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, 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 
incorporation or organization)           (I.R.S. Employer Identification No)

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

                                 (801) 973-6090
                           (Issuer's telephone number)
                                      
         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 May 12, 1997 the issuer had 3,033,407 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, 1997 (unaudited)  and September 30, 1996       4-5

                   Statements of Earnings for the
                  Quarter Ended March 31, 1997 and 1996 and
                  Six month period ended March 31, 1997 and 1996             6

                   Statements of Cash Flows for the six month
                  period ended March 31, 1997 and 1996                     7-9

                  Notes to Financial Statements                          10-14

Item 2            Management's Discussion and Analysis or
                  ---------------------------------------
                  Plan of Operation                                      15-18

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 March 31,  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
     March 31,  1997 and 1996,  and six month  period  ended  March 31, 1997 and
     1996,  and unaudited  condensed  statements of cash flows for the six month
     period ended March 31, 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 six months ended March 31, 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>
                                                                                   March  31         September 30,
                                                                                      1997              1996
                                                                               -------------         -------------
                                                                                (Unaudited)
CURRENT ASSETS
<S>                                                                             <C>                   <C>         
    Cash and cash equivalents                                                   $     51,087          $    169,445
    Receivable (Note C)
        Trade accounts,  less  allowance  for doubtful  accounts of $232,590 and
            $273,852 at March 31, and September 30,
            respectively.                                                          3,969,403             4,259,298
        Current maturities of notes receivable                                       396,716                37,494
    Income tax refund receivable (Note D)                                            320,513               228,241
    Inventories (Notes B and C)                                                    4,497,006             6,198,392
    Prepaid & other assets                                                           617,077               386,494
    Deferred tax asset                                                               260,456               525,800
                                                                               -------------         -------------

                    Total current assets                                          10,112,258            11,805,164


PROPERTY AND EQUIPMENT, AT COST
    (Note C)
        Production equipment                                                       2,455,288             3,010,575
        Furniture and fixtures                                                       775,839               717,821
        Transportation equipment                                                      69,217                49,373
        Leasehold improvements                                                       368,137               354,150
                                                                                 -----------        --------------

                                                                                   3,668,481             4,131,919
        Less accumulated depreciation                                              1,103,383             1,065,205
                                                                                 -----------          ------------

                                                                                   2,565,098             3,066,714
OTHER ASSETS
    Notes receivable, less current maturities                                        594,713                19,630
    Investments (Note D)                                                             400,000                    -
    Goodwill                                                                       1,543,601             1,589,313
    Other                                                                            129,020               176,097
                                                                                ------------         -------------

                                                                                   2,667,334             1,785,040
                                                                                ------------         -------------

                                                                                 $15,344,690           $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>
                                                                                   March 31,          September 30,
                                                                                      1997              1996
                                                                               -------------         -------------
                                                                                 (Unaudited)
CURRENT LIABILITIES
<S>                                                                              <C>                    <C>       
    Line of credit (Note C)                                                      $ 3,513,943            $4,969,864
    Bridge loan (Note D)                                                             700,000                    -
    Current maturities of long-term obligations                                       45,000                19,265
    Current maturities of capital leases                                              57,433                59,878
    Accounts payable                                                               1,996,557             2,954,601
    Accrued liabilities                                                              372,951               611,739
    Income taxes payable                                                             361,600                    -
                                                                               -------------         -------------
                    Total current liabilities                                      7,047,484             8,615,347

LONG-TERM OBLIGATIONS, less current
    maturities                                                                        57,523                96,758

CAPITAL LEASE OBLIGATIONS, less current
    maturities                                                                        99,635               150,382

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

                    Total liabilities                                              7,244,642             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
        3,033,407 shares at March 31 and
        September 30,  respectively.                                                  30,334                30,334
    Additional paid-in capital                                                     7,431,669             7,431,669
    Retained earnings                                                                638,045               106,628
                                                                                ------------           -----------

                    Total stockholders' equity                                     8,100,048             7,568,631
                                                                                 -----------           -----------

                                                                                 $15,344,690           $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 March 31,             Six months ended March 31,
                                                            1997                 1996            1997               1996
                                                           ------------     -----------         ------------       -----------
<S>                                                        <C>              <C>                 <C>               <C>         
Net sales                                                  $  5,482,251     $ 5,442,143         $ 10,740,637      $ 10,012,456
Cost of sales                                                 4,471,980       4,596,168            8,829,116         8,159,524
                                                           ------------     -----------         ------------       -----------

