UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                                       Washington, D.C. 20549 
                                  FORM 10-K
(MARK ONE)
  [ X ]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 27, 1998.
                OR
  [   ]    Transition Report pursuant to Section 13 or 15(d) of the 
           Securities Exchange Act of 1934.

Commission File Number 0-7207

                            National Micronetics, Inc.             
           (Exact name of registrant as specified in its charter)

          Delaware                                14-1507019               
(State or other jurisdiction of                   (I.R.S. Employer
incorporation or organization)                    Identification No.)

        71 Smith Avenue
     Kingston, New York                             12401                  
(Address of principal executive offices)          (Zip Code)

Registrant's telephone number, including area code: (914) 338-0333
         Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $.10 par value              
                              (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
                     Yes   X           No      

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in this Form 10-K or any amendment to
this Form 10-K.                                                 

The aggregate market value of the Common Stock held by non-affiliates as of
August 26, 1998 was $20,000.  For purposes of determining this number all
officers and directors of the registrant are considered to be affiliates of
the registrant.  This number is provided only for the purposes of this report
on Form 10-K and does not represent an admission by either the registrant or
any such person as to the status of such person.

As of August 26, 1998, the registrant had 22,312,524 shares of Common Stock
issued and outstanding.

Index to Exhibits is on sequential page No. 22.  Total pages 53.
                                   PART I
Item 1. Business

National Micronetics, Inc. (the "Company") was originally incorporated in
1969 in New York and reincorporated in Delaware in 1982.  On December 24,
1990, Newmax Co., Ltd. ("Newmax") acquired a controlling interest (50.9%) in
the Company through the purchase of common stock.  Newmax, a Korean
corporation, is affiliated with Tae Il Media Co., Ltd. ("Tae Il") which is
a significant customer of the Company.  The Company historically had operated
exclusively in the magnetic recording head industry.

In reliance primarily upon assembly facilities owned and operated by its
parent company, Newmax, sales revenue attributable to its parent companies
and debt financing supplied or guaranteed by its parent companies or its
affiliated companies between May 10, 1991 and September 1997, the Company had
been principally an integrated manufacturer of magnetic recording heads
primarily for computer disk drives.  The Company has been performing pilot
projects concerning ferrite bars, cores and recording head assemblies.  The
Company has installed a sealed lead acid battery manufacturing line. 
However, the Company has not been able to secure funding to cover the initial
operating expenses for the battery manufacturing, mainly due to the debt
restructuring in both Tae Il and Newmax, and the battery line is not
operational at present.  Moreover, the Company has been negotiating a
contract to sell the building in which the sealed lead acid battery
manufacturing line has been installed, so if that contract is made and
consummated, the Company will have to install that manufacturing line either
in another building which it owns or in a building to be leased.  The Company
can make no assurances that funding will be provided to commence
manufacturing sealed lead acid batteries or to carry on any other business.


Sales and Customers

The Company's computer products had been sold to original equipment
manufacturers.  Because product life cycles for computer products are
relatively short, sales in one period were not necessarily indicative of
future sales.  At any given time, the Company was likely to be dependent on
sales of specific computer products to specific customers.  Please refer to
note 9 to the consolidated financial statements on pages 43 to 44 for an
analysis of export sales of computer products, exports of which comprised
100% of net sales in fiscal 1998.

The past sales and customers of the Company may not be indicative of its
future sales and customers, since during the two fiscal years ended June 24,
1995, the Company had sold most of its assembly line production equipment for
manufacturing ferrite cores and slider assemblies.  The Company is
contemplating selling sealed lead acid batteries at such time as funds needed
to commence operations can be made available by its affiliated companies or
can be supplemented by its selling some of its real estate; however, no
assurance can be made that funds will be made available for that purpose.



In fiscal 1998, one customer, Newmax, accounted for 100% of net sales on a
consolidated basis.  Newmax operates in South Korea and has recently been
subject to business disruptions caused by debt restructuring.  See footnote
9 on pages 43 to 44 for a summary of major customers and footnote 10 to the
consolidated financial statements on pages 44 and 45 for a discussion of
related party transactions.

Backlog

A comparison of backlog at fiscal year-end is shown below:

      June 27, 1998          June 28, 1997
        $   -0-  (in thousands)  $   35

Backlog (primarily Newmax orders at June 28, 1997) included only those orders
for which a delivery schedule has been specified by the customer, although
such orders may be subject to cancellation or modification by the customer
without significant penalty.  Sales fluctuations are not seasonal and often
are not anticipated.  As of September 19, 1997, all backlog orders had been
completed and there were no new orders. 

Competition

The Company's principal market had been supplying recording heads primarily
for computer disk drives.  Newmax, Tae Il and their related entities (see
Item 10, under the caption Relationships and Beneficial Interests) are larger
and better capitalized than the Company, which has become almost entirely
dependent upon them for working capital, assembly facilities, personnel,
sales revenue and for bank loan financing.  Physical proximity to customers
did not significantly affect competition for computer components due to low
shipping costs for this small and light product.  Competition was principally
in the areas of price, quality and product performance.  

The plans of the Company to enter the new, unrelated, highly competitive
sealed lead acid battery market have been frustrated not only by the lack of
working capital from its affiliated companies but also by its own efforts to
avoid foreclosure by selling the facility which had been modified in order
to manufacture sealed lead acid batteries.  The desired sales proceeds of
that facility would not suffice without additional capital from affiliated
companies to enable the Company to modify another facility and to commence
production of sealed lead acid batteries.  The Company has not yet
ascertained whether there are other markets in which it will actively compete
if working capital could be made available for that purpose by its affiliated
companies, which currently are subject to Korean judicial proceedings
pursuant to which moratoriums deferring payment of their creditors have been
granted after approval by creditors as to Tae Il Media Co., Ltd. by the Suwon
District court on September 4, 1998 and as to Newmax Co., Ltd. by the
Cheongju District Court on September 15, 1998.  The Company can make no
assurances that funding needed to compete in the sealed lead acid battery
market or any other markets ever will be made available to the Company.  


Research, Development and Engineering

During fiscal years 1998 and 1997 the Company spent approximately $81,000 and
$209,000, respectively, in connection with continuing engineering and product
development of computer related products.  Research and engineering efforts
during this period had been directed toward the enhancement of its floppy
disk drive and tape drive recording head products.  For the past several
years there has been substantial direct support from Newmax and Tae Il of
manufacturing operations and current product lines.  

Employees

At June 27, 1998 the Company actively employed 10 persons working three days
per week. 

Environmental Compliance

The material effects that compliance with federal, state and local provisions
that have been enacted or adopted regulating the discharge of materials into
the environment or otherwise relating to the protection of the environment
upon the future capital expenditures or earnings of the Company are described
in Item 3, Legal Proceedings and are relevant to the capital and operating
budgets for production of sealed lead acid batteries.

Item 2. Properties

The Company's corporate offices are located at 71 Smith Avenue, Kingston, New
York, 12401.  The Company's operations are conducted from 83,000 square feet
of facilities located in Kingston, New York, owned by the Company, and
mortgaged to an institutional lender to secure a term loan note which matured
in November 1997 and remains due and payable.  Most of those facilities are
not utilized.  If the facility which had been set up for sealed lead acid
battery production is sold to avoid foreclosure of the mortgage, then an
adjacent facility will have to be set up for that purpose at such time as
affiliated companies of the Company can supply adequate working capital
within the constraints of the judicial mediation and debt moratorium
proceedings to which they are subject in Korea.  It is anticipated that new
equipment for battery production will be leased from a related party at fair
market value when and if production orders are obtained.  In addition to the
above, the Company sold a 5,400 square foot building on September 7, 1995 and
a 5,000 square foot building on August 22, 1997.  The Company has a vacant
building totalling 37,000 square feet, which remains available.

However, the Company has inadequate cash flow to satisfy the notes secured
by the mortgage matured in November 1997.  Currently, the company is in
negotiation to sell its 83,000 square foot facility and the proceeds will be
used to pay off the note and accrued interest; however, the Company can make
no assurance that that sale will be consummated.  The Company believes that
its 37,000 square foot facility is in good working condition and is adequate
for the current conduct of its business.  The Company has sold or disposed


of idle and obsolete equipment and could not return to the computer component
production volumes of previous years without significant changes in
operations or use of subcontractors.  The Company was dependent upon its
parent companies for contract production computer component assembly
facilities.  See Item 1 above and note 2 to the consolidated financial
statements on page 39 for a discussion of efforts to overcome under
utilization of facilities.

Item 3. Legal Proceedings

The Company is a defendant in a lawsuit brought about as the result of an
accident involving a Company automobile.  The lawsuit was commenced by John
Conklin and Nancy Conklin against the Company on October 15, 1997 and against
Mr. Montgomery Lee in the Supreme Court for the State of New York for the
County of New York and claims damages aggregating $7,700,000 in regard to an
accident involving a car leased by the Company.  Mr. Montgomery Lee is the
son of Dr. Heehwan Lee, a director and the vice president of operations of
the Company.  The Company's insurer has assumed responsibility and is
defending the Company; however, the damages claimed exceed the $300,000
policy limits.  The Company has filed an answer and is cooperating with
discovery.  Depositions are scheduled for October 1998.  After consulting
with counsel, the Company has determined that it is not possible at this time
to estimate the amount of damage, if any, that may ultimately be incurred. 
Accordingly, no provision has been made in the financial statements of the
Company.

The Company has been notified it is one of many potentially responsible
parties ("PRP's") for an Environmental Protection Agency ("EPA") Superfund
site.  A "PRP" may be jointly and severally liable for clean-up of a
Superfund site, except to the extent of any settlement agreement with the
Environmental Protection Agency.

The site is known as the Solvents Recovery Service of New England Superfund
site and is located on Lazy Lane in Southington, Connecticut.  The Company
was notified by the EPA on June 12, 1992 that it was considered to be a PRP
under the Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA) with respect to the above referenced site.  The EPA has
identified in excess of 1,600 PRP's for this site.

The EPA has indicated it has incurred costs in excess of $3.35 million but
has not as yet completed a remedial action plan.  The EPA is not prepared at
this time to estimate the total cost of remedial action.  Two Non-Time
Critical Removal Actions have been undertaken by the PRP's with EPA
approval. 
The actions undertaken to date are designed to help limit further
environmental damage and to obtain data to better understand the extent of
damage.   Additional treatment will be based upon analysis of data obtained. 
The Company has paid its allocated share of these costs, the amount not being
significant to the financial statements of the Company.




The Company is currently unable to predict the outcome of this matter as the
total cost of remedial action has not been determined and the method of
allocation of liability among all parties who may ultimately be found liable
remains uncertain.  

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

The last annual meeting of stockholders of the Company was held on March 20,
1991.  Since that date, no actions have been taken by written consent of
stockholders and no meetings of stockholders have been held.               

                        
                            PART II

Item 5. Market for Company's Common Stock and Related Stockholder Matters

(a). Price Range of Common Stock

There is no established public trading market for the common stock of the
Company.  The Company's Common Stock is traded on the OTC Bulletin Board and
pink sheets.  The following table sets forth for the periods indicated the
bid prices of the Company's Common Stock as reported by market makers. 
Over-the-counter market quotations reflect inter-dealer prices, without
retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.


         Fiscal Year (ending in June)    High           Low

     1998
      First Quarter                   $  .002      $   .002
      Second Quarter                     .002          .002
      Third Quarter                      .005          .002
      Fourth Quarter                     .005          .002
     1997
      First Quarter                      .001          .001
      Second Quarter                     .005          .001
      Third Quarter                      .01           .001
      Fourth Quarter                     .005          .002

(b). Approximate Number of Equity Security Holders

The approximate number of holders of record of the Company's common stock as
of June 30, 1998 was 2,500.

