SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

|X|         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
            SEPTEMBER 30, 2000.



|_|         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________
            TO___________.

                           Commission File No. 0-27302

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

                 Massachusetts                           04-3116697
         -------------------------------              --------------
         (State or other jurisdiction of             (I.R.S. Employer
         incorporation or organization)              Identification No.)

1499 S.E. Tech Center Place, Suite 350, Vancouver, WA       98683
-----------------------------------------------------------------
       (Address of principal executive offices)            Zip Code

Registrant's telephone number, including area code: (360) 896-2000
                                                    --------------

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       |_|

There were 4,014,728 shares of Common Stock outstanding at October 6, 2000.

<PAGE>

                                   LABTEC INC.
                                      INDEX

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

Item 1.     Financial Statements

             Consolidated Balance Sheets as of September 30, 2000
             (unaudited)and March 31, 2000 .................................  4


            Consolidated Statements of Operations (unaudited) for the
                  three and six month periods ended September 30, 2000......  5

            Consolidated Statements of Cash Flows (unaudited) for the three
                  and six month periods ended September 30, 2000 ...........  6

            Notes to Financial Statements...................................  7

Item 2.     Management's Discussion and Analysis
            of Financial Statements (unaudited)............................. 10

Item 3.     Quantitative and Qualitative Disclosures About Market Risk...... 14

PART II - OTHER INFORMATION

Item 6.     Exhibits and Reports on Form 8-K................................ 15

            Signatures...................................................... 17

<PAGE>

                         PART I. - FINANCIAL INFORMATION

Item 1.          Financial Statements

<TABLE>
<CAPTION>
                                  Labtec, Inc.
                           Consolidated Balance Sheets
                    (In thousands, except per share amounts)

                              Assets                             September 30, 2000        March 31, 2000
                              ------                             ------------------        --------------
                                                                    (Unaudited)
<S>                                                                    <C>                    <C>
Current Assets:
   Cash..........................................................      $    1,890             $   1,373
   Accounts receivable, net......................................          21,760                22,120
   Interest and other receivables................................              25                    16
   Inventories...................................................          18,037                13,955
   Prepaid expenses..............................................              96                   171
   Current deferred income taxes.................................           1,984                 1,854
                                                                            -----                 -----
      Total current assets.......................................          43,792                39,489

Property and equipment, net......................................           2,729                 2,332
Noncurrent deferred income taxes.................................           1,953                 1,953
Debt issuance costs..............................................           2,067                 2,277
Other noncurrent assets..........................................             194                   180
Goodwill, net....................................................          16,439                17,038
                                                                           ------                ------
                                                                       $   67,174             $  63,269
                                                                        =========              ========
          Liabilities and Shareholders' Equity (Deficit)

Current Liabilities:
   Line of credit................................................        $ 14,855              $ 10,761
   Current portion of long-term debt.............................           2,736                 2,900
   Accounts payable..............................................          10,408                 9,411
   Income taxes payable..........................................             882                   185
   Accrued payroll and benefits..................................             672                 1,359
   Accrued interest..............................................             400                   256
   Other accrued expenses........................................           2,500                 1,539
                                                                            -----                 -----
      Total current liabilities..................................          32,453                26,411

Long-term debt...................................................          25,391                28,747
                                                                           ------                ------
                                                                           57,844                55,158
                                                                           ------                ------

Commitments and contingencies....................................             ---                   ---

Shareholders' Equity (Deficit):
Preferred stock, par value $.01, 1,000 share authorized and no
shares outstanding at September 30, or March 31, 2000                         ---                   ---
Common stock, par value $.01, 25,000 shares authorized, 4,014
and 4,013 shares issued and outstanding at September 30, and
March 31, 2000, respectively.....................................              40                    40
Additional paid-in capital.......................................          23,830                23,806
Accumulated deficit..............................................         (14,493)              (15,688)
Accumulated other comprehensive income (loss):
      Cumulative foreign currency translation adjustment.........            (47)                   (47)
                                                                             ----                  ----
                                                                            9,330                 8,111
                                                                            -----                 -----
                                                                         $ 67,174              $ 63,269
                                                                         ========              ========
</TABLE>

The accompanying notes are an integral part of these financial statements

                                       4
<PAGE>
<TABLE>
<CAPTION>
                                  Labtec, Inc.
      Consolidated Statements of Operations and Comprehensive Income (Loss)
                    (In thousands, except per share amounts)
                                   (Unaudited)
                                                     Three Months Ended                   Six Months Ended
                                                  September 30,    September 30,       September 30,    September 30,
                                                  -------------    -------------       --------------   -------------
                                                      2000             1999                 2000             1999
                                                      ----             ----                 ----             ----

<S>                                                   <C>              <C>                <C>              <C>
Net sales                                             $ 24,179         $ 21,674           $ 48,267         $ 37,186

Cost of sales                                           14,266           13,101             28,708           22,276
                                                  -------------    -------------      -------------    -------------

Gross profit                                             9,913            8,573             19,559           14,910
                                                  -------------    -------------      -------------    -------------

