UNITED STATES
                        SECURITIES AND EXCHANGE COMMISION
                             WASHINGTON, D.C. 20549
                                  FORM 10-QSB/A

(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, 1999

   [   ]   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)

                      1601 Alton Parkway Irvice, Ca. 92606
               (Address of Principal Executive Offices) (Zip Code)

                                 (949) 798-5800
                           (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 May 15, 1999 the issuer had 7,539,838 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/A

                             PEN INTERCONNECT, INC.

                                Table of Contents

                                                                            Page
PART I - FINANCIAL INFORMATION

Item 1            Financial Statements

                  Financial Information                                        3

                  Balance Sheets at March 31, 1999
                  (unaudited) and September 30, 1998                         4-5

                  Statements of Operations  for the three months
                  ended March 31, 1999 and 1998 (unaudited) and                6
                  six month periods ended March 31, 1999 and
                  1998 (unaudited)

                  Statements of Cash Flows for the six months
                  ended March 31, 1999 and 1998 (unaudited)                 7-10

                  Notes to Condensed Financial Statements (unaudited)      11-15

Item 2            Management's Discussion and Analysis or
                  Plan of Operation                                        16-19

PART II - OTHER INFORMATION

Item 1            Legal Proceedings                                           20

Item 2            Changes in the Securities and Use of Proceeds               20

Item 3            Defaults Upon Senior Securities                             20

Item 4            Submission of Matters to a Vote of Security Holders         20

Item 5            Other Information                                           20

Item 6(a).        Exhibits                                                    20

Item 6(b).        Reports on Form 8-K                                         20

Signatures                                                                    21


                                        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, 1999 and audited  balance sheet as
of  September  30, 1998 (the  Company's  most  recent  fiscal  year),  unaudited
condensed  statements of operations for the three and six months ended March 31,
1999 and 1998,  and  unaudited  condensed  statements  of cash flows for the six
months ended March 31, 1999 and 1998,  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/A 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/A for the
year ended  September  30, 1998.  The results of  operations  for the six months
ended March 31, 1999 may not be  indicative  of the results that may be expected
for the year ending September 30, 1999.





                                                         3


<PAGE>



                             Pen Interconnect, Inc.

                                 BALANCE SHEETS

                                     ASSETS


<TABLE>
<CAPTION>
                                                                                      March 31,           September 30,
                                                                                         1999                 1998
                                                                                  ------------------   -------------------
                                                                                     (unaudited)
CURRENT ASSETS
<S>                                                                               <C>                   <C>
      Cash and cash equivalents                                                   $          258,681    $          657,777
      Receivables
      Trade accounts less allowance for
         doubtful accounts of $67,434 at March 31, 1999 and                                1,804,583             3,350,970
         $108,575 at September 30, 1998, respectively
      Current maturities of notes receivable                                                 762,409                35,675
      Investments in common stock                                                            242,739               242,739
      Inventories                                                                          2,777,230             3,680,169
      Prepaid expenses and other current assets                                              389,638               261,375
      Deferred tax asset                                                                      41,324                41,324
                                                                                  ------------------   -------------------
                 Total current assets                                                      6,276,604             8,270,029

PROPERTY AND EQUIPMENT, AT COST
      Production equipment                                                                   655,423             2,624,513
      Furniture and fixtures                                                                 243,178               837,594
      Transportation equipment                                                                22,149                83,522
      Leasehold improvements                                                                 242,274               613,248
                                                                                  ------------------   -------------------
                                                                                           1,163,024             4,158,877
      Less accumulated depreciation                                                          305,207             1,680,266
                                                                                  ------------------   -------------------
                                                                                             857,817             2,478,611

OTHER ASSETS
      Notes receivable, less current maturities                                                8,798                 3,989
      Investments in common stock                                                            482,220               482,220
      Deferred income taxes                                                                  725,667               725,667
      Goodwill and other intangibles, net                                                  1,994,018             2,031,685
      Assets transferred under contractual arrangement                                       454,742                     0
      Other                                                                                    4,325                98,455
                                                                                  ------------------   -------------------
                 Total other assets                                                        3,669,770             3,342,016
                                                                                  ------------------   -------------------
                                                                                  $       10,804,191   $        14,090,656
                                                                                  ==================   ===================
</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,
                                                                                         1999                 1998
                                                                                  ------------------   -------------------
                                                                                     (unaudited)
CURRENT LIABILITIES
<S>                                                                                <C>                  <C>
      Subordinated debentures                                                      $         325,000    $        1,401,429
      Line of credit                                                                       2,605,379             4,064,361
      Current maturities of long-term obligations                                            677,265             1,132,538
      Current maturities of capital leases                                                         0                69,621
      Accounts payable                                                                     2,142,030             2,926,797
      Accrued liabilities                                                                    956,353               389,889
                                                                                  ------------------   -------------------
                 Total current liabilities                                                 6,706,027             9,984,635

