UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 --------------

                                   Form 10-QSB
                                   (Mark One)
                [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended October 3, 1998

                                       OR

                 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                               OF THE EXCHANGE ACT

             For the transition period from _________ to __________

                         Commission file number 0-11880

                            HYTEK MICROSYSTEMS, INC.
        (Exact name of small business issuer as specified in its charter)

                              California 94-2234140
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)

                 400 Hot Springs Road, Carson City, Nevada 89706
                    (Address of principal executive offices)

                    Issuer's telephone number: (702) 883-0820

 Check whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 _____

As of October 30, 1998, the issuer had  outstanding  3,039,758  shares of Common
Stock, no par value.

                                                                              

<PAGE>



                            HYTEK MICROSYSTEMS, INC.
                         QUARTERLY REPORT ON FORM 10-QSB
                      FOR THE QUARTER ENDED OCTOBER 3, 1998

                                      INDEX

                                                                     Page Number

Part I.  FINANCIAL INFORMATION:

Item 1.  Financial Statements:

  Balance Sheet at October 3, 1998 (unaudited) and January 3, 1998             3

  Statement of Income   (unaudited) for the Quarters and Nine Months 
       ended October 3, 1998 and September 27, 1997                            4

  Statement of Cash Flows (unaudited) for the Quarters and Nine
       Months ended October 3, 1998 and September 27, 1997                     5

  Notes to Interim Financial Statements (unaudited)                            6

Item 2.  Management's Discussion and Analysis or
              Plan of Operation                                                7


Part II. OTHER INFORMATION:

Item 6.  Exhibits and Reports on Form 8-K                                     12

Signatures                                                                    13

Exhibit Index                                                                 14


<PAGE>

<TABLE>

PART 1. - FINANCIAL INFORMATION

Item 1.    Financial Statements.

                            HYTEK MICROSYSTEMS, INC.
                                  BALANCE SHEET

                                              October 3, 1998    January 3, 1998
                       Assets                 (Unaudited)
                                              ---------------    ---------------
<S>                                             <C>                 <C>    

Current assets:
  Cash and cash equivalents                     $ 2,605,848         $ 1,189,519
  Trade accounts receivable - net of
      allowance for doubtful accounts
       of $50,000 at 10/3/98 and 1/3/98           2,627,163           2,513,668

  Inventories                                     2,479,951           2,581,389
  Prepaid expenses and deposits                      92,454              50,035
                                                ------------        ------------

     Total current assets                         7,805,416           6,334,611

Deferred income taxes                               200,000             200,000

 Plant and equipment, at cost, less
  accumulated depreciation and amortization       1,038,214             755,845
                                                ------------        ------------

      Total  assets                             $ 9,043,630         $ 7,290,456
                                                ============        ============

 
      Liabilities and Shareholders' Equity

Current liabilities:
  Accounts payable                              $   886,550         $ 1,308,335
  Accrued employee compensation and benefits        445,255             349,725
  Accrued warranty, commissions and other           162,167             206,569
  Customer deposits                                       -              28,464
  Current portion of long-term debt                  48,333              43,951
  Current obligations under capital leases           52,742              82,752
                                                ------------        ------------

     Total current liabilities                    1,595,047           2,019,796

Long-term debt, less current portion                 64,812             101,049
Long-term obligations under capital lease            43,952             123,041

Shareholders' equity:
 Common Stock, no par value: 7,500,000 shares     
  authorized, 3,039,758 shares and 2,941,424
  shares issued and outstanding at
  10/3/98 and 1/3/98, respectively                5,007,093           4,974,676
  Retained earnings                               2,332,726              71,894
                                                ------------        ------------

     Total shareholders' equity                   7,339,819           5,046,570
                                                ------------        ------------

Total liabilities and shareholders' equity      $ 9,043,630         $ 7,290,456
                                                ============        ============
                                                

See accompanying notes.
</TABLE>
<PAGE>
<TABLE>




                            HYTEK MICROSYSTEMS, INC.

