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     June 30, 1997

   [   ]   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. Employer Identification No)
 incorporation or organization) 

                 2351 South 2300 West, Salt Lake City, UT 84119
               (Address of Principal Executive Offices) (Zip Code)

                                 (801) 973-6090
                           (Issuer's telephone number)

                                      N/A .

(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 August 15,  1997 the issuer  had  3,238,975  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
                  June 30, 1997 (unaudited)  and September 30, 1996        4-5

                   Statements of Earnings for the
                  Quarter Ended June 30, 1997 and 1996 and
                  Nine month period ended June 30, 1997 and 1996             6

                   Statements of Cash Flows for the nine month
                  period ended June 30, 1997 and 1996                     7-10

                  Notes to Financial Statements                          11-15

Item 2            Management's Discussion and Analysis or
                  ---------------------------------------
                  Plan of Operation                                      16-18
                  -----------------

PART II - OTHER INFORMATION

Item 1            Legal Proceedings                                         19

Item 2            Changes in the Securities                                 19

Item 3            Defaults Upon Senior Securities                           19

Item 4            Submission of Matters to a Vote of Security Holders       19

Item 5            Other Information                                         19

Item 6(a).        Exhibits                                                  19

Item 6(b).        Reports on Form 8-K                                       19

Signatures                                                                  20


                                        2


<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 June 30,  1997 and  audited
     balance  sheet as of September 30, 1996 (the  Company's  most recent fiscal
     year),  unaudited  condensed  statements  of earnings for the quarter ended
     June 30, 1997 and 1996, and nine month period ended June 30, 1997 and 1996,
     and unaudited condensed  statements of cash flows for the nine month period
     ended June 30,  1997 and 1996,  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, 1996.
     The results of operations for the three and nine months ended June 30, 1997
     may not be  indicative  of the results  that may be  expected  for the year
     ending September 30, 1997.



                                        3


<PAGE>
                             Pen Interconnect, Inc.

                                 BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                                                     June 30             September 30
                                                                                      1997                   1996
                                                                                 ---------------         ------------
                                                                                   (Unaudited)
CURRENT ASSETS
<S>                                                                              <C>                     <C>         
    Cash and cash equivalents                                                    $       15,128          $    169,445
    Receivable (Note C)
        Trade accounts,  less  allowance  for doubtful  accounts of $236,083 and
            $273,852 at June 30, and September 30,
            respectively.                                                             3,003,295             4,259,298
        Current maturities of notes receivable                                          394,811                37,494
    Income tax refund receivable (Note D)                                               306,693               228,241
    Inventories (Notes B and C)                                                       4,575,543             6,198,392
    Prepaid & other assets                                                              715,718               386,494
    Deferred tax asset                                                                  209,000               525,800
                                                                                  -------------         -------------

                    Total current assets                                              9,220,188            11,805,164


PROPERTY AND EQUIPMENT, AT COST
    (Note C)
        Production equipment                                                          2,441,263             3,010,575
        Furniture and fixtures                                                          776,973               717,821
        Transportation equipment                                                         69,217                49,373
        Leasehold improvements                                                          368,137               354,150
                                                                                  -------------        --------------

                                                                                      3,655,590             4,131,919
        Less accumulated depreciation                                                 1,175,917             1,065,205
                                                                                  -------------        --------------

                                                                                      2,479,673              3,066,714
OTHER ASSETS
    Notes receivable, less current maturities                                           597,748                 19,630
    Investments (Note D)                                                                400,000                     -
    Trademarks, designs & other intangibles                                             622,214                     -
    Goodwill                                                                          1,591,290              1,589,313
    Other                                                                               174,021                176,097
                                                                                  -------------         --------------

                                                                                      3,385,273              1,785,040
                                                                                  -------------         --------------

                                                                                  $  15,085,134         $   16,656,918
                                                                                  =============         ==============
</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>

                                                                                      June 30              September 30
                                                                                      1997                      1996    .
                                                                                ----------------          ---------------
                                                                                 (Unaudited)
CURRENT LIABILITIES
<S>                                                                              <C>                    <C>       
    Line of credit (Note C)                                                      $ 2,960,000            $4,969,864
    Bridge loan (Note D)                                                           1,000,000                    -
    Current maturities of long-term obligations                                       46,500                19,265
    Current maturities of capital leases                                              53,435                59,878
    Accounts payable                                                               2,026,721             2,954,601
    Accrued liabilities                                                              577,124               611,739
    Income taxes payable                                                             111,644                    -
                                                                              --------------       ---------------

                    Total current liabilities                                      6,775,424             8,615,347

LONG-TERM OBLIGATIONS, less current
    maturities                                                                        83,721                96,758

CAPITAL LEASE OBLIGATIONS, less current
    maturities                                                                        75,466               150,382

DEFERRED INCOME TAXES                                                                 40,000               225,800
                                                                                 -----------       ---------------

                    Total liabilities                                              6,974,611             9,088,287