LONG TERM OBLIGATIONS, less current
      maturities                                                                               7,314                51,965

CAPITAL LEASE OBLIGATIONS, less
      current maturities                                                                           0                22,333

LIABILITIES TRANSFERRED UNDER
      CONTRACTUAL ARRANGEMENTS                                                               514,813                     0

DEFERRED INCOME TAXES                                                                        165,755               165,755
                                                                                  ------------------   -------------------
                 Total liabilities                                                         7,393,909            10,224,688

STOCKHOLDERS' EQUITY
      Preferred stock, $0.01 par value
           Authorized 5,000,000 shares, 1,800
           issued and outstanding at March 31, 1999                                               18                     0
      Common stock, $0.01 par value,
           authorized 50,000,000 shares, issued and                                           68,648                50,184
           outstanding 6,864,838 shares at March 31,
           1999 and 5,018,437 at September 30, 1998
      Additional paid-in capital                                                          14,059,616            10,890,022
      Accumulated deficit                                                                (10,718,000)           (7,074,238)
                                                                                  ------------------   -------------------
                 Total stockholders' equity                                                3,410,282             3,865,968
                                                                                  ------------------   -------------------
                                                                                  $       10,804,191   $        14,090,656
                                                                                  ==================   ===================
</TABLE>





              The accompanying notes are an integral part of these
                                  statements.

                                        5


<PAGE>



                             Pen Interconnect, Inc.

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                        Three months ended                       Six months ended
                                               --------------------------------------     -----------------------------------
                                                   March 31,            March 31,            March 31,          March 31,
                                                      1999                1998                  1999               1998
                                               ------------------   -----------------     ----------------   ----------------
<S>                                            <C>                  <C>                   <C>                <C>
Net sales                                      $        2,828,078   $       3,698,727     $      7,585,917   $      7,603,444
Cost of sales                                           2,424,444           2,842,148            7,015,662          5,897,521
                                               ------------------   -----------------     ----------------   ----------------

      Gross profit                                        403,634             856,579              570,255          1,705,923

Operating expenses
      Sales and marketing                                  55,692              17,590              137,411             69,405
      Research and development                             94,806             104,982              262,503            193,369
      General and administrative                        1,257,576             395,599            2,026,309            997,628
      Depreciation and amortization                        94,590             127,662              221,207            241,937
                                               ------------------   -----------------     ----------------   ----------------
                 Total operating expenses
                                                        1,502,664             645,833            2,647,430          1,502,339
                                               ------------------   -----------------     ----------------   ----------------

      Operating income (loss)                          (1,099,030)            210,746           (2,077,175)           203,584

Other income (expense)
      Interest expense                                   (192,903)           (407,020)            (385,775)          (486,057)
      Loss on disposal of division                       (948,312)                  0             (948,312)                 0
      Other income (expense), net                        (158,281)              4,104             (232,499)            34,337
                                               ------------------   -----------------     ----------------   ----------------
                 Total other income (expense)
                                                       (1,299,496)           (402,916)          (1,566,586)          (451,720)
                                               ------------------   -----------------     ----------------   ----------------

Loss before income taxes                               (2,398,526)           (192,170)          (3,643,761)          (248,136)

Income tax expense (benefit)                                    0                   0                    0            (21,800)
                                               ------------------   -----------------     ----------------   ----------------

Net loss                                       $       (2,398,526)  $        (192,170)    $     (3,643,761)  $       (226,336)
                                               ==================   =================     ================   ================

Loss per common share
      Basic                                    $            (0.46)  $           (0.05)    $          (0.70)  $          (0.05)
      Diluted                                  $            (0.46)  $           (0.05)    $          (0.70)  $          (0.05)

Weighted average common shares outstanding
         Basic                                          6,321,553           4,234,009            5,932,173          4,165,952
         Diluted                                        6,321,553           4,234,009            5,932,173          4,165,952
</TABLE>




              The accompanying notes are an integral part of these
                                  statements.

                                        6


<PAGE>



                             Pen Interconnect, Inc.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                              Six months ended
                                                                                     ------------------------------------
                                                                                         March 31,          March 31,
                                                                                           1999               1998
                                                                                     -----------------  -----------------
Increase (decrease) in cash and cash equivalents
   Cash flows from operating activities
<S>                                                                                  <C>                <C>
        Net loss                                                                     $      (3,643,761) $        (226,336)
        Adjustments to reconcile net loss to net cash
            used in operating activities
                Depreciation and amortization                                                  221,207            241,937
                Bad debts                                                                       13,247             14,527
                Interest on debenture conversion                                                98,571            231,350
                Loss on disposal of division                                                   948,312                  0
                Contingent stock San Jose agreement                                                  0            (40,000)
                Loss on disposal of equipment                                                        0             16,534
                Changes in asset and liabilities
                     Trade accounts receivable                                               1,047,510           (779,795)
                     Inventories                                                               334,370           (963,648)
                     Prepaid expenses and other assets                                         (84,031)          (164,054)
                     Accounts payable                                                         (728,260)           489,269
                     Accrued liabilities                                                       599,881           (263,156)
                     Income taxes                                                                    0              5,331
                                                                                     -----------------  -----------------
                        Total adjustments                                                    2,450,807         (1,211,705)
                                                                                     -----------------  -----------------
                        Net cash used in
                           operating activities                                             (1,192,954)        (1,438,041)
                                                                                     -----------------  -----------------


