FINANCIAL STATEMENTS:

  Consolidated Balance Sheets as of June 30, 1996 and 1995

  For Each of the Years Ended June 30, 1996, 1995 and 1994:

    Consolidated Statements of Income

    Consolidated Statements of Stockholders' Equity

    Consolidated Statements of Cash Flows

    Notes to Consolidated Financial Statements


Schedules are omitted because of the absence of conditions under which 
they are required or because the required information is included in the 
consolidated financial statements or notes thereto.




PARLEX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND 1995
------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ASSETS                                                           1996            1995
                                                              -----------     -----------

<S>                                                           <C>             <C>
CURRENT ASSETS:
  Cash                                                        $   386,608     $   161,392 
  Accounts receivable -- less allowance for doubtful 
   accounts of $80,000 in 1996 and $73,000 in 1995              7,453,333       7,171,553 
  Inventories                                                   7,753,424       6,084,076 
  Refundable income taxes                                          17,794         206,669 
  Deferred income taxes                                           314,743         263,150 
  Other current assets                                            699,386         441,866
                                                              ---------------------------

      Total current assets                                     16,625,288      14,328,706 
                                                              ---------------------------

PROPERTY, PLANT AND EQUIPMENT:
  Land                                                            468,864         468,864 
  Buildings                                                     6,838,391       6,629,301 
  Machinery and equipment                                      22,321,826      21,140,403 
  Leasehold improvements and other                              2,422,084         737,863 
                                                              ---------------------------

      Total                                                    32,051,165      28,976,431 

  Less accumulated depreciation and amortization              (19,396,046)    (19,047,539)
                                                              ---------------------------

      Property, plant and equipment -- net                     12,655,119       9,928,892 
                                                              ---------------------------

OTHER ASSETS                                                      381,649         259,503
                                                              --------------------------- 

TOTAL                                                         $29,662,056     $24,517,101 
                                                              ===========================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt                           $   100,000     $   200,000 
  Bank loan                                                       400,668              --
  Accounts payable                                              5,179,769       3,405,642 
  Accrued liabilities                                           1,797,223       2,257,184 
                                                              ---------------------------

      Total current liabilities                                 7,477,660       5,862,826 
                                                              ---------------------------

LONG-TERM DEBT                                                  3,650,000       2,300,000 
                                                              ---------------------------

OTHER NONCURRENT LIABILITIES                                    1,846,260       1,686,816 
                                                              ---------------------------

MINORITY INTEREST IN PARLEX SHANGHAI                            1,232,691              --
                                                              ---------------------------

STOCKHOLDERS' EQUITY:
  Common stock, $.10 par value -- authorized, 5,000,000 
   shares; issued, 2,582,659 and 2,579,409 shares in 
   1996 and 1995, respectively                                    258,266         257,941 
  Additional paid-in capital                                    3,243,491       3,226,316 
  Retained earnings                                            12,991,313      12,220,827 
  Less treasury stock, at cost -- 210,000 shares in 
   1996 and 1995                                               (1,037,625)     (1,037,625)
                                                              ---------------------------

      Total stockholders' equity                               15,455,445      14,667,459
                                                              --------------------------- 

TOTAL                                                         $29,662,056     $24,517,101 
                                                              ===========================
</TABLE>


See notes to consolidated financial statements.



PARLEX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                        1996            1995            1994

<S>                                                  <C>             <C>             <C>
REVENUES:
  Product sales                                      $47,102,025     $39,756,799     $34,926,468
  License fees and royalty income                        155,000         494,500              --
                                                     -------------------------------------------

      Total revenues                                  47,257,025      40,251,299      34,926,468
                                                     ------------------------------------------- 

COSTS AND EXPENSES:
  Cost of products sold                               40,307,894      32,946,050      29,150,173 
  Selling, general and administrative expenses         5,518,292       4,998,262       4,637,556 
                                                     -------------------------------------------

      Total costs and expenses                        45,826,186      37,944,312      33,787,729 

