<PAGE>

                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C.  20549

                                      FORM 10-Q

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

           For the quarterly period ended   January 31 ,1996
                                           --------------------
                                          OR
    (   )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934

           For the transition period from        to
                                          ------    ------
                          Commission File Number   1-8342
                                                 -----------
                                 PICO PRODUCTS, INC.
-------------------------------------------------------------------------------
                (Exact name of registrant as specified in its charter)

             NEW YORK                            15-0624701
--------------------------------            ---------------------
(State or other jurisdiction of             (I.R.S. Employer
 incorporation or organization)              Identification No.)

12500 Foothill Blvd.
Lakeview Terrace, California                        91342
-----------------------------------------    --------------------
(Address of principal executive offices)         (Zip Code)

Registrant's telephone number, including area code:(818) 897-0028
                                                   --------------
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
requirement for the past 90 days.

              YES    X                      NO
                    ---                          ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of  March 8, 1996.

Common Stock, $0.01 par value               3,692,246
-----------------------------         --------------------
            Class                       Number of Shares

This report consists of 22 pages.

                                       1

<PAGE>

                                 PICO PRODUCTS, INC.

                                        INDEX



<TABLE>
<CAPTION>
                                                           Page No.
                                                           --------
<S>      <C>                                               <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets -
         January 31, 1996 and July 31, 1995                  3-4

         Condensed Consolidated Statements
         of Operations - Three and Six Months
         Ended January 31, 1996 and 1995                     5

         Condensed Consolidated Statements
         of Cash Flows - Six Months Ended
         January 31, 1996 and 1995                           6

         Notes to Condensed Consolidated Financial
         Statements                                          7-10

Item 2.  Management's Discussion and Analysis
         of Results of Operations and Financial
         Condition                                           11-14

PART II  OTHER INFORMATION

Item 1.  Legal Proceedings                                   15

Item 4.  Submission of Matters to a Vote of
         Security Holders                                    15

Item 6.  Exhibits and Reports on Form 8-K                    15
</TABLE>


                                          2

<PAGE>



                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                              PICO PRODUCTS, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                  January 31,      July 31,
                                                     1996            1995
                                                 ------------    ------------
    <S>                                          <C>             <C>
    ASSETS

    CURRENT ASSETS:

      Cash and cash equivalents                  $   453,836     $   501,525
      Accounts receivable (less allowance
         for doubtful accounts: January 31,
         1996, $260,000; July 31, 1995,
         $290,000)                                 5,003,883       5,892,338
      Inventories (Note 2)                        11,582,153       9,760,164
      Prepaid expenses and other current
         assets                                      263,795         183,870
                                                 ------------    ------------
         TOTAL CURRENT ASSETS                     17,303,667      16,337,897
                                                 ------------    ------------

    PROPERTY, PLANT AND EQUIPMENT:

      Buildings                                      217,255         217,255
      Leasehold improvements                         337,540         259,277
      Machinery and equipment                      2,561,458       2,428,605
                                                 ------------    ------------
                                                   3,116,253       2,905,137
      Less accumulated depreciation
         and amortization                          2,265,848       2,121,382
                                                 ------------    ------------
                                                     850,405         783,755
                                                 ------------    ------------
    OTHER ASSETS:

      Patents and licenses (less accumulated
         amortization: January 31, 1996,
         $59,248; July 31, 1995, $56,204)            161,962         165,006
      Excess of cost over net assets of
         businesses acquired (less accumulated
         amortization:  January 31, 1996,
         $352,410; July 31, 1995, $337,890)          225,025         239,545
      Deposits and other noncurrent assets            98,219         107,147
                                                 ------------    ------------
                                                     485,206         511,698
                                                 ------------    ------------
                                                 $18,639,278     $17,633,350
                                                 ------------    ------------
                                                 ------------    ------------
</TABLE>

See notes to condensed consolidated financial statements.