    Cash flows from investing activities
        Purchase of property and equipment                                                     (92,985)          (158,967)
        Issuance of notes receivable                                                          (614,920)           (72,760)
        Collections on notes receivable                                                              0             22,800
        Proceeds from disposal of division                                                   1,075,000                  0
                                                                                     -----------------  -----------------
                        Net cash provided by (used in)
                           investing activities                                                367,095           (208,927)
                                                                                     -----------------  -----------------
</TABLE>











                                   (Continued)

                                        7


<PAGE>



                             Pen Interconnect, Inc.

                       STATEMENTS OF CASH FLOWS - CONTINUED
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                              Six months ended
                                                                                     ----------------------------------
                                                                                         March 31,          March 31,
                                                                                           1999               1998
                                                                                     -----------------  -----------------
    Cash flows from financing activities
<S>                                                                                                  <C>         <C>
        Principal payments on notes payable                                                          0           (574,902)
        Net change in line of credit                                                        (1,087,426)           653,801
        Principal payments on long-term obligations                                         (1,349,459)          (274,767)
        Principal payments on capital lease obligations                                        (49,428)                 -
        Proceeds from issuance of subordinated debentures                                            0          1,000,000
        Proceeds from issuance of long-term obligations                                        900,000            500,000
        Proceeds from sale of common stock                                                     213,076            181,999
        Proceeds from issuance of preferred stock                                            1,800,000                  0
                                                                                     -----------------  -----------------
                          Net cash provided by financing activities                            426,763          1,486,131
                                                                                     -----------------  -----------------
Net decrease in cash and cash equivalents                                                     (399,096)          (160,837)
Cash and cash equivalents at beginning of period                                               657,777            272,148
                                                                                     -----------------  -----------------
Cash and cash equivalents at end of period                                           $         258,681  $         111,311
                                                                                     =================  =================

Supplemental  disclosures of cash flow  information
Cash paid during the period for:
     Interest expense                                                                $         287,204  $         243,728
     Income tax expense                                                              $               0  $               0
</TABLE>


Noncash investing and financing activities

During  the first and  second  quarters  of FY 99,  $1,175,000  of  subordinated
debentures were converted into 1,566,741 shares of common stock.  Along with the
conversion  on  the   debentures,   $98,571  of  unamortized   interest  on  the
subordinated debentures was charged to interest expense.

During the second quarter of FY 99,  $1,800,000 of Series A Preferred  Stock was
issued. Of this amount, $800,000 was used directly to pay off $800,000 of bridge
loans made to the Company during the first quarter of FY 99.











                                   (Continued)

                                        8


<PAGE>



                             Pen Interconnect, Inc.

                      STATEMENTS OF CASH FLOWS - CONTINUED
                                   (Unaudited)


Disposal of Divisions

The letter of intent for the sale of the MotoSat  division  to James  Pendleton,
Pen's  Chairman and former CEO,  states that all assets and  liabilities  of the
MotoSat  division  will be  transferred  to Mr.  Pendleton  in exchange  for the
elimination  of any future  obligations  to pay  retirement  benefits  under Mr.
Pendleton's  employment contract.  If the transaction had been closed as of June
30,  1999 it would have  yielded a gain of $60,071,  representing  the excess of
liabilities over assets to be transferred (see Note A).

Assets acquired and liabilities  assumed by Mr. Pendleton's  purchase of MTI are
as follows:

   Trade accounts receivables                                  $         180,896
   Notes receivable                                                       33,377
   Inventories                                                           206,689
   Property and equipment                                                 33,780
                                                               -----------------
      Assets transferred under contractual arrangements                  454,742


   Accounts payable                                                       56,507
   Accrued liabilities                                                    36,285
   Line of credit                                                        371,556
   Long-term obligations                                                  50,465
                                                               -----------------
      Liabilities transferred under contractual arrangements             514,813
                                                               -----------------
      Potential gain to Company                                $          60,071
                                                               =================







                                   (Continued)

                                        9


<PAGE>



                             Pen Interconnect, Inc.