STOCKHOLDERS' EQUITY (Notes A and E)
    Preferred stock, $0.01 par value, authorized
        5,000,000 shares, none issued                                                     -                     -
    Common stock, $0.01 par value, authorized
        50,000,000 shares, issued and outstanding
        3,238,975 shares at June 30 and
        3,003,407 shares at September 30,  respectively.                              32,390                30,334
    Additional paid-in capital                                                     7,737,965             7,431,669
    Retained earnings                                                                340,168               106,628
                                                                                ------------           -----------

                    Total stockholders' equity                                     8,110,523             7,568,631
                                                                                 -----------           -----------

                                                                                 $15,085,134           $16,656,918
                                                                                 ===========           ===========
</TABLE>

The accompanying notes are an integral part of these statements.


                                        5



<PAGE>
                             Pen Interconnect, Inc.

                             STATEMENTS OF EARNINGS
                                   (unaudited)
<TABLE>
<CAPTION>
                                                            Three months ended June 30,             Nine months ended June 30
                                                               1997             1996               1997              1996
                                                           ------------     ------------      ------------      ------------
<S>                                                        <C>              <C>               <C>               <C>         
Net sales                                                  $  4,479,882     $  8,582,794      $ 15,220,519      $ 18,595,250
Cost of sales                                                 4,083,240        7,446,724        12,912,356        15,606,248
                                                           ------------     ------------      ------------      ------------


            Gross profit                                        396,642        1,136,070         2,308,163         2,989,002

Operating expenses
    Sales and marketing                                         230,040          322,570           695,152           914,173
    Research and development                                     60,914               -            101,283                 -
    General and administrative                                  390,479          582,661         1,115,630         1,127,700
    Depreciation and amortization                                96,347           80,667           285,025           166,329
                                                           ------------     ------------      ------------      ------------

            Total operating expenses                            777,780          985,898         2,197,090         2,208,202
                                                           ------------     ------------      ------------      ------------

            Operating income (loss)                           (381,138)          150,172           111,073           780,800

Other income (expense)
    Interest expense                                          (134,763)         (92,354)          (403,539)         (296,584)
    Gain (loss) on sale of division (Note A)                        -                  -           611,912                 -
    Other income (expense) net                                   19,522           23,759            77,194             6,781
                                                           ------------     ------------      ------------      ------------

            Total other income (expense)                      (115,241)         (68,595)           285,567          (289,803)
                                                           ------------     ------------      ------------      ------------

Earning (loss) before income taxes                            (496,379)           81,577           396,640           490,997

Provision (benefit)for income taxes                           (198,500)           35,422           163,100           192,862
                                                           ------------     ------------      ------------      ------------

Net earnings (loss)                                        $  (297,879)     $     46,155      $    233,540      $    298,135
                                                           ============     ============      ============      ============

Earnings (loss) per common share                           $     (0.09)     $       0.02      $       0.08      $       0.11
                                                           ============     ============      ============      ============
Weighted average common
    shares outstanding                                        3,238,975        3,033,407         3,101,930         2,644,469
                                                           ============     ============      ============      ============
</TABLE>




The accompanying notes are an integral part of these statements.


                                        6


<PAGE>
                             Pen Interconnect, Inc.

                            STATEMENTS OF CASH FLOWS

                          For nine months ended June 30

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                   1997                  1996   
                                                                            ------------------     ---------------

Increase (decrease) in cash and cash equivalents
    Cash flows from operating activities
<S>                                                                           <C>                   <C>           
        Net earnings                                                          $      233,540        $      298,135
        Adjustments to reconcile net earnings to net
            cash used in operating activities
               Depreciation and amortization                                         285,025               166,329
               Bad debts                                                             (19,314)                  649
               Gain on sale of division                                             (611,912)                   -
               Deferred taxes                                                        131,000              (215,089)
               Changes in assets and liabilities
                    Trade accounts receivable                                        615,329              (119,440)
                    Inventories                                                      (15,587)             (418,506)
                    Prepaid expenses and other assets                               (369,942)             (337,023)
                    Deferred offering costs                                               -                294,158
                    Accounts payable                                                (703,410)           (1,239,585)
                    Accrued liabilities                                             (627,103)              707,537
                    Income taxes                                                      33,192              (158,267)
                                                                             ---------------        ---------------

                        Total adjustments                                         (1,282,722)           (1,319,237)
                                                                           -----------------        ---------------

                        Net cash used in
                        operating activities                                      (1,049,182)           (1,021,102)
                                                                             ----------------       --------------

    Cash flows from investing activities
        Purchase of property and equipment                                          (207,994)             (649,776)
        Acquisition of net assets                                                                       (3,500,000)
        Proceeds from sale of division                                            2,000,000                     -
        Issuance of notes receivable                                                 (35,435)              (14,254)
        Collections on notes receivable                                                   -                 15,331
                                                                            ----------------        --------------

                        Net cash (used in) or provided
                        by investing activities                                    1,756,571            (4,148,699)
                                                                              --------------        --------------
</TABLE>

     (Continued)


                                        7


<PAGE>
                             Pen Interconnect, Inc.

