UNITED STATES
                        SECURITIES AND EXCHANGE COMMISION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB
(Mark One)

[X]      QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934

                  For the quarterly period ended     March 31, 2000
                                                 ------------------

[]       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)

                   (Issuer's telephone number) (949) 798-5800

                                       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 March 31,  2000 the  issuer had  20,917,514  shares of its common
stock, par value $0.01 per share, issued and outstanding.
         Transitional Small Business Disclosure Format (check one):

                                    Yes No X

                                       1

<PAGE>

                                   FORM 10-QSB

                             PEN INTERCONNECT, INC.

                                Table of Contents
                                                                         Page
PART I - FINANCIAL INFORMATION

Item 1   Financial Statements

         Financial Information                                           3

         Balance Sheets at March 31, 2000
         (unaudited) and September 30, 1999                            4-5

         Statements of Operations for the three months
         ended March 31, 2000 and 1999 (unaudited) and                   6
         six month periods ended March 31, 2000 and
         1999 (unaudited)

         Statements of Cash Flows for the six months
         ended March 31, 2000 and 1999 (unaudited)                     7-9

         Notes to Condensed Financial Statements (unaudited)         10-14

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

PART II - OTHER INFORMATION

Item 1     Legal Proceedings                                            18

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                                                     19

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

Signatures                                                              20

                                       2


<PAGE>


                             PEN INTERCONNECT, INC.

                                     PART I

                              FINANCIAL INFORMATION

                 ITEM 1. INTERIM CONDENSED FINANCIAL STATEMENTS


Pen  Interconnect,  Inc. (the "Company"),  has included the unaudited  condensed
balance  sheet of the Company as of March 31, 2000 and audited  balance sheet as
of  September  30, 1999 (the  Company's  most  recent  fiscal  year),  unaudited
condensed  statements of operations for the three and six months ended March 31,
2000 and 1999,  and  unaudited  condensed  statements  of cash flows for the six
months ended March 31, 2000 and 1999,  together with unaudited  condensed  notes
thereto. In the opinion of management of the Company,  the financial  statements
reflect  all  adjustments,  all  of  which  are  normal  recurring  adjustments,
considered  necessary  to fairly  present the  financial  condition,  results of
operations and cash flows of the Company for the interim periods presented.  The
financial  statements  included in this report on Form 10-QSB  should be read in
conjunction with the audited  financial  statements of the Company and the notes
thereto included in the annual report of the Company on Form 10-KSB for the year
ended  September 30, 1999.  The results of  operations  for the six months ended
March 31, 2000 may not be indicative of the results that may be expected for the
year ending September 30, 2000.


                                       3

<PAGE>




                             Pen Interconnect, Inc.

                                 BALANCE SHEETS

                                     ASSETS


<TABLE>
<CAPTION>
                                                                                    March 31,         September 30,
                                                                                      2000                1999
                                                                                 ----------------   ------------------
                                                                                   (unaudited)
CURRENT ASSETS
<S>                                                                              <C>                <C>
      Cash and cash equivalents                                                          $ 2,031            $ 177,214
      Escrowed investor cash (Note F)                                                    201,881                    0
      Trade accounts less allowance for
         doubtful accounts of $0 at March 31, 2000 and $1,890,576                              0            2,708,567
         at September 31, 1999
      Current maturities of notes receivable                                                   0              575,112
      Inventories                                                                              0            4,250,661
      Prepaid expenses and other current assets                                           17,610              130,977
                                                                                 ----------------   ------------------

                 Total current assets                                                    221,522            7,842,531


      Production equipment (including capitalized leased                                 469,030            1,450,494
      equipment of $450,390)
      Furniture and fixtures                                                               1,028              167,169
      Transportation equipment                                                                 0               22,149
      Leasehold improvements                                                                   0              273,733
                                                                                 ----------------   ------------------

                                                                                         470,058            1,913,545

      Less accumulated depreciation                                                       34,969              376,681
                                                                                 ----------------   ------------------

                                                                                         435,089            1,536,864

OTHER ASSETS
      Notes receivable, less current maturities                                                0              150,000
      Other                                                                                9,000                    0
                                                                                 ----------------   ------------------

                 Total other assets                                                        9,000              150,000
                                                                                 ----------------   ------------------

