United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-K

           [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                EXCHANGE ACT OF 1934
                For the fiscal year ended September 26, 1999
                                                        or
           [  ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
                EXCHANGE ACT OF 1934
                For the transition period from ____________ to ____________

                         Commission file number 0-25866

                        PHOENIX GOLD INTERNATIONAL, INC.
                        --------------------------------
             (Exact name of registrant as specified in its charter)


                 OREGON                                  93-1066325
                 ------                                  ----------
      (State or other jurisdiction                    (I.R.S. Employer
    of incorporation or organization)              Identification Number)


  9300 NORTH DECATUR STREET, PORTLAND, OREGON                97203
  -------------------------------------------             ----------
   (Address of principal executive offices)               (Zip code)

                                 (503) 286-9300
                                 --------------
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:  None

Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, no par value

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 such  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 definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

The  aggregate  market value of the common stock held by  non-affiliates  of the
registrant was $1,708,355 as of November 30, 1999.

There were 3,085,445 shares of the registrant's  common stock  outstanding as of
November 30, 1999.

                       DOCUMENTS INCORPORATED BY REFERENCE

Parts of registrant's proxy statement dated on or about January 5, 2000 prepared
in connection with the annual meeting of shareholders to be held on February 15,
2000 are incorporated by reference into Part III of this report.


                                        1


<PAGE>
<TABLE>
<CAPTION>

                                             TABLE OF CONTENTS


                                                   PART I

                                                                                        PAGE
                                                                                        ----
<S>       <C>                                                                            <C>
ITEM 1.   BUSINESS                                                                        3

ITEM 2.   PROPERTIES                                                                      7

ITEM 3.   LEGAL PROCEEDINGS                                                               8

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                             8

                                    PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS           8

ITEM 6.   SELECTED FINANCIAL DATA                                                         9

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS                                                                   9

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                     13

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                    13

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE                                                           13

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                             13

ITEM 11.  EXECUTIVE COMPENSATION                                                         14

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                 14

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                 14

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K               14

</TABLE>

                                                      2
<PAGE>

                                     PART I

All  statements in this report that are not  statements  of  historical  results
should be  considered  "forward-looking  statements"  within the  meaning of the
Private Securities Litigation Reform Act of 1995, including, without limitation,
statements as to expectations, beliefs and future financial performance, and are
based on current  expectations  and are  subject to  certain  risks,  trends and
uncertainties  that could  cause  actual  results to vary from those  projected,
which  variances may have a material  adverse  effect on the Company.  Among the
factors that could cause actual results to differ  materially are the following:
competitive   factors;   potential   fluctuations   in  quarterly   results  and
seasonality;  the adverse effect of reduced discretionary consumer spending; the
need for the introduction of new products and product  enhancements;  dependence
on suppliers;  control by current  shareholders;  high  inventory  requirements;
business conditions in international  markets;  the Company's  dependence on key
employees;  the need to protect  intellectual  property;  costs or  expenditures
associated  with  remediating  potential  Year 2000 issues;  and,  environmental
regulation as well as other  factors  discussed in Exhibit 99.1 here to which is
hereby  incorporated  by  reference.  Given  these  uncertainties,  readers  are
cautioned not to place undue  reliance on the  forward-looking  statements.  The
Company does not intend to update its forward-looking statements.

ITEM 1.         BUSINESS
------------------------

     Phoenix Gold International, Inc. (the "Company") designs, markets and sells
innovative,  high  quality and high  performance  electronics,  accessories  and
speakers  to the audio  market.  The  Company's  products  are used in car audio
aftermarket,   professional  sound  and  custom  audio/video  and  home  theater
applications.  The Company manufactures substantially all of its electronics and
a portion of its  accessories at its facility in Portland,  Oregon.  The Company
was incorporated in Oregon in 1991.

     The  Company's  car  audio  products  encompass  substantially  all  of the
components  used in car audio  systems  (other than "head units" such as radios,
tape  decks  and CD  players).  The  Company's  car  audio  electronics  include
amplifiers,  equalizers,  crossovers  and line drivers.  The Company's car audio
accessories include audio cables, speaker and power cables, connectors,  clamps,
capacitors and fuseblocks.  The Company's  speaker products include  subwoofers,
midranges, tweeters, coaxials and speaker component systems.

     As the Company  expanded  its car audio  product line from  accessories  to
electronics  and  speakers,  it  initially  targeted car audio  enthusiasts  and
audiophiles with products that offer value by combining  performance  advantages
with distinctive appearance and superior craftsmanship. The Company subsequently
broadened   its  car   audio   product   line  to  offer   similar   performance
characteristics  at lower price points.  The Company's  primary target market is
car  audio  enthusiasts,  typically  18 to 34 year old  males  who  desire  high
quality, high performance systems. The Company also sells to other consumers who
seek to increase  the  quality of their car audio  systems  either by  upgrading
existing  components  or  installing  new systems.  The Company also designs and
sells accessories and speakers to OEM customers.

     In November 1995, the Company acquired  substantially  all of the assets of
the professional sound division of Carver Corporation.  The Company, as licensee
of the name "Carver  Professional  ", designs,  manufactures,  markets and sells
electronic  amplifiers and  accessories  for  professional  sound  applications,
including OEM customers.


                                       3
<PAGE>

PRODUCTS

The Company has three product lines:  electronics, accessories and speakers.

     ELECTRONICS.   The  Company's  amplifiers,   signal  processors  and  other
electronics  are designed to deliver sonic  excellence,  system  flexibility and
reliable  performance.  The Company  sells car audio  electronics  designed  for
audiophiles, serious audio enthusiasts and sound competitors.

     AMPLIFIERS.  The Company  sells a total of 23 car audio  amplifiers  in the
ZEROpoint  ZXti,  ZPA,  ZX,  XS and QX  series at  retail  prices  ranging  from
approximately  $180 to $1,650.  Amplifiers  in the  ZEROpoint  ZXti,  ZPA and ZX
series,   introduced  between  1999  and  1996,  are  the  Company's   reference
amplifiers,  designed to deliver  maximum  performance  in  expensive,  high-end
systems capable of driving multiple speakers. The XS series, introduced in 1997,
includes  multi-channel  amplifiers with built-in crossovers and offers at lower
prices the performance and sonic excellence of the reference series  amplifiers,
except in the most demanding applications. The QX series, introduced in 1997, is
designed to provide high  performance at even lower prices.  The QX amplifier is
the first of the Company's electronics products to be designed and engineered by
the Company and manufactured by a third party vendor. Due to the introduction of
the  ZEROpoint  ZXti series in 1999,  the Company does not expect the ZPA and ZX
series to provide meaningful revenue in the future.

     Additionally, the Company has periodically introduced limited edition theme
amplifiers, such as "Frank Amp'n Stein," "Son of Frank Amp'n Stein," "Route 66,"
"Outlaw 1845" and "Bandit 1895".  The "Reactor" was  introduced in 1998.  Retail
prices range from approximately $500 to $2,500.

     The Company sells a total of 19 Carver  Professional  amplifiers in the PM,
PT, CA, PX and PXm series at retail prices  ranging from  approximately  $535 to
$2,780. The PM series was designed for multiple purposes,  including  instrument
amplification,  fixed installations and touring applications.  The PT series was
designed   specifically   for  the   touring   sound   industry   for   ease  of
transportability and use in a variety of settings. The CA series amplifiers were
designed for fixed installation applications, including churches, warehouses and
auditoriums.  The PX series, introduced in 1997 and the first series designed by
the Company, includes multi-application models that offer increased features and
power at lower price points.  The PXm series,  introduced in 1998 and the second
series designed by the Company,  expands the PX series and addresses entry level
price points and greater ease of transportability.

     SIGNAL  PROCESSORS.  The  Company  sells a  total  of 14 car  audio  signal
processors,   including  equalizers,   line  drivers,  and  active  and  passive
crossovers.  Signal processors, which are sold both as upgrade components and as
parts of complete systems,  are used to increase the flexibility and performance
of audio systems.  Retail prices of signal  processors range from  approximately
$110 to $700.

     ACCESSORIES.  The Company  manufacturers and distributes  innovative,  high
quality accessories.  The Company sells over 900 accessories,  many of which are
manufactured to the Company's  design  specifications,  for use primarily in car
audio  aftermarket  applications.  Car audio  accessories  include audio cables,
speaker and power cables, connectors, clamps, adapters, capacitors,  fuseblocks,
distribution blocks,  alternators,  carpet, textiles and adhesives.  The Company
continually  improves  its  existing  accessories  line and  introduces  new and


                                       4

<PAGE>

replacement  accessories.  The Company is a single source from which its dealers
and  distributors  can purchase all of the accessories  necessary to install the
full range of car audio systems.  Accessories are available either as individual
items or combined in pre-packaged installation kits.

     The  Company's  accessories  for  use  in  professional  sound  and  custom
audio/video  and home  theater  applications  include  crossovers,  attenuators,
transformers, speaker selectors, audio and video cables, connectors, wall plates
and volume controls.  The Company manufactures Smart Audio Management panels for
the custom home  audio/video  market that provide for speaker  distribution  and
impedance matching.

     SPEAKERS.  The Company began selling speakers in 1994. The Company offers a
total  of 43 car  audio  speakers  in the  XMAX,  XS  and QX  series,  including
tweeters, midranges, subwoofers, coaxials and component systems. The XMAX series
features  reproduction  of tight,  accurate  bass in a small  enclosure.  The XS
series features exceptional musicality, excursion and versatility at lower price
points.  The QX series,  introduced in 1998, is the Company's lowest price point
speaker line. Retail prices of speakers range from approximately $40 to $340.