                      STATEMENTS OF CASH FLOWS - CONTINUED

                        For the nine months ended June 30

<TABLE>
<CAPTION>

                                                                                   1997                  1996
                                                                            -------------------   ----------------

    Cash flows from financing activities
<S>                                                                        <C>                          <C>        
        Principal payments on notes payable                                               -             (1,600,000)
        Net change in line of credit                                              (2,009,864)            2,296,044
        Proceeds from bridge loan                                                  1,000,000                    -
        Principal payments on long-term obligations                                  (76,842)             (527,723)
        Proceeds from sale of common stock and warrants                              225,000             4,707,802
                                                                           -----------------       ---------------

                        Net cash (used in) or provided
                        by financing activities                                     (861,706)            4,876,123
                                                                                -------------        -------------

                        Net increase (decrease) in cash
                            and cash equivalents                                    (154,317)             (293,678)

Cash and cash equivalents at beginning of period                                     169,445               376,488
                                                                            ----------------       ---------------

Cash and cash equivalents at end of period                                   $        15,128             $  82,810
                                                                             ===============             =========

Supplemental disclosures of cash flow information

    Cash paid during the period for
        Interest                                                            $        390,157           $   351,294
        Income taxes                                                                      -                521,038
</TABLE>

     (Continued)

                                        8


<PAGE>
                             Pen Interconnect, Inc.

                      STATEMENTS OF CASH FLOWS - CONTINUED

                For the nine months ended June 30, 1997 and 1996

Non-cash investing and financing activities
-------------------------------------------
Effective  November  1, 1996,  the  Company  sold  substantially  all assets and
certain  liabilities  of the San Jose  Division  for $2  million  cash and other
consideration. Assets and liabilities sold were as follows:

       Accounts receivable                                            $680,420
       Inventories                                                   1,644,336
       Prepaid expenses                                                 34,177
       Other assets                                                     26,099
       Property and equipment                                          638,373
       Accounts payable                                               (277,429)
       Accrued liabilities                                             (35,373)
       Capital leases                                                  (22,515)
                                                             ------------------

       Net assets sold                                               2,688,088

       Less non cash consideration received
               Notes                                  900,000
               Stock                                  400,000
                                                                     1,300,000

       Cash consideration                                            2,000,000
                                                             ------------------

       Gain on sale of division                              $         611,912
                                                             =================

Acquisition of businesses
-------------------------
During May 1996,  the  Company  acquired  substantially  all assets and  assumed
certain  liabilities and the operations of InCirT Technology,  a division of the
Cerplex Group, Inc. for $3.5 million in cash and 333,407 shares of stock. Assets
acquired and liabilities  assumed in conjunction  with this  acquisition were as
follows:

       Accounts receivable (net)                                $  3,463,186
       Inventories                                                 3,311,416
       Prepaid expenses                                                5,436
       Property and equipment                                        705,899
       Other assets                                                   30,424
       Accounts payable                                           (3,563,436)
       Accrued liabilities                                           (33,906)
                                                            -----------------
           Net Assets Acquired                                  $  3,919,019

       Excess purchase price over net assets
           acquired allocated to goodwill                          1,380,981
                                                            ================

       Purchase price                                           $  5,300,000
       Less Stock issued                                           1,800,000
                                                            ----------------

       Total cash paid                                          $  3,500,000
                                                           =================
                                        9

<PAGE>

                             Pen Interconnect, Inc.

                      STATEMENTS OF CASH FLOWS - CONTINUED

                For the nine months ended June 30, 1997 and 1996


Effective  January 1, 1996, the Company acquired selected net assets of Overland
Communications   (MOTO-SAT).  Assets  acquired  and  liabilities   assumed  in
conjunction with this acquisition were as follows:

       Accounts receivable (net)                                    $   145,439
       Inventories                                                      306,306
       Prepaid and other assets                                           5,798
       Furniture and equipment                                           43,755
       Accounts payable                                                (256,182)
       Accrued liabilities                                              (46,209)
       Long term obligations                                           (306,698)
                                                                    ------------
       Net liabilities assumed                                      $  (107,791)
                                                                    ============

       Excess purchase price over net assets acquired resulted
           in recognition of goodwill



Effective  April 1, 1997,  the Company  acquired  the net assets of  Powerstream
Technology,  Inc.  (Powerstream).  Assets  acquired and  liabilities  assumed in
conjunction with this acquisition were as follows:

       Accounts receivable (net)                                  $    20,432
       Inventories (net)                                                5,900
       Prepaid and other assets                                           603
       Furniture and equipment                                         53,325
       Accounts payable                                               (52,959)
       Accrued liabilities                                           (402,861)
       Long term obligations                                          (32,198)
                                                                  ------------
       Net liabilities assumed                                       (407,758)

       Plus stock issued                                              225,000
                                                                  ------------
       Excess purchase price over net assets acquired 
          resulted in recognition of goodwill                       $ 632,758
                                                                    =========









The accompanying notes are an integral part of these statements.