                                                                                 $       665,611    $       9,529,395
                                                                                 ================   ==================
</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,
                                                                                      2000                1999
                                                                                 ----------------   ------------------
                                                                                   (unaudited)
CURRENT LIABILITIES
<S>                                                                              <C>
      Line of credit                                                             $             0     $     4,436,562
      Current maturities of long-term obligations                                         54,450           1,682,478
      Current maturities of capital leases                                               341,140             122,759
      Accounts payable                                                                 3,236,303           3,961,412
      Accrued liabilities                                                                406,914             837,261
                                                                                 ----------------   ------------------

                 Total current liabilities                                             4,038,807          11,040,472

CAPITAL LEASE OBLIGATIONS, less
      current maturities                                                                       0             299,051
                                                                                 ----------------   ------------------

                 Total liabilities                                                     4,038,807          11,339,523

STOCKHOLDERS' EQUITY
      Convertible preferred stock, $0.01 par value
           Authorized 5,000,000 shares, Series A: 381
           issued and outstanding at March 31, 2000;
           1800 issued and outstanding at September 30,                                        4                  18
           1999                                                                               10                  10
           Series B: issued and outstanding 1,000 shares
      Common stock, $0.01 par value,
           authorized 50,000,000 shares, issued and                                      209,173              96,381
           outstanding 20,917,514 shares at March 31,
           2000 and 9,638,114 at September 30, 1999
      Additional paid-in capital                                                      18,166,782          17,447,876
      Accumulated deficit                                                            (21,749,165)        (19,354,413)
                                                                                 ----------------   ------------------

                 Total stockholders' equity (deficit)                                 (3,373,196)         (1,810,128)
                                                                                 ----------------   ------------------

                                                                                     $   665,611          $9,529,395
                                                                                 ================   ==================
</TABLE>


                 The accompanying notes are an integral part of
                               these statements.

                                       5

<PAGE>


                             Pen Interconnect, Inc.
                            STATEMENTS OF OPERATIONS
                                   (Uaudited)

<TABLE>
<CAPTION>

                                                     Three months ended                      Six months ended
                                                 March 31,         March 31,            March 31,        March 31,
                                                   2000               1999                2000              1999
                                              ----------------   ---------------      --------------    -------------
<S>                                                     <C>          <C>                     <C>          <C>
Net sales                                               $   0        $2,828,078              $    0       $7,585,916
Cost of sales                                               0         2,424,444                   0        7,015,662
                                              ----------------   ---------------      --------------    -------------
      Gross profit                                          0           403,634                   0          570,254

Operating expenses
      Sales and marketing                                   0            55,692                   0          137,411
      Research and development                              0            94,806                   0          262,503
      General and administrative                      571,017         1,257,576             612,462        2,026,309
      Depreciation and amortization                        26            94,590                  52          221,207
                                              ----------------   ---------------      --------------    -------------

      Total Operating Expenses                        571,043         1,502,664             612,514        2,647,430
                                              ----------------   ---------------      --------------    -------------

      Operating income (loss)from                   (571,043)       (1,099,030)           (612,514)      (2,077,176)
      continued operations

      Discontinued Operations:
      -----------------------
      Loss from operations of
       discontinued Powerstream Division             (53,552)                             (269,356)
      Gain on sale of Powerstream                     186,643                               186,643
      Loss from operations of
       discontinued InCirT  Division                (114,346)                             (222,611)
      Loss on repossession of assets (Note D)       (900,008)                             (900,008)
      Loss on disposal of Cables To Go                                (948,312)                            (948,312)
                                              ----------------   ---------------      --------------    -------------
      Loss from discontinued operations             (881,263)         (948,312)         (1,205,332)        (948,312)

Other income (expense)
      Interest expense                              (131,891)         (192,903)           (308,102)        (385,775)
      Other income (expense), net                    (77,558)         (158,281)            (66,036)        (232,499)
                                              ----------------   ---------------      --------------    -------------

                 Total other income (expense)       (209,449)         (351,184)           (374,138)        (618,274)
                                              ----------------   ---------------      --------------    -------------
Earnings (loss) before income taxes               (1,661,755)       (2,398,526)         (2,191,984)      (3,643,762)

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

Net earnings (loss)                              $(1,662,655)      $(2,398,526)        $(2,192,884)     $(3,643,762)
                                              ================   ===============      ==============    =============
Earnings (loss) per common share
      Basic                                            $(.12)           $(0.46)              $(.20)        $  (0.70)
      Diluted                                          $(.12)           $(0.46)              $(.20)        $  (0.70)
Weighted average common shares
   outstanding
      Basic                                        13,584,534         6,321,553          11,626,602        5,932,173
      Diluted                                      13,584,534         6,321,553          11,626,602        5,932,173

</TABLE>

                 The accompanying notes are an integral part of
                               these statements.