OPERATING INCOME                                       1,430,839       2,306,987       1,138,739

OTHER INCOME (EXPENSE)                                    90,588          88,288         (21,870)

INTEREST EXPENSE                                        (351,125)       (154,974)       (109,621)
                                                     -------------------------------------------

INCOME FROM OPERATIONS BEFORE INCOME TAXES             1,170,302       2,240,301       1,007,248 

PROVISION FOR INCOME TAXES                              (386,961)       (754,413)             --
                                                     -------------------------------------------

INCOME BEFORE MINORITY INTEREST                          783,341       1,485,888       1,007,248 

MINORITY INTEREST                                         12,855              --              --
                                                     -------------------------------------------

NET INCOME                                           $   770,486     $ 1,485,888     $ 1,007,248
                                                     =========================================== 

NET INCOME PER SHARE                                 $       .31     $       .61     $       .44
                                                     ===========================================    

WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON 
 EQUIVALENT SHARES OUTSTANDING                         2,449,820       2,434,035       2,310,788
                                                     ===========================================
</TABLE>


See notes to consolidated financial statements.



PARLEX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                  Additional
                                               Common Stock        Paid-in       Retained      Treasury
                                            Shares      Amount     Capital       Earnings       Stock 

<S>                                        <C>         <C>        <C>          <C>           <C>
BALANCE, JULY 1, 1993                      2,517,359   $251,736   $2,906,575   $ 9,727,691   $(1,037,625)

  Tax benefit arising from the exercise 
   of nonqualified stock options                  --         --        6,776            --            --

  Issuance of stock                            4,500        450       17,269            --            --

  Net income                                      --         --           --     1,007,248            --
                                           -------------------------------------------------------------

BALANCE, JUNE 30, 1994                     2,521,859    252,186    2,930,620    10,734,939    (1,037,625)

  Tax benefit arising from the exercise 
   of nonqualified stock options                  --         --       70,220            --            --

  Issuance of stock                           57,550      5,755      225,476            --            --

  Net income                                      --         --           --     1,485,888            --
                                           -------------------------------------------------------------

BALANCE, JUNE 30, 1995                     2,579,409    257,941    3,226,316    12,220,827    (1,037,625)

  Issuance of stock                            3,250        325       17,175            --            --

  Net income                                      --         --           --       770,486            --
                                           -------------------------------------------------------------

BALANCE, JUNE 30, 1996                     2,582,659   $258,266   $3,243,491   $12,991,313   $(1,037,625)
                                           =============================================================
</TABLE>


See notes to consolidated financial statements.



PARLEX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                          1996           1995           1994

<S>                                                    <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                           $   770,486    $ 1,485,888    $ 1,007,248
                                                       -----------------------------------------

  Adjustments to reconcile net income to net cash 
   provided by operating activities:
    Depreciation and amortization                        1,678,150      1,438,974      1,422,162 
    (Gain) loss on sale of equipment                        13,652           (500)        31,480 
    Deferred income taxes                                   37,510         75,006       (365,423)
    Deferred compensation                                   70,341         64,015         83,414
    Minority interest                                       12,855             --             --
    Changes in current assets and liabilities:
      Accounts receivable--net                            (681,780)    (1,009,837)    (1,494,103)
      Inventories                                       (1,669,348)      (897,710)      (163,677)   
      Refundable income taxes                              188,875       (206,669)            --
      Other current assets                                (257,520)      (140,501)       (10,882)
      Accounts payable and accrued liabilities           1,314,166        811,262        735,954
      Income taxes payable                                      --       (292,721)       369,716
                                                       -----------------------------------------

        Total adjustments                                  706,901       (158,681)       608,641
                                                       -----------------------------------------

        Net cash provided by operating activities        1,477,387      1,327,207      1,615,889
                                                       -----------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property, plant and equipment            (2,968,713)    (2,851,360)    (1,521,490)
  Increase in other assets                                (122,146)       (90,234)       (10,755)
  Proceeds from sale of equipment                           10,198            500          3,850 
                                                       -----------------------------------------