                                       10


<PAGE>
                             PEN INTERCONNECT, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE A - ACQUISITIONS AND DISPOSITION OF ASSETS

Effective  April 1,  1997,  the  Company  acquired  the  assets  of  Powerstream
Technology,  Inc.  (Powerstream)  by  issuing  150,000  shares of common  stock.
Powerstream  is  a  research  and  development  company  specializing  in  power
recharging devices and powersupply products.. This transaction was accounted for
using the purchase method of accounting;  accordingly  the purchased  assets and
liabilities  have been recorded at their fair value at the date of  acquisition.
The results of  operations  of the acquired  business  have been included in the
financial statements since the effective date of the acquisition.

Effective  April 1, 1996,  the  Company  entered  into an  agreement  to acquire
substantially  all assets and assumed certain  liabilities and the operations of
InCirT  Technology,  a division  of the Cerplex  Group,  Inc.  for $5.3  million
comprised  of $3.5  million  in cash and  333,407  shares  of common  stock.  In
addition,  the Company  agreed to deliver to Cerplex .09261 shares of its common
stock for every dollar of past due over 90 days  accounts  receivable  of InCirt
Technology  collected by the Company during the first 180 days after the date of
the acquisition  closing up to a maximum of 55,568 shares of common stock. These
additional  shares were issued in June 1997. This  transaction was accounted for
using the  purchase  method of  accounting.  The  results of  operations  of the
acquired  business  have been  included in the  financial  statements  since the
effective date of the acquisition.

Effective  January  1,  1996,  the  Company  acquired  the  assets  of  Overland
Communication, Inc. d.b.a. MOTO-SAT by assuming that company's debt and offering
future  stock   distributions   contingent   upon   achievement  of  performance
milestones.  MOTO-SAT is a manufacturer of high-end satellite television systems
for recreational vehicles. This transaction was accounted for using the purchase
method of accounting; accordingly the purchased assets and liabilities have been
recorded  at their  fair  value  at the  date of  acquisition.  The  results  of
operations  of the  acquired  business  have  been  included  in  the  financial
statements since the effective date of the acquisition.

Effective  March 24, 1995,  the Company  acquired  substantially  all assets and
assumed certain liabilities and the operations of Quintec  Interconnect  Systems
(QIS) of San Jose,  California  (San Jose  Division)  for  $2,107,457  including
acquisition  costs of $107,457.  This  transaction  was  accounted for using the
purchase method of accounting;  accordingly the purchased assets and liabilities
were recorded at their estimated fair value at the date of acquisition.

However, effective November 1, 1996, the Company sold all of the net assets used
by the San Jose Division ("Division") to Touche Electronics,  Inc. ("Touche"), a
subsidary of TMCI Electronics, Inc. ("TMCI"). The sales price for the net assets
of the Division was  $3,300,000;  consisting of $2,000,000 in cash,  $900,000 in
promissory  notes,  and 53,669  shares of TMCI common  stock with an agreed upon
guaranteed  value of  $400,000.  In  addition,  Pen has the  rights  to  receive
$700,000 in contingent  earnouts for a potential total sale price of $4,000,000.
Pen  originally   purchased  the  Division  in  March  1995  for   approximately
$2,100,000.  As part of the  transaction,  Touche and TMCI also assumed  certain
liabilities associated with the operations of the Division.








                                   (Continued)

                                       11


<PAGE>
                             PEN INTERCONNECT, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE A - ACQUISITIONS AND DISPOSITION OF ASSETS - CONTINUED

The $900,000 in promissory  notes are comprised of two  promissory  notes in the
amounts of $400,000 and $500,000,  respectively.  The $400,000  promissory  note
bears  interest at  one-half  of one  percent  above the prime rate and is to be
fully amortized and paid monthly over a 24 month period. The $500,000 promissory
note bears interest at the rate of one-half of one percent above the prime rate,
is  amortized  over a 48 month  period  and is payable  monthly  with the entire
balance  coming due on October 31,  1999.  As of June 30, 1997 no payments  have
been made under the terms of these notes. See Part II item 1.

In addition, Pen has the right to receive up to $700,000 of contingent earnouts.
These contingent earnouts are described as follows:

1.   Accounts Receivable Over 120 Days. Pen is entitled to receive .13417 shares
     of TMCI  common  stock  for  every $1 of past  due  over 120 days  accounts
     receivable of the Division as of October 31, 1996 collected within 180 days
     of the closing date, up to a maximum of 13,417 shares of stock or $100,000.

