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     June 30, 1998

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

                         Commission file number 1-14072

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

            UTAH                                  87-0430260
(State or other jurisdiction of          (I.R.S. Employer Identification No)
incorporation or organization)
                 2351 South 2300 West, Salt Lake City, UT 84119
               (Address of Principal Executive Offices) (Zip Code)
                                 (801) 973-6090
                           (Issuer's telephone number)

                                       N/A

(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                                                     Yes X No

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

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         As of August 14, 1998,  the issuer had  4,773,910  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                                                3

Item 1 Financial Statements

       Balance Sheets at June 30, 1998
       (unaudited) and September 30, 1997                                   4-5

       Statements of Operations  for the Quarters Ended June 30, 1998
       and 1997 and the nine month  periods  ended June 30,  1998 and
       1997
       (unaudited)                                                            6

       Statements of Cash Flows for the ninth month
       periods ended June 30, 1998 and 1997 (unaudited)                     7-9

       Notes to Condensed Financial Statements (unaudited)                 10-15

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

PART II - OTHER INFORMATION

Item 1 Legal Proceedings                                                      19

Item 2 Changes in the Securities and Use of Proceeds                          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

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

Signatures                                                                    20

<PAGE>


                             PEN INTERCONNECT, INC.

                                     PART I

                              FINANCIAL INFORMATION


                 ITEM 1. INTERIM CONDENSED FINANCIAL STATEMENTS

     Pen  Interconnect,   Inc.  (the  "Company"),  has  included  the  unaudited
     condensed  balance  sheet of the  Company as of June 30,  1998 and  audited
     balance  sheet as of September 30, 1997 (the  Company's  most recent fiscal
     year),  unaudited condensed statements of operations for the quarters ended
     June 30,  1998 and 1997,  and nine month  periods  ended June 30,  1998 and
     1997, and unaudited  condensed  statements of cash flows for the nine month
     periods  ended June 30, 1998 and 1997,  together with  unaudited  condensed
     notes  thereto.  In the opinion of management  of the Company,  the interim
     condensed  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,  1997.  The results of  operations  for the three and nine months ended
     June 30, 1998 may not be indicative of the results that may be expected for
     the year ending September 30, 1998.


                                        3


<PAGE>



                             Pen Interconnect, Inc.

                                 BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                                                  June 30,           September 30,
                                                                                    1998                    1997
                                                                                (Unaudited)
CURRENT ASSETS
<S>                                                                             <C>                   <C>         
    Cash and cash equivalents                                                   $    994,397          $    272,148
    Receivables
        Trade accounts,  less  allowance  for doubtful  accounts of $105,089 and
            $137,058 at June 30, 1998 and September 30, 1997,
            respectively.                                                          3,721,930             2,093,056
        Current maturities of notes receivable (Note A)                               27,820               357,006
    Investments in common stock (Note A)                                             350,750               400,000
    Inventories (Notes B)                                                          5,661,634             3,355,871
    Prepaid expenses and other current assets                                        425,446               289,991
    Deferred income taxes                                                            180,693               141,324
                                                                               -------------         -------------

                    Total current assets                                          11,362,670             6,909,396


PROPERTY AND EQUIPMENT, AT COST
        Production equipment                                                       2,568,776             2,418,368
        Furniture and fixtures                                                       852,770               834,971
        Transportation equipment                                                      83,522                69,217
        Leasehold improvements                                                       368,137               368,137
                                                                                 -----------        --------------

                                                                                   3,873,205             3,690,693
        Less accumulated depreciation                                              1,523,349             1,303,063
                                                                                 -----------          ------------

                                                                                   2,349,856             2,387,630
OTHER ASSETS
    Notes receivable, less current maturities (Note A)                               103,105               607,524
    Investments in common stock  (Note A)                                            684,000                    -
     Deferred income taxes                                                         1,290,592             1,392,658
    Goodwill and other intangibles (net)                                           2,164,298             2,287,146
    Other                                                                            665,529               322,630
                                                                                ------------         -------------

                                                                                   4,907,524             4,609,958
                                                                                 -----------          ------------

                                                                                 $18,620,050           $13,906,984
                                                                                 ===========           ===========
</TABLE>



    The accompanying notes are an integral part of these statements.


                                        4


<PAGE>




                             Pen Interconnect, Inc.

