UNITED STATES
                        SECURITIES AND EXCHANGE COMMISION
                             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     March 31, 2001
                                                 -------------------------------

   [   ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT
         For the transition period from                  to
                                        ------------------------------------

                         Commission file number 1-14072

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

            UTAH                                              87-0430260
(State or other jurisdiction of                       (I.R.S. Identification No)
incorporation or organization)

27121 Calle Arroyo, San Juan Capistrano, CA 92675
(Address of Principal Executive Offices) (Zip Code)

                                 (949) 661-2660
                           (Issuer's telephone number)

                2941 W. MacArthur Blvd, #121, Santa Ana, CA 92704
                -------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

         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

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

         Check whether the issuer filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
         Yes                       No

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         As of March 31, 2001 the issuer had 39,166,916 shares of its common
stock, par value $0.01 per share, issued and outstanding.
         Transitional Small Business Disclosure Format (check one):
                                                         Yes   No X

<PAGE>

                                   FORM 10-QSB
                             PEN INTERCONNECT, INC.
                                Table of Contents
                                                                            Page
PART I - FINANCIAL INFORMATION
Item 1   Financial Statements

         Financial Information                                                3

         Balance Sheets at March 31, 2001
         (unaudited) and September 30, 2000                                  4-5

         Statements of Operations for the three months
         ended March 31, 2001 and 2000 (unaudited) and                        6
         six month periods ended March 31, 2001 and
         2000 (unaudited)

         Statements of Cash Flows for the six months
         ended March 31, 2001 and 2000 (unaudited)                           7-8

         Notes to Condensed Financial Statements (unaudited)                9-11

Item 2   Management's Discussion and Analysis or
         Plan of Operation                                                 12-14

PART II - OTHER INFORMATION

Item 1   Legal Proceedings                                                   14

Item 2   Changes in the Securities and Use of Proceeds                       15

Item 3   Defaults Upon Senior Securities                                     15

Item 4   Submission of Matters to a Vote of Security Holders                 16

Item 5   Other Information                                                   16

Item 6(a). Exhibits                                                           16

Item 6(b). Reports on Form 8-K                                                16

Signatures                                                                    16

Exhibit 11 Calculation of Earnings                                            17



<PAGE>


                             PEN INTERCONNECT, INC.

                                     PART I

                              FINANCIAL INFORMATION

                 ITEM 1. INTERIM CONDENSED FINANCIAL STATEMENTS


Pen  Interconnect,  Inc. (the "Company"),  has included the unaudited  condensed
balance  sheet of the Company as of March 31, 2001 and audited  balance sheet as
of  September  30, 2000 (the  Company's  most  recent  fiscal  year),  unaudited
condensed  statements of operations for the three and six months ended March 31,
2001 and 2000,  and  unaudited  condensed  statements  of cash flows for the six
months ended March 31, 2001 and 2000,  together with unaudited  condensed  notes
thereto. In the opinion of management of the Company,  the financial  statements
reflect  all  adjustments,  all  of  which  are  normal  recurring  adjustments,
considered  necessary  to fairly  present the  financial  condition,  results of
operations and cash flows of the Company for the interim periods presented.  The
financial  statements  included in this report on Form 10-QSB  should be read in
conjunction with the audited  financial  statements of the Company and the notes
thereto included in the annual report of the Company on Form 10-KSB for the year
ended  September 30, 2000.  The results of  operations  for the six months ended
March 31, 2001 may not be indicative of the results that may be expected for the
year ending September 30, 2001.


                                       3


<PAGE>



                             Pen Interconnect, Inc.

                                 BALANCE SHEETS

                                     ASSETS


<TABLE>
<CAPTION>
                                                                                    March 31,         September 30,
                                                                                      2001                2000
                                                                                 ----------------   ------------------
                                                                                   (unaudited)
CURRENT ASSETS
<S>                                                                              <C>                <C>
      Cash and cash equivalents                                                  $         32,657   $            9,319
      Prepaid expenses                                                                      3,817                    0
      Assets from discontinued operations                                                       0                9,605
                                                                                 ----------------   ------------------

                  Total current assets                                           $         36,474   $           18,924
                                                                                 ----------------   ------------------


PROPERTY AND EQUIPMENT, AT COST
      Computer Equipment                                                                   1,028                1,028
      Less accumulated depreciation                                                         (206)                (154)
                                                                                 ----------------   ------------------
      Total property and equipment                                               $            822   $              874
                                                                                 ----------------   ------------------


      Total Assets                                                                $        37,296   $           19,798
                                                                                 ================   ==================

</TABLE>


The accompanying notes are an integral part of these statements.