        Net cash used for investing activities          (3,080,661)    (2,941,094)    (1,528,395)
                                                       -----------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from bank loan                                  400,668             --             --
  Capital contributions to joint venture--minority
   interest                                                160,322             --             --
  Borrowings (payments) under revolving credit 
   agreement                                             1,450,000      1,550,000        (25,000)
  Payments of other long-term debt                        (200,000)      (200,000)      (200,000)
  Exercise of stock options                                 17,500        231,231         17,719
                                                       -----------------------------------------

        Net cash provided by (used for) financing 
         activities                                      1,828,490      1,581,231       (207,281)
                                                       -----------------------------------------

NET INCREASE (DECREASE) IN CASH                            225,216        (32,656)      (119,787)

CASH, BEGINNING OF YEAR                                    161,392        194,048        313,835 
                                                       -----------------------------------------

CASH, END OF YEAR                                      $   386,608    $   161,392    $   194,048
                                                       =========================================

SUPPLEMENTARY DISCLOSURE OF NONCASH TRANSACTIONS:
  Property and equipment contributed as capital 
   by joint venture partner                            $ 1,060,000    $        --    $        --
                                                       =========================================
  Property, plant and equipment acquired in 
   exchange for accounts receivable                    $   400,000    $        --    $        --
                                                       =========================================
</TABLE>


See notes to consolidated financial statements.



PARLEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
------------------------------------------------------------------------------

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Consolidation -- The consolidated financial statements 
     include the accounts of Parlex Corporation (the "Company"), its 
     wholly owned subsidiaries and its 50.1% investment in Parlex 
     (Shanghai) Circuit Co., Ltd. (see Note 2) whose fiscal year end is 
     March 31.  Intercompany transactions have been eliminated.

     Inventories -- Inventories of raw materials are stated at the lower 
     of first-in, first-out cost or market.  Work in process represents 
     costs accumulated under a job-cost accounting system less the 
     estimated cost of shipments to date, in the aggregate not in excess 
     of net realizable value.  At June 30, inventories consisted of:

<TABLE>
<CAPTION>
                                        1996           1995

           <S>                       <C>            <C>
           Raw materials             $2,419,744     $1,867,370 
           Work in process            5,333,680      4,216,706 
                                     -------------------------

           Total                     $7,753,424     $6,084,076
                                     ========================= 
</TABLE>


     Property, Plant and Equipment -- Property, plant and equipment are stated
     at cost and are depreciated over their estimated useful lives using the
     straight-line method.

     Preferred Stock -- The Company has 1,000,000 shares of $1.00 par value
     preferred stock authorized. No shares were issued at June 30, 1996 or 1995.

     Revenue Recognition -- Product sales are recognized upon shipment. License
     fees and royalty income are recognized when earned and as related costs are
     incurred.

     Research and Development -- Research and development costs are expensed as
     incurred and amounted to $2,380,000, $2,215,000 and $1,767,000 for the
     years ended June 30, 1996, 1995 and 1994, respectively. These amounts are
     reflected in the Company's cost of products sold.

     Income Taxes --The Company accounts for income taxes in accordance with
     Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting
     for Income Taxes." This statement requires an asset and liability approach
     to accounting for income taxes based upon the future expected values of the
     related assets and liabilities. Deferred income taxes are provided for
     items which are recognized in different years for tax and financial
     reporting purposes.

     Net Income Per Share -- Net income per share has been computed based on the
     weighted average number of common shares and common share equivalents
     outstanding during the year.

     Use of Estimates -- The preparation of the Company's consolidated financial
     statements in conformity with generally accepted accounting principles
     necessarily requires management to make estimates and assumptions that
     affect the reported amounts of assets and liabilities and disclosure of
     contingent assets and liabilities at the balance sheet dates. Estimates
     include reserves for accounts receivable, useful lives of properties,
     accrued liabilities including health insurance claims and deferred income
     taxes. Actual results could differ from those estimates.