                               STATEMENT OF INCOME
                                   (Unaudited)
      Quarters and nine months ended October 3, 1998 and September 27, 1997

                                    Quarter ended          Nine months ended
                              ----------------------  --------------------------
                                10/3/98     9/27/97     10/3/98       9/27/97

                              ----------- ----------- ------------ ------------
<S>                           <C>         <C>         <C>          <C>    
Net revenues                  $ 3,026,632 $ 2,046,791 $ 10,303,720 $ 5,815,430

Costs and expenses:
  Cost of sales                 1,932,950   1,387,254    6,478,035   4,012,101
  Engineering and development     246,213     196,978      709,755     555,386
  Selling, general and
    administrative                335,777     180,118      857,762     512,519
                               ----------- ----------- ------------ -----------
    Total costs and expenses    2,514,940   1,764,350    8,045,552   5,080,006
                               ----------- ----------- ------------ -----------

Operating income                  511,692     282,441    2,258,168     735,424

Interest income                    31,209       7,760       58,738      27,516
Interest expense                  (11,950)     (1,307)     (21,774)     (4,154)
                               ----------- ----------- ------------ -----------
Income before provision
  for income taxes                530,951     288,894    2,295,132     758,786
Provision for income taxes        (14,500)     (7,500)     (34,300)    (47,500)
                               ----------- ----------- ------------ -----------

Net income                    $   516,451 $   281,394 $  2,260,832 $   711,286
                               =========== =========== ============ ===========
                               

Basic earnings per share      $      0.17 $      0.10 $       0.76 $      0.24
                               =========== =========== ============ ===========

Diluted earnings per share    $      0.16 $      0.09 $       0.72 $      0.23
                               =========== =========== ============ ===========

Shares used in calculating
  basic earnings per share      3,034,647   2,941,424    2,989,900   2,941,424
                               =========== =========== ============ ===========

Shares used in calculating
  diluted earnings per share    3,166,294   3,088,247    3,158,336   3,081,405
                               =========== =========== ============ ===========

                                                                                                               
 
                                                                                               
See accompanying notes.
<PAGE>
</TABLE>

<TABLE>
                            HYTEK MICROSYSTEMS, INC.
                       STATEMENT OF CASH FLOWS (unaudited)
                  Quarters and Nine 1998 and September 27, 1997
                Increase (decrease) in cash and cash equivalents


                                                         Quarter Ended         Nine Months Ended
                                                     ------------------------ ------------------------- 
                                                     Oct 3,1998 Sept 27, 1997 Oct 3, 1998 Sept 27, 1997
                                                     ---------- ------------- ----------- -------------   
<S>                                                  <C>        <C>           <C>         <C>    

Cash flows from operating activities:
    Net income                                       $  516,451 $  281,394    $2,260,832  $  711,286

    Adjustments  to  reconcile  net  
    income to cash flow  provided  by (used in)
    operations:
        Depreciation and amortization                    75,735     33,488       177,690      94,888
        Accounts receivable                           (516,287)  (114,244)     (113,495)   (424,460)
        Inventories                                   (496,748)  (126,049)       101,438    (88,170)
        Prepaid expenses and deposits                  (12,183)   (11,218)      (42,419)    (23,835)
        Accounts payable                                346,837    384,423     (421,785)     398,195
        Accrued employee compensation and benefits      112,164     14,363        95,530   (157,300)
        Accrued warranty, commissions and other         (5,374)     12,527      (44,402)    (19,182)
        Customer deposits                              (28,464)   (27,503)      (28,464)   (134,798)
                                                      ---------- ----------    ----------  ----------
          Net cash provided by (used in) operating      (7,869)    447,181     1,984,925     356,624
        activities

Cash flows from investing activities:
    Cash purchases of equipment                       (293,643)   (22,550)     (460,059)   (149,160)
                                                      ---------- ----------    ----------  ----------

          Net cash used in investing activities       (293,643)   (22,550)     (460,059)   (149,160)

Cash flows from financing activities:
    Principal payments on long-term debt               (13,961)          -      (31,855)           -
    Payment of capital lease obligations               (58,834)    (8,497)     (109,099)    (28,325)
    Proceeds from exercise of stock options               8,200          -        32,417      12,000
                                                      ---------- ----------    ----------  ----------
          Net cash provided by (used in) financing     (64,595)    (8,497)     (108,537)    (16,325)
           activities

Net increase (decrease) in cash and cash equivalents  (366,107)    416,134     1,416,329     191,139
Cash and cash equivalents at beginning of period      2,971,955  1,201,721     1,189,519   1,426,716
                                                      ---------- ----------    ----------  ----------

Cash and cash equivalents at end of period           $2,605,848 $1,617,855    $2,605,848  $1,617,855
                                                      ========== ==========    ==========  ==========


See accompanying notes.
</TABLE>
<PAGE>


                                                                           

                            HYTEK MICROSYSTEMS, INC.
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                 OCTOBER 3, 1998
                                   (Unaudited)

         1. In the opinion of management,  the accompanying  unaudited financial
statements  include  all  adjustments   (consisting  of  only  normal  recurring
adjustments)  that are  necessary  in order  to make  the  financial  statements
contained herein not misleading.  These financial statements, notes and analyses
should be read in conjunction with the financial  statements for the fiscal year
ended January 3, 1998, and notes  thereto,  which are contained in the Company's
Annual  Report on Form 10-KSB for such fiscal year.  The results for the quarter
ended October 3, 1998 are not necessarily  indicative of the results that may be
expected for the entire year ending January 2, 1999.  The Company  operates on a
52/53 week fiscal year, which approximates the calendar year.