Operating expenses:
  Selling and marketing                                  4,733            3,924              9,958            7,273
  General and administrative                             1,278            1,297              2,557            2,334
  Research and development                                 525              575              1,124            1,073
  Depreciation                                             403              413                780              759
  Amortization of goodwill                                 299            1,112                598            1,929
                                                  -------------    -------------      -------------    -------------

                                                         7,238            7,321             15,017           13,368
                                                  -------------    -------------      -------------    -------------

Income from operations                                   2,675            1,252              4,542            1,542

  Interest expense, net                                  1,270            1,001              2,442            1,763
  Other nonoperating expense                                72               32                129               59
                                                  -------------    -------------      -------------    -------------

Total other expense                                      1,342            1,033              2,571            1,822
                                                  -------------    -------------      -------------    -------------

Income (loss) before income taxes                        1,333              219              1,971             (280)

Provision for income taxes                                 527              206                776              255
                                                  -------------    -------------      -------------    -------------

Net income (loss) before extraordinary items          $    806         $     13           $  1,195         $   (535)

Extraordinary loss                                                      (1,016)                              (1,016)
                                                  -------------    -------------      -------------    -------------

Net income (loss)                                     $    806         $(1,003)           $  1,195         $ (1,551)
                                                  =============    =============      =============    =============

Weighted average shares outstanding
     Basic                                               4,013            3,526              4,013            3,489
     Diluted                                             4,025            3,526              4,023            3,489

Net income (loss) per share
     Basic                                            $   0.20         $  (0.28)          $   0.30         $  (0.44)
                                                  =============    =============      =============    =============
     Diluted                                          $   0.20         $  (0.28)          $   0.30         $  (0.44)
                                                  =============    =============      =============    =============
Comprehensive income (loss):
  Net income (loss)                                   $    806         $ (1,003)          $  1,195         $ (1,551)
  Change in cumulative translation                         (8)               21                 --               (9)
    adjustment
                                                  -------------    -------------      -------------    -------------
Comprehensive income (loss)                           $    798         $  (982)           $  1,195         $ (1,560)
                                                  =============    =============      =============    =============
</TABLE>
The accompanying notes are an integral part of these financial statements
                                       5
<PAGE>
<TABLE>
<CAPTION>
                                  Labtec, Inc.
                      Consolidated Statement of Cash Flows
                    (In thousands, except per share amounts)
                                   (Unaudited)

                                                                Six Months Ended September 30,
                                                              -----------------------------------
                                                                   2000              1999
                                                                   ----              ----
<S>                                                                <C>               <C>
Cash flow from operating activities
  Net income (loss)                                                   $ 1,195           $ (1,551)
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities
      Depreciation                                                        780                759
      Amortization of goodwill                                            598              1,929
      Amortization of debt issuance costs                                 219                214
      Change in deferred income taxes                                    (130)                27
      Compensation expense on stock options                                11                ---
      Write-off of debt issuance costs                                    ---              1,693
  Changes in current assets and liabilities:
      Accounts receivable                                                 360             (1,315)
      Inventories                                                      (4,082)             1,097
      Interest and other receivables                                       (9)               (20)
      Income taxes receivables                                            ---                 97
      Prepaid expenses                                                     75                101
      Accounts payable                                                    997             (2,053)
      Income taxes payable                                                697               (449)
      Accrued interest                                                    144                277
      Accrued payroll and other expenses                                  274               (567)
                                                              ----------------   ----------------
Net cash provided by operating activities                               1,129                239
                                                              ----------------   ----------------

Cash flow from investing activities
  Capital expenditures                                                 (1,159)              (726)
  Other assets                                                            (31)               111
  Costs associated with CRU purchase                                                     (11,640)
                                                              ----------------   ----------------
Net cash used in investing activities                                  (1,190)           (12,255)
                                                              ----------------   ----------------

Cash flow from financing activities
  Net increase (decrease) in short-term credit facility                 4,095              5,520
  Proceeds from issuance of long-term debt                                                28,500
  Repayment of long-term debt                                          (3,521)           (20,732)
  Debt issuance costs                                                      (8)            (2,419)
  Proceeds from exercise of stock options                                  12                 27
  Proceeds from issuance of common stock                                                   1,000
  Collection on stock subscription                                                             9

                                                              ----------------   ----------------
Net cash provided by financing activities                                 578             11,905
                                                              ----------------   ----------------

Effect of foreign currency on cash                                        ---                (10)
                                                              ----------------   ----------------

Net increase (decrease) in cash                                           517               (121)

Cash at beginning of period                                             1,373                768
                                                              ----------------   ----------------

Cash at end of period                                                 $ 1,890              $ 647
                                                              ================   ================
</TABLE>

The accompanying notes are an integral part of these financial statements

                                       6
<PAGE>

                                  Labtec, Inc.
                   Notes to Consolidated Financial Statements
                     (In thousand, except per share amounts)
                                   (Unaudited)

1.     Basis of Presentation

The accompanying consolidated financial statements are unaudited and have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission and in the opinion of management include all
adjustments, consisting only of normal recurring adjustments, necessary for the
fair statement of results for the interim periods. Certain information and
footnote disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. These consolidated financial
statements and notes should be read in conjunction with the audited financial
statements and notes thereto included in the Company's annual report on Form
10-K for the year ended March 31, 2000. The results of operations for the
interim periods are not necessarily indicative of the results for the entire
year.