            Gross profit                                      1,010,271         845,975            1,911,521         1,852,932

Operating expenses
    Sales and marketing                                         262,793         327,296              465,112           591,603
    Research and development                                    (4,939)          42,732               40,369            42,732
    General and administrative                                  390,793         227,184              725,151           502,307
    Depreciation and amortization                                96,389          46,662              188,678            85,662
                                                           ------------     -----------         ------------       -----------

            Total operating expenses                            745,036         643,874            1,419,310         1,222,304
                                                           ------------     -----------         ------------       -----------

            Operating income                                    265,235          202,101             492,211           630,628

Other income (expense)
    Interest expense                                           (128,613)         (89,868)           (268,776)         (204,230)
    Gain on sale of division (Note A)                                -                 -             611,912                 -
    Other income (expense)                                       41,414            1,051              57,672           (16,978)
                                                           ------------     ------------         -----------       -----------

            Total other income (expense)                        (87,199)         (88,817)            400,808          (221,208)
                                                           ------------     ------------         -----------       -----------

Earning before income taxes                                     178,036          113,284             893,019           409,420

Provision for income taxes                                       76,049           41,600             361,600           157,440
                                                          -------------     ------------         -----------       -----------

Net earnings                                              $     101,987     $     71,684         $   531,419       $   251,980
                                                          =============     ============         ===========       ===========

Earnings  per common share                                $        0.03     $       0.03         $      0.18       $      0.10
                                                          =============     ============         ===========       ===========
Weighted average common
    shares outstanding                                        3,033,407        2,700,000           3,033,407         2,450,000
                                                          =============     ============         ===========       ===========
</TABLE>

The accompanying notes are an integral part of these statements.


                                        6
<PAGE>
                             Pen Interconnect, Inc.

                            STATEMENTS OF CASH FLOWS

                         For six months ended March 31,

                                   (Unaudited)

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

Increase (decrease) in cash and cash equivalents
    Cash flows from operating activities
<S>                                                                           <C>                   <C>           
        Net earnings                                                          $      531,419        $      251,980
        Adjustments to reconcile net earnings to net
            cash used in operating activities
               Depreciation and amortization                                         188,678                85,662
               Bad debts                                                             (22,807)               9,201
               Gain on sale of division                                             (611,912)                   -
               Deferred taxes                                                         79,544                    -
               Changes in assets and liabilities
                    Trade accounts receivable                                       (367,718)           (1,102,020)
                    Inventories                                                       57,050            (1,147,571)
                    Prepaid expenses and other assets                               (249,298)             (209,306)
                    Deferred offering costs                                               -                294,158
                    Accounts payable                                                (680,615)              350,903
                    Accrued liabilities                                             (203,414)              109,013
                    Income taxes                                                     269,328              (285,348)
                                                                             ---------------        ---------------

                        Total adjustments                                         (1,541,164)           (1,895,308)
                                                                             ---------------        ---------------

                        Net cash used in
                        operating activities                                      (1,009,745)           (1,643,328)
                                                                             ----------------       --------------

    Cash flows from investing activities
        Purchase of property and equipment                                          (274,210)             (457,253)
        Proceeds from sale of division                                             2,000,000                     -
        Issuance of notes receivable                                                 (34,305)              (12,647)
        Collections on notes receivable                                                   -                  8,195
                                                                             ---------------         -------------

                        Net cash (used in) or provided
                        by investing activities                                    1,691,485              (461,705)
                                                                             ---------------          ------------
</TABLE>

                                   (Continued)


                                        7
<PAGE>
                             Pen Interconnect, Inc.

                      STATEMENTS OF CASH FLOWS - CONTINUED

                       For the six months ended March 31,

<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                                              (1,455,921)              335,701
        Proceeds from bridge loan                                                    700,000                    -
        Principal payments on long-term obligations                                  (44,177)             (235,264)
        Proceeds from sale of common stock                                                -              4,806,893
                                                                             ---------------         -------------

                        Net cash (used in) or provided
                        by financing activities                                     (800,098)            3,307,330
                                                                             ----------------        -------------

                        Net increase (decrease) in cash
                            and cash equivalents                                    (118,358)            1,202,297

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

Cash and cash equivalents at end of period                                   $        51,087         $   1,578,785
                                                                             ===============         =============

Supplemental disclosures of cash flow information

    Cash paid during the period for
        Interest                                                             $        272,477        $    199,628
        Income taxes                                                                        -             442,788
</TABLE>


                                   (Continued)

                                        8
<PAGE>
                             Pen Interconnect, Inc.