                                       6

<PAGE>


                             Pen Interconnect, Inc.

                            STATEMENTS OF CASH FLOWS
                                   (Uaudited)


<TABLE>
<CAPTION>
                                                                                           Six months ended
                                                                                     March 31,         March 31,
                                                                                        2000              1999
                                                                                   ---------------   ---------------

Increase (decrease) in cash and cash equivalents
    Cash flows from operating activities
<S>                                                                                   <C>              <C>
        Net loss                                                                      $(2,192,884)     $ (3,643,762)
        Adjustments to reconcile net loss to net cash
            Depreciation and amortization                                                  90,463           221,937
            Bad debts                                                                           0            13,247
            Interest on debenture conversion                                                    0            98,571
            Loss on disposal of divisions (Note A)                                        305,324           948,312
            Loss on transfer of assets  (Notes A & D)                                     900,008                 0
            Changes in asset and liabilities
                 Trade accounts receivable                                                      0         1,047,510
                 Accounts receivable offset to customers' accounts payable              2,439,266                 0
                 Inventories                                                                    0           334,370
                 Net assets transferred to lender                                       3,238,079                 0
                 Prepaid expenses and other assets                                         (7,892)          (84,031)
                 Accounts payable                                                        (725,109)         (728,260)
                 Accrued liabilities                                                     (393,014)          599,882
                                                                                   ---------------   ---------------

                       Net cash generated (used) in
                          operating activities                                          3,654,241        (1,192,954)
                                                                                   ---------------   ---------------

    Cash flows from investing activities
        Purchase of property and equipment                                                (15,500)          (92,985)
        Issuance of notes receivable                                                       19,410          (614,920)
        Proceeds from disposal of division (Note A)                                        74,324         1,075,000
                                                                                   ---------------   ---------------

                       Net cash provided by (used in)
                          investing activities                                             78,234           367,095
                                                                                   ---------------   ---------------

</TABLE>

                                   (Continued)


                                       7

<PAGE>


                             Pen Interconnect, Inc.

                       STATEMENTS OF CASH FLOWS - CONTINED
                                   (Uaudited)


<TABLE>
<CAPTION>
                                                                                          Six months ended
                                                                                     March 31,         March 31,
                                                                                       2000               1999
                                                                                  ----------------   ---------------
    Cash flows from financing activities
<S>                                                                                   <C>                <C>
        Net change in line of credit                                                  (4,436,562)        (1,087,426)
        Accrued dividends on preferred shares                                            137,288                  0
        Principal payments on long-term obligations                                     (167,786)        (1,349,459)
        Principal payments on capital lease obligations                                  (71,916)           (49,428)
        Proceeds from issuance of long-term obligations                                        0            900,000
        Discount on exercised common shares options                                      294,171                  0
        Discount on warrant conversion to common stock                                    89,941                  0
        Proceeds from sale of common stock                                               340,341            213,076
        Proceeds from issuance of short term note payable                                 54,450                  0
        Proceeds from issuance of preferred stock                                              0          1,800,000
                                                                                  ----------------   ---------------

                       Net cash consumed in financing activities                      (3,760,073)           426,763
                                                                                  ----------------   ---------------

Net increase in cash and cash equivalents                                                 26,698           (399,096)

Cash and cash equivalents at beginning of period                                         177,214            657,777
                                                                                  ----------------   ---------------

Cash and cash equivalents at end of period                                               203,912        $   258,681
                                                                                  ================   ===============


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


Noncash investing and financing activities
During  the first 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.

During the quarter  Series A preferred  shareholders  converted  1419  preferred
shares into 7,848,661 common shares at an average  conversion price of $.185 per
common share. Under the conversion terms of the convertible  preferred shares, a
holder  has the  right  to  convert  preferred  shares  into  common  shares  at
eighty-five  (85%)  percent of the average of the two lowest  closing bid prices
during the last  twenty-two (22)  consecutive  trading days prior to conversion.
Additionally,  a preferred  shareholder exercised warrants attached to preferred
stock and  received  313,866  common  shares in return  for a waiver of  certain
covenants  relative to  registration of the convertible  preferred  shares.  The
waiver was expensed at the value of the conversion of $89,941.

                                       8

<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.