                      STATEMENTS OF CASH FLOWS - CONTINUED
                                   (Unaudited)


During the second quarter of FY 99 the Company disposed of the Cable division by
selling certain assets and  liabilities to Cables To Go Inc. (CTG).  The Company
then  determined  the remaining  Cable division  assets,  not sold to CTG, to be
impaired as they had no market  value and could no longer be utilized in current
operations.  The  impairment  resulted in the write off of the  remaining  Cable
division assets with a net book value totaling $1,144,940.  The combined sale to
CTG and write off of assets  resulted in a net loss on the disposal of the Cable
division  of  $948,312.  Assets  sold  and  liabilities  assumed  by CTG were as
follows:

     Accounts receivable (net of allowance)                   $         310,467
     Inventories                                                        361,880
     Property and equipment                                             398,551
     Capital leases                                                     (42,526)
                                                              -----------------
               Net assets sold                                        1,028,372


     Proceeds received                                                1,075,000
     Note receivable                                                    150,000
                                                              -----------------
               Gain on assets sold to CTG                               196,628


     Write off of remaining Cable division net assets                (1,144,940)
                                                              -----------------
               Total loss on disposal of Cable division       $        (948,312)
                                                              =================









              The accompanying notes are an integral part of these
                                  statements.

                                       10



<PAGE>


                             PEN INTERCONNECT, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)




NOTE A - ACQUISITIONS/DISPOSITIONS

       Laminating Technologies Inc.

       On December 23, 1998, the Company signed a definitive  agreement to merge
       with Laminating Technologies Inc. (LTI). On April 2, 1999 the Company and
       LTI mutually terminated this definitive agreement to merge.

       Cables To Go Inc.

       On January 29,  1999 the  Company  signed an  agreement  to sell  certain
       assets and transfer  certain  liabilities of the Cable division to Cables
       To Go Inc (CTG).  CTG purchased  certain of the  receivables,  inventory,
       machinery  and  equipment and assumed  capital  lease  liabilities  for a
       purchase price of $1,075,000  thus yielding the Company a net loss on the
       disposition of ($948,312).

       Mobile Technology Inc.

       On  February  1, 1999 the  Company  signed a letter of intent with Mobile
       Technology  Inc. (MTI) to sell all assets and  liabilities of the MotoSat
       division. MTI's principal owner is James Pendleton, a former Chairman and
       CEO of the  Company.  The  letter of intent  calls for MTI to assume  all
       assets and liabilities of the MotoSat  division.  If the transaction were
       closed as of March 31, 1999,  it would yield a gain to the Company on the
       sale of $60,071.  Pending the closing of the sale, the Company has agreed
       to maintain  and/or provide a $300,000 credit facility with the Company's
       major lender. The Company anticipates closing the transaction when MTI is
       able to secure independent sources of financing.  In the interim, MTI has
       assumed  operational  control of the  MotoSat  division  but the  Company
       retains  ownership of the MotoSat  division's  receivables  and inventory
       which are collateral for the Company's credit facility.

       Inasmuch  as the  Company is still at risk for the credit  facility  made
       available  to MTI,  on the  receivables  and  inventory  currently  being
       submitted to finance the current  operations of MotoSat,  the Company has
       recorded the position of financial condition as of the date of the letter
       of  intent   (February  1,  1999).   Assets  and  liabilities  have  been
       reclassified  as  "Assets  /Liabilities   Transferred  Under  Contractual
       Arrangements"  on the balance sheet at March 31, 1999.  In addition,  the
       Company has advanced  $96,367 to MTI at 11.75 percent  interest  which is
       included  in notes  receivable.  The note will be repaid when MTI secures
       its own lender and source of funding.

                                       11

<PAGE>


                             PEN INTERCONNECT, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)




NOTE A - ACQUISITIONS/DISPOSITIONS - CONTINUED

       Transdigital Communications Inc.

       The Company  signed a  definitive  agreement  to merge with  Transdigital
       Communications,  Inc. (TCC) in July of 1999.  The agreement,  which would
       result in a reverse merger with TCC management becoming the management of
       the new company,  stipulated  various closing conditions for both Pen and
       TCC.  As of  this  date,  it is  doubtful  that  the  closing  conditions
       stipulated  in the  agreement  will be met and both parties have mutually
       agreed to terminate the agreement,  although a writing to this effect has
       not been completed.


NOTE B - INVENTORIES

       Inventories consist of the following:
                                         March 31,           September 30,
                                          1999               1999
                                     ---------------     -------------------
Raw materials (net of allowance)     $     1,942,174     $         2,252,933
Work-in-process                              835,056               1,391,664
Finished goods                                     -                  35,572
                                     ---------------     -------------------
                                     $     2,777,230     $         3,680,169
                                     ===============     ===================


NOTE C - BRIDGE LOANS

       During the 1st quarter of FY 1999,  the Company  secured two bridge loans
       both of which were to be repaid with funds to be received from the merger
       with LTI. The term of each loan was 90 days and carried an interest  rate
       of 8 percent.  One bridge loan was secured in November  for  $500,000 and
       the other in December for $400,000.  Both bridge loans were  subsequently
       repaid from proceeds  received from the issuance of preferred stock. (See
       Note F).


