UNITED STATES
SECURITIES AND EXCHANGE COMMISION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
---------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
For the transition period from to
-------------------
Commission file number 1-14072
PEN INTERCONNECT, INC.
(Exact name of small business issuer as specified in its charter)
UTAH 87-0430260
(State or other jurisdiction of (I.R.S. Employer Identification No)
incorporation or organization)
1601 Alton Parkway, Irvine, CA 92606
(Address of Principal Executive Offices) (Zip Code)
(949) 798-5800
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
As of December 31, 1999 the issuer had 9,913,114 shares of its common
stock, par value $0.01 per share, issued and outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
<PAGE>
FORM 10-QSB
PEN INTERCONNECT, INC.
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
Financial Information 3
Balance Sheets at December 31, 1999
(unaudited) and September 30, 1999 4-5
Statements of Operations for the three months
ended December 31, 1999 and 1998 (unaudited) 6
Statements of Cash Flows for the three months
ended December 31, 1999 and 1998 (unaudited) 7-8
Notes to Condensed Financial Statements (unaudited) 9-10
Item 2 Management's Discussion and Analysis or
---------------------------------------
Plan of Operation 11-13
-----------------
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 14
Item 2 Changes in the Securities and Use of Proceeds 14
Item 3 Defaults Upon Senior Securities 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 14
Item 6(a). Exhibits 14
Item 6(b). Reports on Form 8-K 14
Signatures 15
PEN INTERCONNECT, INC.
PART I
FINANCIAL INFORMATION
ITEM 1. INTERIM CONDENSED FINANCIAL STATEMENTS
Pen Interconnect, Inc. (the "Company"), has included the unaudited
condensed balance sheet of the Company as of December 31, 1999 and audited
balance sheet as of September 30, 1999 (the Company's most recent fiscal
year), unaudited condensed statements of operations for the three months
ended December 31, 1999 and 1998, and unaudited condensed statements of
cash flows for the three months ended December 31, 1999 and 1998, together
with unaudited condensed notes thereto. In the opinion of management of the
Company, the financial statements reflect all adjustments, all of which are
normal recurring adjustments, considered necessary to fairly present the
financial condition, results of operations and cash flows of the Company
for the interim periods presented. The financial statements included in
this report on Form 10-QSB should be read in conjunction with the audited
financial statements of the Company and the notes thereto included in the
annual report of the Company on Form 10-KSB for the year ended September
30, 1999. The results of operations for the three months ended December 31,
1999 may not be indicative of the results that may be expected for the year
ending September 30, 2000.
<PAGE>
Pen Interconnect, Inc.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
---------------- ------------------
(unaudited)
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 56,409 $ 177,214
Trade accounts receivables, less allowance for
doubtful accounts of $1,890,576 and
$1,890,576 at December 31, 1999 and
September 30, 1999 respectively 3,039,422 2,708,567
Current maturities of notes receivable 585,587 575,112
Inventories (Note B) 4,200,948 4,250,661
Prepaid expenses and other current assets 9,718 130,977
---------------- ------------------
Total current assets 7,892,084 7,842,531
PROPERTY AND EQUIPMENT, AT COST
Production equipment 1,452,667 1,450,494
Furniture and fixtures 167,169 167,169
Transportation equipment 22,149 22,149
Leasehold improvements 273,733 273,733
---------------- ------------------
1,915,718 1,913,545
Less accumulated depreciation 431,137 376,681
---------------- ------------------
1,484,581 1,536,864
OTHER ASSETS
Notes receivable, less current maturities 150,000 150,000
Other 4,860 0
---------------- ------------------
Total other assets 154,860 150,000
---------------- ------------------
$9,531,525 $9,529,395
================ ==================
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
Pen Interconnect, Inc.