SALES, MARKETING AND DISTRIBUTION

     The Company sells its products  through car audio and specialty  retailers,
principally in the United  States,  Canada,  Central and South America,  Europe,
Japan,  Southeast  Asia,  Australia and New Zealand.  In the United States,  the
Company sells its car audio,  professional sound and home audio products through
independent  sales  representatives  and  distributors.  The  Company  sells its
products   internationally  through  distributors  serving  over  40  countries.
International  sales accounted for 27.1%, 32.4% and 39.2% of net sales in fiscal
years 1999, 1998 and 1997, respectively.  International sales are denominated in
United States dollars and are generally shipped f.o.b. the Company's facility in
Portland, Oregon.

     No customer  accounted  for 10% or more of the  Company's  net sales during
fiscal  1999,  1998 or 1997.  As of  September  30, 1999 and 1998,  one customer
accounted for 15.0% and 15.5% of total accounts receivable.

     The Company  offers its dealers and  distributors  complete  product lines,
excellent service and support,  and high  performance,  reliable  products.  The
Company believes these efforts enable it to attract and retain qualified dealers
and  distributors.  The Company  recruits  on a selective  basis new dealers and
distributors for each of its product lines in specific geographic areas. Dealers
and distributors are chosen based on location,  financial  stability,  technical
expertise, sales history,  integrity, and installation and service capabilities.
The Company generally does not have written  agreements with its car audio sales
representatives, dealers or distributors or its professional sound distributors.
The Company's written agreements with its professional sound representatives and
dealers are generally terminable upon no more than 30 days notice.

     The Company  markets its car audio  products by  participating  in consumer
electronics  trade  shows  and  enthusiast  events  and  by  promoting  its  own
demonstration  vehicles.  The Company  offers  incentives to "Team Phoenix Gold"
competitors  in  regional,  national  and  international  car  audio  shows  and
competitions  and  provides  technical  assistance,  training  and support  from
Company  engineers  and  technicians  at "Tweek N Tune"  workshops.  The Company
advertises in car audio  consumer  magazines and its products have been reviewed
and profiled in national and international publications. The Company markets its
professional sound, custom audio/video and

                                       5
<PAGE>

home theater  products by  participating  in trade shows,  advertising  in trade
journals and magazines and providing dealer support.

     Historically  the Company's sales have been greater during the third (April
through  June) and fourth (July  through  September)  quarters of the  Company's
fiscal year than during the first two fiscal quarters. Due to the seasonality of
its business, the Company's quarterly results of operations will not necessarily
be indicative of its results of operations for the year.

COMPETITION

      The markets for the  Company's  products  are highly  competitive  and are
served by many United States and international  manufacturers  that market their
own lines of electronics,  accessories  and speakers  through  specialty  dealer
networks and mass  merchandise  retail stores,  as well as companies that market
generic products through the same distribution channels. The Company's principal
accessories  competitors include Esoteric Audio USA Group of Companies,  Monster
Cable  Products,  Inc.  and Recoton  Corp.  The  Company's  principal  car audio
electronics competitors include MTX Corporation ("MTX"), Orion Industries, Inc.,
Precision  Power,  Inc.  and  Rockford  Fosgate,  a division of  Rockford  Corp.
("Rockford").  The Company's  principal  professional sound competitors  include
Crest Audio, Inc., Crown  International,  Inc. and QSC Audio Products,  Inc. The
Company's  principal  speaker  competitors  include Boston  Acoustics,  Inc., JL
Audio, Inc., MB Quart Electronics USA, Inc., MTX, Rockford and Stillwater Design
and Audio, Inc. Many competitors have greater financial and other resources than
the Company.

     The Company  competes  principally on the basis of  innovation,  breadth of
product  line,   quality  and   reliability  of  products,   name   recognition,
merchandising and distribution organization,  and price. The Company believes it
competes favorably with respect to each of these factors.

MANUFACTURING AND ASSEMBLY

      MANUFACTURED PRODUCTS.  The Company manufactures  substantially all of its
electronics  products  and a  portion  of its  accessories  at its  facility  in
Portland,  Oregon.  Manufacturing  processes  include  laser-cutting,   computer
controlled metal fabrication,  powder coating, automated insertion of components
into and wave soldering of circuit  boards,  toroid winding,  plastic  injection
molding,  silk-screening  graphics and quality control  testing.  For use in its
manufacturing activities,  the Company also purchases components manufactured by
third parties according to design  specifications  developed by the Company. The
Company  purchases  substantially  all  of its  raw  materials,  components  and
subassemblies  from  approximately 140 suppliers located primarily in the United
States  and  the  Pacific  Rim.  Certain  of  these  materials,  components  and
subassemblies  are  obtained  from a single  supplier  or a  limited  number  of
suppliers.  The  Company's  principal  supplier  is Team  Phoenix Co.  Ltd.,  an
unaffiliated company.

     DISTRIBUTED ACCESSORIES. The Company distributes accessories, many of which
are manufactured to its design  specifications  by third parties.  Substantially
all distributed  accessories are subjected to quality control  procedures at the
Company's   facility  and  are  marketed   under  the  PHOENIX  GOLD  or  CARVER
PROFESSIONAL tradenames.

     DESIGNED SPEAKERS. The Company's speakers are manufactured by third parties
in the United States and Asia  according to  acoustical  and  electrical  design
specifications  developed  by the  Company.  Speakers  are  subjected to quality
control procedures performed by the Company.

                                       6
<PAGE>

CUSTOMER SERVICE

     The Company believes two of the most important elements in its business are
understanding  consumers  and their  preferences,  and  providing  high quality,
reliable  products.  The Company  strives to understand  the evolving  needs and
preferences of consumers by communicating with its representatives,  dealers and
distributors,  sponsoring  "Team  Phoenix  Gold" members and attending car audio
competitions and car audio,  professional  sound and custom audio/video and home
theater trade shows.  Company  representatives  regularly seek  suggestions from
dealers for improved design and performance of the Company's products.

     Proper  installation  is critical to achieving  optimum  performance of car
audio  systems.  The Company offers a three-year  limited  warranty on car audio
electronics and a one, two or three-year  limited warranty on speakers installed
by an authorized dealer or installer.  If an authorized dealer or installer does
not install the product,  the Company offers a one-year  limited warranty on car
audio electronics and speakers.  The Company offers a five-year limited warranty
on professional sound electronics.

INTELLECTUAL PROPERTY

     PHOENIX  GOLD (R), PG (Phoenix  Gold and Design) (R),  CARVER  PROFESSIONAL
(TM),  POWERFLOW (TM),  QUICKSILVER (TM),  SAPPHIRE (TM), AND ZEROpoint (TM) are
the principal  trademarks of the Company. The Company believes that PHOENIX GOLD
and CARVER  PROFESSIONAL  have  strong  brand  name  recognition,  an  important
competitive factor in its markets. The Company has obtained three design patents
related to its  products.  Carver  Corporation  has taken the position  that the
Company's exclusive, paid-up license to use the name CARVER PROFESSIONAL expires
at the end of November  2000.  The Company  has brought a  declaratory  judgment
action against Carver Corporation to determine future rights to the tradename.

GOVERNMENTAL APPROVAL OF PRODUCTS

     The Company is subject to and  believes it is in  compliance  with  certain
European  Union  regulations  regarding  electromagnetic  standards  and product
safety on  substantially  all of its electronics sold in the European Union. The
Company  believes that additional  similar  regulations will be imposed in other
areas. Any inability by the Company to comply with such similar regulations on a
timely basis could have a material adverse effect on the Company.

EMPLOYEES

     As of  September  30,  1999,  the  Company  had  202  full-time  employees,
including 167 in  manufacturing,  engineering and  warehousing,  23 in sales and
marketing and 12 in administration. The Company considers its employee relations
to be good.

ITEM 2.         PROPERTIES
--------------------------

     The Company's executive offices and manufacturing operations are located at
9300 North Decatur Street, Portland, Oregon. The Company leases a 155,000 square
foot  building.  Approximately  12,500  square feet of office  space and 100,000
square feet of  manufacturing  and warehouse space are used by the Company.  The
remaining  42,500 square feet of office,  manufacturing  and warehouse space are
subleased by the Company to a third party through January 2000.  Annual rent for
the Company's  facility is  approximately  $520,800 plus an annual

                                       7
<PAGE>

escalator of 2.5%. The lease expires June 30, 2009. The Company has an option to
extend the lease for one ten-year term.  The Company  believes that its existing
facilities are adequate to meet its needs for the  foreseeable  future and that,
if  needed,  suitable  additional  or  alternative  space will be  available  on
commercially reasonable terms.

     During fiscal 1999, the Company purchased its leased office,  warehouse and
manufacturing  facility for $3,132,000  from its landlord.  On the same day, the
Company sold the facility and the existing  improvements,  with a remaining  net
book value of $924,000, for a net sales price of $5,037,000, and then leased the
facility  from  the  purchaser.  A gain of  $981,000  was  deferred  and will be
recognized over the ten-year lease term as a reduction in rent expense.

ITEM 3.         LEGAL PROCEEDINGS
---------------------------------

None.

ITEM 4.         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------------------------------------------------------------------

None.


                                     PART II

ITEM 5.         MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS
-----------------------------------------------------------------------------

     The  Company's  Common  Stock  began  trading  on May 4, 1995 in the NASDAQ
National  Market  under the symbol  "PGLD".  On October 5, 1998,  trading in the
Company's  Common  Stock was  transferred  to the  NASDAQ  SmallCap  Market.  As
reported  by NASDAQ,  the  following  table sets forth the range of high and low
closing bid prices per share for the Company's Common Stock.