         2. The Company leases its Carson City facility pursuant to a continuing
lease  expiring in 2005. The aggregate  future minimum rental  commitments as of
October 3, 1998 for this lease were:


                                    1998                    $  40,605
                                    1999                      164,856
                                    2000                      169,800
                                    2001 - 2005               828,678
                                                              -------
                                                            $1,203,939

          3. Inventories are stated at the lower of cost  (determined  using the
first-in, first-out method) or market. Inventories consisted of:

                                              10-3-98           1-3-98

                  Raw Material               $1,249,641         $1,261,612
                  Work-In-Process             1,168,702          1,287,720
                  Finished Goods                 66,608             32,057
                                             ----------        -----------
                                             $2,479,951         $2,581,389
                                             ----------         ----------

          4. Plant and  equipment are stated at cost and depreciated on a 
straight-line basis over the estimated useful life of the assets, generally 
three to eight years.

         5. In 1997, the Financial  Accounting  Standards Board issued Statement
No.  128,  "Earnings  per  Share".  This  Statement  established  standards  for
computing and  presenting  earnings per share (EPS) and applies to entities that
are publicly  held.  This  Statement  simplifies the standards for computing EPS
presently contained in Accounting Principles Board Opinion No. 15, "Earnings Per
Share".  This Statement  replaces the  presentation of primary and fully diluted
EPS under APB No. 15 with a  presentation  of basic and diluted EPS. The Company
adopted the provisions of this Statement during the year ended January 3, 1998.

                                                                          
<PAGE>


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

         For the purposes of the following discussion,  dollar amounts have been
rounded to the  nearest  $1,000  and all  percentages  have been  rounded to the
nearest 1%.

         This interim  report on Form 10-QSB  contains  certain  forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933 and
Section 21E of the Securities  Exchange Act of 1934. Actual results could differ
materially from those projected in the forward-looking statements as a result of
various  factors,  including  the  factors  set forth  below  and under  "Future
Outlook" and  elsewhere in this  section.  The Company has attempted to identify
forward-looking  statements  by placing an asterisk  immediately  following  the
sentence or phrase containing the forward-looking  statement(s).  All statements
made herein are made as of the date of filing of this Form  10-QSB.  The Company
disclaims  any duty to update such  statements  after the date of filing of this
Form 10-QSB, except as required by law.

Results of Operations

         Net revenues  for the quarter  ended  October 3, 1998  increased by 48%
from net revenues for the quarter ended September 27, 1997. Net revenues for the
quarter ended October 3, 1998 were $3,027,000, as compared to $2,047,000 for the
quarter ended September 27, 1997. Net revenues for the nine months ended October
3, 1998 increased 77% to $10,304,000 from net revenues for the nine months ended
September 27, 1997 of  $5,815,000.  The increase in revenues  during the quarter
and  nine-month  period results from an increase in units shipped due to a solid
backlog at the  beginning of 1998  coupled  with an increased  level of customer
orders  received  during the nine-month  period.  Shipments of geophysical  data
conversion modules to Chesapeake Sciences Corp. accounted for approximately $6.8
million of the current year  nine-month  revenues as compared to $2.8 million in
the prior year nine-month period.

         The Company's  backlog of customer  orders was $8,525,000 at October 3,
1998 as compared to $10,554,000 at September 27, 1997, and $7,676,000 at January
3, 1998.  Approximately  $7,700,000  of the total  backlog at October 3, 1998 is
currently  scheduled for shipment during the next twelve months.*  Approximately
53% of the total backlog relates to orders from Chesapeake  Sciences Corp.,  the
Company's largest  customer.  Because customers may place orders for delivery at
various  times  throughout  the year,  and due to the  possibility  of  customer
changes in delivery  schedules  (which have been  experienced  in the past),  or
cancellation  of orders with little or no penalty,  the Company's  backlog as of
any particular date may not be indicative of actual future sales.*