                                          3
<PAGE>



                                 PICO PRODUCTS, INC.
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                     (continued)
                                     (Unaudited)

<TABLE>
<CAPTION>
                                                   January 31,     July 31,
                                                      1996           1995
                                                 -------------  -------------
<S>                                              <C>            <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Notes payable                                  $  9,047,719   $   7,778,655
  Current portion of long-term debt  (Note 6)         339,624         362,239
  Accounts payable                                  3,248,293       3,326,366
  Accrued expenses:
    Legal and accounting                              150,351          90,443
    Payroll and payroll taxes                         383,217         484,854
    Other accrued expenses                            333,261         336,450
  Other current liabilities (Note 5)                  462,066         462,066
                                                 ------------   -------------

     TOTAL CURRENT LIABILITIES                     13,964,531      12,841,073
                                                 ------------   -------------

LONG-TERM DEBT                                        270,186         278,820
                                                 ------------   -------------

COMMITMENTS AND CONTINGENCIES (Note 5)                   -              -

SHAREHOLDERS' EQUITY (Note 6):

  Preferred shares, $.01 par value;
    authorized 500,000 shares;
    no shares issued                                     -              -
  Common shares, $.01 par value;
    authorized 15,000,000 shares;
    issued and outstanding 3,692,246
    shares at January 31, 1996 and
    3,637,046 shares at July 31, 1995                  36,922          36,370
  Additional paid-in capital                       21,586,328      21,565,255
  Accumulated deficit                             (17,107,498)    (17,010,269)
  Cumulative translation adjustment                  (111,191)        (77,899)
                                                 ------------   -------------

     TOTAL SHAREHOLDERS' EQUITY                     4,404,561       4,513,457
                                                 ------------   -------------

                                                 $ 18,639,278   $  17,633,350
                                                 ------------   -------------
                                                 ------------   -------------
</TABLE>

See notes to condensed consolidated financial statements.


                                          4

<PAGE>

                                 PICO PRODUCTS, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                     (Unaudited)

 
<TABLE>
<CAPTION>
                                                      Three Months Ended           Six Months Ended
                                                          January 31,                  January 31,
                                                  ---------------------------  ---------------------------
                                                      1996          1995           1996           1995
                                                  -----------    -----------   ------------   ------------
<S>                                               <C>            <C>           <C>            <C>
SALES                                             $8,486,258     $8,007,041    $16,860,220    $16,098,943
COSTS AND EXPENSES:
  Cost of sales                                    6,364,732      6,077,534     12,609,997     12,253,806
  Selling and
     administrative
     expenses                                      1,985,431      1,744,164      3,886,193      3,453,869
                                                  -----------    -----------   ------------   ------------

TOTAL COSTS AND EXPENSES                           8,350,163      7,821,698     16,496,190     15,707,675
                                                  -----------    -----------   ------------   ------------

INCOME FROM OPERATIONS                               136,095        185,343        364,030        391,268

OTHER INCOME (Note 3)                                  3,081        121,077          4,890        250,899
INTEREST EXPENSE                                    (238,462)      (156,120)      (466,149)      (308,963)
                                                  -----------    -----------   ------------   ------------

INCOME (LOSS) BEFORE
  INCOME TAXES                                       (99,286)       150,300        (97,229)       333,204
                                                  -----------    -----------   ------------   ------------

INCOME TAX PROVISION
  (Note 4)                                              -              -              -             -
                                                  -----------    -----------   ------------   ------------

NET INCOME (LOSS)                                 $  (99,286)    $  150,300    $   (97,229)   $   333,204
                                                  -----------    -----------   ------------   ------------
                                                  -----------    -----------   ------------   ------------

NET INCOME (LOSS) PER
  COMMON AND COMMON
  EQUIVALENT SHARE:

  Primary                                         $    (0.03)    $     0.04    $     (0.03)   $      0.08
                                                  -----------    -----------   ------------   ------------
                                                  -----------    -----------   ------------   ------------

  Fully diluted                                   $    (0.03)    $     0.04     $    (0.03)   $      0.08
                                                  -----------    -----------   ------------   ------------
                                                  -----------    -----------   ------------   ------------

WEIGHTED AVERAGE COMMON
  AND EQUIVALENT SHARES
  OUTSTANDING:

  Primary                                          3,684,746      4,220,171      3,668,266       4,275,765
                                                  -----------    -----------   ------------   ------------
                                                  -----------    -----------   ------------   ------------

  Fully diluted                                    3,684,746      4,220,171      3,668,266      4,275,765
                                                  -----------    -----------   ------------   ------------
                                                  -----------    -----------   ------------   ------------
</TABLE>

See notes to condensed consolidated financial statements.