                      STATEMENTS OF CASH FLOWS - CONTINUED

                For the six months ended March 31, 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:
<TABLE>
<CAPTION>

<S>                                                       <C>                                 <C>     
       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
                                                                                      ================
</TABLE>


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:
<TABLE>
<CAPTION>
<S>                                                                                                        <C>        
       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)
                                                                                                           ============
</TABLE>

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

The accompanying notes are an integral part of these statements.

                                        9


<PAGE>
                             PEN INTERCONNECT, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE A - ACQUISITIONS AND DISPOSITION OF ASSETS

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 will 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.  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)

                                       10
<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 March 31, 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)
                                       11

<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 six month period ended March 31, 1997, respectively and three and six months
of operations for three and six months ended March 31, 1996,  respectively.  The
balance  sheet  excludes the Division as of March 31, 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 March 31,   Six months ended March 31,
                                             (amounts  in thousands, except share data)
                                        1997           1996           1997          1996
                                        ----           ----           ----          ----
<S>                                  <C>            <C>           <C>            <C>    
Net sales                            $ 5,196        $ 3,297       $ 10,455       $ 5,991
Operating income (loss)                  248          (269)            475         (305)
Net earnings (loss)                      101           (64)            530          (33)
Earnings (loss) per share               0.03         (0.02)           0.17        (0.01)
Weighted shares outstanding        3,033,407      3,033,407      3,033,407     3,033,407
</TABLE>


NOTE B - INVENTORIES

Inventories consist of the following:
<TABLE>
<CAPTION>
                                       March 31,                  September 30,
                                         1997                         1996
                                    --------------               ---------------
<S>                                 <C>                          <C>        
Raw materials                       $    2,723,499               $     3,780,800
Work-in-process                          1,732,616                     1,830,891
Finished goods                              40,891                       586,701
                                    --------------               ---------------

                                    $    4,497,006               $     6,198,392
                                    --------------               ---------------
</TABLE>


                                       12

<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 (10.75% at
March 31 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 $3,513,943 and $4,969,864 under the new line of
credit at March 31, 1997 and September 30, 1996, respectively (the Company still
has $2,486,057  available  under the line at March 31, 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.


NOTE D - BRIDGE LOAN

During the quarter ended March 31, 1997, certain investors, in connection with a
private  placement,  loaned the  Company  $700,000.  The loan was secured by the
income tax refund and a 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 a 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)
                                       13

<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 not included in the  weighted  average
shares  outstanding  as they were not  issued  at March  31,  1997 and would not
materially change the earnings per share calculation.


                                       14

<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
six month periodS ending March 31, 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.


                                       15
<PAGE>

Results of Operations

Effective April 1, 1996, the Company  acquired the net assets InCirT  Technology
(InCirT),  which has been accounted for as a purchase. The statement of earnings
data for the three and six months  ended March 31, 1997  includes the results of
operations for this division.

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 six months ended March 31, 1997 includes the results of operations for
this division.

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 six months
ended March 31, 1997 and for the three and six months ended March 31, 1996.

Net sales. Net sales for the Company  increased  approximately 1% and 7% for the
three and six month periods ended March 31, 1997 as compared to the same periods
in the prior year respectively.  These increases  principally  resulted from the
inclusion  of the recent  acquisitions  of the InCirT  Division and the MOTO-SAT
Division which were offset by the loss of revenue from the sold division.  There
have been no  material  increases  in prices  of any of the  Company's  products
between the periods and the Company  anticipates that prices will remain subject
to  competitive  pressures  in the  foreseeable  future  which  may  prohibit  a
significant price increase.

Cost of sales.  Cost of sales as a  percentage  of net sales have  decreased  to
approximately  81% for the three months ended March 31, 1997, as compared to 84%
for the same  period in the prior  year.  Cost of sales as a  percentage  of net
sales have increased  slightly to approximately to 82%, for the six month period
ended March 31, 1997,  as compared to 81% for the same period in the prior year.
This slight  decrease in costs for the current quarter  resulted  primarily from
improved cost controls.

Operating  expenses.  Operating expenses in total as a percent of net sales have
increased to  approximately  14% and 13% for the three and six month  periods in
1997,  respectively  as  compared  to  approximately  12% in both the prior year
periods.  These  increases  resulted  from,  the  Company  adding  research  and
development  costs with its recent  acquisitions and an increase in depreciation
and amortization  due to machinery and equipment  purchases and the recording of
goodwill.