                           BALANCE SHEETS - CONTINUED

                      LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                                    June 30,          September 30,
                                                                                      1998              1997
                                                                                (Unaudited)
CURRENT LIABILITIES
<S>                                                                            <C>                     <C>        
    Notes payable                                                              $          -            $   641,505
    Bridge loan                                                                           -                100,000
    Line of credit                                                                 3,795,541             2,237,690
    Current maturities of long-term obligations                                      314,643               263,255
    Current maturities of capital leases                                              66,464                66,464
    Accounts payable                                                               3,028,073             2,053,348
    Accrued liabilities                                                              310,561               481,356
                                                                                ------------               -------

                    Total current liabilities                                      7,515,282             5,843,618

LONG-TERM OBLIGATIONS, less current
    maturities (Note C)                                                              927,178               681,722

CAPITAL LEASE OBLIGATIONS, less current
    maturities                                                                         8,377                70,889

SUBORDINATED DEBENTURES (Note D)                                                   1,380,059                   -

DEFERRED INCOME TAXES                                                                165,755               165,755
                                                                                ------------           -----------

                    Total liabilities                                              9,996,651             6,761,984


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
         4,773,910 shares at June 30, 1998 and
        4,072,863  shares at September 30, 1997                                       47,739                40,729
    Additional paid-in capital                                                    10,151,115             8,733,126
    Accumulated deficit                                                           (1,575,455)           (1,628,855)
                                                                               --------------       ---------------

                    Total stockholders' equity                                     8,623,399              7,145,000
                                                                               -------------            -----------

                                                                                 $18,620,050            $13,906,984
                                                                                 ===========            ===========
</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 June 30,        Nine months ended June 30
                                                   ---------------------------      ---------------------------
                                                     1998               1997            1998         1997
                                                  ------------     ------------     ------------   ------------
<S>                                               <C>               <C>             <C>            <C>         
Net sales                                         $  4,510,112      $ 4,479,882     $ 12,113,556   $ 15,220,519
Cost of sales                                        3,534,452        4,083,240        9,431,973     12,912,356
                                                  ------------     ------------     ------------   ------------
               Gross profit                            975,660          396,642        2,681,583      2,308,163

Operating expenses
     Sales and marketing                               192,071          230,040          619,562        695,152
     Research and development                           49,675           60,914          243,044        101,283
     General and administrative                        477,792          390,479        1,117,334      1,115,630
     Depreciation and amortization                     122,288           96,347          364,225        285,025
                                                  ------------     ------------     ------------   ------------

               Total operating expenses                841,826          777,780        2,344,165      2,197,090
                                                  ------------     ------------     ------------   ------------

               Operating income (loss)                 (33,834         (381,138)         337,418        111,073

Other income (expense)
     Interest expense                                 (112,400)        (134,763)        (367,107)      (403,539)
     Gain on sale of division (Note A)                      -              -                -           611,912
     Other income (expense), net                        84,318           19,522          118,655         77,194
                                                  ------------     ------------     ------------   ------------

               Total other income (expense)            (28,082)        (115,241)        (248,452)       285,567
                                                  ------------     ------------     ------------   ------------

Earning (loss) before income taxes                     105,752         (496,379)          88,966        396,640

Income taxes (benefit) expense                          42,301         (198,500)          35,566        163,100
                                                  ------------     ------------     ------------   ------------

Net earnings (loss)                                    $63,451        $(297,879)        $ 53,400      $ 233,540
                                                  ============     ============     ============   ============

Earnings (loss) per common share:
     Basic                                                $0.01          $(0.09)           $0.01          $0.08
                                                  ============     ============     ============   ============
     Diluted                                              0.01            (0.09)            0.01           0.07
                                                  ============     ============     ============   ============
Weighted average common and dilutive
    common equivalent shares outstanding
     Basic                                           4,586,962        3,238,975        4,452,312      3,101,930
                                                  ============     ============     ============   ============
     Diluted                                         5,121,153        3,238,975        5,510,758      3,518,097
                                                  ============     ============     ============   ============
</TABLE>





        The accompanying notes are an integral part of these statements.


                                        6


<PAGE>




                             Pen Interconnect, Inc.