Reclassifications have been made to amounts in prior years to conform to the
current year presentation. These changes had no impact on previously reported
results of operations or shareholders' equity.

2.     Accounts Receivable

Accounts receivable are net of allowances for doubtful accounts and for sales
returns of $1,299 and $1,290 at September 30 and March 31, 2000, respectively.
At September 30 and March 31, 2000, 12% and 11%, respectively, of receivables
were from one customer.

3.     Inventories

Inventories are manufactured by foreign factories subcontracted by the Company.
Of total inventories, $241 and $450 was in transit at September 30, and March
31, 2000, respectively.

4.     Property and Equipment

Property and equipment consists of the following:

                                     September 30, 2000         March 31, 2000
                                     ------------------         --------------
Leasehold improvements                      $    127                  $    256
Tooling and molds                              1,859                     2,588
Furniture and equipment                        2,741                     2,473
Retail displays                                1,581                     2,145
                                               -----                     -----
                                               6,308                     7,462
Less: accumulated depreciation                (3,579)                   (5,130)
                                              -------                   -------
                                          $    2,729                $    2,332
                                          ==========                ==========

                                       7
<PAGE>

                                  Labtec, Inc.
             Notes to Consolidated Financial Statements - Continued
                     (In thousand, except per share amounts)


5.       Stock

On December 1, 1999 the Company completed a one-for-two reverse stock split of
its common stock. Subsequent to the reverse stock split, one of the Company's
subordinate debt holders converted $1,500 principal amount of its Senior
Subordinated Note due October 1, 2005 for 262 shares of common stock. Also, the
Company's majority shareholder converted $824 of the Unsecured Subordinated
Promissory Note due February 17, 2005 and $28 of accrued interest for 149 shares
of common stock.

6.       Earnings Per Share

Net income (loss) per share on a diluted basis is based on the weighted average
number of shares of common stock and all potentially dilutive securities
outstanding during the periods, computed using the treasury stock method for
stock options. Given the Company's net loss for the three and six months ended
September 30, 1999, the dilutive effect of stock options has been excluded from
the computation of the weighted average shares outstanding. For the three and
six months ended September 30, 2000, the dilutive impact of stock options are
included in the computation of net income per share in accordance with FAS 128.
On December 1, 1999 the Company had a one-for-two reverse stock split. The
weighted average shares outstanding in 1999 have been adjusted to reflect the
reverse split.

Weighted average shares outstanding consist of the following:
<TABLE>
<CAPTION>
                                                  For the Three Months Ended        For the Six Months Ended
                                                        September 30,                     September 30,
                                                  --------------------------        ------------------------
                                                    2000             1999             2000            1999
                                                    ----             ----             ----            ----
<S>                                                  <C>              <C>             <C>             <C>
Weighted average shares outstanding (basic)          4,013            3,526           4,013           3,489
Effect of dilutive stock options                        12                0              10               0
                                                     -----            -----           -----           -----
Weighted average shares outstanding (diluted)        4,025            3,526           4,023           3,489
                                                     =====            =====           =====           =====
</TABLE>

7.     Purchase of Connector Resources Unlimited, Inc.

On August 20, 1999, Labtec, Inc. ("Labtec") completed the acquisition of
Connector Resources Unlimited, Inc. ("CRU"). As a result, Labtec acquired all
the outstanding shares of CRU for approximately $13,146 in cash and $1,500 in
debt. Concurrent with the acquisition of CRU, Labtec entered into a $43,000
credit facility with a lender and also sold 156 shares of common stock for
$1,000. The net proceeds from the credit facility and proceeds from the stock
sale were used to retire outstanding debt and accrued interest totaling $23,400,
to pay debt issuance costs and loan fees on the new credit facility, to pay for
certain acquisition costs related to the purchase of CRU and to fund the
purchase of CRU. CRU designs, develops and markets computer peripheral products
principally in North America. The acquisition was accounted for as a purchase
and therefore the operations of CRU have been included with those of the Company
since August 20, 1999.

                                       8
<PAGE>

                                  Labtec, Inc.
             Notes to Consolidated Financial Statements - Continued
                     (In thousand, except per share amounts)


The following sets forth the reconciliation of fair value of the assets acquired
and the liabilities assumed.

Purchase price                                                $14,646
Fair value of tangible assets acquired                         (5,338)
Liabilities assumed                                             2,098
Direct costs of acquisition                                       755
                                                              -------
Excess of purchase price over fair value of tangible assets   $12,161
                                                              =======

The excess of the purchase price over fair value of tangible assets acquired is
being amortized over an estimated useful life of twenty years.