BALANCE SHEETS - CONTINUED
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
---------------- ------------------
(unaudited)
CURRENT LIABILITIES
<S> <C> <C>
Line of credit 4,140,160 4,436,562
Current maturities of long-term obligations 1,615,151 1,682,478
Current maturities of capital leases 123,249 122,759
Accounts payable 4,920,145 3,961,412
Accrued liabilities (Note D) 846,780 837,261
---------------- ------------------
Total current liabilities 11,645,485 11,040,472
CAPITAL LEASE OBLIGATIONS, less
current maturities 255,898 299,051
---------------- ------------------
Total liabilities 11,901,383 11,339,523
STOCKHOLDERS' EQUITY
Convertible Preferred stock, $0.01 par value
authorized 5,000,000 shares,
Series A; issued and outstanding 1,800 shares 18 18
Series B; issued and outstanding 1,000 shares 10 10
Common stock, $0.01 par value, authorized 50,000,000 shares, issued and
outstanding 9,913,114 shares at December 31,
1999 and 9,638,114 at September 30, 1999 99,131 96,381
Additional paid-in capital (Note C) 17,527,625 17,447,876
Accumulated deficit (Notes C & D) (19,996,642) (19,354,413)
---------------- ------------------
Total stockholders' deficit (2,369,858) (1,810,128)
---------------- ------------------
$9,531,525 $9,529,395
================ ==================
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
Pen Interconnect, Inc.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
December 31,
----------------------------------
1999 1998
---------------- ---------------
<S> <C> <C>
Net sales $ 4,409,348 $4,757,839
Cost of sales 4,196,459 4,591,218
---------------- ---------------
Gross profit 212,889 166,621
Operating expenses
Sales and marketing 0 81,719
Research and development 87,423 167,697
General and administrative 436,550 768,733
Depreciation and amortization 54,455 126,617
---------------- ---------------
Total operating expenses 578,428 1,144,766
---------------- ---------------
Operating loss (365,539) (978,145)
Other income (expense)
Interest expense (176,211) (192,872)
Other income, (expense) net 11,523 (74,218)
---------------- ---------------
Total other income (expense) (164,688) (267,090)
---------------- ---------------
Loss before income taxes (530,227) (1,245,235)
Provision (benefit) for income taxes 0 0
---------------- ---------------
Net loss $ (530,227) $ (1,245,235)
================ ===============
Loss per common share
Basic and diluted (Note E) $ (.05) $ (0.22)
================ ===============
Weighted average common shares outstanding -
basic and diluted 9,668,670 5,551,257
================ ===============
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
Pen Interconnect, Inc.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
December 31,
---------------------------------
1999 1998
--------------- ---------------
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities
<S> <C> <C>
Net loss $ (530,227) $(1,245,235)
Adjustments to reconcile net loss to net cash
Depreciation and amortization 54,455 126,617
Bad debts 0 8,427
Changes in asset and liabilities
Trade accounts receivable (330,855) (126,795)
Inventories 49,713 460,092
Prepaid expenses and other assets 116,399 98,978
Accounts payable 958,733 (251,380)
Accrued liabilities 9,518 86,929
--------------- ---------------
Total adjustments 857,963 402,868
--------------- ---------------
Net cash used in operating activities 327,736 (842,367)
--------------- ---------------
Cash flows from investing activities
Purchase of property and equipment (2,173) (22,433)
Issuance of notes receivable (10,475) 0
Collections on notes receivable 0 1,922
--------------- ---------------
Net cash used in investing activities (12,648) (20,511)
--------------- ---------------
</TABLE>
(Continued)
7
<PAGE>
Pen Interconnect, Inc.