                            STATEMENTS OF CASH FLOWS

                         For nine months ended June 30,

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                   1998                  1997
                                                                            ------------------     ---------------

Increase (decrease) in cash and cash equivalents
    Cash flows from operating activities
<S>                                                                             <C>                 <C>           
        Net earnings                                                            $     53,400        $      233,540
        Adjustments to reconcile net earnings
            to net cash used in operating activities
               Depreciation and amortization                                         364,225               285,025
               Bad debts                                                               3,420               (19,314)
               Gain on sale of division                                                   -               (611,912)
               Contingent stock San Jose agreement                                   (40,000)                   -
               Loss on disposal of equipment                                          16,534                    -
               Deferred taxes                                                         62,697               131,000
               Changes in assets and liabilities
                    Trade accounts receivable                                     (1,632,294)              615,329
                    Inventories                                                   (2,305,763)              (15,587)
                    Prepaid expenses and other assets                               (306,138)             (369,942)
                    Accounts payable                                                 974,725              (703,410)
                    Accrued liabilities                                             (254,795)             (627,103)
                    Income taxes                                                      -                     33,192
                                                                              --------------           -----------

                        Total adjustments                                         (3,117,389)           (1,282,722)
                                                                           -----------------        ---------------

                        Net cash used in
                        operating activities                                      (3,063,989)           (1,049,182)
                                                                             ----------------       --------------

    Cash flows from investing activities
        Purchase of property and equipment                                          (202,353)             (207,994)
        Proceeds from sale of division                                                   -               2,000,000
        Proceeds from sale of investments                                            389,250                    -
        Issuance of notes receivable                                                 (89,195)              (35,435)
        Collections on notes receivable                                               22,800                    -
                                                                        --------------------      ---------------

                        Net cash provided
                        by investing activities                                      120,502             1,756,571
                                                                                ------------           -----------
</TABLE>


                                   (Continued)


                                       7
<PAGE>

                                                          Pen Interconnect, Inc.

                                           STATEMENTS OF CASH FLOWS - CONTINUED

                                         For the nine months ended June 30,


<TABLE>
<CAPTION>
                                                                                   1998                  1997
                                                                            -------------------   ---------------

    Cash flows from financing activities
<S>                                                                         <C>                   <C>            
        Principal payments on notes payable                                 $       (641,505)     $             -
        Net change in line of credit                                               1,557,851            (2,009,864)
        Proceeds from bridge loan                                                         -              1,000,000
        Principal payments on bridge loan                                           (100,000)                   -
        Principal payments on long-term obligations                                 (265,668)              (76,842)
        Proceeds from issuance of subordinated debentures                          1,910,000                    -
        Proceeds from issuance of long-term obligation                               500,000                    -
        Proceeds from sale of common stock                                           705,058               225,000
                                                                            ----------------         -------------

                        Net cash (used in) or provided
                            by financing activities                                3,665,736              (861,706)
                                                                               -------------         --------------

                        Net (decrease) increase in cash
                            and cash equivalents                                     722,249              (154,317)

Cash and cash equivalents at beginning of period                                     272,148               169,445
                                                                            ----------------       ---------------

Cash and cash equivalents at end of period                                    $      994,397        $       15,128
                                                                              ==============        ==============

Supplemental disclosures of cash flow information

    Cash paid during the period for
        Interest                                                                   $ 370,028           $   390,157
        Income taxes                                                                      -                     -

</TABLE>

                                   (Continued)

                                        8


<PAGE>



                             Pen Interconnect, Inc.

                      STATEMENTS OF CASH FLOWS - CONTINUED

                For the nine months ended June 30, 1998 and 1997

Non-cash investing and financing activities

During the third quarter of fiscal year 1998,  subordinated  debentures totaling
$480,000 were converted to 248,122 shares of common stock.

During the second quarter of fiscal year 1998,  subordinated debentures totaling
$320,000 were converted to 147,092 shares of common stock.

During the first quarter of fiscal year 1998, notes receivable totaling $900,000
plus accrued interest of $84,000 were converted to investments in common stock.

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

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

       Net assets sold                                       2,688,088

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

       Cash consideration                                    2,000,000

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




        The accompanying notes are an integral part of these statements.