The following unaudited pro forma information presents the results of the
Company's operations assuming the CRU acquisition occurred at the beginning of
the respective three month periods, after giving effect to adjustments for
amortization of goodwill, estimated increase in interest expense and the
estimated impact on the income tax provision.

                               Three Months Ended           Six Months Ended
                                 September 30,                September 30,
                                 -------------                -------------
                               2000          1999          2000          1999
                               ----          ----          ----          ----
                                  (unaudited)                  (unaudited)
Net sales                       $ 24,179     $ 23,625   $ 48,267   $ 43,096
Net income (loss)                    806         (612)     1,195     (1,651)
Net income (loss) per share:
Basic                            $  0.20     $  (0.17)   $  0.30   $  (0.47)
Diluted                             0.20        (0.17)      0.30      (0.47)

The unaudited pro forma financial information is not necessarily indicative of
the operating results that would have occurred had the CRU acquisition been
consummated as of the beginning of each period, nor is it necessarily indicative
of future operating results. The unaudited pro forma information should be read
in conjunction with the report of the Company on Form 8-K dated August 20, 1999
and the report of the Company on Form 8-K/A filed November 2, 1999.

8.     Borrowings

In conjunction with the purchase of CRU in August 1999, the Company repaid its
$7,500 revolving line of credit and $19,250 long-term loan with funds obtained
from a $27,000 long-term loan and a $16,000 revolving line of credit with other
lenders. Also, a $1,500 seven and one-half year promissory note was issued to
the prior shareholders of CRU. Fees related to the extinguished credit line are
included in the extraordinary loss on extinguishment of debt. At September 30,
2000, the long-term loans and a portion of the revolving line of credit were
accruing interest at LIBOR plus 3.00-3.50% and the remaining portion of the
revolving line of credit was accruing interest at the prime rate plus 1.50%. In
December 1999, the Company entered into an interest rate swap agreement with its
primary lender in order to fix the interest rate on a portion of its long-term
debt. At September 30, 2000, the amount of debt subject to the fixed rate was
$12,100, for which the rate was 9.66%. The bank line of credit is secured by
substantially all of the Company's assets. Loan fees paid to the banks and
transaction fees relating to the term loan, revolving line of credit and
promissory note were $2,419 and have been recorded in debt issuance costs. The
current line of credit expires in September 2005 and the long-term debt expires
June 30, 2005.

                                       9
<PAGE>

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

Overview

The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto appearing elsewhere herein.

This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements that involve a number of risks
and uncertainties. The following are among the factors that could cause actual
results to differ materially from the forward-looking statements: business
conditions and growth in the personal computer and workstation industries;
general economies, both domestic and international; lower than expected customer
orders or variations in customer order patterns; competitive factors, including
increased competition, new product offerings by competitors and pricing
pressures; the availability of parts and components; changes in product mix;
resource constraints encountered in developing new products; and product
shipment interruptions due to manufacturing difficulties. The forward-looking
statements contained in the MD&A regarding industry trends, product development
and liquidity and future business activities should be considered in light of
these factors.

Three and Six Months Ended September 30, 2000 and September 30, 1999

Net sales were $24,178,950 for the three months ended September 30, 2000
compared to $21,674,325 for the three months ended September 30, 1999 and
$48,267,304 for the six months ended September 30, 2000 compared to $37,186,584
for the six months ended September 30, 1999. The increase in net sales over the
periods was due primarily to the increase in sales for the Company's personal
audio, PC Voice Access(TM) and 3D input device line of products, and the
addition of sales from the data storage product line. Also, the Company's North
American retail business increased substantially. The Company's largest customer
represented 11.7% of sales for the six months ended September 30, 2000, as
compared to 9.8% of sales for six months ended September 30, 1999.

<TABLE>
<CAPTION>
                                         Three Months Ended                             Six Months Ended
                                            September 30,                                September 30,
                                  ---------------------------------          -------------------------------------
                                      (in thousands, except %)                      (in thousands, except %)
                                   2000         1999       % Change            2000           1999        % Change
                                   ----         ----       --------            ----           ----        --------
<S>                              <C>          <C>             <C>            <C>            <C>             <C>
Net Sales                        $24,179      $21,674         12%            $48,267        $37,186         30%
</TABLE>

Cost of sales increased for the three and six months ended September 30, 2000
compared to the three and six months ended September 30, 1999 primarily as a
result of higher net sales. Cost of sales as a percentage of net sales decreased
for the three and six months ended September 30, 2000 compared to the three and
six months ended September 30, 1999 primarily as a result of the change in
product mix from a larger portion of higher cost products (speakers) to a larger
portion of lower cost products (PC Voice Access(TM) and personal audio).