<TABLE>
<CAPTION>

                                       Fiscal year ended               Fiscal year ended
                                      September 30, 1999              September 30, 1998
                                    ---------------------           ---------------------
Common Stock (PGLD)                    High        Low                High         Low
-------------------                 ----------  ---------           ---------   ---------
  <S>                               <C>         <C>                  <C>        <C>
  First Quarter                     $   2.063   $  1.00              $  6.50     $  3.75
  Second Quarter                        4.25       1.375                3.938       2.75
  Third Quarter                         2.813      1.75                 3.813       2.438
  Fourth Quarter                        2.938      2.125                2.563       1.75

</TABLE>

     At November 30, 1999, the  approximate  number of shareholders of record of
Common Stock was 140.

     The Company has never  declared  or paid any cash  dividends  on its Common
Stock.  The Company  intends to retain all  earnings for use in its business and
therefore  does not  anticipate  paying any cash  dividends  in the  foreseeable
future.  The Company's  existing  credit  agreements  do not expressly  limit or
prohibit the Company's ability to declare and pay dividends,  although covenants
contained in such  agreements  related to a minimum  level of tangible net worth
and minimum  ratios of current  assets to current  liabilities  and debt service
coverage may have such effect.

                                       8
<PAGE>

ITEM 6.         SELECTED FINANCIAL DATA
---------------------------------------

<TABLE>
<CAPTION>

                                                      As of or for the year ended September 30,
                                 --------------------------------------------------------------------------------------
                                       1999               1998              1997               1996              1995
<S>                              <C>               <C>                <C>               <C>               <C>
OPERATING DATA:
Net sales                        $ 27,538,149       $ 26,484,715      $ 27,798,728       $ 26,563,142      $ 20,173,822
Net earnings (loss)  (1)              854,129           (772,374)          410,095         (1,269,142)        1,881,277
Earnings (loss) per share
    Basic                        $       0.26       $      (0.22)     $       0.12       $      (0.37)     $       0.70
    Diluted                              0.26              (0.22)             0.12              (0.37)             0.67
Average shares outstanding
    Basic                           3,293,758          3,464,698         3,456,278          3,449,068         2,672,129
    Diluted                         3,293,758          3,464,698         3,535,288          3,449,068         2,798,877


BALANCE SHEET DATA:
Working capital                  $  9,839,492      $   8,020,615     $   7,278,373      $   6,033,190     $   8,821,267
Total assets                       13,888,439         15,208,128        17,455,149         19,832,527        14,509,249
Line of credit                              -            900,000         3,147,936          4,278,983                 -
Long-term obligations                       -            938,233           494,927            171,995           286,189
Total shareholders' equity         10,958,906         10,497,602        11,243,019         10,788,998        12,013,188


Book value per share             $       3.39      $        3.03     $        3.25      $        3.12     $        3.49


(1) See Note 2 to Financial Statements describing non-recurring charges for
    1998. In 1996, the Company recorded a pre-tax charge of $1.1 million for
    in-process research and development in connection with the purchase of
    substantially all of the assets of the professional sound division of
    Carver Corporation.

</TABLE>

ITEM 7.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS
-------------------------------------------------------------------------------


COMPARISON OF FISCAL 1999 TO FISCAL 1998

     NET SALES. Net sales increased $1.1 million,  or 4.0%, to $27.5 million for
fiscal  1999  compared to $26.5  million for fiscal  1998,  due  principally  to
increased  domestic sales.  Domestic sales increased $2.2 million,  or 12.2%, to
$20.1  million  for fiscal  1999  compared  to $17.9  million  for fiscal  1998.
International sales decreased $1.1 million, or 13.0%, to $7.5 million for fiscal
1999 compared to $8.6 million for fiscal 1998. International sales accounted for
27.1% of net sales in fiscal 1999 and 32.4% of net sales in fiscal  1998.  Sales
of electronics and speakers  increased 4.9% and 44.3%,  respectively,  in fiscal
1999 compared to fiscal 1998. Sales of accessories  decreased 10.8%. The Company
believes  international  sales for  fiscal  2000 to remain at levels  lower than
historically achieved.

     GROSS PROFIT.  Gross profit  increased to 25.9% of net sales in fiscal 1999
from 24.7% in fiscal 1998.  The increase was  primarily  due to increased  sales
volume which decreased manufacturing overhead as a percentage of sales.

     OPERATING EXPENSES. Operating expenses decreased $1.8 million, or 24.7%, to
$5.6 million in fiscal 1999  compared to $7.4 million in fiscal 1998.  Operating
expenses  were  20.4% and 28.1% of net sales in  fiscal  1999 and  fiscal  1998,
respectively.


                                       9
<PAGE>


     Selling expenses  decreased  $642,000,  or 15.9%, to $3.4 million in fiscal
1999  compared to $4.0 million in fiscal 1998.  Selling  expenses were 12.3% and
15.2% of net sales in fiscal 1999 and fiscal  1998,  respectively.  The decrease
was  primarily  due  to  reduced  promotional  activities  and  sales  incentive
programs.

     General and administrative  expenses decreased $318,000,  or 12.5%, to $2.2
million in fiscal 1999  compared  to $2.5  million in fiscal  1998.  General and
administrative  expenses  were  8.1% and 9.6% of net  sales in  fiscal  1999 and
fiscal 1998,  respectively.  The decrease in general and administrative expenses
occurred  principally  because of lower payroll and related costs as a result of
reductions  in  administrative   personnel  and  decreased   professional  fees.
Historically,  the Company has built  infrastructure  and added  personnel on an
as-needed basis, resulting in occasional increases in general and administrative
expenses that are  disproportionate  to increases in net sales.  This policy has
resulted  in  and  may  continue  to  result  in   variations   in  general  and
administrative expenses as a percentage of sales from period to period.

     In fiscal 1998, the Company took one-time, non-recurring charges of $1.1
million ($878,000  included in operating  expenses and $233,000 included in cost
of sales) related to the  implementation of a restructuring  plan which included
the  phase-out of a product line and actions to reduce future  operating  costs.
The  $878,000  charge  included in  operating  expenses was equal to 3.3% of net
sales in fiscal 1998.

     OTHER EXPENSES. Other expenses, net of other income, decreased $217,000, or
69.0%, to $97,000 in fiscal 1999 from $314,000 in fiscal 1998,  primarily due to
decreased borrowings and decreased interest rates on the outstanding borrowings.

     NET  EARNINGS  (LOSS).  The  increase  in  domestic  sales and  decrease in
operating  expenses  contributed to net earnings in fiscal 1999 of $854,000,  or
$0.26 per share - basic and diluted (based on 3.29 million shares  outstanding),
compared to a net loss of $772,000  in fiscal  1998,  or $0.22 per share - basic
and diluted (based on 3.46 million shares outstanding).


COMPARISON OF FISCAL 1998 TO FISCAL 1997

     NET SALES. Net sales decreased $1.3 million,  or 4.7%, to $26.5 million for
fiscal  1998  compared to $27.8  million for fiscal  1997,  due  principally  to
decreased  international sales.  Domestic sales increased $1.0 million, or 6.0%,
to $17.9  million for fiscal 1998  compared  to $16.9  million for fiscal  1997.
International sales decreased $2.3 million, or 21.3%, to $8.6 million for fiscal
1998 compared to $10.9 million for fiscal 1997.  International  sales  accounted
for 32.4% and 39.2% of net sales in fiscal 1998 and fiscal  1997,  respectively.
Sales of electronics,  speakers and accessories  decreased 2.0%, 10.9% and 5.3%,
respectively, in fiscal 1998 compared to fiscal 1997.

     GROSS PROFIT.  Gross profit  increased to 24.7% of net sales in fiscal 1998
from 24.5% in fiscal  1997.  The  increase  was  primarily  due to an  increased
percentage of domestic versus international sales.

     OPERATING EXPENSES. Operating expenses increased $1.8 million, or 31.6%, to
$7.4 million in fiscal 1998  compared to $5.7 million in fiscal 1997.  Operating
expenses  were  28.1% and 20.4% of net sales in  fiscal  1998 and  fiscal  1997,
respectively.


                                       10
<PAGE>

     Selling expenses  increased  $700,000,  or 21.0%, to $4.0 million in fiscal
1998  compared to $3.3 million in fiscal 1997.  Selling  expenses were 15.2% and
12.0% of net sales in fiscal 1998 and fiscal  1997,  respectively.  The increase
was primarily due to increased promotional,  advertising and trade show expenses
to support sales of existing products and the introduction of new products,  and
increased domestic sales incentive programs reflecting  increased domestic sales
volume.

     General and administrative  expenses increased  $200,000,  or 9.0%, to $2.5
million in fiscal 1998  compared  to $2.3  million in fiscal  1997.  General and
administrative  expenses  were  9.6% and 8.4% of net  sales in  fiscal  1998 and
fiscal 1997,  respectively.  The increase was due  principally  to increased bad
debt expense, higher legal expense and increased engineering expense.

      In fiscal 1998, the Company took one-time,  non-recurring  charges of $1.1
million related to the implementation of a restructuring plan which included the
phase-out of a product line and actions to reduce future  operating  costs.  The
Company  determined  that an impairment of tooling and royalty costs  associated
with the product  line  resulted  from the  phase-out  of the product  line.  In
addition,  the impairment of the product line required a $233,000  write-down of
inventories,  which is included in cost of sales.  The  restructuring  plan also
included the write-off of leasehold  improvements  in connection  with the early
termination  of a lease on an adjacent  building and the  separation  of certain
employees.  Future cash  payments  were not material and were paid by the end of
the first  quarter of fiscal  1999.  The $878,000  charge  included in operating
expenses was equal to 3.3% of net sales in fiscal 1998.