                                       5
<PAGE>


                                 PICO PRODUCTS, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (Unaudited)

<TABLE>
<CAPTION>

                                                  Six Months Ended
                                                     January 31,
                                            ----------------------------
                                                1996           1995
                                            -------------  -------------
<S>                                         <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                         $   (97,229)   $   333,204
  Adjustments to reconcile net income
    (loss) to net cash provided (used)
    in operating activities:

    Depreciation and amortization               176,248        218,253
    Changes in operating assets
      and liabilities                        (1,173,532)         2,802
                                            -------------  -------------

NET CASH PROVIDED (USED) IN
  OPERATING ACTIVITIES                       (1,094,513)       554,259
                                            -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                         (211,116)      (145,085)
                                            -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (payments) under a
    line of credit agreement                  1,269,064       (526,515)
  Principal payments on long-term debt          (62,341)       (37,645)
  Additional long-term debt financing            31,092           -
  Proceeds from exercise of stock options        20,125          3,000
                                            -------------  -------------

NET CASH PROVIDED (USED) BY FINANCING
  ACTIVITIES                                  1,257,940       (561,160)
                                            -------------  -------------

NET DECREASE IN CASH
  AND CASH EQUIVALENTS                          (47,689)      (151,986)

CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                           501,525        441,609
                                            -------------  -------------

CASH AND CASH EQUIVALENTS AT
  END OF PERIOD                             $   453,836    $   289,623
                                            -------------  -------------
                                            -------------  -------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

CASH PAID DURING THE PERIOD FOR:

  Interest                                  $   460,452    $   303,329
  Income taxes                                   28,950           -

</TABLE>

See notes to condensed consolidated financial statements.

                                          6


<PAGE>

                                 PICO PRODUCTS, INC.
                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (Unaudited)

(1) GENERAL

The Company's primary industry is the manufacturing and distribution of
equipment and parts for the cable television (CATV) and satellite master antenna
television (SMATV) markets.  The accompanying unaudited condensed consolidated
financial statements include all adjustments which are, in the opinion of the
Company's management, necessary to present fairly the Company's financial
position as of January 31, 1996, and the results of its operations and its cash
flows for the three and six month periods ended January 31, 1996 and 1995. All
such adjustments are of a normal recurring nature.  All significant intercompany
accounts and transactions have been eliminated.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission.  These condensed consolidated financial
statements should be read in conjunction with the financial statements and
related notes contained in the Company's Annual Report on Form 10-K for the
fiscal year ended July 31, 1995.

The results of operations for the interim periods shown in this Report are not
necessarily indicative of the results to be expected for the fiscal year.

(2) INVENTORIES

The composition of inventories was as follows:

<TABLE>
<CAPTION>
                               January 31,          July 31,
                                  1996                1995
                              ------------        ------------
<S>                           <C>                 <C>
Raw materials                 $ 3,719,815         $ 3,350,435
Work in process                 1,013,845             319,386
Finished goods                  6,848,493           6,090,343
                              ------------        ------------

                              $11,582,153         $ 9,760,164
                              ------------        ------------
                              ------------        ------------
</TABLE>

                                          7

<PAGE>

(3) OTHER INCOME

Other income consisted of the following:

<TABLE>
<CAPTION>
                         Three Months Ended         Six Months Ended
                             January 31,               January 31,
                        ---------------------    --------------------
                          1996         1995        1996        1995
                        ---------   ---------    --------    --------
<S>                     <C>         <C>          <C>         <C>
Royalty income          $   -       $114,854     $   -       $239,141
Interest income            3,081       6,223        4,890      11,758
                        --------    --------     --------    --------
                        $  3,081    $121,077     $  4,890    $250,899
                        --------    --------     --------    --------
                        --------    --------     --------    --------
</TABLE>

(4) INCOME TAXES

No provision for U.S. Federal and state income taxes or foreign income taxes has
been recorded for the three and six month periods ended January 31, 1996 and
1995 due to the Company's U.S. Federal and state net operating loss carryforward
positions and tax holidays granted the Company's foreign subsidiaries.