                                       10
<PAGE>
<TABLE>
<CAPTION>
                                         Three Months Ended                            Six Months Ended
                                           September 30,                                September 30,
                                  ----------------------------------          -------------------------------------
                                      (in thousands, except %)                     (in thousands, except %)
                                  2000          1999       % Change           2000           1999         % Change
                                  ----          ----       --------           ----           ----         --------
<S>                              <C>          <C>             <C>            <C>            <C>             <C>
Cost of sales                    $14,266      $13,101         9%             $28,708        $22,276         29%
As a % of net sales                 59.0%        60.4%                         59.5%          59.9%
</TABLE>


Selling and marketing expenses increased by $809 to $4,733 for the three months
ended September 30, 2000 from $3,924 for the three months ended September 30,
1999. For the six months ended September 30, 2000 selling and marketing expenses
increased by $2,685. As a percentage of net sales, selling and marketing
expenses increased slightly to 20.6% for the six months ended September 30, 2000
from 19.6% for the six months ended September 30, 1999. The dollar increase is
primarily a result of additional sales personnel, higher travel costs to support
the increased sales volume, increased variable costs related to the increased
sales volume, and increased marketing efforts in the North American retail
portion of the business to maintain market share in this very competitive
market.
<TABLE>
<CAPTION>
                                         Three Months Ended                            Six Months Ended
                                           September 30,                                September 30,
                                  ----------------------------------          -------------------------------------
                                      (in thousands, except %)                     (in thousands, except %)
                                  2000          1999       % Change           2000           1999         % Change
                                  ----          ----       --------           ----           ----         --------
<S>                              <C>          <C>            <C>             <C>            <C>             <C>
Selling and marketing            $4,733       $3,924         21%             $9,958         $7,273          37%
As a % of net sales              19.6%        18.1%                           20.6%         19.6%
</TABLE>


General and administrative expenses, which include the Company's corporate
finance, legal, human resources, and administrative functions, decreased
slightly for the three months ended September 30, 2000 as compared to the three
months ended September 30, 1999. For the six months ended September 30, 2000
general and administrative expenses increased by $223 from the six months ended
September 30, 1999. As a percentage of net sales, general and administrative
expenses decreased to 5.3% for the six months ended September 30, 2000 from 6.3%
for the prior period. The dollar increase is due primarily to additional labor
costs related to the adding personnel after the CRU acquisition. As a percentage
of net sales, general and administrative expenses decreased primarily due to
increased net sales.
<TABLE>
<CAPTION>
                                         Three Months Ended                             Six Months Ended
                                            September 30,                                September 30,
                                  ---------------------------------          -------------------------------------
                                      (in thousands, except %)                      (in thousands, except %)
                                   2000         1999       % Change            2000           1999        % Change
                                   ----         ----       --------            ----           ----        --------
<S>                              <C>         <C>            <C>             <C>            <C>             <C>
General and administrative       $1,278      $1,297         (1%)            $2,557         $2,334          10%
As a % of net sales               5.3%        6.0%                           5.3%           6.3%
</TABLE>


Research and development expenses increased by $51 for the six months ended
September 30, 2000 as compared to the six months ended September 30, 1999,
primarily due to the increased investment in the development of software drivers
for the 3D motion control product line and the development of new speaker and PC
Voice Access(TM) products. Also, the dollar increase reflects the increased
hiring of employees working in research and development. As a percentage of net
sales, research and development decreased primarily due to increased net sales.

                                       11
<PAGE>
<TABLE>
<CAPTION>
                                         Three Months Ended                             Six Months Ended
                                            September 30,                                September 30,
                                  ---------------------------------          -------------------------------------
                                      (in thousands, except %)                      (in thousands, except %)
                                   2000         1999       % Change            2000           1999        % Change
                                   ----         ----       --------            ----           ----        --------
<S>                              <C>         <C>            <C>             <C>            <C>             <C>
Research and development         $525        $575           (9%)            $1,124         $1,073          5%
As a % of net sales              2.2%        2.7%                            2.3%           2.9%
</TABLE>

Depreciation dollar amounts increased for the six months ended September 30,
2000 compared to the six months ended September 30, 1999 as the result of
increased capital expenditures for computer equipment and software and
tooling/molds for new products being developed. Depreciation decreased as a
percentage of net sales primarily due to the increase in net sales.
<TABLE>
<CAPTION>
                                         Three Months Ended                             Six Months Ended
                                            September 30,                                September 30,
                                  ---------------------------------          -------------------------------------
                                      (in thousands, except %)                      (in thousands, except %)
                                   2000         1999       % Change            2000           1999        % Change
                                   ----         ----       --------            ----           ----        --------
<S>                              <C>         <C>            <C>             <C>            <C>             <C>
Depreciation                     $403        $413           (2%)            $780           $759            3%
As a % of net sales              1.7%        1.9%                           1.6%           2.0%
</TABLE>