     Fair Value of Financial Instruments -- SFAS No. 107, "Disclosures About
     Fair Value of Financial Instruments," requires disclosure of the fair value
     of certain financial instruments. The carrying amounts of cash, accounts
     payable and accrued expenses approximate fair value because of their
     short-term nature. The carrying amounts of the Company's debt instruments
     approximate fair value.

     New Accounting Standards -- In March 1995, the Financial Accounting
     Standards Board ("FASB") issued SFAS No. 121, "Accounting for the
     Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
     Of." This statement establishes accounting standards for the impairment of
     long-lived assets, certain identifiable intangibles, and goodwill when
     events or changes in circumstances indicate that the carrying amount of the
     assets may not be recoverable. The Company intends to adopt SFAS No. 121 in
     1997. The Company is presently evaluating the impact, if any, that this
     statement will have on its consolidated financial position and results of
     operations.

     In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
     Compensation," which will be effective for the Company beginning July 1,
     1996. SFAS No. 123 requires expanded disclosures of stock-based
     compensation arrangements with employees and encourages (but does not
     require) compensation cost to be measured based on the fair value of the
     equity instrument awarded. Companies are permitted, however, to continue to
     apply APB Opinion No. 25, which recognizes compensation cost based on the
     intrinsic value of the equity instrument awarded. The Company will continue
     to apply APB Opinion No. 25 to its stock-based compensation awards to
     employees and directors, and will disclose the required pro forma effect on
     net income and net income per share in its June 30, 1997 consolidated
     financial statements.

2.   JOINT VENTURE

     In May 1995, the Company entered into an agreement to establish a limited
     liability company in the form of a joint venture in the People's Republic
     of China. The Company owns 50.1% of the joint venture. The joint venture
     manufactures flexible printed circuits and commenced operations in
     September 1995.

3.   ACCRUED LIABILITIES

     Accrued liabilities at June 30 consisted of:

<TABLE>
<CAPTION>
                                            1996          1995

     <S>                                 <C>           <C>
     Payroll and related expenses        $  993,947    $  999,954
     Accrued health insurance               222,170       213,798
     Customer deposit                            --       545,295
     Other                                  581,106       498,137
                                         ------------------------

     Total                               $1,797,223    $2,257,184
                                         ========================
</TABLE>


4.   INDEBTEDNESS

     The Company's China joint venture has a short-term bank loan bearing
     interest at 1.25% over Singapore Interbank Offer Rate ("SIBOR").

     Long-term debt at June 30 consisted of:


<TABLE>
<CAPTION>
                                                    1996          1995

         <S>                                     <C>           <C>
         Revolving Credit Agreement              $3,650,000    $2,200,000
         Industrial Revenue Development Bond        100,000       300,000
                                                 ------------------------

         Total long-term debt                     3,750,000     2,500,000
         Less current portion                       100,000       200,000
                                                 ------------------------

         Long-term debt -- net                   $3,650,000    $2,300,000
                                                 ========================
</TABLE>


     The Company has an Industrial Revenue Development Bond with a bank, at a
     varying interest rate, which annually approximates 65% of prime (8.25% at
     June 30, 1996). Interest and principal are payable quarterly. Buildings
     owned by the Company are pledged as collateral. The net book value of such
     buildings is approximately $3,560,000 at June 30, 1996.

     On December 12, 1995, the Company renegotiated its unsecured Revolving
     Credit Agreement (the "Agreement") (dated June 22, 1994) making available
     up to a total of $5,000,000 through December 31, 1997. On January 1, 1998,
     at the Company's option, the Company may convert the Agreement to a term
     loan with principal and interest payments due monthly over a
     thirty-six-month period to December 31, 2000. Borrowings under the
     Agreement are at the bank's corporate base rate (8.25% at June 30, 1996),
     and carry an annual commitment fee of 1/2% on the average daily unused
     portion of the bank's commitment. Interest is payable monthly. At June 30,
     1996, the unused commitment amounted to $1,350,000.