         Cost of sales was $1,933,000,  or 64% of net revenues,  for the quarter
ended October 3, 1998, as compared to  $1,387,000,  or 68% of net revenues,  for
the quarter ended  September  27, 1997.  Cost of sales for the nine months ended
October  3,  1998  was  $6,478,000,  or 63%  of net  revenues,  as  compared  to
$4,012,000,  or 69% of net  revenues,  for the nine months ended  September  27,
1997.  The  decrease in cost of sales as a percentage  of net  revenues  results
primarily from the spreading of fixed costs over a significantly  higher revenue
base.
<PAGE>

         Engineering  and  development  expenses  were  $246,000,  or 8% of  net
revenues, for the quarter ended October 3, 1998, as compared to $197,000, or 10%
of net revenues,  for the quarter  ended  September  27, 1997.  Engineering  and
development expenses for the nine months ended October 3, 1998 were $710,000, or
7% of net revenues,  as compared to $555,000,  or 10% of net  revenues,  for the
nine months  ended  September  27, 1997.  The  increase in the dollar  amount of
engineering  and  development  expenses  for the quarter  and nine months  ended
October 3, 1998, as compared to the quarter and nine months ended  September 27,
1997, is primarily  attributable to increased  compensation costs resulting from
hiring of additional  personnel  required for  additional  engineering-intensive
programs.

         Selling,  general and administrative  expenses were $336,000, or 11% of
net revenues, for the quarter ended October 3, 1998, as compared to $180,000, or
9% of net revenues in the quarter ended September 27, 1997. Selling, general and
administrative expenses for the nine months ended October 3, 1998 were $858,000,
or 8% of net revenues, as compared to $513,000,  or 9% of net revenues,  for the
nine months  ended  September  28, 1997.  The  increase in the dollar  amount of
selling, general and administrative expenditures for the quarter and nine months
ended October 3, 1998 is  attributable  to increased  costs of compensation as a
result of additional  staffing and base compensation  adjustments,  coupled with
increases in commission  expense,  travel expense,  legal costs and professional
fees.

         The Company had an operating  profit of $512,000 for the quarter  ended
October 3, 1998, as compared to an operating  profit of $282,000 for the quarter
ended  September 27, 1997.  The increase in quarterly  operating  results is the
result of higher sales and improved gross margin,  partially offset by increases
in engineering and development  expense and selling,  general and administrative
expenses described above. As a result of a 77% increase in revenues, the Company
had an operating profit of $2,258,000 for the nine months ended October 3, 1998,
as  compared  to an  operating  profit of  $735,000  for the nine  months  ended
September 27, 1997.

         Net  interest  income  increased  to $37,000 for the nine months  ended
October 3, 1998 as compared to $23,000 for the prior year nine-month period as a
result of larger average monthly cash balances in interest-bearing accounts.

          Income tax  expense of  $15,000  and  $34,000  was  recognized  in the
quarter and nine months ended October 3, 1998, respectively,  as a result of the
alternative minimum tax. Income tax expense in the prior year periods was $8,000
and  $48,000,  respectively.  The  Company  has  remaining  net  operating  loss
carryforwards   for  federal   income  tax   purposes  at  January  3,  1998  of
approximately  $2.3  million.  These  carryforwards  are  expected  to be  fully
utilized at the end of the current fiscal year.*


Liquidity and Capital Resources

         The Company had  $2,606,000 in cash and cash  equivalents at October 3,
1998, as compared to $1,190,000 at January 3, 1998.  This increase of $1,416,000
from year end is  comprised  of  $1,985,000  provided  by  operating  activities
(primarily  generated from net income) partially offset by $460,000 used for the
purchase  of  capital  equipment  and  $109,000  used  in  financing  activities
(repayment of long-term debt and capital lease obligations).
<PAGE>

         Accounts  receivable were $2,627,000 at October 3, 1998, as compared to
$2,514,000 at January 3, 1998. This increase primarily results from fluctuations
in customer payment cycles.

         Inventories  were  $2,480,000  at  October  3,  1998,  as  compared  to
$2,581,000 at January 3, 1998. Inventory levels had been increased significantly
at the  beginning  of the  year in  anticipation  of a higher  level of  product
shipments during 1998.

         Prepaid  expenses  and  deposits  were  $92,000  at  October 3, 1998 as
compared to $50,000 at January 3, 1998.  This increase  reflects  normal ongoing
business transactions that are affected by fiscal month ending dates.

         Property, plant and equipment,  net, increased to $1,038,000 at October
3, 1998,  as compared to $756,000 at 1997 fiscal year end, due to the  Company's
purchase of new production equipment.