     OTHER EXPENSES. Other expenses, net of other income, decreased $159,000, or
33.7%,  to $314,000 in fiscal 1998 from $473,000 in fiscal 1997,  primarily as a
result of lower  average debt levels  during fiscal 1998 due to the reduction of
debt and lower interest rates on the outstanding borrowings.

     NET EARNINGS (LOSS).  The decrease in  international  sales and increase in
operating expenses,  including the non-recurring  charges,  contributed to a net
loss in fiscal 1998 of $772,000,  or $0.22 per share - basic and diluted  (based
on 3.46 million shares outstanding),  compared to net earnings in fiscal 1997 of
$410,000,  or $0.12 per share - basic and diluted  (based on 3.54 million shares
outstanding).


LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  primary  needs for funds are for working  capital and, to a
lesser extent, for capital expenditures.  The Company financed its operations in
fiscal 1999,  1998 and 1997  principally  from funds  generated  from  operating
activities.  Net cash provided by operating  activities in fiscal 1999, 1998 and
1997 was $1.7 million, $2.3 million and $945,000,  respectively.  When cash flow
from  operations  exceeded  current  needs,  the  Company  paid down in part the
balance  owing on its  operating  line of credit  rather than  accumulating  and
investing  excess cash which  resulted in low reported  cash  balances in fiscal
1998 and 1997.

     During fiscal 1999, the Company purchased its leased office,  warehouse and
manufacturing  facility for $3,132,000  from its landlord.  On the same day, the
Company sold the facility and the existing  improvements,  with a remaining  net
book value of $924,000, for a net sales price of $5,037,000, and then leased the
facility  from the  purchaser.  A gain of $981,000  was  deferred.

                                       11
<PAGE>

The net  cash  proceeds  were  used to repay  $990,000  in  remaining  long-term
obligations and generated pre-tax cash of $915,000.

     During fiscal 1999, cash and cash equivalents increased $866,000,  accounts
receivable  increased  $507,000,  inventories  decreased $1.3 million,  accounts
payable decreased $706,000 and line of credit decreased $900,000,  leading to an
increase  in working  capital of $1.8  million.  The  increase  in cash and cash
equivalents  is a result of the facility  purchase,  sale and leaseback and cash
generated  from  operations.  The  increase  in accounts  receivable  was due to
increased net sales.  The  decreases in  inventories  and accounts  payable is a
result of management  efforts to increase cash flow from  operations in order to
reduce short and long-term bank borrowings.

     Capital  expenditures were $304,000,  $343,000 and $483,000 in fiscal years
1999,  1998 and 1997,  respectively.  These  expenditures  related  primarily to
manufacturing  automation  and  the  acquisition  of  equipment  for  use by the
Company's  administration,  engineering and marketing  departments.  The Company
does not expect  capital  expenditures  to exceed  $400,000 in fiscal 2000.  The
anticipated  expenditures will be financed from available cash, cash provided by
operations  and,  if  necessary,  proceeds  from a line of credit.  The Board of
Directors  has also  authorized  the Company to  purchase up to $1.0  million of
Company  common  stock.  The Company  purchased  230,400  shares of common stock
during  fiscal 1999 at an aggregate  cost of $393,000.  The purpose of the stock
repurchase  program  is to  help  the  Company  achieve  its  long-term  goal of
enhancing shareholder value.

     A $5.5 million  revolving  operating  line of credit is  available  through
December  31,  1999.  Interest on the  borrowings  is equal to the bank's  prime
lending  rate  (8.25%  at  September  30,  1999)  or  LIBOR  plus an  additional
percentage. Borrowings under the line of credit are limited to eligible accounts
receivable  and  inventories,  and are  subject  to certain  additional  limits.
Borrowings  under  the  line of  credit  are  secured  by  accounts  receivable,
inventories  and certain other  assets.  The line of credit  contains  covenants
which  require a minimum  level of  tangible  net  worth and  minimum  ratios of
current assets to current liabilities and debt service coverage. As of September
30,  1999,  the Company was  eligible to borrow $5.3  million  under the line of
credit. No borrowings were outstanding under the line of credit as of that date.
The Company  expects to renew the revolving  operating line of credit on similar
terms prior to December 31, 1999.

YEAR 2000 CONVERSION

     Many  computer  programs  use only two digits to  identify a year in a date
field  within  the  program  (e.g.  "99" or "01").  If not  corrected,  computer
applications  may fail or cause  incorrect  results by or at the year 2000.  The
Company has  substantially  completed  the  process of  preparing  its  computer
systems and applications for the Year 2000 date conversion. The process included
a review of information  systems used in the Company's internal business as well
as by third party vendors,  its bank,  component and speaker  manufacturers  and
other suppliers. The Company's products do not include embedded technology, such
as  microcontrollers.  The Company's third party interfaces,  such as those with
its vendors and customers,  are not computerized,  and the Company's information
systems utilize  standard,  ready available  business  software.  The Company is
still  assessing the potential cost of any required  conversion of its phone and
voice-mail system. However, at this time, the Company believes the effect of the
Year 2000 conversion on its business will not be material.


                                       12
<PAGE>

     Information systems determined not to be Year 2000 compliant were modified,
upgraded or replaced through  acquisition and  implementation of "off the shelf"
upgrades to existing  information  system  software.  The upgrades were acquired
from third party vendors at a cost of less than $20,000.

     There can be no  assurance,  however,  because of the existence of numerous
systems and related  components  within the Company and the  interdependency  of
these systems,  that certain systems at the Company, or systems at entities that
provide  services or goods for the Company,  will operate in the Year 2000.  The
Company is continuing to evaluate the risks to the Company of failure to be Year
2000  compliant  and expects to complete a  contingency  plan prior to year end.
Although there can be no assurance, the failure of a system at the Company or at
an entity that  provides  services  and goods to the Company is not  expected to
have a material impact on future operating results,  financial condition or cash
flows.

ITEM 7A.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------

     The Company has assessed  its  exposure to market  risks for its  financial
instruments  and  has  determined  that  its  exposures  to such  risks  are not
material. As of September 30, 1999, the Company had cash and cash equivalents of
$868,000  compared to $3,000 as of September 30, 1998.  The Company  invests its
excess cash in highly  liquid  marketable  securities  with  maturities of three
months or less at date of purchase.  The Company  does not invest in  derivative
securities.

ITEM 8.         FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-----------------------------------------------------------

     Pages 18 through  32 of this  Annual  Report on Form 10-K are  incorporated
herein by reference.

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
------------------------------------------------------------------

      This is  hereby  incorporated  by  reference  the  information  under  the
captions  "Proposal 1:  Election of  Directors"  and "Section  16(a)  Beneficial
Ownership Reporting  Compliance" of the Company's  definitive Proxy Statement to
be filed pursuant to Regulation  14A, which Proxy Statement is anticipated to be
filed with the Securities and Exchange  Commission within 120 days after the end
of Registrant's fiscal year ended September 26, 1999.


                                       13
<PAGE>


ITEM 11.        EXECUTIVE COMPENSATION
--------------------------------------

     This is hereby  incorporated by reference the information under the caption
"Proposal 1: Election of Directors" of the Company's  definitive Proxy Statement
to be filed pursuant to Regulation  14A, which Proxy Statement is anticipated to
be filed with the Securities and Exchange  Commission  within 120 days after the
end of Registrant's fiscal year ended September 26, 1999.


ITEM 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------------

     This is hereby  incorporated by reference the information under the caption
"Security  Ownership  of  Certain  Beneficial  Owners  and  Management"  of  the
Company's  definitive  Proxy  Statement to be filed pursuant to Regulation  14A,
which  Proxy  Statement  is  anticipated  to be filed  with the  Securities  and
Exchange  Commission  within 120 days after the end of Registrant's  fiscal year
ended September 26, 1999.


ITEM 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------

     None.


                                     PART IV


ITEM 14.        EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------

(a)  Exhibits

     Articles of Incorporation and Bylaws
     ------------------------------------

     3(i)     1995 Restated Articles of Incorporation and Articles of Amendment
              (incorporated  by  reference  to  Exhibit  3(i)  to  Registration
              Statement on Form SB-2  effective  May 3, 1995  (Registration  No.
              93-90588))

     3(i)(a)  Articles  of  Amendment  filed  April  7,  1995  (incorporated  by
              reference to Exhibit 3(i) (a) to  Registration  Statement on Form
              SB-2 effective May 3, 1995 (Registration No. 93-90588))

     3(ii)    Restated Bylaws (incorporated by reference to Exhibit 3(ii) to
              Registration  Statement  on  Form  SB-2  effective  May 3,  1995
              (Registration No. 93-90588))

     Instruments Defining Rights of Security Holders
     -----------------------------------------------

     4        Articles 2, 5 and 6 of Exhibit 3(i) and Article 6 of Exhibit 3(ii)
              are incorporated  herein by reference

                                       14
<PAGE>

     Material Contracts
     ------------------

      10.1     Amended and  Restated  1995 Stock  Option Plan  (incorporated  by
               reference  to  Appendix  A  to  the  Company's  definitive  proxy
               statement  filed with the Securities  and Exchange  Commission on
               January 15, 1997) (1)

      10.1a    Form  of  Incentive  Stock  Option  Agreement   (incorporated  by
               reference to Exhibit  10.1(a) to  Registration  Statement on Form
               SB-2 effective May 3, 1995 (Registration No. 93-90588)) (1)