       Effectively  January 31, 1999, the Company sold  substantially all of the
       assets and  certain  liabilities  of its Cable  Division to Cables To Go,
       Inc. (CTG). Net assets of $2,732,059 were sold for $1,075,000 in cash and
       a  royalty  payment  contingent  upon the  future  revenues  of the Cable
       Division.  $150,000 of the royalty  payment was  guaranteed  and has been
       recorded by the Company as a note  receivable from CTG. CTG agreed to use
       and compensate  the Company for an additional  $558,747 of the net assets
       contingent  upon  certain  of its future  operating  needs.  The  company
       originally  recorded a loss of  $948,312  upon  disposition  of the Cable
       Division  but  has  adjusted,  as of  September  30,  1999,  the  loss to
       $1,507,059 based on its present  determination  that CTG will not use nor
       compensate the Company for the additional net assets.

       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.  Effective  September  30,  1999,  the Company  sold
       substantially  all the assets and liabilities of its MOTO-SAT Division to
       James Pendleton.  The net assets of $68,438 were sold in exchange for Mr.
       Pendleton's  agreement  to waive any claim to  post-employment,  deferred
       compensation  or retirement  benefits.  The Company  recognized a loss of
       $68,438 upon disposition of the MOTO-SAT Division.

       PowerStream Division

       On January 21st, 2000 the Company sold its  Powerstream  Division to Lund
       Instrument  Engineering of Orem, UT., which purchased  certain assets and
       assumed  certain  liabilities  of  PowerStream  Division.  Lund  remitted
       $74,324 to the  Company as a partial  payment  for the  acquisition.  The
       Company is to  receive  for three  years  royalties  of a) sixteen  (16%)
       percent  of the gross  profits  generated  from  sales  generated  from a
       contract with L3 Communications,  less any customer advances and b) eight
       (8%)  percent of gross  profits on all other sales  contracts in place at
       closing.  The Company  recognized  a gain of  $186,643  on the sale,  not
       including any possible future royalty payments.

                                       9

<PAGE>


       Pen Corporate and InCirT Division

       The  Company  had  been  operating   under  a  default  notice  with  its
       asset-based  lender,  Finova  Capital,  since  September  1999,  when the
       Company began seeking buyers for its two remaining divisions  PowerStream
       and InCirT. In February a Letter of Intent to sell the InCirT division to
       another  contract  manufacturer was terminated.  The Company  solicited a
       competitor  to  purchase  most of the assets and to  negotiate a supplier
       agreement  with the  Company's  largest  account  as part of a  voluntary
       foreclosure of all the remaining assets of the Company,  for which Finova
       had a perfected security  interest.  The Company's March 31, 2000 balance
       sheet reflects the transfer of all  collateral  assets to Finova to which
       the Company has recognized an offset of the bank's line of credit balance
       and term loans owed by the Company. As required by FASB Statement 15, the
       Company  estimated  a loss on  transfer  of  assets of  $(900,008).  This
       estimate may change and is dependent upon the liquidation  value achieved
       in the disposition of the assets transferred to the lender.

NOTE B - INVENTORIES

       Inventories consist of the following:
        Allinventory  has  transferred  to Finova  Capital on March 2, March 31,
           September 30, 2000 as part of voluntary foreclosure agreement.
                                                  2000              1999
                                             -------------    ----------------
        Raw materials (net of allowance)    $           0    $      2,684,238
        Work-in-process                                 0           1,507,108
        Finished goods                                  0              59,315
                                             -------------    ----------------
                                            $           0    $      4,250,661
                                             =============    ================

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).

Note D - CREDIT FACILITY

       On March 3, 2000 the Company and its secured asset based  lender,  Finova
       Capital,  entered into a voluntary  foreclosure  in which all  collateral
       secured under Finova's  perfected  security  interest was  transferred to
       Finova to satisfy the  revolving  credit and term loans held by the bank.
       As of March  31,  2000 the  outstanding  line of  credit  and term  loans
       amounted  to  $3,934,432.  Finova has sold some of the assets to ADTI,  a
       subsidiary of Comtel  Holdings for promissory  notes,  which will be paid
       down according to usage of inventory and periodic payments for equipment.
       The  Company's  loan will be reduced by the payments made by ADTI as well
       as collections of other accounts  receivable and sales of other inventory
       to third parties. The Company's March 31, 2000 balance sheet reflects the
       transfer  of all  collateral  assets to Finova to which the  Company  has
       recognized an offset of the bank's line of credit  balance and term loans
       owed by the Company. In accordance with FASB 15, the Company recognized a
       loss on transfer of assets of $(900,008).