         Accounts  payable  were  $887,000  at October 3, 1998,  as  compared to
$1,308,000 at January 3, 1998. This decrease is primarily the result of improved
cash flow allowing for more timely payments to suppliers.

         Accrued employee  compensation and benefits were $445,000 at October 3,
1998, as compared to $350,000 at January 3, 1998. This increase is the result of
an approximately  25% increase in overall  employment since the beginning of the
current  year,  combined  with  increased  amounts  accrued for employee  profit
sharing.

         Accrued  warranty,  commissions  and  other  accrued  liabilities  were
$162,000 at October 3, 1998,  as  compared to $207,000 at January 3, 1998.  This
reduction reflects normal recurring accruals and transactions.

         Customer  deposits  decreased to zero at October 3, 1998 as compared to
$28,000 at January 3, 1998,  as the result of the delivery of pre-paid  products
to customers.

         At October 3, 1998,  the  Company  had both  short-term  and  long-term
obligations  under loan and capital lease  agreements with SierraWest Bank in an
aggregate of $210,000.  This is a reduction from $351,000 outstanding at January
3, 1998, as a result of the repayment of long-term  debt and lease  obligations.
The Company uses these loan and lease agreements to finance certain purchases of
capital equipment.

         At October 3, 1998 the Company  also  maintained  a $400,000  revolving
line of credit with SierraWest  Bank. At such date the Company was in compliance
with all  covenants of the loan  agreement and no amounts were  outstanding.  On
October 23, 1998, the Company  renegotiated  the credit line with SierraWest for
an additional  eighteen-month period,  increasing the amount available under the
line of credit to $1,000,000 at an interest rate equal to the prime rate.

<PAGE>


Future Outlook

         The Company's backlog of unfilled customer orders totaled $8,525,000 at
  October 3, 1998 as compared to $7,676,000  at January 3, 1998 and  $10,554,000
  at  September  27,  1997.  Approximately  $7,700,000  of the total  backlog is
  currently scheduled for shipment over the next twelve months.* However, due to
  the  possibility of customer  changes in delivery  schedules  (which have been
  experienced in the past) or  cancellation of orders with little or no penalty,
  the  Company's  backlog as of any  particular  date may not be  indicative  of
  actual future sales.

          Chesapeake  Sciences,  which  accounted  for 66% of the  Company's net
revenues in the first nine months of 1998, accounts for approximately 53% of the
current backlog. While Chesapeake  historically has contributed to the Company's
growth, it also has the greatest potential for causing major fluctuations in the
Company's revenue and earnings due to the current  uncertainties and instability
in the global oil exploration market.  Subsequent to October 3, 1998, Chesapeake
has rescheduled  certain  deliveries from the fourth quarter of the current year
into the first half of 1999. This  rescheduling is projected to reduce levels of
revenues  and  earnings  during the  fourth  quarter of the  current  year.  The
Company's latest  projections  indicate that revenues and earning for the fourth
quarter  of 1998  will be  significantly  below the prior  year  fourth  quarter
levels.  Current low prices of crude oil "futures",  and  uncertainty  regarding
future world-wide oil production volumes,  could result in further re-scheduling
or cancellation of current orders by Chesapeake. Either such action would have a
material negative impact on future operating results.

         There  is a more  positive  outlook  in  other  markets  served  by the
Company.  Our expanded sales efforts have created potential new opportunities in
the military-aerospace  market and opened the door to potential participation in
the medical device and instrumentation markets.

The Company  relies on an internal  computer  network for much of its day-to day
operating  and  financial  information.  This  system  does not  interface  with
customer or supplier systems outside the Company.  The software for this network
is a commercial  `off-the-shelf'  package provided and maintained by a reputable
supplier.  As of the date of this  filing,  the  supplier  has  installed at the
Company software  revisions that it claims  eliminate any anticipated  potential
problems with the year 2000. The Company has an employee who is responsible  for
its year 2000 compliance efforts and testing the Company's internal systems. The
testing of internal  systems is  approximately  80% complete at the time of this
filing and is estimated  to be  completed  by December 31,  1998.* Thus far, the
cost to the Company for preparation for year 2000 computer readiness, all funded
through  operating cash flows,  has not been  significant.  Future costs are not
anticipated to be material at this time.*