(c). Dividends

The Company has not paid any cash dividends on its Common Stock.  Due in part
to the working capital deficiency of nearly $13,000,000 and the stockholders'
deficiency of $9,819,000 as of June 27, 1998, the Company does not anticipate
paying dividends for the foreseeable future.


(d). No Sales of Unregistered Equity Securities

Within the fiscal year ended June 27, 1998 and thereafter, the Company has
not sold any equity securities which were not registered under the Securities
Act of 1933, as amended.

Item 6. Selected Financial Data

                 Selected Consolidated Statement of Operations Data
                    (in thousands, except per share amounts)

                                     Year Ended In June                  
                              1998      1997    1996     1995      1994  
Net sales                   $    73  $ 2,682  $ 4,151  $ 3,822  $ 7,227 
Cost of products sold           803    2,556    3,605    3,849    7,777 
Gross profit (loss)            (735)     126      546      (27)    (550)
Research, development
 and engineering expense         81      209      231      259      481 
Selling and administration
 expense                        314      489      849      712      816 
Loss before income taxes     (1,599)  (1,267)  (1,336)  (1,599)  (2,699)
Net loss                     (1,599)  (1,267)  (1,336)  (1,599)  (2,699)
Net loss per common share   $ (0.07) $ (0.06)  $(0.06) $ (0.07) $ (0.12) 
Weighted average shares
 outstanding                 22,313   22,313   22,313   22,313   22,313 
   Cash dividends                    -        -        -        -        -


               Selected Consolidated Balance Sheet Data
                               (in thousands)

                                   Year Ended in June                  
                              1998      1997      1996      1995     1994  
Working capital 
   deficiency             $(12,584) $(11,431) $(11,069) $(10,806) $(11,267)
Total assets                 2,807     2,977     4,817     5,400     5,449
Long-term debt and lease
 obligations, including
 current portion             1,420     4,191     4,363     4,626     4,494
Stockholders' deficiency    (9,819)   (8,655)   (7,933)   (7,059)   (6,514)


The reasons for the significant changes in net sales and gross profit margin,
the significant net losses and the decline in assets are discussed at Item
7, Management's Discussion and Analysis of Financial Condition, and Results
of Operations.  The reasons that enable the Company to operate with a working
capital deficiency are discussed on page 11 under the caption Liquidity and
Capital Resource.




The lack of any sales of computer products during the last twelve months make
the financial information for the four fiscal years ended June 28, 1997 of
questionable comparability with the financial information for the fiscal year
ended June 27, 1998.  The pending negotiations to sell the facility where
sealed lead acid battery equipment has been installed and the inability to
plan when production and sales of sealed lead acid batteries will commence
in another facility are material uncertainties which make the financial
information for the five fiscal years ended June 27, 1998 not to be
indicative of the future financial condition of the Company.

Item 7. Management's Discussion and Analysis of Financial Condition and
        Results of Operations

Fiscal 1994 began with increasing volume of double MIG slider sales as well
as an increase in sales of floppy recording head bars.  The sale of MIG
products dropped significantly after December 1993 and stopped by the end of
February 1994.  Sales of floppy recording head bars increased significantly
beginning in February 1994 and represented the majority of sales recorded for
the rest of The fiscal year.  The Company continued efforts to obtain orders
for double MIG products throughout fiscal 1994.  The dramatic changes in disk
drive design and ready availability of thin-film recording heads combined to
make a very difficult market for selling double MIG products.

Fiscal 1995 saw a continuation of the trend established during the second
half of fiscal 1994.  There was a significant lay-off in September 1994 as
the demand for finished floppy recording head bars dropped dramatically.  At
that time, the Company began shipping unfinished floppy disc recording head
bars which were less labor intensive and had a higher profit margin.  The
lower selling price resulting from a lower labor and overhead content of the
product being sold resulted in a significant reduction in sales for fiscal
1995.  There was some improvement in sales to unrelated parties of ferrite
based products made to customers' specifications.

Fiscal 1996 began with significant sales of ferrite products to unrelated
parties.  This business began to decline mid-year as orders were completed
and not replaced with new orders.  There was an increase in related party
orders for ferrite products in the fourth quarter as well as increased sales
of non-ferrite products to unrelated parties.  Employment remained consistent
throughout the year and the Company achieved a positive gross profit margin
for the year.  This was the first positive gross profit in over five years.

Fiscal 1997 has sales of non-ferrite products to unrelated parties only in
the first quarter.  The vast majority of sales for the year were unfinished
floppy disc recording head products sold to related parties (Newmax).  The
gross profit margin remained positive for the second year in a row even
though sales declined by 35%.  By the fourth quarter, sales declined
significantly and most employees were working a reduced number of hours at
reduced pay.  Significant effort was devoted to consolidating remaining
operations to a reduced square footage to make room for the battery
manufacturing line.
  
Fiscal 1998 began with the installation of the battery manufacturing line
with equipment consigned from a related party, and the production of
recording head products was suspended.  Consequently, revenues from recording
head products ceased, so obligations to its primary institutional lender
could not be satisfied by the Company and funds had to be borrowed from
related companies or had to be obtained from the disposal of equipment, since
no revenues were realized from the as yet non-operational sealed lead acid
battery manufacturing line.  The installation was completed in November 1997,
but the Company could not proceed with the manufacturing operation due to the
discontinuation of the funding from a related party.


Fiscal Year Ended June 27, 1998 ("1998")
Compared to
Fiscal Year Ended June 28, 1997 ("1997")

Net Sales.

The Company's net sales decreased by $2,609,000 or 97%, from 1997.  The
decrease is due to the suspension of sales of recording head products, which
caused a decline in sales to Newmax of $2,414,000 and a decline in sales of
ballast of $195,000.

Gross Profit.

Gross profit, as a percentage of sales, declined dramatically to (1,000%)
from 5% in 1997.  This decline in performance is due to the significant
decline in sales combined with the inability to further reduce significant
overhead items such as electricity, real estate taxes, and etc.

Research, Development and Engineering.

Research, development and engineering ("R&D"), as a percentage of sales,
increased from 8% in 1997 to 110% in 1998.  This is due to a cessation of
sales after the first quarter, without a cessation of development and
engineering support.

Selling and Administration.

Selling and administration expenses ("S&A"), as a percent of sales, increased
from 18% in 1997 to 430% in 1998.  The increase in S&A as a percent of sales
is due to cessation of sales after the first quarter, without a cessation of
selling and administration expenses.

Interest Expense.

Interest expense increased by $58,000 or 8% from 1997 to 1998.  This is due
to increases in related party debt and increases in the rate of interest on
bank debt due to the defaults in payment of bank debt.  



Total Assets.

Total assets declined by $170,000 or 6% from 1997 to 1998.  This is primarily
due to a reduction of prepaid and other current assets, but also due to the
absence of inventories and a reduction of cash.  Although dispositions of
nearly fully depreciated machinery and equipment materially reduced property,
plant and equipment, at cost and accumulated depreciation and amortization,
the impact on total assets of those old equipment dispositions was offset by
an increase in buildings and improvements attributable to the installation
of a line for manufacturing sealed lead acid batteries.


Fiscal Year Ended June 28, 1997 ("1997")
Compared to   
Fiscal Year Ended June 29, 1996 ("1996")

Net Sales.  

The Company's net sales decreased by $1,469,000, or 35%, from 1996.  The
decrease is due to a decline in sales of tee-shirts of $400,000, a decline
in sales to Newmax of $276,000 and a decline in sales of ferrite products to
other customers of $793,000.

Gross Profit.  

Gross profit, as a percentage of sales, declined from 13% in 1996 to 5% in
1997.  This decline in performance is due to the significant decline in sales
combined with the inability to further reduce significant overhead items such
as electricity, real estate taxes and etc.

Research, Development and Engineering.  

Research, development and engineering ("R & D"), as a percentage of sales,
increased from 6% in 1996 to 8% in 1997.  This is due to a reduction in
sales, but a constant level of development and engineering support.

Selling and Administration.  

Selling and administration expenses ("S&A"), as a percent of sales, decreased
from 20% in 1996 to 18% in 1997.  The decline in S&A as a percent of sales
is due to significant bad debt recoveries in 1997, and a reduction in
marketing staff and expenses for new products.

Interest Expense.  

Interest expense decreased by $125,000 or 14% from 1996 to 1997.  This is due
to a reduction in interest expense on related party debt of $70,000 based
upon a revised method of calculation and reduction in bank interest of
$55,000 primarily due to a negotiated rate decrease of 1% during November
1996.

Total Assets.
Total assets declined by $1,840,000 or 38% from 1996 to 1997.  This is
primarily due to a reduction in inventories and accounts receivable resulting
from declining sales.  It is also due to a lower cash position due to
continuing losses.

Inflation

Prices in the peripheral data storage market do not ordinarily increase to
offset the effects of inflation.  The Company has curtailed production of
certain products due to the inability to obtain price increases and reduce
costs.

Liquidity and Capital Resources

The Company entered into an agreement with a lending institution on May 10,
1991.  On April 30, 1992 this loan was converted from a $4,000,000 one year
renewable loan to a loan with a fixed repayment plan.  On November 19, 1996
the lending institution agreed to a modification of repayment terms resulting
in payment due November 18, 1997.  This loan has been collateralized by a
Newmax affiliate (guarantor).  The $2,741,000 loan was in default before its
maturity on November 18, 1997.  The institutional lender completed collection
proceedings against a Korean bank letter of credit in the amount of
$2,789,000 securing payment of the revolving credit note.  An affiliated
company which had provided a mortgage on its Korean real estate as collateral
for that Korean bank letter of credit will become entitled to assert a claim
against the Company for all amounts collected from it by the institutional
lender out of the pledge of its assets.

The Company entered into a $3,000,000 term loan agreement with the same
lending institution on November 5, 1991.  On November 26, 1996 the lending
institution agreed to a modification of repayment terms resulting in no
principal payments due until the  November 26, 1997 maturity.  The balance
remaining unpaid on this loan is $1,408,000 and $1,450,000 as of June 27,
1998 and June 28, 1997, respectively.  Monthly interest payments have not
been made since August 1997.  The lender has initiated collection. The amount
of interest in default and in arrears pursuant to the $1,450,000 note was
$126,000 as of June 27, 1998.  The rate of interest of the $1,450,000 term
loan note was the prime rate of Citibank, N.A. until the earlier of November
26, 1997, which was its maturity date, or December 16, 1997, which was the
date of the demand for payment of $1,408,000 of principal and $30,252.44 of
accrued interest, and thereafter became two percent (2%) above the interest
rate of eight and one half percent (8.5%) in affect on that date.  The
Company does not have the funds to satisfy the principal balance and accrued
interest of the term loan note;however, no foreclosure action as yet has been
instituted by the primary institutional lender of the Company.  The Company
believes that the forbearance of this primary lending institution may be due
to the on-going negotiations by the Company to dispose of part of the real
estate which is collateral for the mortgage securing the term loan note at
a price which, if obtained, would enable the Company to satisfy the term loan
note but no assurance can be made that such a disposition will be
consummated.

The $ 1,408,000 term loan is secured by substantially all the assets of the
Company, including a first mortgage on the facilities of the Company in
Kingston, New York.  The term loan has been guaranteed by the related parties
Newmax, Co., Ltd., Tae Il Media Co., Ltd. and Mr. K.H. Chung.  The Company
has been advised that Newmax Co., Ltd. and Tae Il Media Co., Ltd. on October
14, 1997 had obtained waivers of defaults in the payment of amounts due
pursuant to their indebtedness from their institutional lenders and on
November 8, 1997 had filed for reorganization pursuant to bankruptcy laws in
Korea so that they might become entitled to a two-year moratorium on the
repayment of certain obligations to certain creditors.  The debt
restructuring plan of Tae Il Media Co., Ltd. was accepted by its creditors
and was approved by Suwon District Court in Korea on September 4, 1998.  The
debt restructuring plan of Newmax Co., Ltd. was accepted by its creditors and
was approved by Cheongju District Court in Korea on September 15, 1998.  The
Company can make no assurance that its primary lending institution will
continue to forebear from foreclosing on the mortgage if its negotiations to
sell part of the collateral for that mortgage should not yield funds to
satisfy the mortgage indebtedness in a reasonable amount of time.