      10.2     Form of  Nonstatutory  Stock Option  Agreement  (incorporated  by
               reference to Exhibit  10.1(b) to  Registration  Statement on Form
               SB-2 effective May 3, 1995 (Registration No. 93-90588)) (1)

      10.3     Lease Agreement between the Company and BB&S Development  Company
               dated February 2, 1994 (incorporated by reference to Exhibit 10.2
               to  Registration  Statement  on Form SB-2  effective  May 3, 1995
               (Registration No. 93-90588))

      10.4     Amendment dated January 12, 1996 to Lease  Agreement  between the
               Company  and BB&S  Development  Company  dated  February  2, 1994
               (incorporated  by  reference to Exhibit 10.1 to Form 10-QSB filed
               with the  Securities  and Exchange  Commission  for the quarterly
               period ended December 31, 1995)

      10.5     License  Agreement  between the  Company  and Carver  Corporation
               dated as of  November  20, 1995  (incorporated  by  reference  to
               Exhibit 2.3 to Form 8-K filed with the  Securities  and  Exchange
               Commission on December 1, 1995)

      10.6     License  Agreement  dated  September 30, 1993 between the Company
               and   Intersonics   Technology   Corporation,    and   amendments
               (incorporated  by  reference  to  Exhibit  10.2 to Form  10-QSB/A
               (Amendment   No.  1)  filed  with  the  Securities  and  Exchange
               Commission for the quarterly period ended December 31, 1995) (2)

      10.7     Third  Amendment dated as of January 15, 1996 between the Company
               and Intersonics Technology Corporation (incorporated by reference
               to Exhibit  10.3 to Form  10-QSB  filed with the  Securities  and
               Exchange  Commission  for the  quarterly  period  ended March 31,
               1997) (2)

      10.8     Form of Indemnity Agreement (incorporated by reference to Exhibit
               10.6 to Registration Statement on Form SB-2 effective May 3, 1995
               (Registration No. 93-90588))

      10.9     Nonstatutory  Stock  Option  Agreement  dated  February  18, 1997
               between  the  Company  and  Frank  G.  Magdlen  (incorporated  by
               reference  to  Exhibit  10.16  to  Form  10-KSB  filed  with  the
               Securities  and  Exchange  Commission  for the fiscal  year ended
               September 30, 1997) (1)

                                       15
<PAGE>

      10.10    Master  Equipment Lease Agreement dated July 15, 1998 between the
               Company  and First  Security  Leasing  Company  (incorporated  by
               reference to Exhibit 10.18 to Form 10-Q filed with the Securities
               and Exchange  Commission for the quarterly  period ended June 30,
               1998)

      10.11    Lease Schedule to Master Equipment Lease Agreement dated July 15,
               1998  between  the  Company and First  Security  Leasing  Company
               (incorporated  by reference  to Exhibit  10.19 to Form 10-Q filed
               with the  Securities  and Exchange  Commission  for the quarterly
               period ended June 30, 1998)

      10.12    Loan  Agreement  dated  December 18, 1998 between the Company and
               U.S.  Bank  National  Association  (incorporated  by reference to
               Exhibit 10.1 to Form 10-Q filed with the  Securities and Exchange
               Commission for the quarterly period ended December 31, 1998)

      10.13    Promissory  Note dated  December  28, 1998 made by the Company in
               favor  of  U.S.  Bank  National   Association   (incorporated  by
               reference to Exhibit 10.2 to Form 10-Q filed with the  Securities
               and Exchange  Commission for the quarterly  period ended December
               31, 1998)

      10.14    Nonstatutory  Stock  Option  Agreement  dated  February  16, 1999
               between  the  Company  and  Frank  G.  Magdlen  (incorporated  by
               reference to Exhibit 10.1 to Form 10-Q filed with the  Securities
               and Exchange  Commission for the quarterly period ended March 31,
               1999) (1)

      10.15    Purchase  and Sale  Agreement  dated June 15,  1999  between  the
               Company and 6710 LLC  (incorporated by reference to Exhibit 10.23
               to Form 10-Q filed with the  Securities  and Exchange  Commission
               for the quarterly period ended June 30, 1999)

      10.16    First  Amendment  to Purchase and Sale  Agreement  dated June 15,
               1999 between the Company and 6710 LLC  (incorporated by reference
               to  Exhibit  10.24 to Form 10-Q  filed  with the  Securities  and
               Exchange Commission for the quarterly period ended June 30, 1999)

      10.17    6710 LLC Commercial Lease dated June 30, 1999 between the Company
               and 6710 LLC  (incorporated by reference to Exhibit 10.19 to Form
               10-Q filed with the  Securities  and Exchange  Commission for the
               quarterly period ended June 30, 1999)

                                       16
<PAGE>


      23.1     Consent of Deloitte & Touche LLP, Independent Auditors

      27       Financial Data Schedule

      99.1     Certain  Factors to Consider in Connection  with  Forward-Looking
               Statements

(b)  Reports on Form 8-K

           None.


--------------------


      (1)      Management contract or compensatory plan or arrangement.

      (2)      Certain  material  contained in this exhibit has been omitted and
               filed  separately  with the  Securities  and Exchange  Commission
               pursuant to an application for confidential  treatment under Rule
               24b-2 promulgated  under the Securities  Exchange Act of 1934, as
               amended.





                                       17

<PAGE>


                          INDEX TO FINANCIAL STATEMENTS



                                                                  Page
                                                                  ----


Independent Auditors' Report                                       19

Balance Sheets at September 30, 1999 and 1998                      20

Statements of Operations
      for the Three Years Ended September 30, 1999                 21

Statements of Shareholders' Equity
      for the Three Years Ended September 30, 1999                 22

Statements of Cash Flows
      for the Three Years Ended September 30, 1999                 23

Notes to Financial Statements                                      24







                                       18

<PAGE>


                          INDEPENDENT AUDITORS' REPORT






The Board of Directors and Shareholders
Phoenix Gold International, Inc.


We have audited the accompanying  balance sheets of Phoenix Gold  International,
Inc.  as of  September  30,  1999  and  1998,  and  the  related  statements  of
operations,  shareholders'  equity and cash flows for each of the three years in
the  period  ended  September  30,  1999.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these 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 opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the  financial  position of Phoenix  Gold  International,  Inc. as of
September  30,  1999 and 1998,  and the results of its  operations  and its cash
flows for each of the three years in the period ended  September  30,  1999,  in
conformity with generally accepted accounting principles.


/s/ Deloitte & Touche LLP

Portland, Oregon
November 5, 1999




                                       19
<PAGE>
<TABLE>
<CAPTION>




                                        PHOENIX GOLD INTERNATIONAL, INC.
                                                 BALANCE SHEETS


                                                                                      SEPTEMBER 30,
                                                                             ------------------------------
                                                                                1999                   1998
                                                                             ------------      ------------
<S>                                                                         <C>                 <C>
ASSETS


Current assets:
    Cash and cash equivalents                                                $    868,458       $     2,602
    Accounts receivable, net                                                    4,794,799         4,287,965
    Inventories                                                                 5,620,835         6,886,720
    Prepaid expenses                                                              213,677           169,621
    Deferred taxes                                                                315,000           446,000
                                                                             ------------      ------------
        Total current assets                                                   11,812,769        11,792,908


Property and equipment, net                                                     1,055,531         2,522,005
Goodwill, net                                                                     178,081           217,702
Deferred taxes                                                                    600,000           567,000
Other assets                                                                      242,058           108,513
                                                                             ------------      ------------

        Total assets                                                         $ 13,888,439      $ 15,208,128
                                                                             ============      ============

LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
    Accounts payable                                                         $  1,074,881     $   1,781,341
    Line of credit                                                                      -           900,000
    Accrued payroll and benefits                                                  436,970           420,209
    Other accrued expenses                                                        379,782           448,214
    Income taxes payable                                                           81,644                 -
    Current portion of long-term obligations                                            -           222,529
                                                                             ------------      ------------
        Total current liabilities                                               1,973,277         3,772,293


Long-term obligations                                                                   -           938,233

Deferred gain on sale of facility                                                 956,256                 -

Shareholders' equity:
    Preferred stock;
        Authorized - 5,000,000 shares; none outstanding                                 -                 -
    Common stock, no par value;
        Authorized - 20,000,000 shares
        Issued and outstanding - 3,234,345 and 3,464,745 shares                 7,155,997         7,548,822
    Retained earnings                                                           3,802,909         2,948,780
                                                                             ------------      ------------
        Total shareholders' equity                                             10,958,906        10,497,602
                                                                             ------------      ------------


        Total liabilities and shareholders' equity                           $ 13,888,439      $ 15,208,128
                                                                             ============      ============


                                                 SEE NOTES TO FINANCIAL STATEMENTS


                                                              20
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                PHOENIX GOLD INTERNATIONAL, INC.
                                                    STATEMENTS OF OPERATIONS



                                                                       YEAR ENDED SEPTEMBER 30,
                                                         -----------------------------------------------------
                                                             1999                1998                 1997
                                                         --------------      ------------         ------------

<S>                                                       <C>                <C>                  <C>
Net sales                                                 $  27,538,149      $ 26,484,715         $ 27,798,728

Cost of sales                                                20,415,267        19,950,805           20,981,845
                                                          -------------      ------------         ------------

    Gross profit                                              7,122,882         6,533,910            6,816,883


Operating expenses:
    Selling                                                   3,386,595         4,029,059            3,329,339
    General and administrative                                2,221,742         2,540,064            2,331,128
    Non-recurring charges                                             -           878,147                    -
                                                          -------------      ------------         ------------

        Total operating expenses                              5,608,337         7,447,270            5,660,467
                                                          -------------      ------------         ------------