                                       10

<PAGE>


NOTE E - OPTIONS/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.

       In March 2000 the Board of  Directors  approved  the  issuance of 430,000
       five-year  options  shares to key employees at an exercise  price of $.30
       per share - the market price at the time of issuance.  Additionally,  the
       Board approved 492,500 option shares  previously issued to Mr. Stephen J.
       Fryer  and  105,000  option  shares  previously  issued  to  Mr.  Mehrdad
       Mobasseri  become fully vested and  re-priced to market price of $.30 per
       common share.

       In March 2000 the Board of  Directors  approved  the  issuance of 100,000
       warrants  be issued to each of the  members  of the Board at an  exercise
       price of $.30 per common share.

       Options  representing  275,000  common shares were  exercised in December
       1999 at a price of $.134 per share.  The option  shares  were  originally
       priced at $.30 per share.  Proceeds ($36,850) were utilized for corporate
       operations.

       During the second  quarter of FY2000,  certain  options were re-priced by
       the Company.  Options representing 1,876,668 common shares were exercised
       at a weighted average exercise price of $.097 per share,  which generated
       $182,866 in proceeds.  The Company  recognized  $294,171 in  compensation
       expense as a result of the options being exercised below market price.

       During  the second  quarter of FY 2000,  the  Company  re-priced  certain
       warrants as an inducement to exercise the warrants. Warrants representing
       965,000  common  shares were  exercised at an average  weighted  exercise
       price of $.125 per share.

       In light of the financial condition of the Company and the Company's bank
       unwillingness  to  continue  funding  operations,  the  exercise  of  the
       warrants  and options was  completed  with the proviso  that the funds be
       escrowed  and that the use of funds be limited to keeping  the  Company's
       administrative  operations  in tact while the Company  found an qualified
       acquisition  for its  previously  announced  new business  strategy.  The
       Company   has   signed  a   non-binding   letter  of  intent  to  acquire
       perFORMplace.com,  an Internet based entertainment  industry  application
       service provider.  Remaining  escrowed funds will be utilized for ongoing
       administrative  expenses and  professional  fees in conjunction  with the
       acquisition and required public filings.

                                       11

<PAGE>

Note F - Preferred Stock

       The Company 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.

       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").  During the
       first six  months the Board of  Directors  approved  a  reduction  of the
       maximum  Conversion  Price for the Series A Preferred  Stock and Series B
       Preferred Stock to $.53 from $1.17 and $.79 per share  respectively.  The
       reduction  was  granted to obtain a waiver in  relation  to the sale of a
       major  asset - InCirT  Technologies  Division.  The  shares  of  Series B
       Preferred Stock are convertible  into Common Stock at the same Conversion
       Price as the Series A Preferred Stock. 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.

       During  the  quarter  Series  A  preferred  shareholders  converted  1491
       preferred shares into 7,848,661 common shares.

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, 2000, 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 and Series B Preferred Stock and related warrants. (See
       Note F). The beneficial  conversion feature is computed as the difference
       between the market  value of the common stock into which the Series A and
       Series B Preferred  Stock can be converted and the value  assigned to the
       Series A and  Series B  Preferred  Stock in the  private  placement.  The
       imputed  dividend  is a one-time  non-cash  charge  against  the loss per
       common share.

                                       12


<PAGE>


Note G - Earnings (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,
                                                         2000               1999              2000            1999
                                                   -----------------   ---------------    -------------   --------------

<S>                                                    <C>               <C>              <C>              <C>
Net earnings (loss)                                    $(1,662,654)      $(2,398,526)     $(2,192,884)     $(3,643,762)
Preferred dividends                                        (25,288)          (30,773)        (137,288)         (30,773)
Imputed dividend from beneficial                                  0         (449,438)                0        (449,438)
   conversion feature
                                                   -----------------   ---------------    -------------   --------------

           Net earnings (loss)                         $(1,687,942)      $(2,878,737)     $(2,330,172)     $(4,123,973)
           attributable to common
           stockholders
                                                   =================   ===============    =============   ==============

                Basic EPS
-------------------------------------------

Common shares outstanding entire period                   9,913,114         6,069,160        9,663,114        5,018,437

Weighted average common shares issued                     3,671,429           252,393        1,963,488          913,736
                                                   -----------------   ---------------    -------------   --------------