Amortization decreased in dollar amount in the three and six months ended
September 30, 2000 compared to the three and six months ended September 30,
1999. As a percentage of net sales, amortization decreased for the three and six
months ended September 30, 1999 compared to the same periods ended September 30,
1999. This decrease was the result of changing the Spacetec amortization of
goodwill from three (3) years to ten (10) years. Goodwill (the purchase price
paid for Spacetec and CRU in excess of the fair value of net tangible assets) is
being amortized over ten (10) years for Spacetec and twenty (20) years for CRU.
<TABLE>
<CAPTION>
                                         Three Months Ended                             Six Months Ended
                                            September 30,                                September 30,
                                  ---------------------------------          -------------------------------------
                                      (in thousands, except %)                      (in thousands, except %)
                                   2000         1999       % Change            2000           1999        % Change
                                   ----         ----       --------            ----           ----        --------
<S>                              <C>         <C>            <C>             <C>            <C>             <C>
Amortization                     $299       $1,112          (73%)           $598           $1,929          (69%)
As a % of net sales              1.2%        5.1%                           1.2%            5.2%
</TABLE>
Interest expense increased both in dollar amount and as a percentage of net
sales for the three and six months ended September 30, 2000 compared to the
three and six months ended September 30, 1999. The increase was primarily the
result of the Company's refinancing and increasing its debt in conjunction with
the purchase of CRU in August 1999.
<TABLE>
<CAPTION>
                                         Three Months Ended                             Six Months Ended
                                            September 30,                                September 30,
                                  ---------------------------------          -------------------------------------
                                      (in thousands, except %)                      (in thousands, except %)
                                   2000         1999       % Change            2000           1999        % Change
                                   ----         ----       --------            ----           ----        --------
<S>                              <C>         <C>            <C>             <C>            <C>             <C>
Interest expense, net            $1,270      $1,001         27%             $2,442         $1,763          38%
As a % of net sales              5.3%        4.6%                           5.1%           4.7%
</TABLE>
The provision for income taxes was $527 for the three months ended September 30,
2000, as compared to $206 for the same period in fiscal 2000. The provision for
income taxes was $776 for the six months ended September 30, 2000, as compared
to $255 for the same period in fiscal 2000. The primary reason for the increase
was the increase in pre-tax income.

                                       12
<PAGE>

Liquidity and Capital Resources

As of September 30, 2000, the Company had $1,890 in cash and cash equivalents
and working capital of $9,339. The working capital balance decrease from March
31, 2000, was primarily due to the increase in borrowing on the line of credit
and increases in accounts payable and other accrued expenses, which was
partially offset by an increase in inventory.

Net cash provided by operating activities was $1,129 for the six months ended
September 30, 2000, compared to cash provided by operating activities of $239
for the same period in fiscal 2000. The increase in net cash provided by
operating activities was primarily due to the increase in net income over the
prior year net loss and the increase in accounts payable, incomes taxes payable
and other accrued expenses, which was partially offset by an increase in
inventory.

Net cash used in investing activities was $1,190 for the six months ended
September 30, 2000, compared to net cash used in investing activities of $12,255
in fiscal 2000. The decrease was primarily due to the purchase of CRU in the
period during fiscal 2000.

Financing activities provided net cash of $578 for the six months ended
September 30, 2000, principally due to the increase in short-term borrowing,
which was partially offset by the repayment of long-term debt.

At September 30, 2000, the long-term loans were accruing interest at the LIBOR
rate plus 3.00 - 3.50%, the subordinated note at 12%, the line of credit at the
prime rate plus 1.50%, and the promissory notes at 10% and 6%, respectively. In
December 1999, the Company entered into an interest rate swap agreement with its
primary lender in order to fix the interest rate on a portion of its long-term
debt. At September 30, 2000, the amount of debt subject to the fixed rate was
$12,100, for which the rate was 9.66%.

The Company believes that its existing cash and revolving line of credit,
together with future funds from operations, will satisfy its need for working
capital and other cash requirements for at least the next twelve-month period.

Year 2000 Issues

The Year 2000 issue is the result of date-sensitive devices, systems and
computer programs that were deployed using two digits rather than four to define
the applicable year. Any such technologies may recognize a year containing "00"
as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculation causing disruption of operations including, among
other things, a temporary inability to process transactions or engage in similar
normal business activities.

The Company did not experience any significant malfunctions or errors in its
information or business systems when the date changed from 1999 to 2000. Based
on its operations since January 1, 2000, the Company does not expect any
significant problems related to the Year 2000 issue. However, it is possible
that the full impact of the date change has not been fully recognized. For
example, it is possible that Year 2000 or similar issues, such as leap year
related problems, may occur with financial closings. The Company believes that
any such problems will be minor and easily corrected. In addition, the Company
could still be negatively impacted if the Year 2000 or similar issues adversely
affect its customers or suppliers. Currently, the Company is not aware of any
significant Year 2000 or similar problems that have arisen with its customers or
suppliers.

                                       13
<PAGE>

Disclosure Regarding Private Securities Litigation Reform Act of 1995
---------------------------------------------------------------------

From time to time, the Company, through its management, may make forward-looking
public statements in press releases or other communications, such as statements
concerning then expected future revenues or earnings or alliances, product
development, and commercialization, as well as other estimates relating to
future operations. Forward-looking statements may be in reports filed under the
Securities Exchange Act of 1934, as amended, in press releases, or in oral
statements made with the approval of an authorized executive officer. The words
or phrases "believe," "will likely result," "are expected to," "will continue,"
"is anticipated," "estimate," or similar expressions are intended to identify
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934 and Section 27A of the Securities Act of 1933, as enacted
by the Private Securities Litigation Reform Act of 1995.