                                       4

<PAGE>


                             Pen Interconnect, Inc.

                           BALANCE SHEETS - CONTINUED

                      LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                                    March 31,         September 30,
                                                                                      2001                2000
                                                                                 ----------------   ------------------
                                                                                   (unaudited)
CURRENT LIABILITIES
<S>                                                                              <C>                <C>
      Accounts payable                                                           $        347,015   $          200,752
      Accrued liabilities                                                                 691,534              724,647
      Convertible debentures                                                              150,000              150,000
      Notes payable                                                                       401,726               56,648
      Liabilities from discontinued operations                                            744,022              864,791
                                                                                 ----------------   ------------------

                 Total current liabilities                                       $      2,334,297   $        1,996,838
                                                                                 ================   ==================

STOCKHOLDERS' DEFICIT
      Convertible preferred stock, $0.01 par value
           Authorized 5,000,000 shares, Series A: 121
           issued and outstanding at March 31, 2001;
      130                issued and outstanding at September 30,                                1                    1
      2000
           Series B: issued and outstanding 926 shares at March                                 9                    9
      31, 2001 and September 30, 2000
      Common stock, $0.01 par value,
           authorized 50,000,000 shares, issued and
           outstanding 39,166,916 shares at March 31,
           2001 and 27,596,946 at September 30, 2000                                      391,669              275,969
      Additional paid-in capital                                                       19,355,712           19,282,402
      Accumulated deficit                                                             (22,044,382)         (21,535,421)
                                                                                 ----------------   ------------------

                 Total stockholders' equity (deficit)                                  (2,297,001)          (1,977,040)
                                                                                 ----------------   ------------------

                                                                                 $         37,296   $           19,798
                                                                                 ================   ==================

</TABLE>

The accompanying notes are an integral part of these statements.

                                       5



<PAGE>


                             Pen Interconnect, Inc.
                            STATEMENTS OF OPERATIONS
                                   (Uaudited)

<TABLE>
<CAPTION>
                                                     Three months ended                      Six months ended
                                                 March 31,         March 31,            March 31,         March 31,
                                                   2001               2000                2001              2000
                                              ----------------   ---------------      --------------    --------------
<S>                                           <C>                <C>                  <C>               <C>
Net sales                                     $              0   $             0      $            0    $            0
Cost of sales                                                0                 0                   0                 0
      Gross profit                                           0                 0                   0                 0
                                              ----------------   ---------------      --------------    --------------

Operating expenses
      General and administrative                       255,158           571,017             457,936           612,462
      Depreciation and amortization                         26                26                  52                52
                                              ----------------   ---------------      --------------    --------------

      Total Operating Expenses                         255,184           571,043             457,988           612,514

      Loss on Impairment                                     0                 0             (63,000)                0
                                              ----------------   ---------------      --------------    --------------
      Loss from continued operations                  (255,184)         (571,043)           (520,988)         (612,514)
      Loss from discontinued
      operations                                             0          (881,263)            (39,323)       (1,205,332)
                                              ----------------   ---------------      --------------    --------------

Other income (expense)                                   7,925          (209,499)              7,925          (374,138)
                                              ----------------   ---------------      --------------    --------------
      Net loss before income taxes                    (247,259)       (1,661,755)           (552,386)       (2,191,984)
       and extraordinary item

      Extinguishment of debt                            73,168                 0              84,287                 0
                                              ----------------   ---------------      --------------    --------------

      Net loss before income taxes                    (174,091)       (1,661,755)           (468,099)       (2,191,984)

      Income tax expense                                     0               900                   0               900
                                              ----------------   ---------------      --------------    --------------

Net loss                                      $       (174,091)  $    (1,662,655)     $     (468,099)   $   (2,192,884)
                                              ================   ===============      ==============    ==============