                                        9


<PAGE>



                             PEN INTERCONNECT, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE A - ACQUISITIONS/DISPOSITIONS

       POWER STREAM TECHNOLOGY

       Effective April 1, 1997, the Company  acquired  substantially  all of the
       assets,   and  assumed  certain   liabilities  and  the  operations,   of
       PowerStream Technology, Inc. ("PowerStream") by issuing 150,000 shares of
       common  stock  valued at $1.50 per share.  PowerStream  is a research and
       development  company  specializing in power recharging  devices and power
       supply products. In addition the Company entered into a 5 year Employment
       Agreement  with Daniele Reni, the President of  PowerStream.  The Company
       believes  that Mr.  Reni is an  expert  in the  area of power  recharging
       devices and power supply  products.  This  transaction  was accounted for
       using the purchase method of accounting. Accordingly the purchased assets
       and  liabilities  have been  recorded  at their fair value at the date of
       acquisition and the excess purchase price over fair value of net tangible
       assets acquired of $749,114 is being amortized over 15 years. The results
       of  operations  of  the  acquired  business  have  been  included  in the
       financial statements since the effective date of acquisition.

       SALE OF SAN JOSE DIVISION

          Effective  November 1, 1996, the Company sold substantially all of the
          net  assets  used by the San  Jose  Division  ("Division")  to  Touche
          Electronics,  Inc. ("Touche"), a subsidiary 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,  the Company had the right
          to receive up to $700,000 in contingent earnouts for a potential total
          sale  price  of  $4,000,000.  The  Company  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.

          In February 1997,  TMCI filed a notice of demand for rescission of the
          purchase and sale of the Division.  The Company  filed a  counterclaim
          against TMCI in May,  1997,  alleging  that TMCI had  defaulted in its
          obligations under the promissory notes. The disputes were subsequently
          submitted to arbitration in August, 1997.





                                   (Continued)

                                       10


<PAGE>

                             Pen Interconnect, Inc.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE A - ACQUISITIONS/DISPOSALS - CONTINUED

          In December  1997,  the Company and TMCI entered into a Settlement and
          Release Agreement (the "Settlement  Agreement"),  releasing each other
          of any and all respective claims the parties may have had against each
          other. The Settlement Agreement provided,  in part, that TMCI issue to
          the  Company,  137,390  shares of TMCI's  common  stock to replace the
          $900,000 of promissory  notes and related accrued  interest payable by
          TMCI to the Company.  The  Settlement  Stock is  guaranteed  to have a
          minimum value of $7.4532 per share. In the event the Settlement  Stock
          is sold by the Company at less than that amount,  TMCI is obligated to
          pay the  Company  the  difference  between  the  sales  price  and the
          guaranteed  value.  The  conclusion  of the  disputes,  will allow the
          Company  and  TMCI  to  continue   their  joint  sales  and  marketing
          arrangements.

          The results of operations include one month of operations for the nine
          month  period  ended June 30,  1997.  The balance  sheet  excludes the
          Division as of June 30, 1998 and September 30, 1997.

          Pro forma data. The following  unaudited pro forma summary  represents
          the combined  results of operations as if the  disposition  of the San
          Jose  Division had occurred on October 1, 1996,  and do not purport to
          be indicative of what would have  occurred had the  transactions  been
          made as of  October  1,  1996,  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. 

                                                  Nine months  ended June 30,
                                       (amounts in thousands, except share data)
                                                      1998         1997
                                                      ----         ----
       Net sales                                    $ 12,114         $ 14,935
       Operating income                                  337               94
       Net earnings (loss)                                53             (379)
       Earnings (loss) per common share:
             Basic                                      0.01            (0.12)
             Diluted                                    0.01            (0.12)
       Weighted average common and dilutive
        common equivalent shares outstanding:
            Basic                                  4,452,312        3,101,930
            Diluted                                5,510,758        3,101,930




                                       11


<PAGE>


                             Pen Interconnect, Inc.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE B - INVENTORIES

Inventories consist of the following:
                                         June 30,           September 30,
                                          1998                  1997
Raw materials (net of allowance)          $3,466,407        $ 2,531,235
Work-in-process                            2,123,110            736,928
Finished goods                                72,117             87,708
                                      --------------      -------------

                                      $    5,661,634       $  3,355,871
                                      --------------       ------------

NOTE C - LOAN FROM CREDIT FACILITY

          On December 8, 1997,  the Company  obtained  the second term under its
          credit facility with a bank in the principal amount of $500,000, which
          bears  interest  at a fixed  rate of  10.32%  per  annum.  The loan is
          payable in 36 monthly  installments  of $10,417,  including  interest,
          with payments to begin in September 1998.