Working capital consists of very little current assets as there was neither
inventory nor orders for products at year-end.  Current assets will remain
very low until battery production commences or orders are obtained for other
products.  It is anticipated that related party assistance will be necessary
to finance working capital needs for inventory and accounts receivable when
and if orders for new products are obtained.

The Company had commitments for capital expenditures of $463,706 as of June
27, 1998.  These capital expenditures pertain to the installation of the
sealed lead acid battery line.  Capital expenditures exceeded depreciation
during the fiscal year ended June 27, 1998, but depreciation had exceeded
capital expenditures during the three prior fiscal years ended June 28, 1997
by at least $300,000 per year.  Required repayments of long-term debt for
fiscal 1999 are around $1,600,000 so long as the Company may rely on oral
assurances that the Company will not be asked to repay the revolving credit
note.  The primary lending institution has issued notices of default,but has
not initiated any legal action against the Company.

The Company is hopeful that funds generated by facility sales proceeds and
received from Newmax will be adequate to fund production, new product
development, debt service and other operational needs.  Although there is no
firm commitment, affiliated parties and parents are expected to advance funds
on a short-term as needed basis to offset operational cash shortfalls. 
Management believes that the combination of sales of manufacturing
facilities, reduction in overhead spending, continued cooperation of parent
companies and their affiliates, start up of a sealed lead acid battery
manufacturing line and cooperation of the institutional lender will enable
the Company to remain viable for the next twelve months.  The Company cannot
assure that it will receive funds needed from its affiliates to be able to
commence production of sealed lead acid battery manufacturing line during the
next twelve months.



See note 2 to the Company's consolidated financial statements included herein
(page 39) for a further discussion of liquidity and management's action plan.

Item 8. Financial Statements and Supplementary Data

The information called for by item 8 is set forth on pages 30 to 46 and
listed on page 27 of this report.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.



                            PART III
Item 10.  Directors and Executive Officers of the Registrant
                                                            Shares Owned  
                       Position with                        As a Percentage
Name, Age and           Company or              Director    Of Outstanding
Committee Membership   Principal Occupation       Since          Shares   
Dr. Yoon H. Choo,......Chairman, President,       1990               -
60                     Chief Executive Officer,
                       Secretary and Treasurer

Dr. Heehwan Lee,.......Vice President and         1990     (1) (2)   -
48                     Chief Operations Officer



Mr. K.H. Chung,........President, Tae Il Media    1990     (1) (2)   -
53                     Co., Ltd. Ansan City &
                       Seoul, Korea

All directors and officers as a group (3 persons)....      (1) (3)   -

(1)  See the caption Relationships and Beneficial Interests for shares of
capital stock of the parents of the Company owned by Mr. K.H. Chung and Dr.
Heehwan Lee.

(2)  Not listed are shares owned by Newmax Co., Ltd. as explained in detail
in Item 12, Security Ownership of Certain Beneficial Owners and Management.
Mr. K.H. Chung and Dr. Heehwan Lee expressly disclaim that either of them is
at the present time the beneficial owner of any shares of common stock of the
Company for the purpose of Section 13(d) or 13(g) of the Securities Exchange
Act of 1934, as amended, or that either of them is at the present time able
to exercise a controlling influence over the Company.




(3)  Not listed are shares owned by Newmax as explained in detail in Item 12,
Security Ownership of Certain Beneficial Owners and Management.

Business Experience of Directors
Dr. Yoon H. Choo was elected Chairman of the Board in January 1991.  He was
elected President, Chief Executive Officer, Secretary and Treasurer on
February 11, 1991.  He has been a director of the Company since December
1990.  He has been President of Tae Il USA, Inc. since 1984, and Gigamax
Corporation since 1989.  Tae Il USA, Inc. and Gigamax Corporation are
affiliates of the Company and are engaged in businesses which are similar to
that of the Company.  He previously had more than seven years experience with
Digital Equipment Corporation.

Dr. Heehwan Lee has been a director since December 1990.  He was elected
Director and Vice President and Chief Operations Officer on March 1, 1992. 
He has been Vice President of Tae Il Media Co., Ltd. since August 1986.  He
had been Vice President of Newmax from August 1990 until March 29, 1994. 
Newmax and Media are parents and affiliates of the Company and are engaged
in businesses which had been similar to that of the Company.  From July 1975
to July 1986 he was a Senior Researcher with the Korean Agency for Defense
Development.

Mr. K.H. Chung has been a director since December 1990.  He has been
Representative Director and President of Tae Il Media Co., Ltd. since October
1983.  He had been president of Tae Il Magnetics Co., Ltd., from July 1987
until March 29, 1994.  He had been president of Newmax Co., Ltd. from August
1990 until March 29, 1994.  Newmax, Tae Il Media and Tae Il Magnetics are
parents and affiliates of the Company and had been engaged in businesses
which had been similar to that of the Company.  He previously had more than
seventeen years experience with Hanil Textile Co., Ltd. as Chief of the
Corporate Planning Board.

While the value of the Korean won on foreign exchange markets was declining
dramatically and unprecedented numbers of Korean companies nearly
simultaneously were defaulting on their obligations or filing for Korean
bankruptcy law protection, Tae Il Media Co., Ltd., of which Mr. K. H. Chung
is the President and the Representative Director and Dr. Heehwan Lee is a
Director, and its affiliated companies, including Newmax Co., Ltd. on October
14, 1997 obtained waivers of defaults in the payments of amounts due pursuant
to their indebtedness to institutional lenders and on November 8, 1997 filed
for mediation or reorganization pursuant to bankruptcy laws in Korea so that
they might become entitled to a two-year moratorium on the repayment of
certain obligations to certain creditors.  The debt restructuring plan of Tae
Il Media Co., Ltd. was accepted by its creditors and was approved by the
Suwon District Court in Korea on September 4, 1998.  The debt restructuring
plan of Newmax Co., Ltd. was accepted by its creditors and was approved by
the Cheongju District Court in Korea on September 15, 1998.




Relationships and Beneficial Interests

Newmax designated Mr. K.H. Chung, Dr. Yoon H. Choo and Dr. Heehwan Lee as
nominees pursuant to its right to designate a majority of the directors to
be nominated pursuant to the Stock Purchase Agreement dated November 30, 1990
between Newmax and the Company.

Newmax owns 47.1 percent of the common stock of the Company.  Pursuant to the
Stock Purchase Agreement dated November 30, 1990 between the Company and
Newmax,  Newmax may agree to purchase additional shares of common stock of
the Company from time to time in an amount (presently 2,000,000 shares) which
will enable Newmax to own more than 50 percent of the issued and outstanding
shares of common stock of the Company.  This provision directly inures to the
benefit of Newmax and may be deemed indirectly to inure to the benefit of Tae
Il Media Co., Ltd. ("Media"), Tae Il Magnetics, Co., Ltd. (Magnetics)  Mr.
K.H. Chung, Dr. Heehwan Lee, and Mr. Yoon K. Choo.  This provision does not
extend to other holders of the common stock of the Company.

Until March 29, 1994, Mr. K.H. Chung was the representative director and the
president of Newmax and Dr. Heehwan Lee was a director and vice president of
Newmax.  Media and Magnetics combined owned 28 percent of the capital stock
of Newmax as of June 27, 1998.

Mr. K. H. Chung owns approximately 1 percent of the capital stock of Media
and is a representative director and the president of Media and Dr. Heehwan
Lee a director and vice president of Media.  Mr. Yoon K. Choo is a director
and the chairman of the board of directors of Media.  Media owns almost 19
percent of the capital stock of Dae Bang Venture Capital Co., Ltd., which
owns 7.1 percent of the common stock of the Company.  Media owns
approximately 12 percent of the capital stock of Newmax as of June 27, 1998.

Mr. K.H. Chung owns approximately 6 percent of the common stock of Magnetics.
Until March 29, 1994, Mr. K.H. Chung was the representative director and the
president of Magnetics.  Magnetics owns 16 percent of the capital stock of
Newmax as of June 27, 1998.

Dr. Yoon H. Choo is the brother of Mr. Yoon K. Choo and Mr. K.H. Chung and
Dr. Heehwan Lee are sons-in-law of Mr. Yoon K. Choo.

Mr. Yoon K. Choo is related by blood or marriage to Mr. K.H. Chung, Dr.
Heehwan Lee and Dr. Yoon H. Choo, who are directors of the Company.  Newmax
and Media also are associates of Mr. K.H. Chung and Dr. Heehwan Lee.

Magnetics was an associate of Mr. K.H. Chung and Dr. Heehwan Lee until March
29, 1994.  Newmax, Media, Magnetics, Mr. Yoon K. Choo, Mr. K.H. Chung and Dr.
Heehwan Lee also have a substantial direct interest in the transactions
described below.






The Stock Purchase Agreement dated November 30, 1990 between Newmax and the
Company states that they mutually shall provide technical assistance and
patent licenses to one another under the terms of the technical assistance
agreement to be agreed upon by them, subject to appropriate government
approval.  From time to time, varying amounts of services are rendered by the
Company to Newmax or its designees and by Newmax to the Company pursuant to
this commitment.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely on a review of Forms 3 and 4 and amendments thereto furnished
to the Company pursuant to Rule 16a-3(e) of the Securities and Exchange
Commission during its most recent fiscal year ended June 27, 1998 and any
written representation from a reporting person that no Form 5 is required,
no person who, at any time during the fiscal year ended June 27, 1998, was
a director, officer or beneficial owner of more than ten percent of any class
of equity securities of the Company failed to file on a timely basis, as of
disclosed in the above Forms, reports required by Section 16(a) of the
Securities Exchange Act of 1934, as amended, during the most recent fiscal
year ended June 27, 1998 or prior fiscal years except certain new directors
of Newmax Co., Ltd.  Each of whom, as a director of Newmax Co., Ltd. may be
deemed to be a beneficial owner of more than ten percent of the outstanding
shares of common stock of the Company.  See Item 12 on pages 19 to 20.

Transactions with Management and Others

Newmax, Media, Magnetics, or their affiliates have made payments to the
Company or its subsidiaries for property or services.  In particular, the
Company sold to Newmax in fiscal 1997 and 1995 equipment comprising machining
assembly lines and other excess equipment in exchange for cash in an amount
equal to fair market value, as determined by an independent appraisal in
1991, and by subsequent determinations by employees of the Company, ($157,000
and $1,281,000 in fiscal 1997 and 1995, respectively), of that equipment. 
Furthermore, the Company or its subsidiaries have made payments to Newmax,
Media, Magnetics or their affiliates for property or services in amounts
material to the Company.  Nearly $6 million has been borrowed by the Company
at 8 percent interest from Gigamax Corporation and Tae Il U.S.A., Inc., both
of which are controlled by Dr. Yoon H. Choo, President of the Company. 
Techmedia International Corporation ("Techmedia"), which is wholly owned by
Media and has the same president as Newmax, has occasionally advanced funds
to the Company.   Payment of interest with respect to fiscal years 1998, 1997
and 1996, however, was forgiven.  See note 10 to the Company's consolidated
financial statements included herein (pages 44 and 45) for a further
discussion of related party transactions.

See also Item 7, Liquidity and Capital Resources, for a discussion of loans
obtained by the Company with the assistance of guarantees provided by Newmax
and other related parties.  See note 5 to the Company's consolidated
financial statements included herein (page 40) for a further discussion of
short-term debt and related party assistance and note 6 (page 41) for a
further discussion of long-term debt and related party assistance.