Weighted average common shares
   outstanding during period                             13,584,534         6,321,553       11,626,602        5,932,173

                                                   =================   ===============    =============   ==============

Earnings (loss) per common share                        $     (.12)    $       (0.46)          $(.20)        $   (0.70)


               Diluted EPS
-------------------------------------------

Weighted average common shares
   outstanding during period - basic                     13,584,534         6,321,553       11,626,602        5,932,173

Dilutive effect of stock options and
   warrants                                                       0                 0                0                0
                                                   -----------------   ---------------    -------------   --------------

Weighted average common shares
   outstanding during period - diluted                   13,584,534         6,321,553       11,626,602        5,932,173
                                                   =================   ===============    =============   ==============


Earnings (loss) per common share -
   assuming dilution                                      $                $   (0.46)          $             $   (0.70)
                                                        (.12)                                (.20)

</TABLE>

                                       13

<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,  other  factors  and the fact  that the  Company's  only two
remaining  divisions have been sold or liquidated  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,  2000 and 1999.  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, 1999.

General

Through  March  2,  2000 Pen  Interconnect,  Inc.  was a  provider  of  contract
manufacturing services for original equipment manufacturers. It built 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  provided custom design and  manufacturing  of battery  chargers,  power
supplies and uninterrupted  power supply systems.  Pen  Interconnect's  services
included product design and prototyping, systems assembly, software duplication,
packaging and warehousing.

Through March 2, 2000 Pen Interconnect,  Inc.  provided 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. had support manufacturing
facilities in California and Utah.

During the quarter the Company announced a change in its strategic  direction in
disposing of its contract manufacturing operations and seeking new technologies,
with specific interest in Internet business to business activities. On March 29,
2000 the  Company  announced  the  signing  of a letter  of  intent  to  acquire
perFORMplace.com,   a   privately   held   Internet   provider   of   electronic
business-to-business services to the entertainment industry.

                                       14

<PAGE>


Sale of Powerstream Division

On  January  21st,  2000 the  Company  sold  its  Powerstream  Division  to Lund
Instrument  Engineering of Orem, UT., which purchased certain assets and assumed
certain  liabilities  of  PowerStream  Division.  Lund  remitted  $74,324 to the
Company as a partial payment for the acquisition.  The Company is to receive for
three years royalties of a) sixteen (16%) percent of the gross profits generated
from sales generated from a contract with L3  Communications,  less any customer
advances and b) eight (8%) percent of gross profits on all other sales contracts
in place at closing.  The Company recognized a gain of $186,643 on the sale, not
including any possible future royalty payments.

Voluntary Foreclosure and Sale of Certain Assets

On March 3, 2000 the Company and its secured asset based lender, Finova Capital,
entered  into a voluntary  foreclosure  in which all  collateral  secured  under
Finova's  perfected  security  interest was transferred to Finova to satisfy the
revolving  credit  and term  loans  held by the bank.  As of March 31,  2000 the
outstanding  line of credit and term loans  amounted to  $3,934,432.  Finova has
sold some of the assets to ADTI, a subsidiary of Comtel  Holdings for promissory
notes,  which will be paid down  according  to usage of  inventory  and periodic
payments for equipment.  The Company's loan will be reduced by the payments made
by ADTI as well as collections  of other accounts  receivable and sales of other
inventory to third parties.  The Company's March 31, 2000 balance sheet reflects
the  transfer  of all  collateral  assets to Finova  to which  the  Company  has
recognized an offset of the bank's line of credit balance and term loans owed by
the  Company.  In  accordance  with FASB 15,  the  Company  estimated  a loss on
transfer of assets of $(900,008);  the loss reflects the difference between book
value and estimated fair market value.

Results of Operations

Net sales. With the sale of Powerstream  Division and the voluntary  foreclosure
and sale of assets of InCirT  Division  during the quarter,  which represent the
only operating units of the Company,  and the fact that each is accounted for in
the financial  statements as  discontinued  operations and that each  division's
operations  did not occupy a full quarter of activity,  a  comparative  analysis
against prior same quarter and prior same six months periods is inappropriate.

Cost  of  sales.  With  the  sale of  Powerstream  Division  and  the  voluntary
foreclosure  and sale of assets of InCirT  Division  during the  quarter,  which
represent  the only  operating  units of the Company,  and the fact that each is
accounted for in the financial  statements as  discontinued  operations and that
each  division's  operations  did not  occupy  a full  quarter  of  activity,  a
comparative  analysis  against  prior  same  quarter  and prior  same six months
periods is inappropriate.