2.   Division Earnings. Pen has the right to receive up to 80,503 shares of TMCI
     common shares or cash  equivalent at the option of TMCI contingent upon the
     earnings  of the  Division.  To the extent the  earnings  of the  Division,
     determined   before   interest,   income  taxes  and   corporate   overhead
     allocations,  exceed  $800,000  in any one year,  Pen shall be  entitled to
     receive such excess on a dollar for dollar basis in the form of TMCI common
     shares valued at $7.4532 per share until Pen has received up to $600,000 in
     the  aggregate  worth  of  TMCI  common  stock  or  80,503  shares  or cash
     equivalent  at the option of TMCI.  Pen has the right to earn these  shares
     during  the  calendar  years 1997  through  2000.  Based on the  historical
     earnings  if the  transaction  had  occurred  in March  1995  (the date the
     Division was purchased)  the earnout  amount would have been  approximately
     $600,000 at June 30,  1996.  However,  the actual  earnout  amount may vary
     based on future earnings of the Division and the timing of such earnings.

The net  assets  sold  by the  Company  include  all of the  assets  used by the
Division in its operations  including,  but not limited to, inventory,  accounts
receivable,  furniture,  fixtures and equipment,  customer  lists,  intellectual
property and the assumption of accounts payable and other liabilities.

The sales price for the  Division  was  determined  on the basis of  arms-length
negotiations between the Company,  Touche and TMCI and was based in a large part
on  the  earnings  and  net  assets  of the  Division.  There  was  no  material
relationship  between the Company and TMCI prior to the acquisition however, the
Company  leased  space  and sold  product  to  Touche  in the  normal  course of
business.



                                   (Continued)
                                       12


<PAGE>
                             PEN INTERCONNECT, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE A - ACQUISITIONS AND DISPOSITION OF ASSETS - CONTINUED

The results of operations include zero and one month of operations for the three
and nine month  period  ended  June 30,  1997,  respectively  and three and nine
months  of   operations   for  three  and  nine  months  ended  June  30,  1996,
respectively.  The balance  sheet  excludes the Division as of June 30, 1997 and
includes it as of September 30, 1996.

Pro forma data. The following unaudited pro forma summary represents the results
of  operations  as if the  disposition  of the San Jose Division had occurred on
October 1, 1994, and do not purport to be indicative of what would have occurred
had the  transactions  been made as of October 1, 1994,  or of results which may
occur in the future. The pro forma weighted shares is reported as if outstanding
at the beginning of the period.
<TABLE>
<CAPTION>
                                   Three months ended June 30,            Nine month ended June 30,
                                               (amounts in thousands, except share data)
                                        1997               1996                 1997              1996
                                        ----               ----                 ----              ----
<S>                                  <C>                <C>                 <C>               <C>     
Net sales                            $ 4,480            $ 6,888             $ 14,935          $ 12,879
Operating income (loss)                (381)              (177)                   50             (482)
Net earnings (loss)                    (298)                (7)                (380)              (40)
Earnings (loss) per share             (0.09)             (0.00)               (0.12)            (0.01)
Weighted shares outstanding        3,238,975          3,238,975            3,238,975         3,238,975
</TABLE>

NOTE B - INVENTORIES

Inventories consist of the following:
                                        June 30                September 30,
                                       1997                        1996

Raw materials                      $2,734,673                   $ 3,780,800
Work-in-process                     1,695,423                     1,830,891
Finished goods                        145,447                       586,701
                              ---------------               ---------------

                                  $ 4,575,543                  $  6,198,392
                                 -----------                   ------------





                                       13


<PAGE>
                             PEN INTERCONNECT, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE C - CREDIT FACILITY

On April 8, 1996, the Company completed a new 3 year financing  agreement with a
bank for a $6 million  revolving  line of credit with  interest at one-half (.5)
percent over the prime rate.  The line of credit is  collateralized  by accounts
receivable,  inventory, property and equipment. This agreement requires that the
Company maintain certain  financial ratios and meet specified  minimum levels of
total assets,  earnings and  restrictions on the payments of dividends.  Because
the  Company  did not  comply  with  certain  of  these  requirements,  the bank
exercised  its right to increase the interest rate to 2.5% over prime (10.5 % at
June 30, 1997, and September 30, 1996) until such time as these requirements are
met. This new line of credit replaced the previous $3,000,000  revolving line of
credit. The Company has borrowed $2,960,000 and $4,969,864 under the new line of
credit at June 30, 1997 and September 30, 1996,  respectively (the Company still
has $3,040,000  available  under the line at June 30, 1997).  As a result of the
Company's  failure to meet these  requirements  the Company was in default under
the loan  agreement.  The lender has waived these  defaults as of September  30,
1996.  The requirements are reviewed on an annual basis.


NOTE D - BRIDGE LOAN

During the six months ended June 30, 1997, certain investors, in connection with
a private placement,  loaned the Company $1,000,000. The loan was secured by the
income tax refund and the TMCI stock received by the Company associated with the
sale of the San Jose Division and bears interest at 8% per annum.  The loans are
due and payable in 180 days from the date issued.