Board and Committee Meetings

The Board of directors has a standing Audit Committee, but does not have a
Nominating Committee or Compensation Committee.

The functions of the Audit Committee include recommending the appointment of
independent auditors, reviewing with the independent auditors the results of
the annual audit, reviewing the independence of the auditors, determining the
appropriateness of fees for audit and non-audit services provided by
independent auditors and reviewing transactions between the Company and
associates of the directors or officers of the Company.  During fiscal 1998,
1997 and 1996 there were no meetings of the Board of Directors, and no
meetings of the Audit Committee.  The Independent Public Accountants attended
no meetings.


Item 11. Executive Compensation

Summary Compensation Table

The compensation of the chief executive officer of the Company for services
rendered to the Company and its subsidiaries is set forth below:

Name and Principal Position        Year        Annual Salary

Dr. Yoon H. Choo,                  1998         $ 80,000
Chairman, President and Chief      1997         $ 80,000
Executive Officer                  1996         $ 80,000

There are no other officers whose total annual salary and bonus exceeds
$100,000.  Dr. Yoon H. Choo received no other annual compensation or
long-term compensation or other compensation from the Company.  Dr. Yoon H.
Choo
received no grants of stock options or SARs from the Company and had no stock
options or SARs of the Company to exercise or to be repriced or amended.  Dr.
Yoon H. Choo received no long-term incentive plan awards from the Company. 
See Board Interlocks and Insider Participation below.


Board Interlocks and Insider Participation

Dr. Yoon H. Choo and Dr. Heehwan Lee served as officers of the Company and
as members of the Board of Directors for fiscal 1998 and as such, were
entitled to participate in deliberations of the Board of Directors concerning
executive officer compensation.

Dr. Yoon H. Choo is a director and president of Gigamax Corporation and of
Tae Il USA, Inc., which are affiliates of the Company.

Dr. Heehwan Lee was a director and vice president of Newmax until March 29,
1994 and is a director and vice president of Media, both of which are parents
of the Company.

Mr. K.H. Chung also served as a member of the Board of Directors of the
Company for fiscal 1998 and, as such, was entitled to participate in
deliberations of the Board of Directors concerning executive officer
compensation.  He is the president and a representative director of Media,
which is an affiliate of the Company.  Until March 29, 1994 he was the
president and representative director of Magnetics and of Newmax.  He owned
1 percent of the capital stock of Media and 6 percent of the capital stock
of Magnetics.

See Transactions with Management and Others on page 16.  Also see
Relationships and Beneficial Interests on pages 15-16 with respect to the
ownership by Media and Magnetics of 28 percent of the outstanding shares of
capital stock of Newmax, and the ownership by Newmax of 47.1 percent of the
outstanding shares of common stock of the Company, as well as the ownership
by Media and Magnetics combined of 21 percent of the capital stock of Dae
Bang Venture Capital Co., Ltd., which owns 7.1 percent of the outstanding
shares of capital stock of the Company.

Mr. K.H. Chung, who is a director of the Company, a representative director
and president of Media, a 1 percent stockholder of Media, and a 6 percent
stockholder of Magnetics, has a direct material interest in the credit
enhancement which he personally provides to the Company and may be deemed to
have an indirect material interest in the transactions between the Company
and each of Media and Newmax, and in the credit enhancements provided by
Newmax and Media to the Company, as described in notes 5, 6 and 10 to the
consolidated financial statements on page 41 and 44 to 45.  The Company owed
Newmax $125,400 and Media $210,000 as of June 27, 1998.  The notice of
default on November 28, 1997 in respect of the $2,741,000 revolving credit
loan and the notice of default on December 16, 1997 of the $1,408,000 term
loan of the Company intensified Mr. K. H. Chung's interest due to his
personal guaranty and the guaranties of Newmax and Media.

Dr. Heehwan Lee, who is a director and the vice president and chief
operations officer of the Company and the son-in-law of Mr. Yoon K. Choo, may
be deemed to have a material indirect interest in the transactions between
the Company and each of Media and Newmax, and in credit enhancements provided
by Newmax and Media to the Company, as described in notes 5, 6, and 10 to the
consolidated financial statements on pages 40 to 41 and 44 to 45, because of
his official relationships with Media and because the father-in-law of Dr.
Heehwan Lee, Mr. Yoon H. Choo, is a director and chairman of the board of
directors of Media.  The Company owed Newmax $125,400 and Media $210,000 as
of June 27, 1998.  The notice of default on November 28, 1997 in respect of
the $2,741,000 revolving credit loan and the notice of default on December
16, 1997 of the $1,408,000 term loan intensified Dr. Heehwan Lee's interest
because of the guaranties of Newmax and Media.

Dr. Yoon H. Choo, who is a director, the chairman, the president, the
treasurer, and the secretary of the Company, a director and the president of
Gigamax Corporation and a director and the president of Tae Il USA, Inc., has
a direct material interest in the loans provided by Gigamax Corporation and
by Tae Il USA, Inc., to the Company, as described in notes 5 and 10 to the
consolidated financial statements on pages 40 and 44 to 45, respectively. 
The Company owed Gigamax $5,596,000, in principal and $1,370,000 of net
accrued expenses (primarily interest accrued prior to June 24, 1995), as of
June 27, 1998.

Compensation of Directors

The annual fee for directors who are not employees of the Company is $8,000. 
All of the outside directors earn $1,000 for each Board meeting or Committee
meeting attended, except that if a Committee meets on the same day as the
full Board, Committee members earn only $500 for the Committee meeting. 
Telephonic meetings are compensated at fifty percent of the rates noted
above.  Fees earned but unpaid to current and former Board members are
$191,000 at June 27, 1998.  Board members are eligible to receive stock
options.  See Board Interlocks and Insider Participation above.

Employment Contract

The Company entered into a Compensation Agreement with Dr. Yoon H. Choo on
April 17, 1991 for a one year period.  Based upon the terms of the agreement,
it automatically renews for another year on each anniversary date.  The
agreement requires periodic salary payments totaling $150,000 per year. 
Effective November 18, 1991, the salary was renegotiated down to $80,000 per
year due to continuing losses of the Company.  The agreement provides for
payment of one year's salary in the event of contract non-renewal or
termination of employment.  In the event of a change in control, then a
change in title or responsibilities is contractually defined as a termination
of employment.







Item 12.  Security Ownership of Certain Beneficial Owners and Management

Security Ownership of Certain Beneficial Owners

The following table presents information as to the persons who have reported
or are otherwise known to the Company to be the beneficial owners of more
than 5% of the outstanding Common Stock of the Company as of September 9,
1998.
                                         Amount and Nature of    Percent
Name and Address of Beneficial Owner     Beneficial Ownership    of Class


Newmax Co., Ltd. ........................10,500,000              47.1%
27-15 Song Jeong-Dong                    Direct owner (1)
Cheongju, Chungbuk                       sole voting and
360-290, Korea                           investment powers


Jung Kyun Bae ...........................10,500,000              47.1%
Jeong Soo Choi                           Indirect owner (2)
Dong Myung Lee                           shared voting
Kuk Gyo Jeong                            power, shared
In Soo Kim                               investment power
Byung In Kang
456-1 Moknae-Dong, Ansan                 
Kyunggi-Do, 425-100, Korea


Dae Bang Investment Finance Corp.........1,575,000                7.1%
1-181 Chagin-Dong                        Direct owner    
Iri-si, Jullabuk-do                      sole voting and
Korea                                    investment powers

S.Y. Choi ...............................1,575,000                7.1%
C.S. Choi                                Indirect owner (2)
C.H. Lee                                 shared voting
K.W. Choi                                power, shared
D.H. Coue                                investment power
C.D. Um   
Y.W. Kim
J.M. Lee 
J.Y. Joo
O.J. Kwon
D.K. Lee
KWTC Building, Suite 4202, Samsung-dong,
Kangnam-gu, Seoul, Korea

(1)  See the caption Relationships and Beneficial Interests in Item 10,
Directors and Executive Officers of the Registrant.

(2)  The persons who are deemed to be indirect owners possessing shared
voting power and shared investment power expressly disclaim that any of them
is at the present time the beneficial owner of any shares of common stock of
the Company for the purposes of Section 13(d) or 13(g) of the Securities
Exchange Act of 1934, as amended, or that any one of them is at the present
time able to exercise a controlling influence over the Company.



Security Ownership of Management

Identification of and certain information concerning executive officers and
directors of the Company is set forth in part III, Item 10 under the heading
"Directors and Executive Officers of the Registrant".





According to Rule 13d-3 of the Securities and Exchange Commission, the
directors and the executive officers of the Company are not beneficial owners
of any equity securities of the Company.  The following table presents
information as to those directors' and executive officers' beneficial
ownership of equity securities in the parents of the Company.

 Title                 Name of            Amount and Nature        Percent
  of                   Beneficial         of Beneficial              of
 Class                 Owner              Ownership                 Class  
Capital Stock          Kang Hoan Chung    137,746                    1.0%
of Tae Il                                 Direct owner (2) 
Media Co., Ltd. (1)                       Sole voting power
                                          Sole investment power

Capital Stock          Kang Hoan Chung    37,396                     6.2%
of Tae Il                                 Direct owner (2)
Magnetics Co., Ltd. (1)                   Sole voting power
                                          Sole investment power

Capital Stock          Kang Hoan Chung    574,008                    12.2%
of Newmax                                 Indirect owner (2)
Co., Ltd. (1)                             Shared voting power
                                          Shared investment power

Capital Stock          Heehwan Lee        45,393                      .3%
of Tae Il                                 Direct owner (2)
Media Co., Ltd.                           Sole voting power
                                          Sole investment power


Capital Stock          Directors and      574,008                   12.2%
of Newmax              Executive          Indirect owners (2)
Co., Ltd.              Officers of Tae    Shared voting power
                       Il as a Group      Shared investment power

See footnotes on next page.


(1)  See the caption Relationships and Beneficial Interests in Item 10,
Directors and Executive Officers of the Registrant.

(2)  The person who is the direct owner possessing sole voting and sole
investment power of shares of the parents of the Company and the persons who
are deemed to be indirect owners possessing shared voting power and shared
investment power of shares of a parent of the Company, expressly disclaim
that either of them is at the present time the beneficial owner of any shares
of the common stock of the Company for purposes of Section 13(d) or 13(g) of
the Securities Exchange Act of 1934, as amended, or that either one of them
is at the present time able to exercise a controlling influence over the
Company.



Item 13. Certain Relationships and Related Transactions  

Identification of and certain information concerning executive officers and
directors of the Company is set forth in Part III, Item 10 under the heading
"Directors and Executive Officers of the Registrant" and under the heading
"Transactions with Management and Others" and in Part III, Item 11 under the
heading "Board Interlocks and Insider Participation."

Identification of certain information concerning security holders who are
known to the Company to own of record or beneficially more than 5% of its
outstanding shares of common stock and members of the immediate families of
those persons and of executive officers and directors of the Company are set
forth in Part I, Item 1, Business, under the headings  "Sales and Customers",
"Backlog", in Part II, Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations, under the Headings, "Liquidity
and Capital Resources", Item 8, Financial Statements and Supplementary Data,
notes 2,5,6,9, and 10, Part III, Item 10, Directors and Executive Officers
of the Registrant, under the headings, "Relationships and Beneficial
Interests", "Transactions with Management and Others", and Item 11, Executive
Compensation, under the heading "Board Interlocks and Insider Participation."






                           PART  IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K 

     (a)  1. Financial Statements

             Consolidated Financial Statements, Notes to Consolidated      
             Financial Statements and the Reports of Independent Certified 
              Public Accountants are incorporated in Part II of this report 
             (see index on page 27).