     The Industrial Revenue Development Bond and the Agreement have restrictive
     covenants, which include restrictions on payment of cash dividends and
     requirements as to tangible net worth, current ratio, working capital, and
     the ratio of total liabilities to equity. Under the most restrictive
     covenants, amounts available for dividends or other distributions and
     capital expenditures at June 30, 1996 approximated $2,745,000 and
     $4,710,000, respectively.

     Interest paid during the years ended June 30, 1996, 1995 and 1994 was
     approximately $251,000, $97,000 and $63,000, respectively.

     Long-term debt due during the years ending June 30, 1997 and 1998 is
     $100,000 and $3,650,000, respectively.

5.   OTHER NONCURRENT LIABILITIES

     Other noncurrent liabilities at June 30 consisted of:


<TABLE>
<CAPTION>
                                                  1996         1995

         <S>                                   <C>          <C>
         Deferred income taxes (Note 6)        $  980,124   $  891,021
         Deferred compensation                    866,136      795,795
                                               -----------------------

                                               $1,846,260   $1,686,816
                                               =======================
</TABLE>


     The timing of deferred compensation payments cannot presently be
     determined. Amounts, if any, which may be paid within one year are not
     material.

6.   INCOME TAXES

     The provision for income taxes consisted of:

<TABLE>
<CAPTION>
                                                           1996          1995          1994

      <S>                                               <C>           <C>           <C>
      Current:
        State                                           $ (57,943)    $ (78,567)    $  (9,000)
        Federal                                          (291,508)     (600,840)     (126,000)
      Deferred                                            (37,510)      (75,006)     (285,000)
      Benefit of net operating loss carryforwards              --            --       420,000
                                                        -------------------------------------

      Total                                             $(386,961)    $(754,413)    $      --
                                                        =====================================
</TABLE>


     A reconciliation of the statutory federal income tax rate to the effective
     income tax rate is as follows:

<TABLE>
<CAPTION>
                                                          1996     1995     1994

      <S>                                                  <C>      <C>      <C>
      Statutory federal income tax rate                    34 %     34 %     34 %
      State income taxes, net of federal tax benefit        3        4        4
      Tax credits                                          --       (4)      --
      Utilization of net operating loss carryforwards      --       --      (42)
      Other                                                (4)      --        4
                                                          -----------------------

      Effective income tax rate                            33 %     34 %     -- %
                                                          =======================
</TABLE>


     Deferred income tax assets and liabilities at June 30 are attributable to
     the following:

<TABLE>
<CAPTION>
                                                                1996           1995

      <S>                                                    <C>            <C>
      Deferred tax liabilities:
        Depreciation                                         $1,326,252     $1,209,013
        Prepaid expenses                                             --         27,988
                                                             -------------------------

                                                              1,326,252      1,237,001
                                                             -------------------------
      Deferred tax assets:
        Inventories                                              36,281         40,912
        Allowance for doubtful accounts                          31,991         29,157
        Accruals                                                114,584        110,893
        Self-insurance                                           87,920         85,519
        Deferred compensation                                   346,128        317,992
        State net operating loss and credit carryforwards        43,967         24,657
                                                             -------------------------

                                                                660,871        609,130
                                                             -------------------------

      Net deferred tax liability                             $  665,381     $  627,871
                                                             =========================
</TABLE>


     Income tax payments of approximately $445,000, $1,162,000 and $12,300 were
     made in 1996, 1995 and 1994, respectively.

7.   STOCK OPTIONS

     The Company has incentive and nonqualified stock option plans covering
     officers, key employees and directors who are not otherwise employees. The
     options are generally exercisable commencing one year from the date of
     grant and typically expire in either five or ten years, depending on the
     plan. The option price for the incentive stock options and for the
     directors plan is fair market value at the date of grant. Nonqualified
     stock options are granted at fair market value or at a price determined by
     the Board of Directors, depending on the plan. In certain cases, the
     Company may, at the option of the Board of Directors, reimburse the
     employees for the tax cost associated with their options.