STATEMENTS OF CASH FLOWS - CONTINUED
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
December 31,
---------------------------------
1999 1998
--------------- ---------------
Cash flows from financing activities
<S> <C> <C>
Principal payments on long-term obligations (67,327) (69,988)
Net change in line of credit (296,402) (495,107)
Accrued dividends on preferred shares (112,000) 0
Principal payments on capital lease obligations (42,663) (21,524)
Proceeds from issuance of long-term obligations 0 896,000
Discount on exercised common shares options 45,650 0
Proceeds from sale of common stock 36,851 212,012
--------------- ---------------
Net cash provided by financing activities (435,893) 521,393
--------------- ---------------
Net decrease in cash and cash equivalents (120,805) (341,485)
Cash and cash equivalents at beginning of period 177,214 657,777
--------------- ---------------
Cash and cash equivalents at end of period 56,409 $ 316,292
=============== ===============
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 176,211 $ 192,872
Income taxes $ 0 $ 0
</TABLE>
Non-cash investing and financing activities
During the first quarter of FY 98, subordinated debentures totaling $491,064
were converted into 854,473 shares of common stock.
The accompanying notes are an integral part of these statements.
8
<PAGE>
NOTE A - GOING CONCERN
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has had
recurring losses, $530,227 for the quarter ended December 31, 1999, a
deficit of $2,369,858 in stockholders' equity and negative working
capital of $3,753,401 for the period ended December 31, 1999. The Company
plans to satisfy its operating and debt service requirements through the
sale of its InCirT division. The Company is in negotiations with
potential buyers of the division, but has not yet secured a buyer. If the
Company is unable to sell its InCirT division, it will have to raise
additional capital to fund its negative cash flow. These factors, among
others, raise substantial doubt about the Company's ability to continue
as a going concern.
NOTE B - ACQUISITIONS/DISPOSITIONS
PowerStream Division
On December 28, 1999 the Company signed a letter of intent with Mark W.
Lund of Lund Instrument Engineering, Inc. ("Lund") of Orem, UT. to sell
certain assets and to assume certain liabilities of PowerStream Division.
The transaction closed on January 21st, 2000. Lund remitted $74,324.00 to
the Company and received assets with a book value of approximately
$239,350, customer contracts and general intangibles; and assumed
liabilities and customer advances of approximately $411,000. The Company
is to receive for three years royalties of a) sixteen (16) percent of the
gross profits generated from sales generated from a contract with L3
Communications, less any customer advances and b) eight (8) percent of
gross profits on all other sales contracts in place at closing.
InCirT Division
On December 23, 1999 the Company signed a letter of intent to sell the
InCirT division to a contract manufacturer. The parties decided to
discontinue any further negotiations. The Company is currently
negotiating with other potential buyers of the InCirT Division and/or its
assets.
NOTE C - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
---------------- ----------------
<S> <C> <C>
Raw materials (net of allowance) $ 2,525,699 $ 2,684,238
Work-in-process 1,615,934 1,507,108
Finished goods 59,315 59,315
---------------- ----------------
$ 4,200,948 $ 4,250,661
================ ================
</TABLE>
NOTE D - OPTIONS TO PURCHASE COMMON STOCK
Options representing 275,000 common shares were exercised in December,
1999 at a price of $.134 per share. The option shares were originally
priced at $.30 per share. Proceeds ($36,850) were utilized for corporate
operations.
9
<PAGE>
NOTE E - ACCRUED PREFERRED STOCK DIVIDENDS
The Company accrued $112,000 for dividends payable to preferred
shareholders during the quarter.
Note F - Preferred Stock
The Company has issued two series of Preferred Stock. Series A was
issued in February 1999 consisting of 1,800 shares, par value $0.01 per share,
for $1,000 per share. Series B was issued in April 1999 at the same price and
par value but only 1,000 shares were issued. Both series of Preferred Stock
carry a 16 percent dividend rate which is paid quarterly. If and when the
Company's stock is listed again on NASDAQ the dividend rate will drop to 8
percent.
Both issuances of Preferred Stock are convertible into shares
of the Company's Common Stock. Each share of Series A Preferred Stock is
convertible into an amount of shares of Pen Common Stock equal to $1,000 divided
by the average of the two lowest closing bid prices for Pen Common Stock during
the period of 22 consecutive trading days ending with the last trading day
before the date of conversion, after discounting that market price by 15 percent
(the "Conversion Price"). The maximum Conversion Price for the Series A
Preferred Stock is $1.17 per share. The shares of Series B Preferred Stock are
convertible into Common Stock at the same Conversion Price as the Series A
Preferred Stock except for a maximum Conversion Price of $0.79 per share.