The Company wishes to caution readers not to place undue reliance on these
forward-looking statements which speak only as of the date on which they are
made. Various factors could affect the Company's financial or other performance,
and could cause the Company's actual results for future periods to differ
materially from any opinions or statements expressed with respect to future
periods or events in any current statement. These facts include, but are not
limited to: business conditions and growth in the personal computer and
workstation industries and general economies, both domestic and international;
dependence on a limited number of retail customers; dependence on a limited
number of source suppliers; lower than expected customer orders or variations in
customer order patterns due to changes in demand for customers' products and
customers' inventory levels; competitive factors, including increased
competition, new product offerings by competitors and pricing pressures; changes
in product mix; dependence on proprietary technology; assertion of intellectual
property rights by third parties; technological difficulties and resource
constraints encountered in developing new products; product shipment
interruptions and other factors discussed herein and in the Company's other
filings with the Securities and Exchange Commission.

The Company will not undertake and specifically declines any obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events which may cause management to reevaluate such forward-looking statements.

Item 3.          Quantitative and Qualitative Disclosures About Market Risk

                  None.

                                       14
<PAGE>

                           PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K


(a)      Exhibits:
<TABLE>
<CAPTION>

Number    Description of Exhibit                           Method of Filing
------    ----------------------                           ----------------
<S>      <C>                                              <C>
3.1       Restated Articles of Organization                Incorporated  by  reference to Exhibit 3.1 to the
                                                           Company's  Annual  Report  on Form  10-K  for the
                                                           fiscal  year ended March 31, 1999 (the "1999 Form
                                                           10-K")
3.2       Articles of Amendment                            Incorporated  by  reference to Exhibit 3.2 to the
                                                           1999 Form 10-K
3.3       Articles of Amendment                            Incorporated  by  reference to Exhibit 3.3 to the
                                                           Form  10-Q  for  the   quarterly   period   ended
                                                           September 30, 1999
3.4       Articles of Amendment                            Incorporated by reference to Exhibit 3.4 to the
                                                           Company's Quarterly Report on Form 10-Q for the
                                                           fiscal quarter entded December 31, 1999
3.5       Amended and Restated By-Laws of the Company      Incorporated  by  reference to Exhibit 3.3 to the
                                                           1999 Form 10-K
4.1       Specimen   certificate  for  shares  of  common  Incorporated  by  reference to Exhibit 4.1 to the
          stock of the Company                             1999 Form 10-K
10.1      Labtec Inc.  Amended and Restated 1997 Employee  Incorporated  by reference to Exhibit 10.1 to the
          Stock Option Plan                                1999 Form 10-K
10.2      1997  Employee   Stock  Option  Plan  -  Option  Incorporated  by reference to Exhibit 10.2 to the
          Certificate and Agreement                        1999 Form 10-K
10.3      Amended  and  Restated  1997   Employee   Stock  Incorporated  by reference to Exhibit 10.3 to the
          Option Plan - Option Certificate and Agreement   1999 Form 10-K
10.4      Amended and Restated Stock Option Plan           Incorporated  by reference to Exhibit 10.1 to the
                                                           Company's  Registration  Statement  on  Form  S-1
                                                           (Commission     File    No.     33-98064)    (the
                                                           "Registration Statement")
10.5      Amended  and  Restated  1995   Director   Stock  Incorporated  by reference to Exhibit 10.2 to the
          Option Plan                                      Company's  Annual  Report  on Form  10-K  for the
                                                           fiscal year ended March 31, 1997
10.6      1995 Employee Stock Purchase Plan                Incorporated  by reference to Exhibit 10.3 to the
                                                           Registration Statement

10.7      Amended  and  Restated  Agreement  and  Plan of  Incorporated  by  reference to Exhibit 2.1 to the
          Merger  among  Spacetec IMC  Corporation,  SIMC  Company's   Current  Report  on  Form  8-K  dated
          Acquisition  Corporation and Labtec Inc., dated  October  21,   1998  (date  of   earliest   event
          as of October 2, 1998,  as amended and restated  reported)  filed  with the  Commission  (File No.
          as of November 13, 1998                          0-27302) on November 17, 1998
10.8      Spacetec     IMC     Corporation      Unsecured  Incorporated  by reference to Exhibit 10.8 to the
          Subordinated  Promissory  Note  for  $1,065,000  1999 Form 10-K
          dated February 17, 1999
10.9      Stock  Purchase  Agreement,  dated as of August  Incorporated  by  reference to Exhibit 2.1 to the
          4, 1999,  among the Purchaser,  the Company and  Company's   Current  Report  on  Form  8-K  dated
          each   of   the   stockholders   of   Connector  August   20,   1999  (date  of   earliest   event
          Resources Unlimited, Inc.                        reported)  filed  with the  Commission  (File No.
                                                           0-27302)  on  September  2, 1999 (the  "1999 Form
                                                           8-K")