Loss per common share
Loss before discontinued items &
  extraordinary item:
    basic and diluted                                    (0.01)            (0.04)              (0.01)            (0.05)
Loss from discontinued operations:
    basic and diluted                                                      (0.06)              (0.00)            (0.10)
Loss before extraordinary item: basic
    and diluted                                          (0.01)            (0.12)              (0.01)            (0.19)
Extinguishment of debt: basic and diluted
Net loss per share: basic and diluted                    (0.01)            (0.12)              (0.01)            (0.19)

Weighted average common shares
    outstanding-basic and diluted                   29,075,237        13,584,534          35,214,200        11,626,602
                                              ================   ===============      ==============    ==============

</TABLE>

The accompanying notes are an integral part of these statements.

                                       6




<PAGE>

                             Pen Interconnect, Inc.
                            STATEMENTS OF CASH FLOWS
                                   (Uaudited)

<TABLE>
<CAPTION>
                                                                                           Six months ended
                                                                                     March 31,         March 31,
                                                                                        2001              2000
                                                                                   ---------------   ---------------
Increase (decrease) in cash and cash equivalents
    Cash flows from operating activities
<S>                                                                                <C>               <C>
        Net loss                                                                   $     (468,099)   $    (2,192,884)
        Adjustments to reconcile net loss to net cash
           used in operating activities
            Depreciation and amoritazation                                                      52            90,463
            Loss on disposal of divisions (Note A)                                               0           305,324
            Loss on transfer of assets  (Notes A & D)                                            0           900,008
            Allowance for notes receivable                                                  63,000                 0
            Warrant/option compensation expense                                             75,145                 0
            Changes in asset and liabilities
                 Accounts receivable offset to customers' accounts payable                       0         2,439,266
                 Net assets transferred to lender                                                0         3,238,079
                 Prepaid expenses and other assets                                           5,788            (7,892)
                 Accounts payable                                                          (75,147)         (725,109)
                 Accrued liabilities                                                        67,528          (393,014)
                                                                                   ---------------   ---------------
                       Net cash generated (used) in
                          operating activities                                            (331,733)        3,654,241
                                                                                   ---------------   ---------------

    Cash flows from investing activities
        Purchase of property and equipment                                                                   (15,500)
        Issuance of notes receivable                                                                          19,410
        Proceeds from disposal of division (Note A)                                                           74,324
        Advances to perFORMplace                                                           (63,000)                0
                                                                                   ---------------   ---------------
          Net cash provided by (used in) investing activities                              (63,000)           78,234
        Cash flows from financing activities:
          Net change in line of credit                                                                    (4,436,562)
          Accrued dividends on preferred shares                                            (56,512)          137,288
          Principal payments on long-term obligations                                                       (167,786)
          Principal payments on capital lease obligations                                                    (71,916)
          Discount on exercised common shares options                                                        294,171
          Discount of warrants conversion to common stock                                                     89,941
          Proceeds from sale of common stock                                               129,505           340,341
          Proceeds from issuance of short term note payable                                345,078            54,450
                                                                                   ---------------   ---------------
                       Net cash consumed in financing activities                           418,071        (3,760,073)

            Net increase (decrease) in cash and cash equivalents                            23,338            26,698

            Cash and cash equivalents at beginning of period                                 9,319           177,214
                                                                                   ---------------   ---------------
            Cash and cash equivalents at end of period                                      32,657           203,912
                                                                                   ===============   ===============

Supplemental disclosures of cash flow information Cash paid during the period
for:
   Interest expense                                                                $       308,102   $       287,204
   Income tax expense                                                              $           900   $             0
</TABLE>

Noncash investing and financing activities

During the first six months of FY 2001 Series A preferred shareholders converted
9 preferred shares into 450,000 common shares at an average  conversion price of
approximately  $0.02  per  common  share.  Under  the  conversion  terms  of the
convertible preferred shares, a holder has the right to convert preferred shares
into common shares at eighty-five  (85) percent of the average of the two lowest
closing bid prices  during the last  twenty-two  (22)  consecutive  trading days
prior to  conversion.  During the second  three  months of FY2001,  the  Company
issued 8,480,000 common shares to consultants who performed various services for
the Company in lieu of cash  payments.  Additionally,  during the  quarter,  the
Company  re-priced  the  exercise  price for certain  options on 617,000  common
shares from $0.06 to $0.01 and forgave  $37,020 in conversion  costs in exchange
for forgiveness on certain breach of contract occurrences.