NOTE D - SUBORDINATED DEBENTURES


          On June 16, 1998,  the Board of Directors of the Company  approved the
          issuance  of  up  to  $1,000,000  of 3%  convertible  debentures  (the
          "Debentures")  with a maximum term of 24 months.  The Debentures  will
          mature, unless earlier converted by the holders, into shares of common
          stock of the  Company.  The Company has agreed to file a  registration
          statement with the United States  Securities  and Exchange  Commission
          with  respect  to the  Common  Stock of the  Company  into  which  the
          Debentures may be converted.

       The Debentures are  convertible by the holders thereof into the number of
       shares of common stock equal to the face amount of the  Debentures  being
       converted  divided  by the  lesser  of (i)  eighty  percent  (80%) of the
       closing bid price of the Company's common stock as reported on the NASDAQ
       Small Cap market on the day of conversion,  or (ii) $2.75. The Debentures
       may be converted in three equal installments  beginning on the earlier of
       (i) the 75th day of their issuance,  and continuing through the 135th day
       of their  issuance,  or (ii) the day following the effective  date of the
       Registration Statement, through the 60th day following the effective date
       of the Registration Statement. The Company may cause the Debentures to be
       converted  into shares of common stock after the 110th day  following the
       effective  date of the  Registration  Statement,  if the common stock has
       traded at or above $5.50 per share for twenty consecutive days.

          As of June 30,  1998 the  Company  had  issued all  $1,000,000  of the
          convertible debentures and none were converted.

                                   (Continued)
                                       12
<PAGE>

                             Pen Interconnect, Inc.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS


       NOTE D - SUBORDINATED DEBENTURES - Continued

          On October 22, 1997,  the Board of  Directors of the Company  approved
          the issuance of up to $1,500,000  of 3%  convertible  debentures  (the
          "Debentures")  with a maximum term of 24 months.  The Debentures  will
          mature, unless earlier converted by the holders, into shares of common
          stock of the  Company.  The Company has agreed to file a  registration
          statement with the United States  Securities  and Exchange  Commission
          with  respect  to the  Common  Stock of the  Company  into  which  the
          Debentures may be converted

       The Debentures are  convertible by the holders thereof into the number of
       shares of common stock equal to the face amount of the  Debentures  being
       converted  divided  by the  lesser  of (i)  eighty  percent  (80%) of the
       closing bid price of the Company's common stock as reported on the NASDAQ
       Small Cap market on the day of conversion,  or (ii) $2.75. The Debentures
       may be converted in three equal installments  beginning on the earlier of
       (i) the 75th day of their issuance,  and continuing through the 135th day
       of their  issuance,  or (ii) the day following the effective  date of the
       Registration Statement, through the 60th day following the effective date
       of the Registration Statement. The Company may cause the Debentures to be
       converted  into shares of common stock after the 110th day  following the
       effective  date of the  Registration  Statement,  if the common stock has
       traded at or above $5.50 per share for twenty consecutive days.

          As of June 30,  1998 the  Company  had  issued all  $1,500,000  of the
          $1,500,000  convertible  debentures and $800,000 had been converted to
          common  stock at an  average  price of  approximately  $2.03 per share
          (Note F). .

NOTE E - STOCK TRANSACTIONS

          Stock issued

       In the second and third  quarters of fiscal year 1998, the Company issued
89,990 shares of common stock  associated with the exercise of certain  warrants
and  395,214  shares  of  common  stock   associated   with  the  conversion  of
subordinated debentures.

       In the first  quarter of fiscal  year 1998,  the  Company  issued  75,000
shares of common stock associated with the exercise of certain warrants.



                                   (Continued)
                                       13
<PAGE>

                                                         
                            Pen Interconnect, Inc.
                    NOTES TO CONDENSED FINANCIAL STATEMENTS

       NOTE E - STOCK TRANSACTIONS -Continued

          Earnings (loss) per share
       In  February  1997,  the  Financial  Accounting  Standards  Board  issued
     Statement of Financial  Accounting  Standard (SFAS) No. 128,  "Earnings per
     Share."  SFAS No. 128 is effective  for  financial  statements  for periods
     ending  after  December 15,  1997,  and  requires  companies to report both
     "basic" and "diluted" earnings per share. A "Basic" earnings per share does
     not  include  the  addition  of  common  stock  equivalents  to the  shares
     outstanding.  "Diluted"  earnings per share requires the addition of common
     stock equivalents to the shares outstanding.  Average shares outstanding is
     the  denominator   used  in  "basic"   earnings  per  share   calculations.
     Accordingly,  "basic"  earnings  per share  will be higher  than  "diluted"
     earnings per share.  This statement  replaces  Accounting  Principles Board
     ("APB")  Opinion No. 15,  "Earnings per Share." The effect of adopting SFAS
     128 did not  materially  effect  the  Company's  earnings  per  share.  The
     following  tables show the amounts  used in computing  earnings  (loss) per
     common share,  including the weighted average number of shares and dilutive
     potential common shares