                                       12

<PAGE>


                             PEN INTERCONNECT, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)




NOTE D - CREDIT FACILITY

       As of March 31, 1999, the Company has been in violation of certain of the
       covenants of their credit  facility.  At March 31, 1999,  the Company has
       notified the lender of the violations and is negotiating modifications to
       the loan agreement with the lender. As of March 31, 1999, the Company has
       not  received a waiver  from the lender  and all  obligations  under this
       credit facility are payable on demand of the lender and are classified as
       current liabilities in the balance sheet.


NOTE E - WARRANTS TO PURCHASE COMMON STOCK

       During  the first  quarter  of FY 1999 the  Company  issued  warrants  to
       purchase  490,000  shares of the Company's  common  stock.  The following
       table outlines the features of these warrants:

   Number of               Exercise                 Expiration
   warrants                 Price                      date
---------------        ----------------       ----------------------
150,000                     $1.000                     October 2002
125,000                     $0.875                     October 2002
215,000                     $0.875                    November 2001


       During the second  quarter of FY 1999,  the  Company  issued  warrants to
       purchase  160,000 shares of common stock in conjunction  with the issuing
       of Series A Preferred  Stock. The terms of the conversion of the warrants
       to shares of common stock are discussed in Note F.


NOTE F - PREFERRED STOCK

       The Company has issued two series of Preferred Stock. Series A was issued
       in February 1999  consisting of 1,800 shares,  par value $0.01 per share,
       for $1,000 per share. Series B was issued in April 1999 at the same price
       but only 1,000  shares were  issued.  As mentioned in Note C, part of the
       funds  raised  from the  issuance  of this  stock  were used to repay the
       bridge  loans made  earlier in the fiscal  year.  After  repayment of the
       bridge  loans and  paying  $238,500  in fees and  expenses,  the net cash
       raised by the  Company  for  operations  was  $1,665,500.  Both series of
       Preferred Stock carry a 16 percent dividend rate which is paid quarterly.

                                       13

<PAGE>


                             PEN INTERCONNECT, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)





NOTE F - PREFERRED STOCK - CONTINUED

       Both  issuances of  Preferred  Stock are  convertible  into shares of the
       Company's  Common  Stock.  Each  share  of  Series A  Preferred  Stock is
       convertible  into an amount of shares of Pen Common Stock equal to $1,000
       divided  by the  average  of the two  lowest  closing  bid prices for Pen
       Common Stock during the period of 22 consecutive trading days ending with
       the last  trading day before the date of  conversion,  after  discounting
       that market price by 15 percent  (the  "Conversion  Price").  The maximum
       Conversion Price for the Series A Preferred Stock is $1.17 per share. The
       shares of Series B Preferred Stock are  convertible  into Common Stock at
       the same Conversion  Price as the Series A Preferred Stock with a maximum
       Conversion  Price of $0.79 per share.  Warrants to acquire 335,453 shares
       of Common  Stock at  conversion  prices  ranging from $0.86 to $1.434 per
       share  were also  issued to the  purchasers  of the Series A and Series B
       Preferred  Stock. The Warrants expire three years from date the Preferred
       Stock and warrants were initially issued.


NOTE G - EARNINGS (LOSS) PER SHARE

       Basic  earnings  (loss) per common  share is  computed  by  dividing  net
       earnings (loss) available to common  shareholders by the weighted average
       number of common shares outstanding during each period.  Diluted earnings
       per common  share are  similarly  calculated,  except  that the  weighted
       average number of common shares  outstanding  includes common shares that
       may be  issued  subject  to  existing  rights  with  dilutive  potential.
       Outstanding  options and warrants are not included in the  calculation in
       the loss periods because to do so would be anti-dilutive.

       For the three and six months ended March 31, 1999, net loss  attributable
       to common  shareholders  includes  a  non-cash  imputed  dividend  to the
       preferred  shareholders  related to the beneficial  conversion feature on
       the 1999 Series A Preferred  Stock and related  warrants.  The beneficial
       conversion feature is computed as the difference between the market value
       of the  common  stock  into  which the  Series A  Preferred  Stock can be
       converted and the value  assigned to the Series A Preferred  Stock in the
       private  placement.  The imputed  dividend is a one-time  non-cash charge
       against the loss per common share.