Warrants to acquire 320,000 shares of Common Stock at prices ranging from $0.86
to $1.28 per share were also issued to the purchasers of the Series A and Series
B Preferred Stock. The Warrants expire three years from date the Preferred Stock
and warrants were initially issued.
Note G - Earnings (loss) per share
Basic earnings (loss) per common share is computed by dividing net
earnings (loss) available to common shareholders by the weighted average number
of common shares outstanding during each period. Diluted earnings (loss) per
common share are similarly calculated, except that the weighted average number
of common shares outstanding includes common shares that may be issued subject
to existing rights with dilutive potential except for periods when such
calculations would be anti-dilutive.
For the three ended December 31, 1999, net earnings (loss) attributable
to common shareholders includes accrued dividends at the stated dividend rate
from date of issuance and a non-cash imputed dividend to the preferred
shareholders related to the beneficial conversion feature on the 1999 Series A
and B Preferred Stock and related warrants. (See Note E). The beneficial
conversion feature is computed as the difference between the market value of the
common stock into which the Series A and B Preferred Stock can be converted and
the value assigned to the Series A and B Preferred Stock in the private
placement. The imputed dividend is a one-time non-cash charge against the
earnings (loss) per common share. The calculation of earnings (loss) per share
is included in Exhibit 11.
10
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- -------
FORWARD-LOOKING STATEMENTS. This report contains certain forward-looking
statements within the meaning of section 27A of the Securities Act of 1933 as
amended, and section 21E of the Securities Exchange Act of 1934, as amended,
that involve risks and uncertainties. In addition, the Company may from time to
time make oral forward-looking statements. Actual results are uncertain and may
be impacted by the following factors. In particular, certain risks and
uncertainties that may impact the accuracy of the forward-looking statements
with respect to revenues, expenses and operating results include without
limitation, cycles of customer orders, general economic and competitive
conditions and changing consumer trends, technological advances and the number
and timing of new product introductions, shipments of products and components
from foreign suppliers, and changes in the mix of products ordered by customers.
As a result, the actual results may differ materially from those projected in
the forward-looking statements.
Because of these and other factors that may affect the Company's operating
results, past financial performance should not be considered an indicator of
future performance, and investors should not use historical trends to anticipate
results or trends in future periods.
The following discussion and analysis provides certain information which the
Company's management believes is relevant to an assessment and understanding of
the Company's results of operations and financial condition for the three months
ended December 31, 1999 and 1998. This discussion should be read in conjunction
with the audited financial statements of the Company and notes thereto included
in the Annual Report of the Company on Form 10-KSB for the year ended September
30, 1999.
General
Pen Interconnect, Inc. (the "Company" or "Pen") is a contract manufacturing
provider offering EMSI (Electronic Manufacturing Service Industry) manufacturing
(circuit board assembly) and custom design and manufacturing of battery
chargers, power supplies and Uninterruptible Power Supply UPS systems for
original equipment manufactures ("OEMs") in the computer, peripheral,
telecommunications, instrumentation, medical and testing equipment industries.
The Company was incorporated under the laws of the State of Utah on September
30, 1985. The Company maintains divisions located in Orem, Utah and Irvine,
California.
On December 28, 1999 the Company signed a letter of intent to sell the
PowerStream division to a private investor. The division's sale was completed in
January, 2000. The Company is currently negotiating with potential buyers of the
InCirT Division and/or its assets.
The Company's lender, Finova, has withheld advances to reduce the over-advance
situation with the Company's line of credit. This has restricted the Company's
ability to pay vendors and obtain raw materials to meet shipping schedules. The
Company's InCirT Division has had to contract with a competitor to purchase raw
materials for Alaris, InCirT's and the Company's major customer.