During  the  quarter  debt and trade  payables  in the  amount of  $13,788  were
converted  into  6,311  common  shares  and  recognized   gains  of  $11,030  as
extinguishments of debt.

                                       7
<PAGE>


NOTE A - GOING CONCERN

         The accompanying  financial statements have been prepared assuming that
         the  Company  will  continue  as a going  concern.  The Company has had
         recurring  losses,  $174,091  for the quarter  ended March 31,  2001, a
         deficit of  $2,297,001  in  stockholders'  equity and negative  working
         capital of $2,297,823  for the period ended March 31, 2001. The Company
         has  terminated  its purchase  agreement to acquire two divisions  from
         Imaging Technologies  Corporation ("ITEC" /OTC BB) and has entered into
         a definitive  agreement to acquire all of the  outstanding  shares of a
         private  company,  The Automatic  Answer  Company (tAA) in exchange for
         sixty seven  percent of the  outstanding  common shares of the Company.
         The Company  intends to raise  additional  funds in the capital markets
         for working capital  purposes upon completion of the  acquisitions.  If
         the Company does not complete the acquisition, the Company will have to
         raise additional capital to fund its negative cash flow. These factors,
         among others,  raise  substantial  doubt about the Company's ability to
         continue as a going concern.

NOTE B - ACQUISITIONS/DISPOSITIONS

         PowerStream Division

         On December 28, 1999 the Company signed a letter of intent with Mark W.
         Lund of Lund Instrument Engineering, Inc. ("Lund") of Orem, UT. to sell
         certain  assets  and  to  assume  certain  liabilities  of  PowerStream
         Division.  The transaction  closed on January 21st, 2000. Lund remitted
         $74,324.00  to the  Company  and  received  assets with a book value of
         approximately $239,350, customer contracts and general intangibles; and
         assumed  liabilities and customer  advances of approximately  $411,000.
         The Company is to receive for three years  royalties of a) sixteen (16)
         percent of the gross  profits  generated  from sales  generated  from a
         contract  with L3  Communications,  less any  customer  advances and b)
         eight (8)  percent of gross  profits on all other  sales  contracts  in
         place  at  closing.  The  royalty  agreement  has  been  seized  by the
         Company's  secured lender as part of the lender's  foreclosure in March
         2000.

NOTE C - OPTIONS TO PURCHASE COMMON STOCK

         No options were exercised in the second quarter.

NOTE D - WARRANTS TO PURCHASE COMMON STOCK

         Warrants representing 3,165,100 common shares were exercised during the
         quarter at a weighted  average  price of $0.04 per share.  Proceeds  of
         $129,503 were utilized for corporate operations and debt reduction.

NOTE E - OPTIONS/WARRANTS TO PURCHASE COMMON STOCK

         During the second  quarter of FY 2001 the  Company  issued  warrants to
         purchase  8,080,000  shares of the Company's common stock. All warrants
         were  issued  at an  exercise  price,  which  was equal to or above the
         market price at the time of issuance.  The following table outlines the
         features of these warrants:

             Number of             Exercise            Expiration
              Warrants              Price                 Date
           ----------------     -------------      -------------------
               8,080,000             $0.06             April 2002


                                       8
<PAGE>

NOTE F - ACCRUED PREFERRED STOCK DIVIDENDS

         The  Company  accrued  $56,512  for  dividends   payable  to  preferred
         shareholders during the first six months.

NOTE G - PREFERRED STOCK

         The  Company  has issued two series of  Preferred  Stock.  Series A was
         issued in February 1999 consisting of 1,800 shares, par value $0.01 per
         share,  for $1,000 per share.  Series B was issued in April 1999 at the
         same price and par value but only 1,000 shares were issued. Both series
         of  Preferred  Stock  carry a 16  percent  dividend  rate which is paid
         quarterly.  If and when the  Company's  stock is listed again on NASDAQ
         the dividend rate will drop to 8 percent.