                                       14

<PAGE>


                             PEN INTERCONNECT, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)




NOTE G - (LOSS) PER SHARE - CONTINUED

       Basic and diluted  earnings  (loss) per common  share are  calculated  as
follows:

<TABLE>
<CAPTION>
                                                             Three months ended                     Six months ended
                                                    --------------------------------------   ----------------------------------
                                                         March 31,           March 31,          March 31,          March 31,
                                                           1999                1998                1999              1998
                                                    -------------------  -----------------   ----------------   ---------------
<S>                                                 <C>                  <C>                 <C>                <C>
Net loss                                            $        (2,398,526) $        (192,170)  $     (3,643,761)  $      (226,336)
Preferred dividends                                             (30,773)                 -            (30,773)                -
Imputed dividend from beneficial
    conversion feature                                         (449,438)                 -           (449,438)                -
                                                    -------------------  -----------------   ----------------   ---------------
          Net loss attributable to
             common stockholders                    $        (2,878,737) $        (192,170)  $     (4,123,972)  $      (226,336)
                                                    ===================  =================   ================   ===============

          Basic EPS

Common shares outstanding entire period                       6,069,160          4,147,863          5,018,437         4,072,863
Weighted average common shares issued                           252,393             86,146            913,736            93,089
                                                    -------------------  -----------------   ----------------   ---------------

Weighted average common shares
   outstanding during period                                  6,321,553          4,234,009          5,932,173         4,165,952
                                                    ===================  =================   ================   ===============

Loss per common share - basic                       $             (0.46) $           (0.05)  $          (0.70)  $         (0.05)


           Diluted EPS

Weighted average common shares
    outstanding during period - basic                         6,321,553          4,234,009          5,932,173         4,165,952
Dilutive effect of stock options and warrants                         0          2,252,500                  0                 0
                                                    -------------------  -----------------   ----------------   ---------------

Weighted average common shares
    outstanding during period - diluted                       6,321,553          6,486,509          5,932,173         4,165,952
                                                    ===================  =================   ================   ===============

Loss per common share - diluted                     $             (0.46) $           (0.05)  $          (0.70)  $         (0.05)
</TABLE>


                                       15

<PAGE>



            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


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

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

The following  discussion and analysis  provides certain  information  which the
Company's  management believes is relevant to an assessment and understanding of
the Company's  results of operations  and financial  condition for the three and
six months  ended March 31,  1999 and 1998.  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/A for the
year ended September 30, 1998.

General

Pen  Interconnect,  Inc. is a provider of contract  manufacturing  services  for
original  equipment  manufacturers.  It builds electronic systems and subsystems
for  customers  in  a  range  of  industries   including   computers,   consumer
electronics,  industrial and medical instrumentation,  avionics, communications,
and semiconductor applications.  In addition, the Company provides custom design
and  manufacturing of battery chargers,  power supplies and uninterrupted  power
supply  systems.   Pen  Interconnect's   services  include  product  design  and
prototyping, systems assembly, software duplication, packaging and warehousing.

Pen  Interconnect,  Inc.  provides the total  manufacturing  solution  including
circuit  design,  board design from  schematic,  mechanical and product  design,
prototype  assembly,   volume  board  assembly,  system  services  and  end-user
distribution.  The Company was incorporated  under the laws of the State of Utah
on  September  30,  1985.  Pen  Interconnect,  Inc.  has  support  manufacturing
facilities in California, Utah and China.

                                       16

<PAGE>


Sale of Division

Effective  January  29,  1999 the  Company  sold the Cable  division in order to
reduce  the losses  being  incurred  each month and focus on more  strategically
promising  operations.  The sale of the Cable division resulted in a loss to the
Company of ($948,312).  Although the transaction yielded a substantial loss, the
Company  anticipates  reducing losses by  approximately  $170,000 per month. The
agreement  with CTG also  provides  for royalty  payments  equal to 2 percent of
sales to be paid  quarterly  up to an amount of $600,000,  of which  $150,000 is
guaranteed.

Potential  merger.  The  Company  signed a  definitive  agreement  to merge with
Transdigital  Communications,  Inc. (TCC) in July of 1999. The agreement,  which
would result in a reverse merger with TCC management  becoming the management of
the new company,  stipulated various closing conditions for both Pen and TCC. As
of this date,  it is doubtful  that the  closing  conditions  stipulated  in the
agreement  will be met and both parties have  mutually  agreed to terminate  the
agreement, although a writing to this effect has not been completed.

Results of Operations

Net sales.  Net sales for the Company  decreased  $870,649 or  approximately  24
percent for the three month  period ended March 31, 1999 as compared to the same
period in the prior year. This decrease resulted  primarily from the sale of the
Cable division in January 1999 and a decline in the sales at the InCirT division
as the contract  expansion for a major customer was completed and sales returned
to regular levels.  Net sales for the six months ending March 31, 1999 decreased
$17,527 or 0.2 percent from the same period  during the prior  fiscal year.  The
contract  expansion in the InCirT  division  was still  ongoing the first fiscal
quarter  which  offset  the  decline  of sales  following  the sale of the Cable
division in the second quarter.