          2. Financial Statement Schedules

             Included In Part IV of this report:
                                                                  Page #
             Independent Auditors' Reports on Schedule             47-48
             Schedule II- Valuation and Qualifying Accounts        49  
           
             Other schedules are omitted because of the absence of 
             conditions under which they are required or because the 
             required information is given in the consolidated financial   
             statements or notes thereto.

Separate financial statements and supplemental schedules of the Company are
omitted since the Company is primarily an operating company and its
subsidiaries, included in the consolidated financial statements being filed,
do not have a minority equity interest or indebtedness to any person other
than the Company in an amount which exceeds five percent of the total assets
as shown by the consolidated financial statements as filed herein.

     3.   Exhibits

          3.1  Certificate of Incorporation of the Company dated October
               15, 1981 (Incorporated by reference to Exhibit 3.1 to the
               annual report on Form 10-K for the year ended June 24, 1995,
               Commission File Number 0-7207).                             
     
          3.2  Amendment to Certificate of Incorporation of the Company
               dated March 2, 1982 (Incorporated by reference to Exhibit 3.2
               to Registration Statement of the Company, Registration
               No. 2-77035).

          3.3  Amendment to the Certificate of Incorporation of the Company
               dated November 30, 1983 (Incorporated by reference to Exhibit
               3.3 to the annual report on Form 10-K for the year ended June
               24, 1995, Commission File Number 0-7207). 

          3.4  Amendment to the Certificate of Incorporation of the Company
               dated December 27, 1984 (Incorporated by reference to 
               Exhibit 3.4 to the annual report on Form 10-K for the year
               ended June 29, 1985, Commission File Number 0-7207).


          3.5  Amendment to the Certificate of Incorporation of the Company
               dated December 26, 1986 (Incorporated by reference to 
               Exhibit 3.5 to the annual report on Form 10-K for the year
               ended June 27, 1987, Commission File Number 0-7207).

          3.6  Amendment to the Certificate of Incorporation of the Company
               dated April 1, 1991 (Incorporated by reference to Exhibit
               3.6 to the annual report on Form 10-K for the year ended
               June 29, 1991, Commission File Number 0-7207).

          3.7  By-Laws of the Company as amended on December 17, 1990 
               (Incorporated by reference to Exhibit 3.7 to the annual
               report on form 10-K for the year ended June 29, 1991,       
               Commission File Number 0-7207).

          4.1  Revolving Credit Agreement dated May 10, 1991 between
               the Company and Shinhan Bank New York Branch
               (Incorporated by reference to Exhibit (4)(b) to the 
               Report on Form 8-K dated May 10, 1991, Commission File Number
               0-7207).


          4.2  Term Loan Agreement between the Company and Shinhan Bank
               New York Branch dated November 5, 1991 (Incorporated
               by reference to Exhibit 4.1 to the quarterly report on
               Form 10-Q for the quarter ended September 28, 1991, Commission
               File Number 0-7207).

          4.3  General Loan and Security Agreement between the Company
               and Shinhan Bank New York Branch dated November 5, 1991
               (Incorporated by reference to Exhibit 4.3 to the quarterly
               report on Form 10-Q for the quarter ended September 28, 1991, 
               Commission File Number 0-7207).

          4.4  Mortgage between the Company and Shinhan Bank New York
               Branch dated November 5, 1991 (Incorporated by reference
               to Exhibit 4.4 to the quarterly report on Form 10-Q for the
               quarter ended September 28, 1991, Commission File Number 0- 
               7207).

          4.5  Revised repayment schedule between the Company and Shinhan
               Bank New York Branch dated December 23, 1994 (Incorporated by
               reference to Exhibit 4.7 to the annual report on Form 10-K for
               the year ended June 24, 1995, Commission File Number 0-7207).
          
          4.6  Promissory Note dated May 31, 1995 in the maximum principal
               amount of $142,916 payable by the Company to Hartford Fire
               Insurance Company (Incorporated by reference to Exhibit 4.8
               to the annual report on Form 10-K for the year ended June 24,
               1995, Commission File Number 0-7207).

          4.7  Amended Term Note dated November 26, 1996 in the maximum    
               principal amount of $1,450,000 payable by the Company to    
               Shinhan Bank New York Branch (Incorporated by reference to  
               Exhibit 4.1 to the quarterly report on Form 10-Q for the    
               quarter ended March 29, 1997, Commission File Number 0-7207).

          4.8  First Amendment to Term Loan Agreement between the Company and
               Shinhan Bank New York Branch dated November 26, 1996.       
               (Incorporated by reference to Exhibit 4.2 to the quarterly 
               report on Form 10-Q for the quarter ended March 29, 1997,   
               Commission File Number 0-7207).

          4.9  Amended Revolving Credit Note dated November 19, 1996 in the
               principal amount of $2,741,000 payable by the Company to    
               Shinhan Bank New York Branch (Incorporated by reference to  
               Exhibit 4.3 to the quarterly report on Form 10-Q for the    
               quarter ended March 29, 1997, Commission File Number 0-7207).

4.10 Second Amendment to Revolving Credit Agreement between the         
Page 
     Company and Shinhan Bank New York Branch dated November 19,          
     1996 (Incorporated by reference to Exhibit 4.4 to the                
     quarterly report on Form 10-Q for the quarter ended March 29,        
     1997, Commission File Number 0-7207).
                                              
10.1 1987 Stock Incentive Program, as amended in 1989 (Incorporated
     by reference to Appendix A to the Company's Proxy Statement
     dated September 22, 1989 for Annual Meeting of Stockholders
     to be held on November 2, 1989, Commission File Number 0-             
     7207).

10.2 Compensation agreement between the Company and Yoon H. Choo
     dated April 17, 1991 (Incorporated by reference to Exhibit
     10.15 to the annual report on Form 10-K for the year ended
     June 29, 1991, Commission File Number 0-7207).
        
10.3 Stock Purchase Agreement dated as of November 30, 1990
     between Newmax Co. Ltd. and the Company (Incorporated by               
 
     reference to Exhibit 10.8 to the annual report on Form 10-
     K for the year ended June 24, 1995, Commission File Number
     0-7207).

21.  Subsidiaries of the Company.                                         51

23.1 Consent of Sung I. Rhee, C.P.A. to incorporation by                  52
     reference of his report on Financial Statements in 
     Registration Statements on Form S-8 Registration Nos.
     2-81098, 2-81456, 2-89221, 2-96120, 2-96139, 33-14778
     and 33-33567.

23.2 Consent of KPMG Peat Marwick LLP to incorporation by reference       53
     of its report on Financial Statements in Registration Statements 
     on Form S-8 Registration Nos.  2-81098, 2-81456, 2-89221, 2-96120, 
     2-96139, 33-14778 and 33-33567.

27.  Financial Data Schedule (For electronic filing purposes only).
          Copies of Exhibits listed above may be obtained for a nominal
          fee by writing to the Company's Investor Relations Department
          at 71 Smith Avenue, Kingston, New York  12401.

(b)  Reports on Form 8-K

     None  














                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                         NATIONAL MICRONETICS, INC.   

                                      By   Dr. Yoon H. Choo                
                                           Dr. Yoon H. Choo
                                           President and Chief
                                           Executive Officer

Dated:  September 24, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 19th day of September,
1998.

      Signature                                Title

   Dr. Yoon H. Choo               Chairman of the Board of Directors,
  (Dr. Yoon H. Choo)              President, Chief Executive Officer, 
                                  Treasurer and Secretary (Principal
                                  Executive, Financial and Accounting
                                  Officer).

    Dr. Heehwan Lee               Director, Vice President and Chief
   (Dr. Heehwan Lee)              Operations Officer


    Mr. K.H. Chung                Director
   (Mr. K.H. Chung)

















                 NATIONAL MICRONETICS, INC. AND SUBSIDIARIES

                 Index to Financial Statements and Schedule

                                                              Pages

Independent Auditors' Reports                                 28-29

Consolidated Balance Sheets as of June 27, 1998      
 and June 28, 1997                                            30-31

Consolidated Statements of Operations for the years
 ended June 27, 1998, June 28, 1997 and June 29,
 1996                                                         32

Consolidated Statements of Changes in Stockholders'
 Deficiency for the years ended June 27, 1998, June 28,
 1997 and June 29, 1996                                       33

Consolidated Statements of Cash Flows
 for the years ended June 27, 1998, June 28, 1999
 and June 29, 1996                                            34-35

Notes to Consolidated Financial Statements                    36-46

Independent Auditors' Reports on Schedule                     47-48

Schedule of Valuation and Qualifying Accounts                 49
























                        INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
National Micronetics, Inc.:

We have audited the accompanying consolidated balance sheets of National
Micronetics, Inc. and subsidiaries as of June 27, 1998 and June 28, 1997, and
the related consolidated statements of operations, changes in stockholders'
deficiency, and cash flows for each of the years in the two-year period ended
June 27, 1998.  These consolidated financial statements are the
responsibility of the Company's management.  Our responsibility is to report
on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our report.

The accompanying consolidated financial statements have been prepared
assuming that National Micronetics, Inc. and subsidiaries will continue as
a going concern.  The Company has suffered recurring losses from operations
and has net capital deficiencies.  As a result of these recurring losses, the
Company has experienced a significant deterioration in liquidity.  The
Company has received funding for operations from its parent, Newmax Co.,
Ltd., and affiliated companies in the current and prior years; however, the
Company has no guarantee that this funding will continue.  These
circumstances raise substantial doubt about the Company's ability to continue
as a going concern.  Management's plans in regard to these matters are
described in note 2.  The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

Because of the possible material effect of the matter discussed in the
preceding paragraph, we are unable to express, and do not express, an opinion
on the consolidated financial statements referred to above.

As discussed in note 12 to the consolidated financial statements, the Company
is a defendant in a lawsuit brought about as the result of an accident
involving a Company automobile.  The ultimate outcome of the litigation
cannot presently be determined.  Accordingly, no provision for any liability
that may result upon adjudication has been made in the accompanying
consolidated financial statements.

                                       Sung I. Rhee, C.P.A. 
Fort Lee, New Jersey
August 26, 1998




                        INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
National Micronetics, Inc.:

We have audited the accompanying consolidated statements of operations,
changes in stockholders' deficiency, and cash flows  of National Micronetics,
Inc. and Subsidiaries for the year ended June 29, 1996.  These consolidated
financial statements are the responsibility of the Company's management.  Our
responsibility is to report on these consolidated financial statements based
on our audit.

We conducted our audit in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audit provides a
reasonable basis for our report.

The accompanying consolidated financial statements have been prepared
assuming that National Micronetics, Inc. and subsidiaries will continue as
a going concern.  The Company has suffered recurring losses from operations
and has a net capital deficiency.  As a result of these recurring losses,
the Company has experienced a significant deterioration in liquidity.  The
Company has received funding for operations from its parent, Newmax Co.,
Ltd., and affiliated companies in 1996 and prior years; however, the Company
has no guarantee that this funding will continue.  These circumstances raise
substantial doubt about the Company's ability to continue as a going
concern. 
Management's plans in regard to these matters are described in note 2.  The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

Because of the effects on the consolidated financial statements of such
adjustments, if any,  as might have been required had the outcome of the
uncertainty discussed in the preceding paragraph been known, we are unable
to, and do not, express an opinion on the accompanying  consolidated
statements of operations, changes in stockholders' deficiency and cash flows
for the year ended June 29, 1996.