NOTE E - STOCK TRANSACTIONS

Initial public offering

On November  17, 1995,  the Company  successfully  completed  an initial  public
offering  of  1,000,000  shares of its Common  Stock and  warrants  to  purchase
1,000,000  shares of Common Stock.  The initial public  offering price was $6.00
per share of Common  Stock and $0.10 per Warrant.  Each Warrant was  immediately
exercisable  and entitled the registered  holder to purchase one share of Common
Stock at a price of $6.50 and  expires on November  17,  2000.  The  outstanding
Warrants  may be redeemed by the Company upon 30 days'  written  notice at $0.05
per Warrant,  provided that the closing bid  quotations of the Common Stock have
averaged at least $9.00 per share for a period of any 20 trading  days ending on
the third day prior to the day on which the Company gives notice.


                                   (Continued)
                                       14


<PAGE>
                             PEN INTERCONNECT, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS


NOTE E - STOCK TRANSACTIONS

Initial public offering - Continued

In connection  with the offering,  the Company granted the underwriter the right
to  purchase up to 100,000  shares of common  stock and  100,000  warrants.  The
underwriter  was also  granted an  over-allotment  option of  150,000  shares of
common stock and/or warrants to purchase an additional  150,000 shares of common
stock. In December 1995, the underwriter  exercised its option and purchased the
150,000 warrants.  The option to purchase the 150,000 shares of common stock has
expired.


Shares issued in Acquisition

As discussed  in Note A, the Company  issued  333,407  shares of common stock in
connection  with an acquisition in May 1996. In addition,  the Company agreed to
issue an additional  55,568 shares of common stock  ("Contingent  Stock") to The
Cerplex Group, Inc. based on collections of amounts over 90 days in the accounts
receivable.  The Contingent shares were issued in June 1997 and were included in
the weighted average shares outstanding.

As discussed in Note A, the Company has  committed  to issue  150,000  shares of
common stock in connection with an acquisition in April 1997.  These shares were
not issued  before  June 1997 but were  included  as if issued in the  financial
statements  and  were  therefore   included  in  the  weighted   average  shares
outstanding.




                                       15


<PAGE>
                                     PART I



                                     ITEM 2.

                  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
                                  OF OPERATIONS


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 three and
nine month periods ending June 30, 1997 and 1996. 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, 1996.

General

The Company develops and produces on a turnkey basis  interconnection  solutions
for  original  equipment  manufacturers  ("OEMs")  in  the  computer,   computer
peripheral and other computer related industries such as the telecommunications,
instrumentation and testing equipment industries. The Company's products connect
electronic  equipment,  such as computers,  to various external devices (such as
video  screens,  printers,   external  disk  drives,  modems,  telephone  jacks,
peripheral  interfaces  and networks) and connect  devices  within the equipment
(such as  power  supplies,  computer  hard  drives  and PC  cards).  Most of the
Company's  sales  consist of custom  cable  interconnections  developed in close
collaboration  with its  customers.  The  Company's  customers  include  OEMs of
computers including mainframes,  desktops,  portables,  laptops, notebooks, pens
and palmtops as well as OEMs of computer  peripheral  equipment  such as modems,
memory cards, LAN adapters, cellular phones, faxes and printers. Other customers
include OEMs of telecommunications,  instrumentation and testing equipment.  The
InCirT  Division is engaged in the electronic  manufacturing  services  industry
(EMSI),  and  provides  sophisticated  ISO  9002-certified  assembly and testing
services for complex  printed circuit boards and  subsystems.  In addition,  the
Company's MOTO-SAT Division is a manufacturer of satellite receiving systems for
recreational  vehicles.  Powerstream  was  purchased  on April 1,  1997 and is a
battery charger and power supply developer and sales company.


Results of Operations

Effective  April 1, 1997,  the Company  acquired  the net assets of  Powerstream
Technology, Inc. (Powerstream),  which has been accounted for as a purchase. The
statement  of earnings  data for the three and nine  months  ended June 30, 1997
includes the results of operations for this division.

Effective  April  1,  1996,  the  Company  acquired  the net  assets  of  InCirT
Technology (InCirT),  which has been accounted for as a purchase.  The statement
of earnings  data for the three and nine months ended June 30, 1997 includes the
results of operations for this division.

                                                 16

<PAGE>
Effective January 1, 1996, the Company acquired the net assets of MOTO-SAT which
has been  accounted  for as a purchase.  The  statement of earnings data for the
three and nine  months  ended June 30,  1997 and 1996  includes  the  results of
operations for this division from the purchase date.

Effective  March 24, 1995, The Company  acquired the net assets of QIS which has
been  accounted  for as a purchase.  This  division was sold on November 1, 1996
(see Note A - to Financial  Statements).  Therefore,  the  statement of earnings
data  include  the results of  operations  for only one month in the nine months
ended June 30, 1997 and for the three and nine months ended June 30, 1996.