Cost of sales.  Cost of sales as a  percentage  of net sales have  increased  to
approximately  86 percent for the three  months ended March 31, 1999 as compared
to 77 percent for the same period in the prior year.  This  increase is due to a
decline in sales at the InCirT  division  and the impact of fixed  manufacturing
costs on a lower sales base.  Cost of sales as a percentage of net sales for the
first six months of fiscal 1999  increased to 92 percent  compared to 78 percent
for the same period last year.  This increase was further  worsened by declining
sales in the Cable  division  during  the first  quarter  with no  corresponding
reduction  in overhead  costs.  The  increase  was also due to a decrease in the
margins on a major contract at the InCirT division.

Operating expenses. Operating expenses increased $856,831 or 133 percent for the
three months  ended March 31, 1999 over the same three month  period  during the
prior fiscal year. For the first six months of fiscal 1999,  operating  expenses
increased  $1,145,091  or 76 percent  compared to the same period from the prior
fiscal year.  The increases  for both the second  quarter and for the six months
were mostly associated with an increase in general and  administrative  expenses
of  $861,977  and  $1,028,681,   respectively.  The  increases  in  general  and
administrative  expenses during the second quarter are primarily responsible for
the increase.  These included (1) $208,599 in professional  fees associated with
the issuance of the  Company's  Series A Preferred  Stock,  the  negotiation  of
proposed merger  agreements and agreements for the sale of the Cable and Motosat
divisions,   and  Nasdaq  compliance   hearings,   (2)  $429,259  for  financial
representation  services,  and (3)  $97,000  in  supplemental  payroll  expenses
associated  with  the  termination  of  employees  with  the  sale of the  Cable
division.  Research and development  expenses decreased slightly for the quarter
by $10,176  but  increased  for the six months by $69,134  primarily  related to
ongoing product development at the PowerStream division.

                                       17

<PAGE>



Other  income and  expenses.  Excluding  the loss on the  disposal  of the Cable
division of ($948,312)  in the three months ended March 31, 1999 other  expenses
decreased  $51,732 or 13 percent  for the three  months  ended March 31, 1999 as
compared to the same period in the prior year.  These  expenses  also  increased
$166,554  or 37 percent  for the first six months of fiscal  1999 as compared to
the same period in the prior fiscal year.  The  increases in other  expenses for
the second  quarter of fiscal 1999  primarily  include  brokerage fees and other
expenses in  connection  with the issue of the Series A  Preferred  Stock in the
second  quarter and of  subordinated  debentures  during the prior  fiscal year.
Interest  expense  for both the second  quarter  and for the first six months of
fiscal 1999 are higher than corresponding amounts from the prior year because of
interest  expense  associated  with  the  favorable  conversion  feature  of the
subordinated debentures issued during the prior fiscal year.

Net  earnings  (loss) and  earnings  (loss)  per share.  Net loss for the second
fiscal  quarter ended March 31, 1999 totaled  ($2,398,526)  or ($0.38) per basic
share,  compared  with a loss of  $192,170  or ($0.05)  per basic  share for the
second  quarter of fiscal  year 1998.  The change in the loss per basic share of
($0.33) is mostly  comprised  of ($0.13)  related to the increase in general and
administrative  expenses,  ($0.01)  related to the  decrease in other  expenses,
($0.07)  related to the  decline in sales and the  decline in profit  margins on
sales,  and ($0.15) related to the loss on the sale of the Cable  division.  The
loss for the first six months of fiscal year 1999 of  $3,643,761  or ($0.62) per
basic share before  provision for dividends on the Preferred  Stock of $0.08 was
($0.57)  per share  more than that of the first six  months of the prior  fiscal
year. The change in loss per basic share for this period was mostly comprised of
($0.16) related to the increase in general and administrative expenses,  ($0.01)
related to the increase in development costs, ($0.01) related to the decrease in
other expenses,  ($0.18) related to the decline in margins on sales, and ($0.16)
related to the loss on the sale of the Cable division.

Liquidity and Capital Resources

The  working  capital  deficit  at March  31,  1999 is  ($429,423)  compared  to
($2,263,049)  at December 31, 1998 and  ($1,714,606)  at September 30, 1998. The
decrease in negative  working  capital is  primarily  due to 1) the  decrease in
accounts  payable and the Company's line of credit from the proceeds of the sale
of the Cable  division,  and 2) the  issuance  during the second  quarter of the
Series A Preferred Stock.

During the second  quarter of fiscal  1999 the  Company  sustained  losses  from
operations of  ($1,099,030)  compared to a loss incurred during the first fiscal
quarter of  ($978,146).  The  Company's  management  believes that a significant
portion of the  losses in the second  quarter  were due to  nonrecurring  items.
These include increases in general and administrative expenses related to merger
and divisional sale transactions. If these nonrecurring items were excluded, the
Company's  management  believes  that the loss  from  operations  in the  second
quarter would have been only $600,000,  or roughly half of that incurred  during
the first quarter.