                                   /s/ KPMG PEAT MARWICK LLP        
Albany, New York
August 28, 1996
                 




                 NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS

                       June 27, 1998 and June 28, 1997
                               (in thousands)



                                   ASSETS

                                                     1998        1997  
Current assets (note 6):
 Cash and cash equivalents                         $   22      $   35    
 Inventories (note 3)                                   -          22
 Prepaid and other current assets                      20         144    
                                           
      Total current assets                             42         201    

Property, plant and equipment, at cost
 (notes 2, 4 and 6)                                 8,843      11,648     
Less accumulated depreciation and amortization    ( 6,078)    ( 8,872)   

      Net property, plant and equipment             2,765       2,776   
                                                  $ 2,807     $ 2,977

                                                           (Continued)


























                 NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS - Continued

                       June 27, 1998 and June 28, 1997

                 (in thousands, except common share amounts)

                  LIABILITIES AND STOCKHOLDERS' DEFICIENCY

                                                    1998         1997

Current liabilities:
 Current portion of long-term debt (note 6)      $ 1,420      $ 1,450
 Revolving loan (note 5)                               -        2,741
 Short-term debt (notes 5 and 10)                  8,337        4,896
 Accounts payable                                    577          407
 Accrued salaries and related expenses               145          248
 Other accrued expenses                              312          244
 Due to related parties, net (note 10)             1,835        1,646

          Total current liabilities               12,626       11,632

Stockholders' deficiency (note 7):
 Common stock ($.10 par value; authorized -
  40,000,000 shares; issued and 
  outstanding 22,312,524 shares)                   2,231        2,231
 Additional paid-in capital                       59,785       59,350
 Accumulated deficit                             (71,835)     (70,236)

          Total stockholders' deficiency         ( 9,819)     ( 8,655)
Commitments and contingencies (notes 2,4 and 12)
                                                 $ 2,807      $ 2,977


See accompanying notes to consolidated financial statements.

















                 NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS

        Years ended June 27, 1998, June 28, 1997, and June 29, 1996 

                  (in thousands, except per share amounts)

                                            1998      1997       1996  

Net sales                                 $    73   $ 2,682   $ 4,151  
Cost and expenses:
 Cost of products sold                        808     2,556     3,605  
 Research, development and engineering         81       209       231  
 Selling and administration                   314       489       849  
                                            1,203     3,254     4,685  

  Loss from operations                    ( 1,130)  (   572)  (   534) 

Other expense (income):
 Interest expense                             798       740       865  
 Interest income                                -   (     8)  (    36) 
 Other (income) expense, net (note 4)     (   329)  (    37)  (    27) 
                                              469       695       802   

  Loss before income taxes                ( 1,599)  ( 1,267)  ( 1,336) 

Income taxes (note 8)                           -         -         -  

Net loss                                  $(1,599)  $(1,267)  $(1,336)

Basic loss per common share (note 1)      $( 0.07)  $( 0.06)  $( 0.06)


See accompanying notes to consolidated financial statements.


















                 NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF CHANGE IN STOCKHOLDERS' DEFICIENCY

         Years ended June 27, 1998, June 28, 1997 and June 29, 1996
 
                 (in thousands, except common share amounts)

                                                  Additional
                             Common Stock (note 7)   Paid-In   Accumulated
                              Shares    Par Value    Capital    (Deficit) 

Balance June 24, 1995       22,312,524  $    2,231   $ 58,343  $  (67,633)

Net loss -- 1996                     -           -          -      (1,336)

Sale of assets to a
 related party (note 10)             -           -        462           -
Balance June 29, 1996       22,312,524       2,231     58,805     (68,969)

Net loss -- 1997                     -           -          -     ( 1,267)
Interest forgiven on
 related party debt (note 5)                              392    
Sale of assets to a 
 related party (note 10)             -           -        153           -
Balance June 28, 1997       22,312,524       2,231     59,350     (70,236)

Net loss -- 1998                     -           -          -     ( 1,599)
Interest forgiven on 
 related party debt (note 5)         -           -        435           -


Balance June 27, 1998       22,312,524  $    2,231   $ 59,785  $  (71,835)


See accompanying notes to consolidated financial statements.

















                 NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS

         Years ended June 27, 1998, June 28, 1997 and June 29, 1996
                               (in thousands)

                                              1998      1997      1996  
Cash flows from operating activities: 
 Net loss                                  $(1,599)  $(1,267)  $(1,336) 
 Adjustments to reconcile net loss
   to net cash provided (used) by
   operating activities:
    Depreciation and amortization              377       412       549  
    Provision for losses (recoveries)
     on receivables                              -      (132)      135  
    Losses (gains) on sale of property,
     plant and equipment                    (  302)        4       171  
    Interest forgiven on related party debt    435       392       462
Changes in operating assets and liabilities:
  Decrease (Increase) in trade receivables       -       365      (243)  
  Decrease (Increase) in inventories            22       880       (88)
  Decrease (Increase) in prepaid and other
   current assets                              124       (62)       (4)    
  Increase (Decrease) in accounts payable
   and accrued expenses                        135        (5)     (188) 
  Increase (Decrease) in due to related
   parties, net                                189      (941)       742 
  Net cash provided (used) by operating               
   activities                                 (619)     (354)       200 
Cash flows from investing activities:
  Additions to property and equipment         (420)      (56)      (11)  
  Proceeds from sales of property,
   plant and equipment                         356         -          -
  Net cash used by investing activities        (64)      (56)      (11)
Cash flows from financing activities:
  Sale of assets to a related party              -       153         -  
  Proceeds of short-term debt                  712         -         -  
  Repayments on long-term debt                 (42)     (172)     (263) 
  Net cash provided (used) by financing
    activities                                 670       (19)     (263)  
  Net decrease in cash and
   cash equivalents                            (13)     (429)      (74) 
 Cash and cash equivalents at 
   beginning of year                            35       464       538  
 
Cash and cash equivalents at end of year    $   22    $   35    $  464


                                                            (Continued)






                 NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

         Years ended June 27, 1998, June 28, 1997 and June 29, 1996

                                            1998       1997       1996

Supplemental cash flow disclosures:
  Interest paid                             $112       $386       $342 

See accompanying notes to consolidated financial statements.






































                 NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               June 27, 1998, June 28, 1997 and June 29, 1996

(1)  Description of Business and Summary of Significant Accounting Policies

On December 24, 1990, Newmax Co., Ltd. ("Newmax") acquired a controlling
interest (50.9%) in the Company through the purchase of common stock. 
Newmax, a Korean corporation, and its affiliate Tae Il Media Co., Ltd. ("Tae
Il") operate businesses with product lines similar to that of the Company. 
The percentage ownership declined to 47.1% at June 27, 1992 due to other
equity transactions of the Company.  Until the Company ceased manufacturing
computer components in commercial quantities late in the summer of 1997, the
Company had sold products and equipment to Newmax and its affiliates.

In reliance primarily upon assembly facilities owned and operated by its
parent and affiliated companies, sales revenue attributable to its parent
and affiliated companies and debt  financing supplied or guaranteed by its
parent and affiliated companies between May 10, 1991 and September 1997, the
Company has been principally an integrated manufacturer of magnetic recording
heads primarily for computer disk drives.  The Company has modified its
facility to begin manufacturing sealed lead acid batteries; however, the
modified facility is the subject of negotiations with a purchaser and, if
sold, will not be available to the Company, which will have to modify other
facilities which are not being sold or lease another building to begin
manufacturing sealed lead acid batteries.  The Company can make no assurance
that funding will be provided to commence manufacturing sealed lead acid
batteries or to carry on any other business.

The Company has at times been involved in the distribution and sale of other
products.  Some, such as electrical light fixture ballasts and tee shirts,
were outside its previous markets.  The Company is dependent upon other
manufacturers and vendors for production and assembly work.

     (a) Principles of Consolidation

The consolidated financial statements include National Micronetics, Inc. and
its wholly owned subsidiaries.  All significant intercompany balances and
transactions have been eliminated in consolidation.

     (b) Consolidated Statements of Cash Flows

For purposes of the statements of cash flows, the Company considers all
short-term investments and highly liquid debt instruments with original
maturities of three months or less to be cash equivalents. 

     (c) Inventories
Inventories are stated at the lower of cost or market.  Cost is determined
on a first-in, first-out basis.
                                                       (Continued)

               NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(1) Description of Business and summary of Significant Accounting Policies -
Continued

     (d) Property, Plant and Equipment

Depreciation and amortization for financial reporting purposes are provided
by the straight-line method.  Depreciation for tax purposes is on and
accelerated method.  Leasehold improvements are amortized either over the
estimated useful lives of the improvements or the lease term (including
option periods expected to be utilized) whichever is less.
                                            

     (e) Revenue Recognition
Revenue is recognized upon shipment of products to customers.

     (f) Income Taxes
The Company utilizes the asset and liability method, whereby deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.  The effect
on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.  

     (g)  Basic loss per Share
Basic loss per common share is computed by dividing net loss by the weighted
average number of common shares outstanding during the respective periods. 
The weighted average number of common shares was 22,312,524 for fiscal years
1998, 1997 and 1996.  Diluted loss per common share is not presented since
it would be anti-dilutive.                     

     (h)  Fiscal Year
The Company's fiscal year ends on the last Saturday in June.  The fiscal year
ended June 29, 1996 was comprised of 53 weeks.  The fiscal years ended June
28,  1997 and June 27, 1998 were comprised of 52 weeks.

     (i)  Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. 
Actual results could differ from those estimates.      

                                                       (Continued)




               NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(1) Description of Business and Summary of Significant Accounting Policies -
Continued

     (j)   New Accounting Standards

In June, 1997 the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") 130 "Reporting
Comprehensive Income".  SFAS 130 establishes standards for reporting and
display of comprehensive income and its components in a full set of general
purpose financial statements.  SFAS 130 requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
in equal prominence with the other financial statements.

SFAS 130 is effective for fiscal years beginning after December 15, 1997. 
Comparative financial statements provided for earlier periods are required
to be reclassified to reflect the provisions of this statement.  The Company
will comply with the reporting requirements of SFAS 130 beginning with the
quarter ending September 26, 1998.

In June, 1997, the FASB issued SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information".  SFAS 131 establishes standards for the
way public business enterprises are to report information about operating
segments in annual financial statements and requires those enterprises to
report selected information about operating segments in interim financial
reports issued to shareholders.  SFAS 131 focuses on a "management approach"
concept as the basis for identifying reportable segments.  The management
approach is based on the way that management organizes the segments within
the enterprise for making operating decisions and assessing performance.

SFAS 131 is effective for fiscal years beginning after December 15, 1997. 
The Company will comply with the reporting requirements of SFAS 131 for the
fiscal year ending June 22, 1999.  Management anticipates that the adoption
of SFAS 131 will not have a significant impact of the Company's consolidated
financial statements.

In June, 1998, the FASB issued SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities.  SFAS
133 is effective for all fiscal quarters of fiscal years beginning after June
15, 1999.  Management is currently evaluating the impact of SFAS 133 on the
Company's consolidated financial statements.

                                                            (Continued)


               NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued      

(2)  Liquidity and Management's Action Plan

The Company continues to experience difficulty generating sufficient cash
flow from operations to meet its obligations.  Several factors have had a
negative impact on liquidity including product development costs,
qualification of products at customers, and under utilization of facilities,
as well as the lack of funds from its affiliates to commence production of
sealed lead acid batteries.

During this rebuilding process, the Company will continue to need significant
amounts of operating cash.  Since December 1990, the Company has received
direct and indirect support from Newmax to fund operational needs.  Although
there is no formal commitment for continuing support, Newmax has made no
indication that this support will cease.  However, as a result of the
dramatic decline in value of the Korean won on foreign exchange markets,
unprecedented numbers of Korean companies nearly simultaneously defaulted on
their obligations or filed for Korean bankruptcy law protection.  As further
discussed in note 6, the Company has been advised that Newmax Co., Ltd. and
Tae Il Media Co., Ltd. filed for reorganization pursuant to bankruptcy laws
in Korea.  If Newmax does not continue its direct and indirect support of the
Company, financing would be sought from other parent and affiliated Companies
or if possible, through unaffiliated sources of capital.  The Company will
continue to make every effort to become self-sufficient and profitable.