Income (loss) from operations                                 1,514,545          (913,360)           1,156,416


Other income (expense):
    Interest expense                                           (117,821)         (323,530)            (499,818)
    Other income, net                                            20,405             9,516               26,497
                                                          -------------      ------------         ------------

        Total other income (expense)                            (97,416)         (314,014)            (473,321)
                                                          -------------      -------------        ------------


Earnings (loss) before income taxes                           1,417,129        (1,227,374)             683,095


Income tax benefit (expense)                                   (563,000)          455,000             (273,000)
                                                          -------------      ------------         ------------


Net earnings (loss)                                       $     854,129      $   (772,374)        $    410,095
                                                          =============      ============         ============


Earnings (loss) per share:
    Basic and diluted                                     $        0.26      $      (0.22)        $       0.12
                                                          =============      ============         ============

Average shares outstanding:
    Basic                                                     3,293,758         3,464,698            3,456,278
                                                          =============      ============         ============
    Diluted                                                   3,293,758         3,464,698            3,535,288
                                                          =============      ============         ============


                                               SEE NOTES TO FINANCIAL STATEMENTS


                                                              21
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                              PHOENIX GOLD INTERNATIONAL, INC.
                                             STATEMENTS OF SHAREHOLDERS' EQUITY


                                                       Common Stock
                                            ------------------------------------            Retained
                                               Shares                 Amount                Earnings                  Total
                                            ------------       ----------------         ---------------         ----------------
<S>                                            <C>                <C>                      <C>                   <C>
Balance at September 30, 1996                  3,454,605          $   7,477,939            $  3,311,059           $  10,788,998

Issuance of stock upon
    exercise of options                            4,380                 20,498                       -                  20,498

Tax benefit of stock options                           -                 23,428                       -                  23,428

Net earnings                                           -                      -                 410,095                 410,095
                                            ------------       ----------------         ---------------         ----------------

Balance at September 30, 1997                  3,458,985              7,521,865               3,721,154               11,243,019

Issuance of stock upon
    exercise of options                            5,760                 26,957                       -                   26,957

Net loss                                               -                      -                (772,374)                (772,374)
                                            ------------       ----------------         ---------------         ----------------

Balance at September 30, 1998                  3,464,745              7,548,822               2,948,780               10,497,602

Purchase of common stock                        (230,400)              (392,825)                      -                 (392,825)

Net Earnings                                           -                      -                 854,129                  854,129
                                            ------------       -----------------        ---------------         ----------------

Balance at September 30, 1999                  3,234,345        $     7,155,997            $  3,802,909            $  10,958,906
                                            ============       =================        ===============         ================





                                              SEE NOTES TO FINANCIAL STATEMENTS

                                                             22
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                             PHOENIX GOLD INTERNATIONAL, INC.
                                                 STATEMENTS OF CASH FLOWS



                                                                                      Year Ended September 30,
                                                                 -------------------------------------------------------------
                                                                      1999                  1998                    1997
                                                                 ---------------      ----------------        ----------------

<S>                                                              <C>                 <C>                      <C>
Cash flows from operating activities:
    Net earnings (loss)                                          $   854,129          $    (772,374)          $     410,095
    Adjustments to reconcile net earnings (loss) to
    net cash provided by (used in) operating activities:
        Depreciation and amortization                                905,029              1,036,627                 985,401
        Deferred taxes                                                98,000               (402,000)                144,761
        Non-recurring charges                                              -                878,147                       -
        Changes in operating assets and liabilities:
            Accounts receivable                                     (506,834)               898,665                 (67,270)
            Inventories                                            1,265,885                292,100               1,792,740
            Prepaid expenses                                         (44,056)               (24,936)                 38,254
            Other assets                                            (177,603)               (13,953)                (69,964)
            Accounts payable                                        (706,460)               222,592              (1,970,701)
            Accrued expenses                                         (51,671)               178,574                (215,562)
            Income taxes payable                                      81,644                      -                (102,356)
                                                                 ---------------      ----------------        ----------------

    Net cash provided by operating activities                      1,718,063              2,293,442                 945,398


Cash flows from investing activities:
    Proceeds from sale of facility                                 5,036,912                      -                       -
    Exercise of purchase option for facility                      (3,131,857)                     -                       -
    Capital expenditures, net                                       (303,675)              (342,630)               (446,540)
                                                                 ---------------      ----------------        -----------------

    Net cash provided by (used in) investing activities            1,601,380               (342,630)               (446,540)

Cash flows from financing activities:
    Line of credit, net                                             (900,000)            (2,247,936)             (1,131,047)
    Proceeds from long-term obligations                                    -              1,125,000                 800,000
    Repayment of long-term obligations                            (1,160,762)              (854,834)               (211,733)
    Purchase of common stock                                        (392,825)                     -                       -
    Proceeds from exercise of stock options                                -                 26,957                  43,926
                                                                 ---------------      ----------------        ----------------


    Net cash used in financing activities                         (2,453,587)            (1,950,813)               (498,854)
                                                                 ---------------      ----------------        ----------------
Increase (decrease) in cash and cash equivalents                     865,856                     (1)                      4

Cash and cash equivalents, beginning of period                         2,602                  2,603                   2,599
                                                                 ---------------      -----------------       -----------------

Cash and cash equivalents, end of period                         $   868,458            $     2,602            $      2,603
                                                                 ===============      =================       =================

Supplemental disclosures:
    Cash paid for interest                                       $   139,000            $   334,000            $    513,000
    Cash paid for income taxes                                       460,000                 44,000                 222,000
    Equipment financed by long-term obligations                            -                      -                  36,168



                                                SEE NOTES TO FINANCIAL STATEMENTS


                                                               23

</TABLE>
<PAGE>



                        PHOENIX GOLD INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                      Three Years Ended September 30, 1999


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     NATURE OF BUSINESS. Phoenix Gold International, Inc. ("Phoenix Gold" or the
"Company") designs,  markets and sells electronics,  accessories and speakers to
the audio  market.  The  Company's  products are used in car audio  aftermarket,
professional  sound  and  custom  audio/video  and  home  theater  applications.
Substantially all of the electronics and certain accessories are manufactured in
Portland, Oregon.

     REPORTING  PERIODS.  The Company's fiscal year is the 52 or 53 weeks ending
the last Sunday in  September.  Fiscal years 1999,  1998 and 1997 were 52 weeks.
For  presentation  convenience,  these  periods  have  been  presented  in these
financial statements as years ended September 30.

     ESTIMATES.  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 reported  amounts of revenues and expenses  during the reporting
period. Actual results could differ from those estimates.

      CASH AND CASH  EQUIVALENTS.  Cash and cash equivalents  include all highly
liquid  investments  with  maturities  of  three  months  or less  from  date of
purchase.

     INVENTORIES. Inventories are stated at the lower of cost or market. Cost is
determined  by the average  cost method.  Raw  materials  inventories  generally
consist of  component  parts.  Finished  goods and  work-in-process  inventories
include materials, labor and manufacturing overhead.

     PROPERTY  AND  EQUIPMENT.  Property  and  equipment  are  recorded at cost.
Depreciation  is provided  using the  straight-line  method  over the  estimated
useful lives  (generally  three to ten years) of the related  assets.  Leasehold
improvements and equipment under capital leases are amortized over the estimated
useful lives of the assets or the terms of the lease, whichever is shorter.

     GOODWILL.  Goodwill  is  amortized  using the  straight-line  method over a
period  of five to twenty  years.  Accumulated  amortization  was  $197,000  and
$157,000 as of September 30, 1999 and 1998.

     FINANCIAL INSTRUMENTS AND FAIR VALUES. The carrying amounts reported in the
balance sheet for cash, accounts receivable,  accounts payable, accrued expenses
and line of credit approximate fair value because of the immediate or short-term
maturity of these financial instruments.  The carrying amount for long-term debt
approximated  its fair value because the related  interest rates were comparable
to  the  rates  then  currently  available  for  debt  with  similar  terms  and
maturities.

     REVENUE RECOGNITION. Revenue is recognized upon shipment of the product.

                                       24
<PAGE>

     STOCK OPTIONS. Accounting Principles Board (APB) Opinion No. 25, ACCOUNTING
FOR STOCK  ISSUED TO  EMPLOYEES,  is followed to account for stock  options.  No
compensation cost is recognized because the option exercise price is equal to or
greater than the market price of the underlying stock on the date of grant.

     INCOME  TAXES.  Certain items of income and expense are not reported in tax
returns and financial  statements in the same year. The tax effects of temporary
differences are reported as deferred taxes. Deferred tax assets are reduced by a
valuation  allowance  when it is more likely  than not that some  portion of the
deferred tax assets will not be realized.

     EARNINGS (LOSS) PER SHARE.  Basic earnings (loss) per share is based on the
average number of common shares outstanding during each period. Diluted earnings
per share reflects the potential  shares  issuable upon assumed  exercise of the
outstanding stock options and warrants based on the treasury stock method.

     COMPREHENSIVE  INCOME.  In June 1997,  the Financial  Accounting  Standards
Board (FASB) issued Statement of Financial  Accounting Standards (SFAS) No. 130,
REPORTING  COMPREHENSIVE  INCOME.  Phoenix Gold  adopted SFAS No. 130  effective
October 1, 1998. There was no effect on the Company as a result of adopting SFAS
No.  130,  as  there  were  no  differences  between  net  earnings  (loss)  and
comprehensive  income (loss) for the years ended  September  30, 1999,  1998 and
1997.