                                       15
<PAGE>

Number    Description of Exhibit                           Method of Filing
------    ----------------------                           ----------------

10.10     Promissory  Note,  dated as of August 20, 1999,  Incorporated  by  reference to Exhibit 2.2 to the
          issued  by the  Company  and  payable  to  Carl  1999 Form 8-K
          Gromada,  as  collection  agent for each of the
          stockholders of Connector Resources  Unlimited,
          Inc.
10.11     Form of  Credit  Agreement,  dated as of August  Incorporated  by  reference  to Exhibit  10.11 to
          20,   1999,   among  the  Company  and  certain  the Form  10-Q  for the  quarterly  period  ended
          subsidiaries,   various   guarantors,   various  September 30, 1999
          lending  institutions  and The Chase  Manhattan
          Bank, as agent
10.12     Recapitalization  Agreement  and Plan of Merger  Incorporated  by  reference  to Exhibit  10.12 to
          between  Speaker   Acquisition  Corp.  and  LEI  the 1999 Form 10-K
          Holdings, Inc., dated as of August 26, 1997
10.13     Lease Agreement,  dated April 24, 1997, between  Incorporated  by  reference  to Exhibit  10.13 to
          Pacific  Realty  Associates,  L.P.,  and Labtec  the 1999 Form 10-K
          Enterprises, Inc.
10.14     Lease   Agreement,   dated  February  4,  1998,  Incorporated  by  reference  to Exhibit  10.14 to
          between  Columbia  Tech  Center,   L.L.C.,  and  the 1999 Form 10-K
          Labtec Inc.
10.15     Labtec Enterprises,  Inc. $6,000,000  Principal  Incorporated  by  reference  to Exhibit  10.16 to
          Amount of Senior  Subordinated Notes and 50,000  the 1999 Form 10-K
          Shares  of  Common  Stock  Purchase  Agreement,
          dated October 7, 1997
10.16     Amendment  to Purchase  Agreement,  dated as of  Incorporated  by  reference  to Exhibit  10.17 to
          October  25,  1999 and  effective  as of August  the Form  10-Q  for the  quarterly  period  ended
          20, 1999,  between Labtec  Corporation  and The  September 30, 1999
          KB Mezzanine Fund II, L.P.
10.17     Recognition,   Non-Disturbance   and   Attorney  Incorporated  by reference to Exhibit 10.5 to the
          Agreement,  dated  December 26,  1995,  between  1996 Form 10-K
          the Company  and  Historic  Boott Mill  Limited
          Partnership
10.18     Royalty Agreement,  dated May 29, 1991, between  Incorporated  by reference to Exhibit 10.6 to the
          the Company and John A. Hilton                   Registration Statement
10.19     Resale  Agreement,  dated  as of May  1,  1991,  Incorporated  by reference to Exhibit 10.8 to the
          between  the  Company   and   Electronic   Data  Registration  Statement.   See  also  footnote  1
          Systems    Corporation    (as   successors   to  below.
          McDonnell Douglas  Corporation),  as amended by
          Amendment  No. 1 dated  December 23, 1993,  and
          Amendment No. 2 dated October 6, 1994
10.20     Distribution  and  Marketing  Agreement,  dated  Incorporated  by reference to Exhibit 10.9 to the
          April  28,   1994,   between  the  Company  and  Registration  Statement.   See  also  footnote  1
          Sumisho Electronic Devices Corporation           below.
10.21     Form   of   Confidentiality    and   Inventions  Incorporated  by  reference  to Exhibit  10.11 to
          Agreement between the Company and its employees  the Registration Statement.
10.22     Form of  Non-Disclosure  Agreement  between the  Incorporated  by  reference  to Exhibit  10.12 to
          Company and its consultants                      the Registration Statement.
10.23     Severance  Agreement,  dated  March  18,  1998,  Incorporated  by  reference  to Exhibit  10.15 to
          between the Company and Dennis T. Gain           the Company's  Annual Report on Form 10-K for the
                                                           fiscal year ended March 31, 1998
10.24     Employment  Agreement,   dated  June  1,  1998,  Incorporated  by  reference  to Exhibit  10.24 to
          between the Company and Gregory Jones            the 1999 Form 10-K
27.1      Financial Data Schedule                          Filed herewith
</TABLE>
--------
(1) Certain confidential material contained in the document has been omitted and
filed  separately with the Securities and Exchange  Commission  pursuant to Rule
406 of the Securities Act of 1933, as amended,  and Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

       (b)   Reports on Form 8-K

                  The Company has not filed any reports on Form 8-K during the
quarterly period ended September 30, 2000.

                                       16
<PAGE>

                                   SIGNATURES
                                   ----------

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


                                         LABTEC INC.


Dated:    November ___, 2000            By: /s/  Robert G. Wick
                                        ----------------------
                                        Robert G. Wick
                                        President and
                                        Chief Executive Officer



                                       17