The Company is in negotiations to sell its 83,000 square foot facility. The
Company is hopeful that funds generated by facility sales proceeds and
received from Newmax will be adequate to fund debt service and other
operational needs.  Although there is no firm commitment, related parties are
expected to advance funds on a short-term as needed basis to offset
operational cash shortfalls.  Management believes that the combination of
sales of manufacturing facilities reduction in overhead spending continued
cooperation of parent companies and their affiliates, cooperation of the
institutional lender and the addition of the sealed lead acid battery
manufacturing line will enable the Company to remain viable for the next
twelve months.  However, the Company cannot assure that it will receive funds
needed from its affiliates or from sale of facilities to be able to commence
production on the sealed lead acid battery manufacturing line during the next
twelve months.


(3) Inventories                 June 27, 1998      June 28, 1997
                                           (in thousands)             
     Finished goods                 $     -            $     -
     Work in process                      -                 14
     Raw materials and supplies           -                  8
                                    $     -            $    22


                                                       (Continued)
               NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(4) Property, Plant and Equipment                June 27,      June 28,
    Classification  (in thousands)   Life           1998          1997  
Land                                 -           $   239       $   263
Buildings and improvements        20 years         7,832         7,491
Machinery and equipment          3-8 years           626         3,741
Furnishings and fixtures        3-10 years           146           153 
                                                 $ 8,843       $11,648 
The Company conducts certain of its operations using equipment under
operating leases that expire over the next year.  Total rental expense was
$ 9,000, $22,000, and $11,000 for fiscal 1998, 1997, and 1996, respectively.

During fiscal 1998, the Company sold machinery and equipment which had cost
of $3,208,000 and accumulated depreciation of $3,171,000 for $318,000 to
third parties.  For fiscal 1998 the Company incurred $302,000 gain from sale
of property, plant and equipment.  The Company is in negotiation to sell its
83,000 square foot building which consist of land amounting to $211,622 and
building and improvements amounting to $7,219,381 and accumulated
depreciation of $6,891,662. 

(5)  Short-Term Debt
A revolving credit agreement was established in April 1991 for $4,000,000
with a lending institution not previously used by the Company.  This credit
line was renewed on November 26, 1996 and has been collateralized by a Newmax
affiliate (guarantor).  The $2,741,000 note was in default before its
maturity on November 18, 1997.  The institutional lender completed collection
proceedings against a Korean bank letter of credit in the amount of
$2,789,000 securing payment of the revolving credit note.  An affiliated
company which had provided a mortgage on its Korean real estate as collateral
for that Korean bank letter of credit will become entitled to assert a claim
against the Company for all amounts collected from it by the institutional
lender out of the pledge of its assets.  In addition to the above, the
Company borrowed funds from affiliates Gigamax Corporation ("Gigamax"), and
Tae Il USA, Inc. from time to time during fiscal 1998, 1997 and 1996.  These
loans were unsecured at an 8% interest rate.  At June 27, 1998 and June 28,
1997 the balance of these loans was $5,596,000 and $4,896,000, respectively. 
The average amount of short-term debt outstanding and weighted average
interest rate was $6,616,000 at 8% in fiscal 1998 and $4,896,000 at 8% in
fiscal 1997.  The maximum short-term debt outstanding was $8,337,000 in
fiscal 1998 and $4,896,000 in fiscal 1997.  Interest expense recorded on the
$2,741,000 note was $217,000 in fiscal 1998 and $254,000 in fiscal 1997. 
Interest expense recorded on the related party debt to Gigamax of $5,596,000
was $435,000 for fiscal 1998 and $392,000 for fiscal 1997, respectively, and
as a result of the interest being forgiven by related parties in the fourth
quarter due to the Company's limited resources and inability to pay interest
on a timely basis, this amount has been recorded as additional paid-in
capital in the accompanying financial statements.


                                                       (Continued)
                    NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(6)  Long-term Debt
A summary of long-term debt follows:
                                  Annual Interest
                                  Rate at              Balance at
                                  June 27, 1998 June 27, 1998 June 28, 1997
                                                      (in thousands)
Term loan                            10.50%     $  1,408      $ 1,450
Others                                                12            -
      Total long-term debt                         1,420        1,450
Less: Current portion                              1,420        1,450    
                                                 $     0      $     0

The Company entered into a $3,000,000 term loan agreement with a lending
institution on November 5, 1991.  This loan, which based upon a November 26,
1996 revision matured on November 26, 1997, is secured by substantially all
the assets of the Company.  As a condition of this loan, the Company granted
a $7,000,000 mortgage to the lending institution which serves as collateral
for this loan.  The term loan, which bears interest at prime, has been
guaranteed by the related parties Newmax Co., Ltd., Tae Il Media Co., Ltd.
and Mr. K.H. Chung.  The Company has been advised that Newmax Co., Ltd. and
Tae Il Media Co., Ltd. on October 14, 1997 had obtained waivers of defaults
in the payment of amounts due pursuant to their indebtedness from their
institutional lenders and on November 8, 1997 had filed for reorganization
pursuant to bankruptcy laws in Korea so that they might become entitled to
a two-year moratorium on the repayment of certain obligations to certain
creditors.  The debt restructuring plan of Tae Il Media Co., Ltd. was
accepted by its creditors and was approved by the Suwon District Court in
Korea on September 4, 1998.  The debt restructuring plan of Newmax Co., Ltd.
was accepted by its creditors and was approved by the Cheongju District court
in Korea on September 15, 1998.  The Company can make no assurance that its
primary lending institution will continue to forebear from foreclosing on the
mortgage if its negotiations to sell part of the collateral for the mortgage
should not yield funds to satisfy the mortgage indebtedness in a reasonable
amount of time.  The default in payment of the $1,408,000 balance of the term
loan note plus accrued interest on November 26, 1997 has not been cured. 
Moreover, a new letter of credit was not obtained.  Therefore, the entire
principal balance of the term loan note plus accrued interest is due and
payable.  The amount of interest in default and in arrears pursuant to the
$1,408,000 note, was $125,000 and a interest rate of 10.5% as of June 27,
1998.
                  
(7)  Common Stock and Employee Benefits
  
Under the Stock Incentive Program, 1,525,000 shares of Common Stock were
authorized for the grant of options and the issuance of awards.  Under the
terms of this program, options for the purchase of 48,700 shares of common
stock were outstanding at June 27, 1998.  Options issued under the plans
generally become exercisable over a period of from six months to ten years
                                                            (Continued)
                    NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(7)  Common Stock and Employee Benefits - Continued

from the date of grant at a price per share not less than the fair market
value on the date of the grant.  Amounts received upon exercise of options
in excess of par value of shares sold are credited to additional paid-in
capital.  At June 27, 1998, 1,124,797 shares are available for future grants
under the Program.

As of June 27, 1998 and June 28, 1997 there were no outstanding restricted
stock awards for shares issued under the Company's stock award plans.

Options Outstanding          Number of Shares   Option Price Per Share


June 24, 1995 and 
  June 29, 1996                  50,700             .22 -  2.50
  Cancelled                      (2,000)            .22 -     -

June 28, 1997 and
  June 27, 1998                  48,700           $ .22 - $2.50
 
Options exercisable:
  June 27, 1998                  48,700           $ .22 - $2.50


The Company's profit sharing plan covers all employees with six months
employment with the Company.  Contributions to the plan by the Company are
made with its common shares.  The annual contribution is determined under a
formula that considers each participant's compensation for the plan year and
the fair market value of the Company's common shares on the last trading day
of the Company's fiscal year.  The Company's 401(k) retirement savings plan
allows for employee contributions through payroll deductions with optional
matching contributions by the Company.

There was no Company contribution to either plan for fiscal 1995 through
1998.  The plans as amended are intended to comply with the Internal Revenue
Code and the Employee Retirement Income Security Act of 1974 and are
administered by trustees appointed by the Board of Directors.


(8)  Income taxes

No income tax expense or benefit was recognized for fiscal 1998, 1997 and
1996 due to losses incurred and the inability to utilize these losses for
income tax purposes.  At June 27, 1998, the Company has net operating loss
carry forwards of approximately $23,050,000 which will expire as follows:

                                                            (Continued)

                    NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(8)  Income taxes - Continued

          Year           Amount (in thousands)
          2006          $ 6,743
          2007            6,177
          2008            5,436
          2009            1,272
          2010              220
          2011              808
          2012            1,016    
          2013            1,378
                        $23,050                        
               
Carry forwards from prior years have been limited due to the change in
control of the Company which took place on December 24, 1990.  Loss carry
forwards available as of June 27, 1998 from years prior to the change in
control, which are included above, are approximately $2,163,000.

Deferred tax liabilities (assets) are comprised of the following at June 27,
1998 and June 28, 1997:                       1998             1997

     Depreciation                          $  559,000      $  554,000 
     Net operating loss carryforwards      (7,837,000)     (7,272,000)
     Inventory reserves                      (407,000)       (475,000)
     Other                                    (16,000)        (16,000)
                                           (8,260,000)     (7,763,000) 
     Deferred tax valuation allowance       7,701,000       7,209,000 
     Deferred taxes, net                   $        -      $        - 

The deferred tax valuation allowance increased by $492,000 and $338,000
during fiscal 1998 and 1997, respectively.

(9)  Export Sales - Major Customers

The Company's operations used to consist primarily of the manufacture of
recording heads.  The principal products which used to be manufactured and
sold were ferrite materials, recording head cores, and recording head
assemblies.  A recording head assembly is a significant component of a
computer disk or tape memory.

Net sales of the United States operations includes export sales as follows:
                                      Asia
                                  (in thousands)
             1996                   $ 3,101
             1997                   $ 2,517
             1998                   $    73

The amount and percent of sales to those customers comprising ten percent or
more of total sales are shown below.                   (Continued)
                    NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(9)  Export Sales - Major Customers - Continued

          Products
     ($ in thousands)
                           1998          1997             1996
Major Customer 1     $    73 -100%  $ 2,487 - 93%   $ 2,763 - 67%
Major Customer 2     $       -  -   $   143 -  5%   $   543   13%


(10)  Related Party Transactions

During fiscal 1997, the Company sold equipment, at fair value, to Newmax for
$157,000.  The gain on the sale of $173,000 was recorded as additional
paid-in capital and was not recognized in the consolidated statement of
operations.  The gain was not recognized in the statement of operations since
the sale was of "items not held for sale in the ordinary course of business"
and income recognition on items sold to a related party where fair value was
judgmental could be misleading.

Net sales for fiscal 1998, 1997 and 1996 included sales of goods totalling
$73,000, $2,487,000 and $2,763,000, respectively, to Newmax of products made
to specification of Newmax's customer.  These products required significant
additional value added before sale to the ultimate customer.

The Company owed Newmax $38,000 at June 27, 1998 and $30,000 at June 28, 1997
which is included in the consolidated balance sheets under due to related
parties, net.

The Company purchased equipment during 1996 at the request of an affiliated
company, Tae Il Magnetics Co., Ltd. ("Magnetics"), to be sold to and used by
Magnetics.  The Company earned a fee of $33,000 for these services which is
included in other (income) expense, net.

The Company also sold products to Tae Il Media Co., Ltd. ("Tae Il") totaling
approximately $40,000 in fiscal 1996.  Tae Il sold the Company approximately
$211,000 of electrical light fixture ballasts during fiscal 1996.  The unsold
ballast inventory was returned for credit on June 9, 1997.  Tae Il sold the
Company approximately $500,000 of non-electronic consumer goods for resale
during fiscal 1996.  The Company owed Tae Il $210,000  at June 27, 1998 and
June 28, 1997.  These balances have been included in the consolidated balance
sheets under due to related parties, net.