(5) LITIGATION AND CONTINGENCIES

ARCOM LITIGATION

In November 1991, Arrow Communication Laboratories, Inc. (Arcom) of Syracuse,
New York initiated a lawsuit in the Supreme Court in the County of Onondaga, New
York.  The suit, which was amended in June 1992, alleges that Arcom had a paid-
up license with respect to the Company's patent for positive trapping systems,
that Arcom is entitled to unspecified damages based on overpayment of royalty
amounts, and that Arcom has incurred damages in excess of $250,000 as a result
of a Company press release announcing termination of the license agreement.  The
suit also asserts that Arcom is entitled to punitive damages of $3,000,000.  The
Company responded by denying all liability and asserting certain common law and
statutory defenses.

In December 1993, in response to a summary judgment motion filed by the Company,
the New York State Court rejected Arcom's claim that it had a paid-up license.
Instead, the Court held that when Arcom "defaulted in making royalty payments on
or about November 15, 1991, the license terminated by its own terms 30 days
later as asserted by the Company in its termination letter dated January 13,
1992."  Following the New York State Court's summary judgment decision, the
Company initiated a patent infringement lawsuit against Arcom in the United
States District Court for the Northern District of New York.  In its suit, the
Company asked the Federal Court to award it treble damages for willful
infringement plus attorney's fees.  The Company also filed a motion for a
preliminary injunction against further infringement by Arcom.  At a court
hearing on February 15, 1994, the parties agreed, and it was ordered by the
Court, that Arcom would post as security

                                          8

<PAGE>


amounts equal to the royalties due to the Company for the manufacture and sale
of products covered by the license agreement from December 15, 1991, the date
that the license would have terminated, until the expiration of the patent in
February 1995.  Through February 29, 1996 Arcom has made cash payments of
$462,066 covering royalties through February 14, 1995.  The Company has not
included these amounts in income in any fiscal period but has recorded a current
liability for $462,066 at January 31, 1996.  In addition, Arcom posted an
irrevocable letter of credit in an amount deemed sufficient to permit recovery
of a significant portion of the Company's damages if it were to prevail on its
willful infringement claim.  In exchange, the Company withdrew its request for a
preliminary injunction.  In the event that the Company does not prevail on its
infringement claims, the Company has agreed to refund all security payments made
by Arcom.

In July 1994, the Appellate Division, Fourth Department of the New York Supreme
Court ruled that the interpretation of parts of the license agreement relating
to Arcom's paid-up license claims involves questions of fact that must be
resolved at trial.  A trial was scheduled to begin in early January 1996 but due
to court scheduling conflicts, has been postponed until April 1996.  Management
believes that the outcome of this matter will not have a material adverse effect
on the Company's consolidated financial statements.

EPA INFORMATION REQUEST

On March 6, 1995, a subsidiary of the Company received a Joint Request for
Information (the "Information Request") from the United States Environmental
Protection Agency, Region II (the "EPA"), under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), with
respect to the release and/or threatened release of hazardous substances,
hazardous wastes, pollutants or contaminants into the environment at the
Onondaga Lake Site, Syracuse, Onondaga County, New York.  The Company has
learned that the EPA added the Onondaga Lake Site to the Superfund National
Priorities List on December 6, 1994, and has completed an onsite assessment of
the degree of hazard.  The EPA has indicated that the Company is only one of 26
companies located in the vicinity of Onondaga Lake or its tributaries that have
received a similar Information Request.

The Information Request related to the activities of the Company's Printed
Circuit Board Division, which conducted operations within the specified area,
and was sold to a third party in 1992.  Under the Agreement of Sale with the
buyer, the Company retained liability for environmental obligations which
occurred prior to the sale.