Net sales

Net sales for the Company decreased  approximately 48% and 18% for the three and
nine month  periods  ended June 30, 1997 as compared to the same  periods in the
prior  year,  respectively.   These  decreases  principally  resulted  from  the
exclusion of the San Jose division  which was sold on November 1, 1996,  and the
Salt Lake City divisions transfer of its manufacturing for its major customer to
China  which  resulted  in a loss of at lease one  months  worth of sales due to
manufacturing delays. In addition, the Company experienced a general decrease in
sales from all divisions aggravated by difficulty in obtaining parts. There have
been no material  increases in prices of any of the Company's  products  between
the periods. The Company anticipates that prices will remain subject to downward
competitive pressures in the foreseeable future which may prohibit a significant
price increase and may result in decreased sales.

Cost of sales

Cost of sales as a percentage of net sales have increased to  approximately  91%
for the three months ended June 30, 1997, as compared to 87% for the same period
in the prior year.  Cost of sales as a  percentage  of net sales have  increased
slightly to approximately to 85%, for the nine month period ended June 30, 1997,
as  compared  to 84% for the same  period in the prior  year.  These  percentage
increases  resulted  primarily from sales dropping below break-even levels which
reduced   management's  ability  to  reduce  cost  sufficiently  to  maintain  a
reasonable  margin. In addition,  freight has increased cost of sales due to the
global expansion of the customer base and sales territory.

Operating expenses

Operating  expenses decreased by $208,118 for the three month period compared to
the prior year and by $11,114  for the nine month  period  compared to the prior
year. These decreases have occurred despite the  acquisitions,  the increases in
research and development  costs,  and increases in depreciation and amortization
costs due to machinery  and  equipment  purchases and the recording of goodwill.
Management continues to focus on ways to decrease operating expenses.

Other income and expenses

Other income and expenses  (not  including  the gain on the sale of the San Jose
Division)  have  increased  in the  current  periods as  compared to prior years
periods due to increases in interest expense. Interest expense has increased due
to higher rates and the interest  associated with the bridge loans.  The Company
also sold its San Jose  Division  as of  November  1, 1996 which  resulted  in a
current gain of approximately $612,000.

Net earnings (loss) and earnings  (loss) per share

The net  earnings  (loss)  for the three  months  ended  June 30,  1997  totaled
($297,879)  or ($0.09) per share,  compared  with $46,155 or $0.02 per share for
the same quarter in the prior year.  For the nine months ended June 30, 1997 net
earnings totaled $196,492 or $0.06 per share compared with $298,135 or $0.11 per
share for the same period in the prior year.  The current  quarter loss resulted
from decreases in sales due to the delay in transferring some production to


                                       17

<PAGE>
China, a general decrease in sales aggravated by delayed  shipments due to parts
requirements,  and increased  interest expense.  The decrease in earnings in the
nine month period from 1996 to 1997 resulted from loss due to factors  discussed
above and the exclusion of the San Jose Division's earnings reported in 1996.

Liquidity and Capital Resources

The Company has historically financed its operations through operating cash flow
and lines of credit.  However,  on November 17, 1995,  the Company  completed an
initial  public  offering  which  produced  net proceeds of  approximately  $4.8
million. This offering significantly  increased the cash and equity balances. It
also allowed the Company to retire the $1,600,000  debt  associated with the QIS
acquisition,  and to purchase additional  inventory and equipment to support the
increased production levels.

Working capital decreased in the current period to approximately $2.4 million at
June 30, 1997 compared to approximately $3.2 million at September 30, 1996. This
decrease is principally the result of losses occurred in operations as discussed
above.

Management  believes that additional working capital may be required to meet its
future operating costs, for business  expansion  opportunities and to adequately
support its China strategic  manufacturing  alliance in addition to its existing
cash balances, borrowings available under the line of credit, and cash generated
from  operations.  However,  there  can be no  assurance  that  such  additional
financing, if required, would be available on favorable terms if at all.

Inflation and Seasonality

The Company does not believe  that it is  significantly  impacted by  inflation.
Historically,  the industry sales tend to decline in January, February, July and
August when activity in the personal computer industry as a whole is reduced.







                                       18
<PAGE>
                                     PART II

                                OTHER INFORMATION

Item 1.  Legal Proceedings.

In 1996,  the Company  sold its San Jose  Division to Touche  Electronics,  Inc.
("Touche") and TMCI Electronics,  Inc.,  ("TMCI").  On February 14, 1997, Touche
and TMCI filed a demand for  arbitration for the purpose of rescinding the Asset
Purchase  Agreement  in Santa Clara  County,  California  under the  arbitration
provisions of the California Code of Civil Procedure  Sections 1282 through 1284
as provided in the  contract of sale.  The  plaintiffs  are  alleging  that,  in
connection  with the  sale of the San  Jose  Division,  (the  Division)  (1) the
Company  overstated  the value of the Division's  inventory,  (2) the Division's
vendors have refused to deal with Touche and TMCI, and (3) the Company failed to
disclose certain accounts payable. As an alternative to rescinding the agreement
the  plaintiffs  requested  a  reduction  in the  purchase  price in  excess  of
$1,050,000 plus fees. The Company is vigorously  contesting those allegations in
the arbitration.