         Both issuances of Preferred  Stock are  convertible  into shares of the
         Company's  Common  Stock.  Each  share of Series A  Preferred  Stock is
         convertible  into an  amount of shares  of Pen  Common  Stock  equal to
         $1,000  divided by the average of the two lowest closing bid prices for
         Pen  Common  Stock  during the period of 22  consecutive  trading  days
         ending with the last trading day before the date of  conversion,  after
         discounting that market price by 15 percent (the  "Conversion  Price").
         The maximum  Conversion Price for the Series A Preferred Stock is $1.17
         per share.  The shares of Series B Preferred Stock are convertible into
         Common  Stock at the same  Conversion  Price as the Series A  Preferred
         Stock  except  for a  maximum  Conversion  Price  of $0.79  per  share.
         Warrants to acquire  320,000  shares of Common Stock at prices  ranging
         from $0.86 to $1.28 per share were also issued to the purchasers of the
         Series A and Series B Preferred  Stock. The Warrants expire three years
         from date the Preferred Stock and warrants were initially issued.

NOTE H - CONVERTIBLE DEBENTURE

         In August  2000,  the  Company  entered  into a  convertible  debenture
         agreement  for  $600,000  in  exchange  for  4,000,000  shares  of  the
         Company's common stock. This agreement consists of three  installments:
         $150,000 upon the signing of the agreement; $150,000 upon the submittal
         of the registration documents;  and $300,000 upon the completion of the
         registration of the debenture. The first installment was received prior
         to September 30, 2000. The  convertible  debenture has an interest rate
         of 7% per annum. The Company still anticipates that it will prepare the
         necessary  documents  to  register  the  debenture.  The  debenture  is
         convertible  into common  stock at the lesser of $0.15 per share or 70%
         of the market price on the conversion date.

NOTE I - CONVERIBLE PROMISSORY NOTE

         In October 2000 the Company  issued a  convertible  promissory  note to
         Imaging  Technologies,  Inc.  (ITEC) for $75,000 at an interest rate of
         ten (10)  percent per annum.  ITEC has the right to convert the note to
         unregistered  common stock of the company at a conversion rate of $0.10
         per share.  Upon  conversion,  the Company is required to register  the
         shares  in the next  appropriate  registration  statement  filed by the
         Company.

         The note was due December 9, 2000.  As the Company has  terminated  its
         definitive  agreement  with ITEC and has signed an agreement to acquire
         tAA, ITEC, the lender has agreed to extend the term of the note pending
         the closing of the acquisition.

                                       9
<PAGE>


NOTE J - EARNINGS (LOSS) PER SHARE

         Basic  earnings  (loss) per common  share is computed  by dividing  net
         earnings  (loss)  available  to  common  shareholders  by the  weighted
         average number of common shares outstanding during each period. Diluted
         earnings (loss) per common share are similarly calculated,  except that
         the  weighted  average  number of common  shares  outstanding  includes
         common  shares  that may be issued  subject  to  existing  rights  with
         dilutive  potential except for periods when such calculations  would be
         anti-dilutive.

         For  the  six  months  ended  March  31,  2001,  net  earnings   (loss)
         attributable to common  shareholders  includes accrued dividends at the
         stated  dividend  rate from date of  issuance  and a  non-cash  imputed
         dividend  to the  preferred  shareholders  related  to  the  beneficial
         conversion  feature  on the 1999  Series A and B  Preferred  Stock  and
         related warrants.  The beneficial conversion feature is computed as the
         difference  between the market value of the common stock into which the
         Series A and B Preferred  Stock can be converted and the value assigned
         to the Series A and B  Preferred  Stock in the private  placement.  The
         imputed  dividend is a one-time  non-cash  charge  against the earnings
         (loss) per common share.  The  calculation of earnings (loss) per share
         is included in Exhibit 11.