The Company has provided all information requested by the EPA.  The Information
Request does not designate the Company as a potentially responsible party, nor
has the EPA indicated the basis upon which it would designate the Company as a
potentially responsible party.  The Company is therefore unable to state whether
there is any material likelihood for

                                          9

<PAGE>

liability on its part, and, if there were to be any such liability, the basis of
any sharing of such liability with others.

OTHER

The Company is involved, from time to time, in certain other legal actions
arising in the normal course of business.  Management believes that the outcome
of other litigation will not have a material adverse effect on the Company's
consolidated financial statements.

(6) DEBT CONVERSION TO EQUITY

In February 1993, the Company completed private placement financings totaling
$1,000,000.  The financings consisted of three notes.  The first note for
$500,000 was paid in full in May 1994.  The second and third notes totaling
$500,000 provide for interest at 8% and are payable in two equal installments in
February 1996 and in February 1997.  In connection with the financings, the
Company issued warrants for 425,000 shares of its common stock, exercisable
through fiscal year 1998 at $1.00 per share.

On February 28, 1996, the Company was notified by the holder of the two
outstanding notes payable that they intend to exercise 250,000 warrants to
purchase common stock of the Company as an offset against the first $250,000
installment payment due on the debt.  The Company expects this transaction to be
completed by the end of March 1996.

                                          10

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
         OF OPERATIONS AND FINANCIAL CONDITION

The following discussion compares the operations of the Company for the three
and six month periods ended January 31, 1996 with the operations for the three
and six month periods ended January 31, 1995, as shown by the unaudited
condensed consolidated statements of operations included in this quarterly
report.

RESULTS OF OPERATIONS

Sales increased by approximately $761,000, or 5%, for the six months ended
January 31, 1996 compared with the six months ended January 31, 1995, and sales
increased by approximately $479,000, or 6%, for the fiscal quarter ended January
31, 1996 compared to the same period in the previous fiscal year. The Company's
CATV division recorded sales increase of approximately 39% and 34%,
respectively, for the six and three month periods ended January 31, 1996
compared to the same periods in the previous fiscal year.  These increases were
primarily due to increasing demand for television signal security products both
internationally and domestically.  The Company's Pico Macom subsidiary recorded
sales decreases of approximately 3% and 1%, respectively, for the six and three
month periods ended January 31, 1996, compared to the same periods of the
previous fiscal year.  These decreases resulted mainly from purchasing
reductions by the major U.S. cable TV system operators (MSO's) in the wake of
consolidation of cable system ownership, as well as a slowdown in orders from
South America.  The Company anticipates that orders from South America for the
remainder of fiscal 1996 will be stronger.

Cost of sales increased by approximately $356,000, or 3%, for the six months
ended January 31, 1996 compared with the six months ended January 31, 1995, and
cost of sales increased by $287,000, or 5%, for the fiscal quarter ended January
31, 1996 compared with the same fiscal quarter in the previous year.  Cost of
sales as a percentage of sales decreased by 1% (from 76% to 75%) for the six and
three month periods ended January 31, 1996 versus the same periods in the
previous fiscal year.  The dollar increase in cost of sales was primarily
attributable to the increase in sales volume.  The 1% decrease in cost of sales
as a percentage of sales was primarily due to the improved purchasing power of
the U.S. dollar in the Far East which resulted in slight product cost
reductions, and due to manufacturing cost improvements for the Company's CATV
division security products.

Selling and administrative expenses increased by approximately $432,000, or 13%,
for the six months ended January 31, 1996 compared to the six months ended
January 31, 1995, and increased by approximately $241,000, or 14%, for the
fiscal quarter ended January 31, 1996 compared to the same fiscal quarter of the
previous year.  The primary reasons for the increases in selling and
administrative expenses were continuing increased investment in

                                          11

<PAGE>

product development and expenditures related to development of new markets in
Asia and to the Company's new regional office in Hong Kong.  The Company's
product development and Asian market development expenses increased for the six
month period ended January 31, 1996 by over $260,000 and $375,000, respectively,
compared to same period of the previous fiscal year.  Management anticipates
that this current level of selling and administrative expenses will continue
throughout fiscal year 1996.