                                             Three months Ended June 30, 1998
                                            Earnings      Shares       Per-Share
       Basic EPS:   Earnings available
         to common  shareholders            $ 63,451     4,586,962        $0.01
                                            =====
       Effect of Dilutive Securites
         Stock options and warrants                        534,191
       Diluted EPS: Earnings available
         to common shareholders             $ 63,451                     $ 0.01

                                                         N
                                               Three months Ended June 30, 1997
                                             (Loss)        Shares      Per-Share
       Basic EPS:   Loss available
         to common  shareholders          ($ 297,879)    3,238,975       ($0.09)
                                             ======
       Effect of Dilutive Securites
         Stock options and warrants          n/a
       Diluted EPS: Loss available
         to common shareholders           ($ 297,879)    3,238,975      ($ 0.09)
                                           =========     =========      ========


                                   (Continued)
                                       14
<PAGE>


                             Pen Interconnect, Inc.




       NOTE E - STOCK TRANSACTIONS -Continued

          Earnings (loss) per share - Continued

                                              Nine months Ended June 30, 1998
                                            Loss          Shares       Per-Share
       Basic EPS:   Earnings available
         to common  shareholders         $  53,400       4,452,312        $ 0.01
                                            ======
       Effect of Dilutive Securites
         Stock options and warrants       1,058,446
       Diluted EPS: Loss available
         to common shareholders            $53,400

       Options and  warrants to purchase  3,030,000  shares were not included in
the  computation  of EPS because the exercise price was greater than the average
market price of the common shares for the period.


                                            Nine months Ended June 30, 1997
                                          Earnings         Shares     Per-Share
       Basic EPS:   Earnings available
         to common  shareholders           $ 233,540     3,101,930        $0.08
                                            =====
       Effect of Dilutive Securites
         Stock options and warrants         416,167
       Diluted EPS: Earnings available
         to common shareholders           $ 233,540                       $0.07
                                          =========

      Options and warrants to purchase 3,527,000 shares were not included in the
computation  of EPS because  the  exercise  price was  greater  than the average
market price of the common shares for the period.


                                       15
<PAGE>


                                                       ITEM 2. 




 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 the timing of operating  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
nine month periods ending June 30, 1998 and 1997. 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, 1997.

General

Pen  Interconnect,  Inc.  (the  "Company"  or "Pen") is a total  interconnection
solution  provider  offering  internal  and  external  custom  cable and harness
interconnections,  mobile satellite  equipment,  EMSI (Electronic  Manufacturing
Service Industry)  manufacturing  (circuit board assembly) and custom design and
manufacturing  of battery  chargers,  power supplies and  Uninterruptible  Power
Supply UPS systems for original equipment manufactures ("OEMs") in the computer,
peripheral,  telecommunications,  instrumentation, medical and testing equipment
industries.  The Company was incorporated under the laws of the State of Utah on
September 30, 1985. The Company  maintains  divisions located in Salt Lake City,
and Orem, Utah and Irvine, California.

Results of Operations

Effective  March 24, 1995,  the Company  acquired the net assets of the San Jose
Division which has been  accounted for as a purchase.  This division was sold on
November 1, 1996 (Note A).  Therefore,  the statement of operations data include
the results of  operations  for only one month in the nine months ended June 30,
1997.

                                       16
<PAGE>

Net sales.  Net sales for the Company  remained  flat for the three month period
ended June 30, 1998 as compared to the same period in the prior year.  Net sales
have decreased  approximately 20% for the nine month period ending June 30, 1998
as compared  to the same period in the prior year.  The flat sales for the three
month period is the direct result of the start of a significant contract for our
InCirT Division which started during this most recent quarter.  The decrease for
the nine month period  principally  resulted from the loss of a large  customer,
the move out of several  orders into future  quarters of the year and  decreased
orders by several other significant customers.  Such move out and loss of orders
were not able to be replaced within the short-term.