On April 8, 1997, the Company filed a complaint against TMCI, Touche and Rolando
Loera in the Superior Court of the State of California, in and for the County of
Santa Clara,  with respect to the defaulted Notes which were part of the sale of
the Division to Touche (the  "Complaint").  In the  Complaint,  the Company made
claims against TMCI,  Touche and the other  defendants  for, among other things,
breach of contract,  fraud,  conversion and claim and delivery.  The Company has
also filed motions in the lawsuit for writs of attachment and possession and has
requested an order allowing the Company to attach the equipment and other assets
acquired  by TMCI and  Touche  in the sale of the  Division.  Hearings  on those
motions were held on May 29, 1997. The Company's  writ of attachment  motion was
denied.  The Company  will now pursue the  arbitrator  for purposes of resolving
certain  "offset"  claims of the  obligees  under the Notes and to enforce  full
payment of the Note obligations.


Item 2.  Changes in the Securities.  None.
         -------------------------
Item 3.  Defaults Upon Senior Securities.  None.
         -------------------------------
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.
         --------------------------------

A:   Reports on Form 8-K
                  No 8-K's were issued during the quarter ended June 30, 1997.

B.   Exhibits
         11  Calculation of earnings per share.
         27  Financial Data Schedule.



                                       19



<PAGE>
                                   SIGNATURES

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


                           PEN INTERCONNECT, INC.

                           By: /s/ James S. Pendleton
                               James S. Pendleton,
                                Chairman, CEO and  Director


                            By: /s/ Wayne R. Wright
                                Wayne R. Wright,
                                Vice-Chairman, CFO,
                                Principal Accounting
                                Officer and Director




                                       20


<PAGE>
                                                                   EXHIBIT 11
                                          PEN INTERCONNECT, INC.
                                    CALCULATION OF EARNINGS PER SHARE
                                   FOR THE THREE AND NINE MONTHS ENDED
                                          JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
                                                                 Months                         Weighted
NINE MONTHS ENDED                                 Common         Out-                            Average
JUNE 30, 1997                                     Shares       standing                           Shares
--------------------------------------------------------------------------------------------------------
<S>                                              <C>                  <C>              <C>      
Balance at October 1, 1996                       3,033,407            9                        3,033,407
Contingent shares                                   55,568            3                           18,523
Issued shares                                      150,000            3                           50,000
                                                                                       -----------------
Balance at June 30, 1997                                                                       3,101,930
                                                                                       =================
Earnings for nine months ended June 30,1997                                                     $233,540
                                                                                       =================
Earnings per share                                                                                $ 0.08
                                                                                       =================
</TABLE>
<TABLE>
<CAPTION>
                                                                 Months                         Weighted
THREE MONTHS ENDED                                  Common      Out-                             Average
JUNE 30, 1997                                       Shares       standing                         Shares
--------------------------------------------------------------------------------------------------------
<S>                                              <C>                  <C>              <C>      
Balance at April 1, 1997                         3,033,407            3                        3,033,407
Contingent shares                                   55,568            3                           55,568
Issued shares                                      150,000            3                          150,000
                                                                                       -----------------
Balance at June 30, 1997                                                                       3,238,975
                                                                                       =================
Loss for three months ended June 30, 1997                                                    $ (297,879)
                                                                                       =================
Loss per share                                                                                  ($ 0.09)
                                                                                       =================
</TABLE>
<TABLE>
<CAPTION>
                                                                 Months                         Weighted
NINE MONTHS ENDED                                   Common      Out-                             Average
JUNE 30, 1996                                       Shares       standing                         Shares
--------------------------------------------------------------------------------------------------------
<S>                                              <C>                  <C>                      <C>      
Balance at October 1, 1995                       1,700,000            9                        1,700,000
Issued shares November 17 1995                   1,000,000          7.5                          750,000
Issued shares                                      333,407            3                          111,136
                                                                                                 -------
Balance at June 30, 1996                                                                       2,644,469
                                                                                               =========
Earnings for six months ended June 30,1996                                                     $ 298,135
                                                                                               =========
Earnings per share                                                                                $ 0.11
                                                                                                  ======
</TABLE>
<TABLE>
<CAPTION>
                                                                 Months                         Weighted
FOR THREE MONTHS                                    Common      Out-                             Average
JUNE 30, 1996                                       Shares       standing                         Shares
--------------------------------------------------------------------------------------------------------
<S>                                              <C>                  <C>              <C>
Balance at April 1, 1996                         2,700,000            3                        2,700,000
Issued shares                                      333,407            3                          333,407
                                                                                       -----------------
Balance at June 30, 1996                                                                       3,033,407
                                                                                       =================
Earnings for three months ended June 30, 1996                                                   $ 46,155
                                                                                       =================
Earnings per share                                                                                $ 0.02
                                                                                       =================
</TABLE>