         In  addition,  the Company has been  informally  advised by many of its
major customers,  suppliers and financial  institutions ("third parties"),  that
they have,  or are in  process,  of taking  actions  sufficient  to protect  the
Company  from adverse  effects of the year 2000 in their own internal  systems.*
The Company  intends to obtain  written  representations  from its "third party"
affiliates  and estimates  that this effort will be completed by June 30, 1999.*
While the Company  believes  its efforts are adequate to address its "year 2000"
concerns,  there can be no  guarantee  that "year  2000"  issues will not have a
material effect on future Company operations.*
<PAGE>

         Management of the Company believes it has an effective program in place
to  resolve  the "year  2000"  issue in a timely  manner.  In the event that the
Company and its third parties do not complete all additional "year 2000" efforts
in a  timely  manner,  or  that  its  remediation  efforts  do not  resolve  the
anticipated  problems,  disruptions in the Company's  day-to-day  operations may
occur. In addition,  disruptions in the economy in general  resulting from "year
2000" issues could also materially  adversely affect the Company.  The amount of
potential  liability  and lost revenue  cannot be  reasonably  estimated at this
time.

         At the present time the Company does not have a formal contingency plan
in the event it does not  complete  all  phases of its year  2000  efforts.  The
Company  plans to evaluate the status of its progress in June 1999 and determine
if such a plan is necessary.

         Management  believes  that ongoing  operations  during the remainder of
1998,  together with its line of credit,  will provide  sufficient  cash to meet
normal  operating  needs without  additional  financing  activities  through the
remainder  of the current  fiscal year and into the first half of fiscal  1999.*
However,  since  the  Company  desires  to  expand  its  technological  base and
production capacity,  additional financing from new equity or debt financing may
be necessary.* In such case,  there can be no assurance that such financing will
be available on terms acceptable to the Company or at all.

         The foregoing discussion contains  forward-looking  statements that are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Actual results could differ materially. Investors are warned
that forward-looking statements involve risks and unknown factors including, but
not  limited to,  customer  cancellation  or  rescheduling  of orders,  problems
affecting   delivery  of   vendor-supplied   raw   materials   and   components,
unanticipated manufacturing problems, availability of direct labor resources and
unanticipated  year 2000 problems.  The Company disclaims any  responsibility to
update  the  forward-looking  statements  contained  herein,  except  as  may be
required by law.




<PAGE>


                                                                             




                           PART II - OTHER INFORMATION


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

                  (a)      Exhibits.

                           10.1     Amendment dated October 23, 1998, to Line of
                                    Credit  Agreement  dated  December  13, 1996
                                    between the Registrant and SierraWest Bank.

                           27.1     Financial Data Schedule.

                  (b)      Reports on Form 8-K.

                                    No Reports on Form 8-K were filed during the
                                    quarter ended October 3, 1998.

                                                                            



                           


<PAGE>






                                   SIGNATURES



         In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                                     HYTEK MICROSYSTEMS, INC.
                                                     (Registrant)



Date:  November 12,  1998                            By:  /s/ Sally B. Chapman
                                                          --------------------
                                                     Sally B. Chapman
                                                     Chief Financial Officer
                                                     (Principal Financial and
                                                      Accounting Officer)

<PAGE>
 
 
                            HYTEK MICROSYSTEMS, INC.


                         Quarterly Report on Form 10-QSB
              for the Quarter and Nine Months ended October 3, 1998


                                  EXHIBIT INDEX

Exhibit
Number                              Exhibit Description

10.1                                Amendment, dated  October 23, 1998,  to Line
                                    of Credit  Agreement dated December 13, 1996
                                    Between  Registrant  and SierraWest Bank.


27.1                                Financial Data Schedule.

<PAGE>


Exibit 10.1                                                                   

10-23-98                                    PROMISSORY NOTE     
Loan No 404022113                             
                          PROMISSORY NOTE EXHIBIT 10.1


Principal  Loan Date Maturity    Loan No. Call Collateral Acct. Officer Initials
---------  --------- --------  ---------  ---- ---------- ----- ------  --------
$1,000,000 10-23-1998 05-15-2000 404022113 10   09        551876  111

References in  the  shaded area are for Lender's use only and do not limit the  
applicability of this document to any particular loan or item.