     SEGMENT  INFORMATION.   In  June  1997,  the  FASB  issued  SFAS  No.  131,
DISCLOSURES  ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED  INFORMATION.  SFAS No.
131  established  standards for disclosure  about  operating  segments in annual
financial  statements and selected  information in interim financial reports. It
also established  standards for related disclosures about products and services,
geographic  areas and major  customers.  This statement  superseded SFAS No. 14,
FINANCIAL REPORTING FOR SEGMENTS OF A BUSINESS  ENTERPRISE.  SFAS No. 131 became
effective  for the year ended  September  30, 1999.  Phoenix Gold  operates in a
single  industry  segment as described in Note 12.  Adoption of SFAS No. 131 did
not result in any additional  disclosures  in the notes to financial  statements
and had no impact on the financial statements.

     PROSPECTIVE  ACCOUNTING CHANGE. In June 1998, the FASB issued SFAS No. 133,
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES.  The new statement
will require  recognition of all  derivatives as either assets or liabilities on
the balance  sheet at fair value.  The new  statement is effective  for the year
ending September 30, 2002. Management has not yet completed an evaluation of the
effect this standard will have on the Company's financial statements.


NOTE 2 - NON-RECURRING CHARGES
<TABLE>
<CAPTION>

      Non-recurring charges consist of the following:

                                                 1999                   1998                   1997
                                             -----------           -------------            ----------
<S>                                          <C>                   <C>                      <C>
Impairment of product line                   $        -            $    913,147             $       -
Restructuring of operations                           -                 198,000                     -
                                             -----------           -------------            ----------
    Total non-recurring charges                       -               1,111,147

Less inventory write-down included in
    cost of sales                                     -                (233,000)                    -
                                             -----------           -------------            ----------
      Total non-recurring charges            $        -            $    878,147             $       -
                                             ===========           =============            ==========

</TABLE>

                                                                 25
<PAGE>

     In 1998, Phoenix Gold took one-time,  non-recurring charges of $1.1 million
related to implementation  of a restructuring  plan which included the phase-out
of a product  line and actions to reduce  future  operating  costs.  The Company
determined  that an impairment of tooling and royalty costs  associated with the
product line resulted  from the phase-out of the product line. In addition,  the
impairment of the product line required a write-down  of  inventories,  which is
included  in cost of sales in the  Statement  of  Operations  for the year ended
September  30, 1998.  The  restructuring  plan also  included  the  write-off of
leasehold improvements in connection with the early termination of a lease on an
adjacent building and the separation of certain employees.  During 1999, Phoenix
Gold completed its restructuring plan. Cash payments were not material.


NOTE 3 - ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>

Accounts receivable consist of the following:


                                                            1999                       1998
                                                    -------------------       --------------------
<S>                                                 <C>                       <C>
Accounts receivable                                 $     5,069,799           $     4,587,965
Allowance for doubtful accounts                            (275,000)                 (300,000)
                                                    -------------------       --------------------
    Total accounts receivable, net                  $     4,794,799           $     4,287,965
                                                    ===================       ====================
</TABLE>


NOTE 4 - INVENTORIES
<TABLE>
<CAPTION>

Inventories consist of the following:

                                                           1999                        1998
                                                    -------------------       --------------------
<S>                                                 <C>                       <C>
Raw materials and work-in-process                   $     2,531,260           $     2,740,639
Finished goods                                            3,063,566                 4,058,828
Supplies                                                     26,009                    87,253
                                                    -------------------       --------------------
    Total inventories                               $     5,620,835           $     6,886,720
                                                    ===================       ====================
</TABLE>

NOTE 5 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>

Property and equipment consist of the following:

                                                           1999                        1998
                                                    -------------------       --------------------
<S>                                                 <C>                       <C>
Machinery, equipment and vehicles                   $     4,717,198           $     4,526,903
Leasehold improvements                                        3,829                 1,527,834
Construction in progress                                          -                    46,835
                                                    -------------------       --------------------
                                                          4,721,027                 6,101,572

Less accumulated depreciation
  and amortization                                       (3,665,496)               (3,579,567)
                                                    -------------------       --------------------
    Total property and equipment, net               $     1,055,531           $     2,522,005
                                                    ===================       ====================



                                                               26
</TABLE>
<PAGE>

     During 1999,  Phoenix  Gold  purchased  its leased  office,  warehouse  and
manufacturing  facility for $3,132,000  from its landlord.  On the same day, the
Company sold the facility and the existing  improvements,  with a remaining  net
book value of $924,000, for a net sales price of $5,037,000, and then leased the
facility  from  the  purchaser.  A gain of  $981,000  was  deferred  and will be
recognized over the ten-year lease term as a reduction in rent expense.  The net
cash proceeds were used to repay $990,000 in remaining long-term obligations.


NOTE 6 - LINE OF CREDIT

     A $5.5 million  revolving  operating  line of credit is  available  through
December  31,  1999.  Interest on the  borrowings  is equal to the bank's  prime
lending  rate  (8.25%  at  September  30,  1999)  or  LIBOR  plus an  additional
percentage. Borrowings under the line of credit are limited to eligible accounts
receivable  and  inventories  and are  subject  to  certain  additional  limits.
Borrowings  under  the  line of  credit  are  secured  by  accounts  receivable,
inventories  and certain other  assets.  The line of credit  contains  covenants
which  require a minimum  level of  tangible  net  worth and  minimum  ratios of
current assets to current liabilities and debt service coverage. As of September
30,  1999,  the Company was  eligible to borrow $5.3  million  under the line of
credit. No borrowings were outstanding under the line of credit as of that date.
Borrowings as of September 30, 1998 were $900,000 and bore interest at 7.94%.

     A $350,000 note payable to Carver Corporation related to the acquisition of
the professional sound division was paid in full in 1997. The note bore interest
at a rate of 6%.


NOTE 7 - LONG-TERM OBLIGATIONS
<TABLE>
<CAPTION>

Long-term obligations consist of the following:

                                                            1999                      1998
                                                    -------------------         -----------------
<S>                                                 <C>                        <C>
Capital lease obligations, paid in full             $              -            $    1,127,775

Term note, payable in monthly installments,
  including interest at 5.9%, paid in full                         -                    27,586

Term note,  payable in monthly installments,
  including interest at 9.0%, paid in full                         -                     5,401
                                                    -------------------         -----------------
                                                                   -                 1,160,762
Less current portion                                               -                  (222,529)
                                                    -------------------         -----------------
    Total long-term obligations                     $              -            $      938,233
                                                    ===================         =================

      During July 1998,  the  Company  completed a  $1,125,000  five-year  lease
financing at an interest rate of 8.25% which was repaid in July 1999.


                                                             27

</TABLE>
<PAGE>

NOTE 8 - COMMITMENTS

     Phoenix Gold leases its office,  warehouse and manufacturing facility under
a ten-year  operating lease  agreement.  Terms of the lease include an option to
extend the length of the lease for ten additional years.

     Minimum future rentals under  operating  leases having initial or remaining
terms of one year or more are as follows:

<TABLE>
<CAPTION>

<S>                                                                                        <C>
     September 30,
       2000                                                                                $    524,000
       2001                                                                                     537,000
       2002                                                                                     550,000
       2003                                                                                     564,000
       2004                                                                                     578,000
       Thereafter                                                                             2,951,000
                                                                                           --------------
        Total                                                                              $  5,704,000
                                                                                           ==============

</TABLE>

     Rent expense under operating leases for the three years ended September 30,
1999, 1998 and 1997 was $255,000, $365,000 and $333,000.


NOTE 9 - TAXES
<TABLE>
<CAPTION>

Income tax benefit (expense):

                                               1999                      1998                      1997
                                         ------------------        ------------------       -----------------
<S>                                      <C>                       <C>                     <C>
Current:
  Federal                                $     (412,000)           $      47,000            $    (112,000)
  State                                         (53,000)                   6,000                  (16,239)
                                         ------------------        ------------------       -----------------
    Total current                              (465,000)                  53,000                 (128,239)

Deferred:
  Federal                                       (87,000)                 368,000                 (127,000)
  State                                         (11,000)                  34,000                  (17,761)
                                         ------------------        ------------------       ------------------
    Total deferred                              (98,000)                 402,000                 (144,761)
                                         ------------------        ------------------       ------------------
      Total                              $     (563,000)           $     455,000            $    (273,000)
                                         ==================        ==================       ==================
</TABLE>

Effective income tax rates are as follows:
<TABLE>
<CAPTION>

                                               1999                      1998                      1997
                                         -----------------         ----------------         -----------------
<S>                                              <C>                       <C>                      <C>
Taxes at statutory
   federal income tax rate                        (34.0%)                   34.0%                   (34.0%)
State taxes, net of
  federal benefit                                  (4.4)                     4.4                     (4.4)
Other, net                                         (1.3)                    (1.3)                    (1.6)
                                         -----------------         ----------------         -----------------
    Total                                         (39.7%)                   37.1%                   (40.0%)
                                         =================         ================         =================


                                                           28
</TABLE>
<PAGE>

     The tax effects of  temporary  differences  which give rise to deferred tax
assets and deferred tax liabilities are as follows:

                                                 1999                 1998
                                            -------------        --------------
Deferred tax liability - depreciation       $    (133,000)       $    (72,000)


Deferred tax assets:
  Accrued expenses                                138,000             286,000
  Deferred gain on sale of facility               367,000                   -
  Goodwill and other intangibles                  366,000             550,000
  Inventory valuation                             177,000             249,000
                                           --------------        ---------------
    Total deferred tax assets                   1,048,000           1,085,000
                                           --------------        ---------------
      Net deferred taxes                    $     915,000        $  1,013,000
                                           ==============        ===============

Current deferred tax asset                  $     315,000        $    446,000
Long-term deferred tax asset                      600,000             567,000
                                           --------------        ---------------
      Net deferred taxes                    $     915,000        $  1,013,000
                                           ===============       ===============


NOTE 10 - BENEFIT PLAN

     Phoenix Gold adopted a profit  sharing and 401(k) savings plan in September
1997 which covers substantially all employees. Participating employees may defer
up to 15% of their compensation,  subject to certain regulatory limitations. The
Company matches 100% of employee  contributions up to $750 of each participating
employee's compensation.  The matching contribution expense was $63,000, $77,000
and $10,000 for the years ended September 30, 1999, 1998 and 1997.