Operating  expenses.  With the sale of  Powerstream  Division and the  voluntary
foreclosure  and sale of assets of InCirT  Division  during the  quarter,  which
represent  the only  operating  units of the Company,  and the fact that each is
accounted for in the financial  statements as  discontinued  operations and that
each  division's  operations  did not  occupy  a full  quarter  of  activity,  a
comparative  analysis  against  prior  same  quarter  and prior  same six months
periods is inappropriate.

                                       15

<PAGE>


Other income and expenses.  Other expenses  decreased by $141,735 or 40% for the
three  months  ended  March 31, 2000 as compared to the same period in the prior
year. These expenses also decreased  $244,136 or 39% for the first six months of
fiscal 2000 as compared  to the same  period in the prior year.  The  reductions
were the result of lower line of credit borrowings and lower securities offering
costs and conversions.

Net  earnings  (loss) and  earnings  (loss)  per share.  Net loss for the second
fiscal  quarter ended March 31, 2000 totaled  ($1,687,942)  or ($0.12) per basic
share,  compared with a loss of  ($2,878,737) or ($0.46) per basic share for the
second  quarter of fiscal  year 1999.  The change in the loss per basic share of
($0.34) is mostly comprised of a reduction of operating losses of $.12 per share
and approximately $0.19 per share decrease as a result of a 115% increase in the
number of shares  outstanding.  The loss for the first six months of fiscal year
2000 of  ($2,330,172) or ($0.20) per basic share was ($0.50) per share less 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 a reduction  in  operating
losses of $0.16 per share and approximately $0.30 per share decrease as a result
of a 96% increase in the number of shares outstanding.

Liquidity and Capital Resources

During  the  first  three  months  of FY 2000 the  Company  sustained  losses of
$530,227.  Management  has taken  steps to correct  this  trend by  selling  the
PowerStream  division  during the second  quarter of FY 2000,  which incurred an
operating loss of approximately $215,000 during the first quarter.

The Company  has  previously  announced  its  intention  to seek a buyer for the
InCirT  Division,  which  incurred an operating loss of  approximately  $119,000
during the first  quarter of FY2000.  As of the end of February 2000 the Company
had  decided  that the sale of InCirT  Division  at book value or better was not
likely before Finova Capital foreclosed on the Company's assets. The Company and
Finova  negotiated  the sale of  certain  InCirT  Division's  assets to ADTI,  a
subsidiary of Comtel  Holdings under a prearranged,  voluntary  foreclosure  and
resale transaction on March 2, 2000.

As a result of the Company's lender restricting loan advances during the quarter
and foreclosure on March 2, 2000, the Company raised  additional  capital during
the quarter from the exercise of warrants ($120,625) and options ($182,867).  In
light  of the  financial  condition  of  the  Company  and  the  Company's  bank
unwillingness to continue funding  operations,  the exercise of the warrants and
options  required  the funds be escrowed and that the use of funds be limited to
keeping the Company's administrative  operations in tact while the Company found
an qualified acquisition for its new business strategy. The Company has signed a
non-binding  letter of intent to acquire  perFORMplace.com,  an  Internet  based
entertainment  industry  application service provider.  Remaining escrowed funds
will be utilized for ongoing  administrative  expenses and professional  fees in
conjunction with the acquisition and required public filings.

                                       16

<PAGE>


Liquidity and Capital Resources - Continued

The Company's  management estimates that approximately $2 million may have to be
raised to  support  post  acquisition  activity  of  perFORMplace.com  until the
acquisition  reaches  a  positive  cash  flow  estimated  to be during FY 2001by
perFORMplace.com's  management.  This does not  include  any  payments  to trade
creditors of the former  operations of the Company.  The Company has an offer to
such creditors to replace  approximately $3 million in trade debt with 1 million
restricted  common shares.  As of this date of filing this Form 10QSB,  complete
responses to the offer have not been received.

Inflation and Seasonality

The Company does not believe that its discontinued operations were significantly
impacted by inflation  or  seasonality.  It does not believe that the  operating
performance of its announced  acquisition in process of perFORMplace.com will be
significantly impacted by inflation or seasonality.


                                     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.  As of the date of this filing,  the
Company and it's CEO,  Steve  Fryer,  are being sued by a former  officer of the
Company for fraud and misrepresentation.  Per the Company's legal counsel, there
are no grounds  for the lawsuit and there is no  expectation  that any  judgment
will be made against the Company.