Cash from operations has not been sufficient during the recent quarter or during
the current fiscal year to cover expenses.  The Company  anticipates an increase
in sales and new contracts with more profitable  margins  generating a return to
profitability  beginning  in the third  quarter of fiscal  1999.  The  Company's
management  has also taken steps to reduce losses by selling the Cable  division
to CTG Inc. and by signing a letter of intent to sell the MotoSat division. With
the sale of the these two divisions,  the Company expects to save  approximately
$170,000  per  month in  operating  costs  and  interest.  The sale of the Cable
division yielded proceeds of $1,075,000.

                                       18

<PAGE>



Liquidity and Capital Resources - Continued

The Company's  management estimates that approximately $1 million may have to be
raised to sustain  operations.  Funds have been  realized  from the  issuance of
Series A Preferred  Stock and Series B  Preferred  Stock in the second and third
fiscal  quarters of fiscal 1999.  The  issuance of the Series A Preferred  Stock
raised $850,000 after payment of $150,000 in fees and applying  $800,000 towards
the  repayment of two bridge loans made to the Company  during the first quarter
of fiscal 1999. The sale of the Cable and Moto-Sat  divisions,  the  anticipated
increases in sales from the remaining  divisions and the  anticipated  return to
profitability should generate sufficient cash to fund operations for the rest of
calendar  year 1999.  However,  the Company may be unable to raise funds and the
anticipated increases in sales may not occur.

In conjunction  with the Company's  definitive  agreement to merge with TCC, the
Company advanced  approximately $516,000 to assist TCC in funding its operations
until  completion  of the  merger.  TCC has  signed a  promissory  note with the
Company to repay all funds advanced with interest at eight percent.  The note is
to be repaid from future funding sources acquired by TCC.

Inflation and Seasonality

The Company does not believe that it is significantly impacted by inflation. The
Company has been marginally  influenced  with  seasonality of sales in the past.
With the sale of the Cable  and  MotoSat  divisions,  the  Company  is even less
impacted by seasonality than before.

Year 2000 Readiness

In general,  the Year 2000 issue  relates to computers  and other  systems being
unable to  distinguish  between  the years  1900 and 2000  because  they use two
digits,  rather than four, to define the applicable  year.  Systems that fail to
properly recognize such information will likely generate erroneous data or cause
a system to fail possibly resulting in a disruption of operations. The Company's
products do not incorporate such date coding so the Company's efforts to address
the Year  2000  issue  fall in the  following  three  areas:  (i) the  Company's
information  technology ("IT") systems; (ii) the Company's non-IT systems (i.e.,
machinery,  equipment and devices which utilize  technology  which is "built in"
such as embedded microcontrollers);  and (iii) third-party suppliers. Management
has  initiated  a program to prepare  for  compliance  in these  three areas and
expects such program to be implemented and completed by June 1999. Costs will be
expensed as incurred and currently are not expected to be material.

The Company believes its current IT systems are year 2000 compliant. The Company
is currently conducting an inventory of non-IT systems which may have inadequate
date coding and will commence efforts to remedy any non-compliant systems by the
end of the first quarter of 1999. Third party suppliers and customers  present a
different  problem in that the Company  cannot control the efforts of such third
parties.  The  Company  anticipates  requesting  confirmations  from third party
suppliers that they are year 2000 compliant to avoid disruptions of services and
supplies.  However,  any  failure  on the part of such  companies  with whom the
Company  transacts  business  to be year 2000  compliant  on a timely  basis may
adversely affect the operations of the Company.

                                       19

<PAGE>


                                     PART II

                                OTHER INFORMATION



Item 1.           Legal Proceedings.

From time to time the  Company  has been a party to  various  legal  proceedings
arising in the ordinary course of business. The Company has had a judgement made
against it pertaining to an obligation of $79,000 to YC Intl. which has not been
paid.  Agreements  made  with the legal  counsel  of YC Intl.  call for  monthly
payments of $10,000 to be made. To date the Company has made payments of $20,000
towards this obligation.

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

Exhibits

         27  Financial Data Schedule

B.       Reports on Form 8-K

On February 17, 1999,  the Company filed a report on Form 8-K reporting the sale
of the Cable division,  the execution of the merger  agreement with LTI, and the
issuance of the Series A Preferred  Stock. It consisted of: Item 2.  Acquisition
or  Disposition  of  Assets,  Item  5.  Other  Events,  and  Item  7.  Financial
Statements, Pro Forma Financial Information and Exhibits.

                                       20


<PAGE>




                                   SIGNATURES

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


                                 PEN INTERCONNECT, INC.

                                 By:  /s/ Stephen J Fryer
September 14, 1999                 Stephen J. Fryer
                                 President and CEO


                                 By: /s/ Robert J. Albrecht
September 14, 1999                 Robert J. Albrecht
                                 CFO, Principal Accounting
                                 Officer and Vice President



                                       21