                                       10

<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


FORWARD-LOOKING   STATEMENTS.   This  report  contains  certain  forward-looking
statements  within the meaning of section 27A of the  Securities  Act of 1933 as
amended,  and section 21E of the  Securities  Exchange Act of 1934,  as amended,
that involve risks and uncertainties.  In addition, the Company may from time to
time make oral forward-looking statements.  Actual results are uncertain and may
be  impacted  by  the  following  factors.  In  particular,  certain  risks  and
uncertainties  that may impact the  accuracy of the  forward-looking  statements
with  respect to  revenues,  expenses  and  operating  results  include  without
limitation,   cycles  of  customer  orders,  general  economic  and  competitive
conditions and changing consumer trends,  technological  advances and the number
and timing of new product  introductions,  shipments of products and  components
from foreign suppliers, and changes in the mix of products ordered by customers.
As a result,  the actual results may differ  materially  from those projected in
the forward-looking statements.

Because  of these and other  factors  that may affect  the  Company's  operating
results,  past  financial  performance  should not be considered an indicator of
future performance, and investors should not use historical trends to anticipate
results or trends in future periods.

The following  discussion and analysis  provides certain  information  which the
Company's  management believes is relevant to an assessment and understanding of
the Company's  results of operations and financial  condition for the six months
ended March 31, 2001 and 2000.  This  discussion  should be read in  conjunction
with the audited financial  statements of the Company and notes thereto included
in the Annual Report of the Company on Form 10-KSB for the year ended  September
30, 2000.

General

There were no sales from  continuing  operations for the quarter ended March 31,
2001.  All operating  divisions  were disposed of during 1999 and 2000,  and all
operating activity was reclassified as discontinued  operations.  Since March 2,
2000,  the Company  decided to maintain  its'  situation  as a reporting  public
company,  and to reduce  its' debt in order to make the  Company  attractive  to
private  companies  that would want to use Pen to go public.  This approach is a
major step to help maintain shareholder value in the Company's stock price.

The  Company  did enter  into a Letter of Intent to  reverse  merge with a small
private .com company, perFORMplace.com,  in the entertainment services business.
A definitive  agreement was signed in late August 2000 with the intent to obtain
shareholder ratification at the next shareholders' meeting. However, on November
8, 2000,  before the  meeting  could be held,  perFORMplace.com  terminated  the
merger.

In December 2000, Pen entered into an agreement with Imaging  Technologies  Inc.
(ITEC) of San Diego,  CA whereby  Pen would  acquire two  divisions  of ITEC and
issue to ITEC Pen's unregistered  common stock such that upon closing ITEC would
receive  seventy-five  (75) percent of the outstanding  shares of Pen.  However,
this  agreement  was  terminated  in January  2001 by mutual  agreement  by both
companies.  Subsequently, Pen entered into a definitive agreement to acquire all
of the outstanding shares of tAA, a private company involved in the PC based PBX
systems and voice over IP. Due diligence is ongoing.  The acquisition is subject
to shareholder ratification.

Since  the  disposition  of the net  assets  and  operations  of our  historical
operations,  the  Company  has  reduced  its'  staff  to two  employees  and one
part-time  financial  consultant.  The Company has  subsequently  moved to a new
smaller  location a few miles from its former  address,  so as to further reduce
expenses.

                                       11
<PAGE>

Results of Operations

Net sales. With the sale of PowerStream  Division and the voluntary  foreclosure
and sale of assets of InCirT Division during the second quarter of FY2000, which
represent  the only  operating  units of the Company,  and the fact that each is
accounted for in the financial  statements as  discontinued  operations and that
each  division's  operations  have not been  operational  since March 2, 2000, a
comparative analysis against prior same quarter is inappropriate.

Cost  of  sales.  With  the  sale of  PowerStream  Division  and  the  voluntary
foreclosure  and sale of assets of InCirT  Division during the second quarter of
FY2000,  which represent the only operating  units of the Company,  and the fact
that  each  is  accounted  for  in  the  financial  statements  as  discontinued
operations and that each division's  operations have not been operational  since
March 2, 2000, a comparative analysis against prior same quarter.

Operating expenses.  Operating expenses decreased during the first six months of
fiscal 2001 by  approximately  $154,526 as compared to same period FY 2000. This
decrease  was  caused  by a  reduction  in  personnel,  facilities  and  general
tightening of corporate expenses.

Other income and  expenses.  Other income and expenses  increased by $63,000 for
the six months  ended March 31, 2001 as compared to the same period in the prior
year. This increase is the Company's writing off $63,000 of notes receivable due
from  perFORMplace.com  as  uncollectable;  consistent  with  its  write  off of
previous advances to perFORMplace  during the previous fiscal year. Other income
and expense (related to discontinued  operations)  incurred during the first six
months of FY 2001 are  reflected  in the loss from  discontinued  operations  of
$39,323.