Other income decreased by approximately $246,000, or 98% for the six months
ended January 31, 1996 compared to the six months ended January 31, 1995, and
other income decreased by approximately $118,000, or 98%, for the fiscal quarter
ended January 31, 1996 compared to the same fiscal quarter in the previous year.
The decreases in other income were primarily due to the elimination of royalty
income from license holders following the expiration of the Company's patent for
positive encoding and decoding systems in February 1995.

Interest expense increased by approximately $157,000, or 51%, for the six months
ended January 31, 1996 compared with the six months ended January 31, 1995, and
interest expense increased by approximately $82,000, or 53%, for the fiscal
quarter ended January 31, 1996 compared with the same fiscal quarter of the
previous year.  The increases were primarily due to higher borrowing levels on
the Company's bank line of credit to support the Company's working capital
requirements, and due to a higher prime rate during the six and three month
periods ended January 31, 1996.

No provision for U.S. Federal and state income taxes or foreign income taxes has
been recorded for the three and six month periods ended January 31, 1996 and
1995 due to the Company's U.S. Federal and state net operating loss carryforward
positions and tax holidays granted the Company's foreign subsidiaries.

The Company recorded a net loss  in both the six and three month periods ended
January 31, 1996 of approximately $97,000 and $99,000, respectively.  Return to
profitability is contingent upon a resurgence of demand in South America for the
Company's products coupled with an increase in capital spending by the major
U.S. cable TV system operators.

LIQUIDITY AND CAPITAL RESOURCES

As of January 31, 1996, the Company had working capital of approximately
$3,339,000 and a ratio of current assets to current liabilities of approximately
1.24:1, compared with working capital of approximately $3,497,000 and a ratio of
1.27:1 as of July 31, 1995.  During the six months ended January 31, 1996, the
Company recorded negative cash flow from operating activities primarily as a
result of increased inventory purchases to support the Company's forecasted
sales levels.

                                          12
<PAGE>


However, sales for the first six months of fiscal year 1996 have been lower than
anticipated, resulting in higher inventory levels.  This inventory investment
has placed a strain on the Company's working capital position.  The Company is
working to reduce inventory levels through increased orders from South America,
Asia and U.S. cable TV system operators, and through conversion of raw material
and components for newly developed products into finished goods for shipment to
customers.

During the six months ended January 31, 1996 and 1995, cash used for capital
expenditures was approximately $211,000 and $145,000 respectively.  Capital
expenditures for the remainder of fiscal year 1996 are expected to be under
$100,000.

In November 1995, Pico Macom requested an amendment to its revolving bank line
of credit to increase the borrowing limit against eligible inventories.  In
December 1995, Pico Macom's bank increased the limit on its line of credit from
$10,000,000 to $11,000,000, and increased the borrowing limit against eligible
inventories from $4,500,000 to $5,500,000.  The bank also extended the term of
the line of credit from May 25, 1996 to December 31, 1996.

At January 31, 1996 Pico Macom had an $11,000,000 revolving bank line of credit
which provides for interest at the prime rate (8.50% at January 31, 1996) plus
1.25%.  The bank line of credit is used to fund operating expenses, product
purchases, and letters of credit for import purchases.  The line is structured
as a $11,000,000 line of credit with a sublimit of $1,500,000 for outstanding
letters of credit.  The amount available is based on various percentages of
eligible accounts receivable and inventories as defined in the agreement, which
is subject to review and renewal on December 31, 1996.  The credit facility is
subject to certain financial tests and covenants.

Management anticipates that the bank line of credit will be renewed.  In the
event that it was not renewed, the Company would seek alternative asset-based
financing.  Failure to obtain such financing would have a materially adverse
effect on the Company's working capital requirements.  At January 31, 1996, Pico
Macom had approximately $9,048,000 in revolving loans and approximately $94,000
in letters of credit outstanding, and the unused portion of the borrowing base
was approximately $100,000.