Newmax provided quarantees via a letter of credit to assist in obtaining a
$4 million revolving credit agreement; however, that revolving credit loan
in the amount of $2,741,000 has been in default and that letter of credit was
drawn down by the primary institutional lender of the Company.  An affiliated
company had provided a mortgage on its Korean real estate as collateral for
the Korean bank letter of credit.  The Company now owes $2,741,000 to the
                                                  (Continued)
               NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(10)      Related Party Transactions - Continued

affiliated company as of June 27, 1998 which is included in short-term debt
in the consolidated financial statements.  Interest accrued on $2,741,000
debt to the affiliate of $182,000 as of June 27, 1998 has been included in
due to related parties.  Gigamax has made short-term loans averaging
$5,596,000 for fiscal 1998 and $4,896,000 for fiscal 1997 and 1996.  Both of
these are also discussed in note (5).  Included in due to related parties at
June 27, 1998 and June 28, 1997 is $1,370,000  due to Gigamax and Tae Il USA,
Inc. for interest on short-term borrowing and other charges.

The Company was advanced $35,000 by Techmedia International Corporation
("Techmedia"), an affiliated company, during fiscal 1997 to fund operating
expenses.  The total $35,000 from Techmedia still remains payable at June 27,
1998.

Although negotiated in good faith, the impact of the above transactions on
the financial statements may be significantly different than had the
transactions been negotiated with unrelated parties.

(11)   Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to
estimate that value.

       (a)  Cash and Cash Equivalents, Accounts Payable and Accrued Expenses

        The carrying amount of cash, accounts payable and accrued expenses
        approximate fair value because of the short maturity of these       
 
 instruments.

       (b)  Debt

        The interest rates on the Company's short-term and long-term debt are
        reset according to changes in the current market (see notes 5 and
6). 
        Consequently, the carrying value of the debt approximates fair value.

(12)  Contingent Liabilities

The Company is a defendant ia a lawsuit brought about as the result of an
accident involving a Company automobile.  The lawsuit was commenced by the
plaintiffs against the company on October 15, 1997 in the Supreme Court for
the State of New York for the county of New York and claims damages
aggregating $7,700,000 in regard to an accident involving a car leased by the
Company.  The Company's insurer has assumed responsibility and is defending
the Company; however, the damages claimed exceed the $300,000 policy limits. 
The Company has filed an answer and is cooperating with discovery. 
                                                            (Continued)
               NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(12) Contingent Liabilities - Continued

Depositions are scheduled for October 1998.  After consulting with counsel,
the company has determined that it is not possible at this time to estimate
the amount of loss; if any, that may ultimately be incurred.  Accordingly,
no provision has been made in the accompanying consolidated financial
statements.

The Company has been notified it is one of many potentially responsible
parties ("PRP's") for an Environmental Protection Agency ("EPA") Superfund
site.  A "PRP" may be jointly and severally liable for clean-up of a
Superfund site, except to the extent of any settlement agreement with the
Environmental Protection Agency.

The site is known as the Solvents Recovery Service of New England Superfund
site and is located on Lazy Lane in Southington, Connecticut.  The EPA has
identified in excess of 1,600 PRP's for this site.  The EPA has indicated it
has incurred costs in excess of $3.35 million but has not as yet completed
a remedial action plan.  The EPA is not prepared at this time to estimate the
total cost of remedial action.  Two Non-Time Critical Removal Actions have
been undertaken by the PRP's with EPA approval.  The actions undertaken to
date are designed to help limit further environmental damage and to obtain
data to better understand the extent of damage.  Additional treatment will
be based upon analysis of data obtained.  The Company has paid its allocated
share of these costs, the amount not being significant to the financial
statements of the Company.  

The Company is currently unable to predict the outcome of this matter as the
total cost of remedial action has not been determined and the method of
allocation of liability among parties who may ultimately be found liable
remains uncertain.  The Company believes, however, that it is unlikely that
any liability it may incur would have a significant effect on its financial
statements.


















               INDEPENDENT AUDITORS' REPORT ON SCHEDULE

The Board of Directors and Stockholders
National Micronetics, Inc.:


Under date of August 26, 1998, we reported on the consolidated balance sheets
of National Micronetics, Inc. and subsidiaries as of June 27, 1998 and June
28, 1997, and the related consolidated statements of operations, changes in
stockholders' deficiency and cash flows for each of the years in the two-year
period ended June 27, 1998.  In connection with our audits of the
aforementioned consolidated financial statements, we also have audited the
related financial statement schedule as listed in the index on page 27.  This
financial statement schedule is the responsibility of the Company's
management.  Our responsibility is to report on this financial statement
schedule based on our audits.

The accompanying financial statement schedule has been prepared assuming that
National Micronetics, Inc. and subsidiaries will continue as a going
concern. 
The Company has suffered recurring losses from operations and has net capital
deficiencies.  As a result of these recurring losses, the Company has
experienced a significant deterioration in liquidity.  The Company has
received funding for operations from its parent, Newmax Co., Ltd., and
affiliated companies in the current and prior years; however, the Company has
no guarantee that this funding will continue.  These circumstances raise
substantial doubt about the Company's ability to continue as a going
concern. 
Management's plans in regard to these matters are described in note 2 to the
consolidated financial statements.  The financial statement schedule does not
include any adjustments that might result from the outcome of this
uncertainty.

Because of the possible material effect of the matter discussed in the
preceding paragraph, we are unable to express, and do not express, an opinion
on the financial statement schedule referred to above.

As discussed in note 12 to the consolidated financial statements, the Company
is a defendant in a lawsuit brought about as the result of an accident
involving a Company automobile.  The ultimate outcome of the litigation
cannot presently be determined.  Accordingly, no provision for any liability
that may result upon adjudication has been made in the accompanying financial
statement schedule.


                                  Sung I. Rhee, C.P.A. 

Fort Lee, New Jersey
August 26, 1998







               INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
National Micronetics, Inc.:


Under date of August 28, 1996, we reported on the consolidated statements of
operations, changes in stockholders' deficiency and cash flows of National
Micronetics, Inc. and Subsidiaries for the year ended June 29, 1996.  In
connection with our audit of the aforementioned consolidated financial
statements, we also have audited the related financial statement schedule as
listed in the index on page 27.  This financial statement schedule is the
responsibility of the Company's management.  Our responsibility is to report
on this financial statement schedule based on our audit.

The accompanying financial statement schedule has been prepared assuming that
National Micronetics, Inc. and subsidiaries will continue as a going
concern. 
The Company has suffered recurring losses from operations and has a net
capital deficiency.  As a result of these recurring losses, the Company has
experienced a significant deterioration in liquidity.  The Company has
received funding for operations from its parent, Newmax Co., Ltd., and
affiliated companies in 1996 and prior years; however, the Company has no
guarantee that this funding will continue.  These circumstances raise
substantial doubt about the Company's ability to continue as a going
concern. 
Management's plans in regard to these matters are described in note 2 to the
consolidated financial statements.  The financial statement schedule does not
include any adjustments that might result from the outcome of this
uncertainty.

Because of the effects on the financial statement schedule of such
adjustments, if any, as might have been required had the outcome of the
uncertainty discussed in the preceding paragraph been known, we are unable
to, and do not, express an opinion on the accompanying financial statement
schedule for the year ended June 29, 1996.


                               /s/ KPMG PEAT MARWICK LLP

Albany, New York
August 28, 1996










                                                        Schedule II

                 NATIONAL MICRONETICS, INC. AND SUBSIDIARIES
                      Valuation and Qualifying Accounts

                    Years ended June 1998, 1997 and 1996
                               (in thousands)


                                               Accounts
                       Balance at  Charged to  written off        Balance
                       beginning   costs and   as uncollectible,  at end
Description            of period   expenses    net of recoveries  of period

Year ended June 1998:

Allowance for doubtful
 accounts receivable   $       -   $      -    $        -        $      -

Year ended June 1997:

Allowance for doubtful
 accounts receivable   $     132   $   (132)    $       -        $      -


Year ended June 1996:

Allowance for doubtful
 accounts receivable   $       -   $    135    $        3        $    132























                        Exhibits Filed Electronically


                                                                        Page


21        Subsidiaries of the Company                                    51


23.1      Consent of Sung I. Rhee, C.P.A. to incorporation by 
          reference of its report on Financial Statements in 
          Registration Statements on Form S-8 Registration Nos.
          2-81098, 2-81456, 2-89221, 2-96120, 2-96139, 33-14778 
          and 33-33567.                                                  52

23.2      Consent of KPMG Peat Marwick LLP to incorporation by 
          reference of its report on Financial Statements in
          Registration Statements on Form S-8 Registration Nos. 
          2-81098, 2-81456, 2-89221, 2-96120, 2-96139, 33-14778
          and 33-33567.                                                  53

27        Financial Data Schedule (For electronic filing purposes only).   






























                                                        Exhibit 21

                 NATIONAL MICRONETICS, INC. AND SUBSIDIARIES

                       SUBSIDIARIES OF THE REGISTRANT


                                                  State or County in
Name                                              which incorporated


National Micronetics Sales, Inc...................Delaware

National Micronetics International Limited........Hong Kong




































                                                          Exhibit 23.1

                      Consent of Independent Auditors'


The Board of Directors
National Micronetics, Inc.:


We consent to incorporation by reference in the Registration Statement Nos.
2-81098, 2-81456, 2-89221, 2-96120, 2-96139, 33-14778 and 33-33567 on Forms
S-8 of National Micronetics, Inc. of our reports dated August 26, 1998,
relating to the consolidated balance sheets as of June 27, 1998 and June 28,
1997, and the consolidated statements of operations, changes in stockholders'
deficiency and cash flows and related schedule for each of the years in the
two-year period ended June 27, 1998, which reports appear in the June 27,
1998 annual report on Form 10-K of National Micronetics, Inc.

Our reports dated August 26, 1998 contain explanatory paragraphs that state
that the Company's recurring losses from operations, its net capital
deficiencies, the deterioration in liquidity and other matters raise
substantial doubt about the Company's ability to continue as a going concern.
The consolidated financial statements and financial statement schedule do not
include any adjustments that might result from the outcome of this
uncertainty.

Because of the possible material effect of the matter discussed in the
preceding paragraph, we are unable to express, and do not express, an opinion
on the consolidated financial statements and schedule referred to above.

As discussed in note 12 to the consolidated financial statements, the Company
is a defendant in a lawsuit brought about as the result of an accident
involving a Company automobile.  The ultimate outcome of the litigation
cannot presently be determined.  Accordingly, no provision for any liability
that may result upon adjudication has been made in the accompanying
consolidated financial statements and schedule.


                                  Sung I. Rhee, C.P.A.         



Fort Lee, New Jersey
September 23, 1998








                                                          Exhibit 23.2




The Board of Directors
National Micronetics, Inc.:


We consent to incorporation by reference in the Registration Statement Nos.
2-81098, 2-81456, 2-89221, 2-96120, 2-96139, 33-14778 and 33-33567 on Forms
S-8 of National Micronetics, Inc. of our reports dated August 28, 1996,
relating to the  consolidated statements of operations, changes in
stockholders' deficiency and cash flow for the year ended June 29, 1996, and
related schedule, which reports appear in the June 28, 1997 annual report on
Form 10-K of National Micronetics, Inc.  

Our reports dated August 28, 1996 contained an explanatory paragraph that
states that the Company's recurring losses from operations, its net capital
deficiency, the deterioration in liquidity and other matters raise
substantial doubt about the Company's ability to continue as a going concern.
The consolidated financial statements and financial statement schedule do not
include any adjustments that might result from the outcome of this
uncertainty.

Because of the effects on the consolidated financial statements of such
adjustments, if any, as might have been required had the outcome of the
uncertainty discussed in the preceding paragraph been known, we were unable
to, and did not, express an opinion on the consolidated financial statements
and schedule as of June 29, 1996 and for the year then ended June 29, 1996.


                               /s/ KPMG PEAT MARWICK LLP        



Albany, New York     
September 24, 1998