Net  earnings  (loss) and  earnings  (loss)  per share.  Net loss for the second
fiscal  quarter  ended March 31, 2001 totaled  ($174,091)  or ($0.01) per share,
compared with losses of  ($1,662,655) or ($0.12) per share for the second fiscal
quarter of FY 2000.  The  decrease in the loss per share of $0.11 is caused by a
($0.01)  decrease  in loss from  discontinued  operations;  from an  increase in
extinguishments of debt; and an increase in loss from impairments. Approximately
($0.06) of per share  improvement  is the result of an increase in the number of
outstanding common shares.

Liquidity and Capital Resources

During the first six months of FY 2001 the Company sustained losses of $468,099.
As a result  of these  losses,  the  Company  has had to raise  cash  ($129,505)
through the exercise of warrants, representing 5,144,301 common shares and issue
a promissory note for $345,078.

Inflation and Seasonality

The Company does not believe that it is significantly impacted by inflation.


                                       12

<PAGE>

                                     PART II

                                OTHER INFORMATION


Item 1.  Legal Proceedings.

         From  time to time  the  Company  has  been a party  to  various  legal
proceedings arising in the ordinary course of business

1.       On October 28, 1999 Color Savvy  Systems,  Ltd.,  filed suit to recover
         $165,750 in past due uncontested  vendor  obligations.  On February 16,
         2000, Color Savvy obtained a judgment against the Company for $165,750.
2.       On  February  15,  2000,  Amistar  Corporation  filed suit  against the
         Company to recover $95,733 in uncontested past due vendor  obligations.
         As of this writing,  Amistar has accepted the Company's  stock for debt
         offer.
3.       On March 21, 2000,  Interworks  Computer Products,  Inc., filed suit to
         recover $35,771 in past due uncontested vendor obligations.  Settled in
         January 2001.
4.       On July 22, 2000,  Force  Electronics  filed suit to recover $68,816 in
         past due  uncontested  vendor  obligations,  and obtained a judgment on
         September 15, 2000. Settled in January 2001.
5.       Control  Design  Supply/Nedco  filed suit to recover $6,788 in past due
         uncontested vendor obligations. Settled in January 2001.
6.       On March 20, 2000,  DHL Airways Inc.  obtained a judgment in the amount
         of $3,868 for past due uncontested vendor obligation.  Settled in March
         2001
7.       In January 2001 Fidelity Leasing, Inc. filed suit to recover $26,608.91
         and obtained a judgment  for  uncontested  past due lease  obligations.
         Settled in February 2001.

On November 15,  1999,  Alan L. Weaver,  former CEO of Pen  Interconnect,  Inc.,
obtained a judgment  against the Company in the amount of $135,300 for breach of
a settlement  agreement relative to Mr. Weavers'  employment  agreement with the
Company.  The Company has  reserved  $135,300 as a  contingent  liability  as of
September 30, 2000 for this agreement.



                                       13
<PAGE>


Item 2.  Changes in the Securities and Use of Proceeds.

         During the quarter  3,171,411  common shares were issued:  6,311 shares
for debt  conversion;  575,000  shares for services;  and  2,590,000  shares for
option/warrant exercises. Additionally the Company issued convertible promissory
notes  for  $250,000.   Cash  proceeds  $196,325  were  utilized  for  corporate
operations.

         In October 2000 the Company  issued a  convertible  promissory  note to
Imaging  Technologies,  Inc.  (ITEC) for $75,000 at an interest rate of ten (10)
percent per annum. ITEC has the right to convert the note to unregistered common
stock of the company at a conversion rate of $0.10 per share.  Upon  conversion,
the  Company  is  required  to  register  the  shares  in the  next  appropriate
registration statement filed by the Company.

         The  note  was due  December  9,  2000.  As the  Company  has  mutually
terminated its definitive  agreement with ITEC and has entered into an agreement
to purchase  tAA,  the lender has agreed to extend the term of the note  pending
the closing of the acquisition.