11
<PAGE>
Pen is seeking to relieve the liquidity problems by pursuing the sale of its
remaining division. However, additional capital would still probably be
necessary to fund the operations of a new business, after the sale of InCirT's
operations. The Company has withdrawn from active pursuit of new business to
acquire, pending the sale of InCirT. There can be no assurance that management
may be able to raise additional capital for the Company's planned new
businesses.
Results of Operations
Net sales. Net sales for the Company decreased $348,491 or approximately 7.3
percent for the three month period ended December 31, 1999 as compared to the
same period in the prior year. This decrease resulted from credit difficulties
with certain suppliers, thereby restricting production against sales orders.
Sales during the first three months of FY 2000 were $4,409,348 compared to
$4,757,839 during the first three months in FY 99.
Cost of sales. Cost of sales as a percentage of net sales have decreased
slightly to approximately 95.2 percent for the three months ended December 31,
1999, as compared to 96.5 percent for the same period in the prior year. This
decrease is due to a combination of factors, which considered individually are
each immaterial.
Operating expenses. Operating expenses decreased during the first quarter of
fiscal 2000 by approximately $611,988. This decrease resulted in the following
areas: (1) Research and development of $80,274 associated with new product
development costs in the PowerStream Division; (2) General and Administrative
costs decreased by $332,182 primarily due to the sale of the Company's Cable and
MotoSat divisions during the prior year; (3) Sales and marketing expenses
declined by $81,719 due to an inability to finance any sales growth; and 4)
Depreciation and amortization costs decreased by $72,162 primarily due to the
sale of the Company's Cable and MotoSat divisions during the prior year;.
Other income and expenses. Other income and expenses decreased $102,402 for the
three months ended December 31, 1999 as compared to the same period in the prior
year. This decrease is the result of decreased interest expense of $16,661 due
to a decrease in the average line of credit outstanding and in the term loan
during the quarter with Finova. Other income represents accrued interest income
on certain notes receivable and money market interest income. In the first
quarter of FY 99 other expenses were incurred associated with financing
transactions which were non-recurring.
Net earnings (loss) and earnings (loss) per share. Net loss for the first fiscal
quarter ended December 31, 1999 totaled ($530,227) or ($0.05) per share,
compared with losses of ($1,245,235) or ($0.22) per share for the first fiscal
quarter of FY 1999. The decrease in the loss per share of $0.17 is caused by
($0.005) due to increased margins on sales, ($0.05) from a decrease in sales and
marketing, in research and development and in general administrative expenses,
($0.01) from a decrease in interest expense and other expense and an increase in
interest income. Approximately ($.10) of per share improvement is the result of
a 74% increase in the number of outstanding common shares.
12
<PAGE>
Liquidity and Capital Resources
During the first three months of FY 2000 the Company sustained losses of
$530,227. Management has taken steps to correct this trend by selling the
PowerStream division during the second quarter of FY 2000, which incurred an
operating loss of approximately $215,000 during the first quarter. The Company
has previously announced its intention to seek a buyer for the InCirT Division,
which incurred an operating loss of approximately $119,000 during the first
quarter.
As a result of these losses and the Company's lender restricting loan advances
due to increased ineligibility of two of the Company's customers failing to
remit according to sales terms, the Company has had to raise cash ($36,850)
through the exercise of options from a re-strike of the purchase price of the
stock (275,000 common shares). The Company has been procuring parts for
production, as a result of Finova's restrictive loan advance policy with the
Company, by maximizing its open account activity with vendors and by having
customers purchase or consign parts for the Company in order to meet sales order
requirements. This has resulted in a significant increase in accounts payable
due vendors/customers. If the Company is unable to sell its InCirT division, it
will have to raise additional capital to fund its negative cash flow.
Inflation and Seasonality
The Company does not believe that it is significantly impacted by inflation.
Historically, the computer industry sales tend to decline in December, January,
July and August when activity in the personal computer industry as a whole is
reduced. However, the Company has recently diversified into the medical and
telecommunications products in an effort to offset the seasonality in the
computer industry.