During the first two quarters of FY2000 lawsuits were filed against the Company:

       1)     In January 2000, McBride Electric Inc. obtained a judgment against
              the Company for $2,963 . As of this  writing  McBride has accepted
              the Company's stock for debt offer,  contingent upon the Company's
              receiving an acceptable acceptance rate on all other vendors.

       2)     On  October  28,  1999 Color  Savvy  Systems,  Ltd.  filed suit to
              recover $165,750 in past due uncontested  vendor  obligations.  On
              February  16,  2000 Color Savy  obtained  a judgment  against  the
              Company for $165,783.

       3)     On February 9, 2000 Totex Manufacturing Inc. file suit against the
              Company  to  recover  $169,404  in  uncontested  past  due  vendor
              obligations.  As of this writing  Totex has accepted the Company's
              stock for debt offer,  contingent upon the Company's  receiving an
              acceptable acceptance rate on all other vendors.

       4)     On February 15, 2000 Amistar  Corporation suit against the Company
              to recover $95,733 in uncontested past due vendor obligations.  As
              of this writing  Amistar has accepted the Company's stock for debt
              offer,  contingent  upon the  Company's  receiving  an  acceptable
              acceptance rate on all other vendors.

       5)     On March 1, 2000 Xstatic,  LLC.  filed suit against the Company to
              recover $21,549.90 uncontested past due vendor obligations.  As of
              this writing  Xstatic has accepted  the  Company's  stock for debt
              offer,  contingent  upon the  Company's  receiving  an  acceptable
              acceptance rate on all other vendors.

                                       17

<PAGE>


       6)     On March 21, 2000 Interworks Computer Products, Inc. filed suit to
              recover $35,771 in past due uncontested vendor obligations.

       7)     On April 7, 2000 Wyle Electronic filed suit to recover  $90,437.87
              in past due uncontested vendor obligations.

Item 2.  Changes in the  Securities  and Use of  Proceeds.  During the first six
months the Board of  Directors  approved a reduction  of the maximum  Conversion
Price for the Series A Preferred Stock and Series B Preferred Stock to $.53 from
$1.17 and $.79 per share  respectively.  The  reduction  was granted to obtain a
waiver in relation to the sale of a major asset - InCirT Technologies Division.

During the quarter  Series A preferred  shareholders  converted  1491  preferred
shares into 7,848,661 common shares.

As a result of the Company's lender restricting loan advances during the quarter
and foreclosure on March 2, 2000, the Company raised  additional  capital during
the quarter from the exercise of warrants ($120,625) and options ($182,867).  In
light  of the  financial  condition  of  the  Company  and  the  Company's  bank
unwillingness to continue funding  operations,  the exercise of the warrants and
options  required  the funds be escrowed and that the use of funds be limited to
keeping the Company's  administrative  operations intact while the Company found
an qualified acquisition for its new business strategy. The Company has signed a
non-binding  letter of intent to acquire  perFORMplace.com,  an  Internet  based
entertainment  industry  application service provider.  Remaining escrowed funds
will be utilized for ongoing  administrative  expenses and professional  fees in
conjunction with the acquisition and required public filings.

During the second  quarter of FY2000,  certain  options  were  re-priced  by the
Company.  Options  representing  1,876,668  common  shares were  exercised  at a
weighted average exercise price of $.097 per share,  which generated $182,866 in
proceeds. The Company recognized $294,171 in compensation expense as a result of
the options being exercised below market price.

During the second quarter of FY 2000, the Board of Directors  re-priced  certain
warrants  as an  inducement  to exercise  the  warrants.  Warrants  representing
965,000  common shares were exercised at an average  weighted  exercise price of
$.125 per share.

Item 3.  Defaults Upon Senior  Securities.  On March 3, 2000 the Company and its
secured asset based lender, Finova Capital, entered into a voluntary foreclosure
in which all collateral  secured under Finova's  perfected security interest was
transferred to Finova to satisfy the revolving credit and term loans held by the
bank.  As of March  31,  2000 the  outstanding  line of  credit  and term  loans
amounted to $3,934,432.

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.

                                       18
<PAGE>



A.       Exhibits

         27  Financial Data Schedule

B.       Reports on Form 8-K  None.


                                       19


<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
May 15, 2000              Stephen J. Fryer
                          Chairman, CEO and
                          Principal Accounting Officer

                                       20