Item 3.  Defaults Upon Senior Securities.

         The Company entered into a financing agreement with a bank in September
1997 for $6,300,000.  The agreement  consisted of a $5,000,000  revolving credit
line and two term loans for $800,000 and $500,000. Under the loan agreements for
these  loans,  the Company was  required to meet  certain  financial  ratios and
specific  minimum  levels of earnings and net worth.  The loan  agreements  also
restricted employee advances, capital expenditures, compensation, and additional
indebtedness;  and restricted the payment of dividends. The Company had borrowed
$4,436,562  under the line of credit at September 30, 1999. At times,  including
at  September  30,  1999,  the Company had been in  violation  of certain of the
covenants of this credit  facility.  The Company  operated  under a  forbearance
agreement during all of fiscal 1999.

         As of September  30,  1999,  the Company had not received a waiver from
the lender and all obligations under this credit facility were payable on demand
of the lender and were  classified as current  liabilities in the balance sheet.
Subsequent  to September  30, 1999,  the lender  declared the loan  agreement in
default.

         The Company continued  operating under a default notice with its lender
and began seeking buyers for its two remaining divisions PowerStream and InCirT.
The  Company  solicited  a  competitor  to  purchase  most of the  assets and to
negotiate a supplier  agreement with the Company's  largest account as part of a
voluntary  foreclosure of all the remaining assets of the InCirT division of the
Company,  for which  Finova had a perfected  security  interest.  The  Company's
December 31, 2000 balance sheet reflects the transfer of all  collateral  assets
to Finova, and the Company has recognized an offset of the bank's line of credit
balance  and term  loans owed by the  Company.  The  Company  recorded a loss on
transfer of assets of $963,027.

         The bank line of credit has a remaining  balance  due of  approximately
$1,400,000  that is not  recorded in the  financial  statements,  and  remaining
estimated  assets to collect  of  approximately  $2,400,000,  which are also not
recorded in the financial  statements.  The Company is currently  negotiating an
agreement with the lender, which it expects will result in complete satisfaction
of all the loans with the lender in exchange for the assets the lender currently
has in its  possession.  The draft  agreement  also  includes  the  repricing of
certain  warrants  that the Company has issued to the lender and the issuance of
certain number of additional warrants to the lender.

                                       14


<PAGE>

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

         None during the quarter.

Item 5.  Other Information.
         None

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

         None

A.       Exhibits

         11  Calculation of earnings (loss) per share.

B.       Reports on Form 8-K.

         None

                                   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.


                                  PEN INTERCONNECT, INC.


Date:     May 14, 2001            By:  /s/ Stephen J. Fryer
                                     ----------------------
                                     Stephen J. Fryer, Chairman, CEO,
                                       and Principal Accounting Officer



                                       15

<PAGE>


Exhibit 11
                             Pen Interconnect, Inc.

                    CALCULATION OF EARNINGS (LOSS) PER SHARE
                    FOR THE THREE MONTHS AND SIX MONTHS ENDED
                             MARCH 31, 2001 AND 2000




<TABLE>
<CAPTION>

                                     Three Months Ended March 31,       Six Months Ended March 31,
                                         2001            2000              2001             2000
                                    -----------      ------------     -------------     ------------
<S>                                 <C>              <C>              <C>               <C>
Loss attributable to
Common stockholders                 $   174,091      $ (1,687,942)    $     468,099     $ (2,330,172)
                                    -----------      ------------     -------------     ------------

     Basic EPS

Common shares outstanding entire
period                               27,596,946         9,638,114        27,596,946        9,638,114

Weighted average common shares
issued                                1,478,291         3,671,429         4,264,200        1,963,488

Weighted average common shares
outstanding during period            29,075,237        13,584,534        35,214,200       11,626,602

Loss per common share                      (.01)             (.12)             (.01)            (.20)

    Diluted EPS

Weighted average common shares
outstanding during period-basic      29,075,237        13,584,534        35,214,200       11,626,602

Dilutive effect of stock options
and Warrants                                  0                 0                 0                0

Weighted average common shares
outstanding during period-diluted    29,075,237        13,584,534        35,214,200       11,626,602

Loss per common share-diluted              (.01)             (.12)             (.01)            (.20)

</TABLE>