                                       16
<PAGE>
Other income and expenses.  Other income and expenses (not including the gain on
the sale of the San Jose Division) have remained constant at approximately  1.6%
and 2.2% for the  three  and six  months  ended  March  31,  1997,  compared  to
approximately  1.6% and 2% for the same  periods in the prior year.  The Company
also sold its San Jose  Division  as of  November  1, 1996 which  resulted  in a
current gain of  approximately  $612,000.  This  Division was  profitable in the
prior year but was not  producing  to the same level of sales and profits in the
current year.

Net earnings  and  earnings  per share.  Net earnings for the three months ended
March 31, 1997  totaled  $101,987 or $0.03 per share,  compared  with $71,684 or
$0.03 per share for the same quarter in the prior year. For the six months ended
March 31, 1997 net earnings  totaled  $531,419 or $0.18 per share  compared with
$251,980  or $0.10  per  share  for the same  period  in the  prior  year.  This
significant increase in the six month period resulted from a gain on the sale of
a division of  approximately  $367,000 (after tax) or $0.12 per share and income
from operations of approximately  $164,000 or $0.06 per share. These current per
share amounts  occurred  despite  increasing the weighted shares  outstanding by
more than 638,900  shares in the current six month  period  compared to the same
period in the prior year.

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 was  approximately  $3.1 million at March 31, 1997  compared to
approximately $3.2 million despite the sale of the San Jose Division in November
of 1996.  The current  ratio has remained  consistant at about 1.4 to 1 at March
31, 1997 and at September 30, 1996.

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.

                                       17
<PAGE>
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.

     On  February 14, 1997,  Touche and TMCI filed a demand for  arbitration  in
         California  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.   The  Company  is  vigorously   contesting   those
         allegations in the arbitration.

     On  April 8, 1997, the Company filed a complaint  against TMCI,  Touche and
         an individual in the Superior Court of the State of California,  in and
         for the County of Santa Clara, with respect to the defaulted Notes (the
         "Complaint").  In the Complaint,  the Company made claims against TMCI,
         Touche and the other  defendants for,  amounts 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 are set currently for May
         29, 1997.

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 March 31, 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 SIX MONTHS ENDED
                             MARCH 31, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                 Months                Weighted
                                                    Common      Out-                    Average
                         1997                     Shares       standing                  Shares
--------------------------------------------------------------------------------------------------------
<S>                                             <C>            <C>                  <C>
Balance at October 1, 1996                       3,033,407            6               3,033,407
                                                                                      ---------

Balance at March 31, 1997                                                             3,033,407
                                                                                      =========

Earnings for six months ended March 31,1997                                            $531,419
                                                                                       ========

Earnings per share                                                                       $ 0.18
                                                                                         ======
</TABLE>

<TABLE>
<CAPTION>
                                                                 Months                Weighted
                                                    Common      Out-                    Average
                         1997                     Shares       standing                  Shares
-------------------------------------------------------------------------------------------------------
<S>                                             <C>            <C>                   <C>
Balance at January 1, 1997                       3,033,407            3                3,033,407
                                                                                       ---------

Balance at March 31, 1997                                                              3,033,407
                                                                                       =========

Earnings for six months ended March 31, 1997                                           $ 101,987
                                                                                       =========

Earnings per share                                                                        $ 0.03
                                                                                       =========
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                 Months                Weighted
                                                    Common      Out-                    Average
                         1996                     Shares       standing                  Shares
--------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>                    <C>
Balance at October 1, 1995                       1,700,000            6                1,700,000
Issued shares November 17 1995                   1,000,000          4.5                  750,000
                                                                                       ---------

Balance at March 31, 1996                                                              2,450,000
                                                                                       =========

Earnings for six months ended March 31,1996                                             $251,980
                                                                                        ========

Earnings per share                                                                        $ 0.10
                                                                                          ======
</TABLE>


<TABLE>
<CAPTION>
                                                                 Months               Weighted
                                                    Common      Out-                   Average
                         1996                     Shares       standing                 Shares
--------------------------------------------------------------------------------------------------------
<S>                                             <C>             <C>                  <C>
Balance at January 1, 1996                       2,700,000            3                2,700,000
                                                                                       ---------

Balance at March 31, 1996                                                              2,700,000
                                                                                       =========

Earnings for six months ended March 31, 1996                                           $ 71,684
                                                                                       ==========

Earnings per share                                                                       $ 0.03
                                                                                       ==========
</TABLE>