In February 1993, the Company completed private placement financings totaling
$1,000,000.  The financings consisted of three notes.  The first note for
$500,000 was paid in full in May 1994.  The second and third notes totaling
$500,000 provide for interest at 8% and are payable in two equal installments in
February 1996 and in February 1997.  In connection with the financings, the
Company issued warrants for 425,000 shares of its common stock, exercisable
through fiscal year 1998 at $1.00 per share.


                                          13


<PAGE>

On February 28, 1996, the Company was notified by the holder of the two
outstanding notes payable that they intend to exercise 250,000 warrants to
purchase common stock of the Company as an offset against the first $250,000
installment payment due on the debt.  The Company expects this transaction to be
completed by the end of March 1996.

Management believes that the current credit arrangements along  with an
inventory reduction program should provide sufficient cash to fund the Company's
operations for the remainder of the fiscal year.  Should the Company identify
opportunities that require cash beyond that generated internally or available
from its credit line, the Company would seek to increase its current credit
line.  Alternatively, the Company would consider seeking other sources of cash,
including, but not limited to, a public offering or a private placement.
However, there can be no assurance that additional financing with favorable
terms will be available if needed.

Profitability of operations is subject to various uncertainties including
general economic conditions, favorable settlement of ongoing litigation and the
actions of actual or potential competitors and customers.  The Company's
future depends on the growth of the cable TV market in the United States and
internationally.  In the United States, a number of factors could affect the
future profitability of the Company, including changes in the regulatory climate
for cable TV, changes in the competitive structure of the cable and
telecommunications industries or changes in the technology base of the industry.
Internationally, the Company's profitability depends on its ability to penetrate
new markets in the face of competition from other United States and foreign
companies.


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<PAGE>

                              PART II OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS.

Incorporated by reference from financial statement footnote number 5 of Part I.

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

On December 14, 1995, the Company held its 1995 annual meeting of shareholders.
Management's nominees for director were elected by the following votes:  Charles
G. Emley, Jr., 3,027,892 (275,029 withheld); David A. Heenan, 3,086,356 (216,565
withheld); Everett T. Keech, 3,027,492 (275,429 withheld); George M. Knapp,
3,086,456 (216,465 withheld); E.B. Leisenring, Jr., 3,088,456 (216,465
withheld); William W. Mauritz, 3,028,192 (274,729 withheld); J. Michael Sills,
3,087,436 (215,485 withheld).  Management's proposal to ratify the appointment
of Deloitte and Touche LLP as the Company's independent accountants for the
fiscal year ending July 31, 1996, was approved by the following vote:  3,266,121
for; 24,800 against; and 12,000 abstentions.  Management's proposal to amend the
Company's 1981 Non-Qualified Stock Option Plan was approved by the following
vote:  1,239,861 for; 886,502 against; and 38,382 abstentions.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits:

    4 (g)     Amendment to 1981 Non-Qualified Stock Option Plan.

    10(q)     Amendment No. 3 to the Loan and Security Agreement between Pico
              Macom, Inc. and Marine Midland Business Loans, Inc. dated May 25,
              1994 - amendment dated December 20, 1995.

    11.1      Computation of Per Share Earnings.

    27        Financial Data Schedule (included only in the EDGAR filing).

(b) Reports on Form 8-K:

    Current report on Form 8-K dated December 29, 1995.


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<PAGE>

                                      SIGNATURES

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


                                          PICO PRODUCTS, INC.
                                          REGISTRANT


DATE:  March 12, 1996                     Joseph T. Kingsley
                                          -------------------------------------
                                          Senior Vice President of Finance
                                          Chief Financial Officer


                                          16

<PAGE>

                                      FORM 10-Q

                            QUARTER ENDED JANUARY 31, 1996

                                       EXHIBITS


4 (g)    Amendment to 1981 Non-Qualified Stock Option Plan.

10(q)    Amendment No. 3 to the Loan and Security Agreement between Pico Macom,
         Inc. and Marine Midland Business Loans, Inc. dated May 25, 1994 -
         amendment dated December 20, 1995.

11.1     Computation of Per Share Earnings

27       Financial Data Schedule (included only in the EDGAR filing).



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