13
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
From time to time the Company has been a party to various legal
proceedings arising in the ordinary course of business. As of the date of this
filing, the Company and it's CEO, Steve Fryer, are being sued by a former
officer of the Company for fraud and misrepresentation. Per the Company's legal
counsel, there are no grounds for the lawsuit and there is no expectation that
any judgement will be made against the Company.
During the quarter two lawsuits were filed against the Company. In
January 2000, McBride Electric Inc. obtained a judgment against the Company for
$2,963. On October 28, 1999 Color Savvy Systems, Ltd. filed suit to recover
$165,750 in past due uncontested vendor obligations.
Item 2. Changes in the Securities and Use of Proceeds.
----------------------------------------------
Options representing 275,000 common shares were exercised in
December, 1999 at a price of $.134 per share. The option shares were originally
priced at $.30 per share. Proceeds ($36,850) were utilized for corporate
operations.
Item 3. Defaults Upon Senior Securities.
--------------------------------
In October of 1999 the Company received notice from its primary lender
(Finova) that they are placing the Company's loan in default status for
non-compliance with loan covenants. The Company was originally given until
December 18, 1999 to pay off the loan balance. Finova has extended the deadline
to February 28, 2000.
Item 4. Submission of Matters to a Vote of Security Holders.
None during the quarter.
Item 5. Other Information. None
------------------
Item 6. Exhibits and Reports on Form 8-K. None
--------------------------------
A. Exhibits
11 Calculation of earnings (loss) per share.
27 Financial Data Schedule.
B. Reports on Form 8-K. None
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PEN INTERCONNECT, INC.
February 14, 2000 By: /s/ Stephen J. Fryer
---------------------
Stephen J. Fryer,
CEO,Chairman and
Principal Accounting Officer
<PAGE>
Exhibit 11
Pen Interconnect, Inc.
CALCULATION OF EARNINGS (LOSS) PER SHARE
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
-------------- -------------
<S> <C> <C>
Loss available to
common shareholders $ (530,277) $ (1,245,235)
============== =============
Basic EPS
- -------------------------------------------
Common shares outstanding entire period 9,638,114 5,018,437
Weighted average common shares issued
during period 30,556 532,820
-------------- -------------
Weighted average commons shares
outstanding during period 9,668,670 5,551,257
============== =============
Loss per common share - basic $ (.05) $ (0.22)
============== =============
Diluted EPS
- -------------------------------------------
Weighted average common shares
outstanding during period - basic 9,668,670 5,551,257
Dilutive effect of stock options and
warrants 0 0
-------------- -------------
Weighted average common shares
outstanding during period - diluted 9,668,670 5,551,257
============== =============
Loss per common share -
diluted $ (.05) $ (0.22)
============== =============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Pen
Interconnect, Inc. December 31, 1999 financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001000266
<NAME> Pen Interconnect, Inc.
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 3-MOS
<PERIOD-END> DEC-31-1999
<FISCAL-YEAR-END> SEP-30-2000
<EXCHANGE-RATE> 1.00
<CASH> 56,409
<SECURITIES> 0
<RECEIVABLES> 5,515,585
<ALLOWANCES> 1,890,576
<INVENTORY> 4,200,948
<CURRENT-ASSETS> 7,892,084
<PP&E> 1,915,718
<DEPRECIATION> 431,137
<TOTAL-ASSETS> 9,531,525
<CURRENT-LIABILITIES> 11,645,485
<BONDS> 0
0
28
<COMMON> 99,131
<OTHER-SE> (2,469,017)
<TOTAL-LIABILITY-AND-EQUITY> 9,531,525
<SALES> 4,409,348
<TOTAL-REVENUES> 4,409,348
<CGS> 4,196,459
<TOTAL-COSTS> 4,196,459
<OTHER-EXPENSES> 578,428
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 176,211
<INCOME-PRETAX> (530,227)
<INCOME-TAX> 0
<INCOME-CONTINUING> (530,227)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (530,227)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