     At June 30, 1996, there were 221,750 shares reserved for future grants.

     Information concerning the Company's stock option plans is as follows:

<TABLE>
<CAPTION>
                           Shares
                           Under           Option
                           Option          Prices         Exercisable

      <S>                  <C>         <C>                  <C>
      July 1, 1993         142,775     $3.25 -- $ 4.00      49,263
                                                            ======
 
        Granted            110,000      6.00 --   6.88
        Surrendered         (9,850)     3.25 --   4.00
        Exercised           (4,500)     3.25 --   4.00
                           -------

      June 30, 1994        238,425      3.25 --   6.88      73,299
                                                            ======

        Granted             25,500      6.25 --  18.50
        Surrendered        (12,500)     3.25 --   6.25
        Exercised          (57,550)     3.25 --   6.25
                           -------

      June 30, 1995        193,875      3.25 --  18.50      63,248
                                                            ======

        Granted             26,500      8.75
        Surrendered         (6,250)     3.25 --   6.25
        Exercised           (3,250)     3.25 --   6.25
                           -------

      June 30, 1996        210,875                          99,185
                           =======                          ======
</TABLE>


8.   SEGMENT, MAJOR CUSTOMER AND FOREIGN SALES INFORMATION

     The Company operates within a single segment of the electronics industry as
     a specialist in the interconnection and packaging of electronic equipment
     with its product lines of flexible printed circuits, laminated cable, and
     related assemblies.

     Sales to several divisions of one customer represented 29% and 12% of total
     revenues, in 1996 and 1995, respectively. In 1994, sales to two customers
     represented 11% and 10% of total revenues.

9.   RENTAL COMMITMENTS

     The Company leases certain property and equipment under agreements
     generally with initial terms from three to five years with renewal options.
     Rental expense for each of the years ended June 30, 1996, 1995 and 1994 was
     approximately $153,000. Future payments under noncancelable operating
     leases are:

<TABLE>

            <C>                        <C>
            1997                       $285,708
            1998                        132,708
            1999                        132,708
            2000                         73,763
            2001                         20,670
            Thereafter                       --
                                       --------

                                       $645,557 
                                       ========
</TABLE>


10.  BENEFIT PLANS

     The Company has a qualified profit-sharing retirement plan to provide
     benefits to eligible employees. Annual contributions to the plan are at the
     discretion of the Board of Directors and are discretionary in amount. No
     contributions were made to the plan for the years ended June 30, 1996, 1995
     or 1994.

     During fiscal 1995, the Company adopted a 401(k) Savings Plan (the "Plan")
     covering all employees of the Company that have six consecutive months of
     service and have attained the age of twenty- one. Matching employer
     contributions can be made to the Plan at the discretion of the Board of
     Directors. No matching contribution was made to the Plan for the years
     ended June 30, 1996 and 1995.

11.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

     Summarized quarterly financial data are as follows (in thousands except per
     share amounts):

<TABLE>
<CAPTION>
       1996 Quarters
                                   First      Second     Third      Fourth

       <S>                         <C>        <C>        <C>        <C>
       Revenues                    $11,611    $11,685    $11,703    $12,258
       Gross profit                  1,316      1,539      1,820      2,274
       Net income                       24         91        196        459
       Net income per share            .01        .04        .08        .18

       1995 Quarters

       Revenues                    $ 9,417    $ 9,982    $10,031    $10,821
       Gross profit                  1,801      1,999      1,745      1,760
       Net income                      373        472        241        400
       Net income per share            .16        .19        .10        .16
</TABLE>


     Gross profit in the fourth quarter of 1995 includes the effects of start-up
     costs of approximately $400,000 associated with a major contract. Also
     during this quarter, the Company adjusted its annual effective tax rate to
     34% from 40% which it had previously provided during the first three
     quarters of the year. This reduction resulted principally from changes in
     the estimation of tax credits earned during the year. The adjustment had
     the effect of increasing fourth quarter net income by approximately
     $107,000 (4 cents per share).

                                  * * * * * *