Cost of sales.  Cost of sales as a  percentage  of net sales have  decreased  to
approximately  78% for the three months ended June 30, 1998,  as compared to 91%
for the same  period in the prior  year.  Cost of sales as a  percentage  of net
sales have  decreased  to  approximately  78% for the nine months ended June 30,
1998, as compared to 85% for the same period in the prior year.  These decreases
in costs resulted from reduced  materials  costs due to discounts  obtained from
vendors on several new contracts.  In addition,  the Company has reduced support
costs in cost of goods  sold  during  the  most  recent  nine  month  period  to
correspond with the reduced sales levels.

Operating  expenses.  Operating  expenses have  increased as a percentage of net
sales to  approximately  19% for the three and nine  month  periods  at June 30,
1998, respectively as compared to approximately 17% and 14% for the same periods
in the prior year.  These cost  increases  have  resulted from the following two
areas:  1) Research  and  Development  expenditures  in an effort to develop new
products with  improved  margins and 2)  depreciation  and  amortization  due to
amortization  of  goodwill  and other  intangible  assets  associated  with past
acquisitions.  Sales and marketing actually decreased when compared to the prior
year but reflect an increase in relation to sales due to the  decrease in sales.
General and  Administrative  expenses increased in the three month period due to
increased costs in public relations and the legal and accounting fees associated
with the merger  negotiations with TMCI. Due to the fixed components included in
the other  operating  costs  they  could  not be  significantly  reduced  in the
short-term  and due to the  expected  rebound in sales in future  quarters  such
reductions were not considered necessary.

Other income and expenses.  Other income and expenses (not including the gain on
the sale of the San Jose Division) as a percentage of net sales of approximately
(1%) and (2%) respectively for the three and nine months ended June 30, 1998 are
basically  unchanged  as compared to  approximately  (2%) for both the three and
nine months ended in the prior year. 



                                       17
<PAGE>

Net  earnings(loss)  and  earnings(loss)  per share.  Net earnings for the three
months  ended June 30, 1998 totaled  $63,451 or $0.01 basic per share  earnings,
compared  with a loss of ($297,879) or ($0.09) basic per share loss for the same
period  in the prior  year.  For the nine  months  ended  June 30,  1998 the net
earnings  were $53,400 or $0.01 basic per share  earnings,  compared with a loss
(before the gain on sale of division) of  ($215,272)  or ($0.07) basic per share
loss for the same period in the prior year.

The increase in earnings and earnings per share as compared to the prior periods
(excluding  the  gain  on the  sale of the  division)  is due in  large  part to
improved  pricing from several vendors and cost cutting  efforts  implemented by
management.

Liquidity and Capital Resources

Working  capital  increased to  $3,847,388  on June 30, 1998 from  $1,065,778 on
September 30, 1997.  The increase is  principally  due to the proceeds  received
from the sale of the debentures and from the additional term loan.

Management believes that existing cash balances,  borrowings available under the
line of credit together with cash generated from projected  operations should be
adequate to meet the Company's  anticipated  cash  requirements  during the next
twelve months. However; in the event the Company's operating performance is less
than projected the Company may be forced to seek additional financing. There can
be no assurance that such additional financing, if required, would be available;
and if available would be available on favorable terms.

Inflation and Seasonality

The Company does not believe  that it is  significantly  impacted by  inflation.
Historically,  the computer industry sales tend to decline in December, January,
July and August when  activity in the personal  computer  industry as a whole is
reduced.  However,  the Company has  recently  diversified  into the medical and
telecommunications  products  in an  effort  to offset  the  seasonality  in the
computer industry.



                                       18
<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 is not currently a party
to any material litigation and is not aware of any litigation threatened against
it that could have a materially adverse effect on its business.

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.

     A.   Exhibits

          27  Financial Data Schedule.

     B.   Reports on Form 8-K.. None



                                       19


<PAGE>



                                   SIGNATURES

In accordance with the  requirements of the Securities  Exchange Act of 1934, as
amended,  the  Registrant  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


PEN INTERCONNECT, INC.

By:  /s/ James S. Pendleton               Date:  26 August 1998
James S. Pendleton,
CEO and Chairman


By: /s/ Wayne R. Wright                   Date:  26 August 1998
Wayne R. Wright,
CFO, Principal Accounting
Officer and Vice-Chairman





                                       20