Borrower: HYTEK MICROSYSTEMS, INC. (TIN: 94-2234140)  Lender:   SierraWest Bank
          400 HOT SPRINGS RD.                                   Reno Main Office
          CARSON CITY, NV  89706-1609                           P. O. BOX 10925
                                                                RENO, NV 89510

================================================================================
Principal Amount: $1,000,000.00                             Initial Rate: 8.000%
Date of Note:October 23, 1998

PROMISE  TO  PAY.  HYTEK  MlCROSYSTEMS,  INC,  ("Borrower")  promises  to pay to
SierraWest  Bank  ("Lender"),  or order, in lawful money of the United States of
America, the principal amount of One Million & 00/100 Dollars ($1,000,000.00) or
so much as may be outstanding,  together with interest on the unpaid outstanding
principal balance of each advance. Interest shall be calculated from the date of
each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on May 15, 2000. In addition, Borrower will pay
regular monthly payments of accrued unpaid interest  beginning November 24 1998,
and all subsequent interest payments are due on the same day of each month after
that.  The annual  interest  rate for this Note is computed on a 365/360  basis;
that is, by applying  the ratio of the annual  interest  rate over a year of 360
days, multiplied by the outstanding principal balance,  multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender at
Lender's  address  shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest,  then to principal,  and any remaining
amount to any unpaid collection costs and late charges.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the Prime Rate as
published in the WESTERN  EDITION OF THE WALL STREET JOURNAL (the "Index").  The
Index is not  necessarily the lowest rate charged by Lender on its loans. If the
Index becomes  unavailable  during the term of this loan, Lender may designate a
substitute index after notice to Borrower. Lender will tell Borrower the current
Index rate upon Borrower's  request.  Borrower  understands that Lender may make
loans based on other rates as well. The interest rate change will not occur more
often than each day. The Index currently is 8.000% per annum.  The interest rate
to be applied to the unpaid principal  balance of this Note will be at a rate of
0.000 percentage  points over the Index,  resulting in an initial rate of 8.000%
per annum. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are  earned  fully as of the date of the loan and will not be  subject to refund
upon early  payment  (whether  voluntary or as a result of  default),  except as
otherwise  required by law.  Except for the foregoing,  Borrower may pay without
penalty  all or a portion  of the  amount  owed  earlier  than it is due.  Early
payments will not,  unless agreed to by Lender in writing,  relieve  Borrower of
Borrower's  obligation to continue to make payments of accrued unpaid  interest.
Rather, they will reduce the principal balance due.

LATE CHARGE.  If a payment is 10 days or more late,  Borrower will be charged 
5.000% of the regularly  scheduled  payment or $15.00, whichever is greater.

DEFAULT.  Borrower  will be in  default  if any of the  following  happens:  (a)
Borrower  fails to make any payment when due.  (b)  Borrower  breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement  related to this Note, or in any other  agreement or loan Borrower
has with Lender.  (c)  Borrower  defaults  under any loan,  extension of credit,
security  agreement,  purchase or sales agreement,  or any other  agreement,  in
favor of any  other  creditor  or  person  that  may  materially  affect  any of
Borrower's  property  or  Borrower's  ability  to  repay  this  Note or  perform
Borrower's obligations under this Note or any of the Related Documents.  (d) Any
representation  or  statement  made or  furnished  to Lender by  Borrower  or on
Borrower's  behalf is false or misleading in any material  respect either now or
at the time made or furnished.  (e) Borrower  becomes  insolvent,  a receiver is
appointed for any part of Borrower's property,  Borrower makes an assignment for
the benefit of creditors,  or any proceeding is commenced  either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's  property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any  guarantor  dies or any of the other  events  described  in this default
section  occurs  with  respect to any  guarantor  of this  Note.  (h) A material
adverse change occurs in Borrower's financial condition,  or Lender believes the
prospect of payment or performance of the  Indebtedness is impaired.  (i) Lender
in good faith deems itself insecure.

If any default,  other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same  provision  of this Note  within
the preceding twelve (12) months,  it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default:  (a) cures the default within fifteen (15) days; or (b) if
the cure requires more than fifteen (15) days, immediately initiates steps which
Lender deems in Lender's  sole  discretion  to be sufficient to cure the default
and  thereafter  continues  and  completes all  reasonable  and necessary  steps
sufficient to produce compliance as soon as reasonably practical.

LENDER'S  RIGHTS.  Upon default,  Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest  immediately  due,  without
notice, and than Borrower will pay that amount. Upon default,  including failure
to pay upon final maturity,  Lender, at its option, may also, if permitted under
applicable  Iaw,  increase  the  variable  interest  rate on this  Note to 6.500
percentage  points over the Index; The interest rate will not exceed the maximum
rate  permitted by applicable  law.  Lender may hire or pay someone else to help
collect this Note if Borrower  does not pay.  Borrower also will pay Lender that
amount.  This includes,  subject to any limits under  applicable  law,  Lender's
attorneys'  fees and Lender's legal expenses  whether or not there is a lawsuit,
including  attorneys'  fees  and  legal  expenses  for  bankruptcy   proceedings
(including  efforts  to modify  or vacate  any  automatic  stay or  injunction),
appeals,  and  any  anticipated   post-judgment   collection  services.  If  not
prohibited  by  applicable  law,  Borrower  also  will pay any court  costs,  in
addition to all other sums  provided  by law.  This Note has been  delivered  to
Lender and  accepted  by Lender in the State of  Nevada.  If there is a lawsuit,
Borrower  agrees  upon  Lender's  request to submit to the  jurisdiction  of the
courts of Washoe County, the State of Nevada (Initial Here ). This Note shall be
governed by and construed in accordance with the laws of the State of Nevada.
<PAGE>

RIGHT OF SETOFF.  Borrower  grants to Lender a contractual  possessory  security
interest in, and hereby assigns,  conveys,  delivers,  pledges, and transfers to
Lender all Borrower's right,  title and interest in and to, Borrower's  accounts
with  Lender  (whether  checking,  savings,  or some other  account),  including
without  limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future,  excluding  however all IRA and Keogh accounts,
and all trust  accounts  for which the  grant of a  security  interest  would be
prohibited  by law.  Borrower  authorizes  Lender,  to the extent  permitted  by
applicable  law, to charge or setoff all sums owing on this Note against any and
all such accounts.

LINE OF CREDIT.  This Note evidences a revolving line of credit.  Advances under
this Note may be  requested  either  orally or in writing by  Borrower  or by an
authorized  person.  Lender may, but need not, require that all oral requests be
confirmed  in  writing.  All  communications,  instructions,  or  directions  by
telephone  or  otherwise  to Lender are to be directed to Lender's  office shown
above.  The following party or parties are authorized to request  advances under
the line of credit until Lender receives from Borrower at Lender's address shown
above  written  notice of  revocation  of their  authority:  CHARLES  S.  BYRNE,
PRESIDENT/CEO. Borrower agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized  person or (b) credited to any
of Borrower's  accounts with Lender.  The unpaid principal balance owing on this
Note at any time may be  evidenced by  endorsements  on this Note or by Lender's
internal  records,  including  daily  computer  printouts.  Lender  will have no
obligation to advance funds under this Note if: (a) Borrower or any guarantor is
in default  under the terms of this Note or any  agreement  that Borrower or any
guarantor has with Lender,  including any agreement made in connection  with the
signing of this Note; (b) Borrower or any guarantor  ceases doing business or is
insolvent;  (c) any  guarantor  seeks,  claims or  otherwise  attempts to limit,
modify or revoke such guarantor's  guarantee of this Note or any other loan with
Lender;  (d)  Borrower  has  applied  funds  provided  pursuant to this Note for
purposes  other than  those  authorized  by Lender;  or (e) Lender in good faith
deems itself insecure under this Note or any other agreement  between Lender and
Borrower.

ZERO  BALANCE  REQUIREMENT.  Notwithstanding  any other  provision  in this Note
including  the  provisions  regarding  advances  and  payments,  Borrower  shall
maintain an outstanding balance of $0 during a period of thirty (30) consecutive
days during each one-year.

GENERAL  PROVlSIONS.  Lender may delay or forgo  enforcing  any of its rights or
remedies under this Note without losing them.  Borrower and any other person who
signs,  guarantees or endorses this Note,  to the extent  allowed by law,  waive
presentment, demand for payment, protest and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise  expressly stated in writing, no
party who signs this Note, whether as maker,  guarantor,  accommodation maker or
endorser,  shall be released from liability.  All such parties agree that Lender
may renew or  extend  (repeatedly  and for any  Iength of time)  this  loan,  or
release any party or guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral;  and take any other action
deemed necessary by Lender without the consent of or notice to anyone.  All such
parties  also agree that Lender may modify  this loan  without the consent of or
notice to anyone other than the party with whom the modification is made.

PRIOR TO SIGNING THIS NOTE,  BORROWER READ AND  UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE,  INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.  BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.


BORROWER:

HYTEK MICROSYSTEMS, INC.


By:      /S/ Charles S. Byrne
         -------------------------------
         CHARLES S. BYRNE, PRESIDENT/CEO


Variable Rate.  Line of  Credit.  
LASER  PRO, Reg. U.S. Pat.& T.M.Off., Ver. 3.24(c)1997 CFI ProServices, Inc.  
All rights reserved.  [NV-D20 HYTEK1.LN C1.OVL]Line of Credit.