     The profit sharing and 401(k) savings plan also permits the Company to make
discretionary  profit  sharing  contributions  to all  employees.  Discretionary
profit sharing  contributions are determined annually by the Board of Directors.
No profit sharing  expense was approved for the years ended  September 30, 1999,
1998 and 1997.


NOTE 11 - SHAREHOLDERS' EQUITY AND STOCK OPTION PLAN

     Phoenix Gold's Board of Directors and  shareholders  adopted and approved a
stock option plan (the "Stock Option Plan") on January 27, 1995. Under the Stock
Option Plan, the Board of Directors may grant incentive and nonqualified options
to employees,  directors  and  consultants  to purchase up to 315,000  shares of
common stock.  On July 16, 1996, the Stock Option Plan was amended to reserve an
additional 200,000 shares for issuance.

     In  general,  options to purchase  common  stock may not be granted at less
than  fair  market  value  at  the  date  of  grant.  Options  generally  become
exercisable  ratably  over a three to five year  period and  expire  five to ten
years after the date of grant.  The Stock Option Plan expires in 2005. The Stock
Option Plan can also be terminated by the Board of Directors at any time without
shareholder  approval  with  respect  to shares of common  stock not  subject to
outstanding options.

                                       29


<PAGE>

<TABLE>
<CAPTION>


     Information  relating to option  activity  for the Stock Option Plan is set
forth below:


                                                    Outstanding Options                      Exercisable
                                               -----------------------------         -----------------------------
                                                                   Weighted                            Weighted
                                Shares            Number           Average             Number          Average
                              Available             Of             Exercise              of            Exercise
                              for Option          Shares            Price              Shares           Price
                             ------------      -----------        ----------         ------------     ------------
<S>                          <C>               <C>               <C>                   <C>             <C>
September 30, 1996             209,530           295,865          $    5.06            161,764         $    4.97

Granted                       (239,545)          239,545               5.34
Exercised                            -            (4,380)              4.68
Canceled                        38,930           (38,930)              6.28
                             ------------      -----------

September 30, 1997               8,915           492,100               5.10            221,615              4.97

Granted                        (11,550)           11,550               4.00
Exercised                            -            (5,760)              4.68
Canceled                       128,575          (128,575)              5.74
                             ------------      -----------

September 30, 1998             125,940           369,315               4.85            258,383              4.86

Granted                         (2,800)            2,800              3.125
Exercised                            -                 -
Canceled                        42,340           (42,340)              4.72
                             ------------      -----------

September 30, 1999             165,480           329,775          $    4.85            271,508         $    4.87
                             ============      ===========

</TABLE>
<TABLE>
<CAPTION>

      The following table summarizes information about stock options outstanding
under the Stock Option Plan at September 30, 1999:

                                                 Outstanding                                      Exercisable
                              --------------------------------------------------      --------------------------------
                                                    Weighted
                                                     Average           Weighted                           Weighted
       Range of                                     Remaining          Average                             Average
       Exercise                  Number            Contractual         Exercise        Number             Exercise
        Prices                  of Shares             Life              Price         of Shares             Price
--------------------          ------------      --------------       -----------      ----------        --------------
<S>                             <C>                  <C>            <C>               <C>               <C>
            $  3.125              2,800               4.4            $   3.125               -          $    3.125
$  4.00  -  $  4.75             237,575               5.1                4.67          196,908               4.68
$  5.15  -  $  5.50              88,000               3.4                5.31           73,200               5.27
            $ 11.75               1,400               1.3               11.75            1,400              11.75
                               -----------      --------------       ----------       ----------        --------------

                                329,775               4.6            $  4.85           271,508          $    4.87
                               ===========      ==============       ===========      ==========        ==============


     At September 30, 1999 and 1998, there were outstanding warrants to purchase
up to 110,000  shares of common stock at $8.10 per share.  Such warrants  became
exercisable on May 4, 1996 and expire on May 3, 2000.

</TABLE>

                                                            30
<PAGE>

     At September  30, 1999,  nonqualified  options to purchase  5,000 and 1,400
shares of common  stock were  outstanding  at $4.63 and  $3.125 per share.  Such
options become  exercisable  ratably over a three-year period and expire in 2007
and 2004. At September  30, 1999,  Phoenix Gold has reserved  611,655  shares of
common stock for issuance upon exercise of the stock options and warrants.

     Phoenix Gold has elected to continue to account for stock options according
to APB Opinion No. 25.  However,  as  required by SFAS No. 123,  ACCOUNTING  FOR
STOCK-BASED  COMPENSATION,  the Company has  computed  for pro forma  disclosure
purposes the value of options  granted during the years ended September 30, 1999
and 1998 using the  Black-Scholes  option  pricing model.  The weighted  average
estimated fair value of options  granted  during 1999,  1998 and 1997 was $2.09,
$2.45 and $4.52 per  share.  The  weighted  average  assumptions  used for stock
option  grants during the years ended  September 30, 1999,  1998 and 1997 were a
risk free interest rate of 5.00%, 5.75% and 6.25%, an expected dividend yield of
0%, 0% and 0%, an  expected  life of 5.0  years,  5.0 years and 7.1 years and an
expected volatility of 79.0%, 67.8% and 94.6%.

     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating  the fair value of traded  options that have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions,  including  the  expected  stock price
volatility.  Because the Company's  options have  characteristics  significantly
different  from those of traded  options and because  changes in the  subjective
input assumptions can materially affect the fair value estimate,  in the opinion
of management,  the existing models do not necessarily provide a reliable single
measure of the fair value of its options.

     For purposes of the pro forma disclosures,  the estimated fair value of the
stock-based  awards is amortized over the vesting period. Pro forma net earnings
(loss) and earnings (loss) per share is as follows:

                                            1999           1998          1997
                                       -----------     ----------     ----------

Pro forma net earnings (loss)          $  789,000      $ (781,000)    $ 306,000

Pro forma earnings (loss) per share          0.24           (0.23)         0.09



     The effects of applying  SFAS No. 123 to provide pro forma  disclosure  are
not likely to represent  net earnings  (loss) and earnings  (loss) per share for
future  years  since SFAS No.  123 does not apply to grants  prior to October 1,
1995,  options vest over several  years,  additional  awards are  anticipated in
future years and  assumptions  used for any additional  awards may vary from the
current assumptions.

     During  1999,  Phoenix Gold began  acquiring  shares of its common stock in
connection  with a stock  repurchase  program  announced in November 1998.  That
program  authorizes  the Company to purchase up to $1.0  million of common stock
from time to time on the open market or pursuant to negotiated  transactions  at
price levels the Company deems attractive.  The Company purchased 230,400 shares
of common stock in 1999 at an aggregate cost of $392,825.


                                       31
<PAGE>

NOTE 12 - SALES AND MAJOR CUSTOMERS

     Phoenix Gold operates in a single industry segment: the design, manufacture
and sales of electronics,  accessories and speakers for use in the audio market.
Net sales by geographic region are as follows:

                                 1999               1998              1997
                           ---------------     --------------     -------------

United States              $   20,078,164      $  17,903,217      $ 16,894,741
International:
  Europe                        3,746,786          4,624,273         5,565,352
  Asia                          1,157,670            945,600         2,245,232
  Other                         2,555,529          3,011,625         3,093,403
                           ---------------     --------------     -------------
    Total international         7,459,985          8,581,498        10,903,987
                           ---------------     --------------     --------------
      Net sales            $   27,538,149      $  26,484,715      $ 27,798,728
                           ===============     ==============     ==============

     No customer accounted for 10% or more of the Company's net sales during the
years ended September 30, 1999, 1998 or 1997. As of September 30, 1999 and 1998,
one  customer  accounted  for  approximately  15.0% and 15.5% of total  accounts
receivable.


NOTE 13 - QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>

     The  following is a summary of  operating  results by quarter for the years
ended September 30, 1999 and 1998:


1999 QUARTER ENDED             DECEMBER 31        MARCH 31          JUNE 30         SEPTEMBER 30         TOTAL
------------------           ---------------    ------------     ------------      --------------    --------------
<S>                          <C>                <C>              <C>               <C>               <C>
Net sales                    $  6,665,935       $  6,200,066     $  7,454,978      $  7,217,170      $  27,538,149
Gross profit                    1,721,052          1,673,617        2,055,526         1,672,687          7,122,882
Net earnings                      206,336            159,719          335,901           152,173            854,129
Earnings per share                   0.06               0.05             0.10              0.05               0.26

1998 QUARTER ENDED

Net sales                    $  6,058,001       $  6,613,495     $  7,687,304      $  6,125,915      $  26,484,715
Gross profit                    1,414,797          1,787,877        2,297,119         1,034,117          6,533,910
Net earnings (loss) (1)             3,002             67,995          269,535        (1,112,906)          (722,374)
Earnings (loss) per share            0.00               0.02             0.08             (0.32)             (0.22)



(1) See Note 2 to Financial Statements describing non-recurring charges.

                                                       32
</TABLE>
<PAGE>



                                         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.


                                         PHOENIX GOLD INTERNATIONAL, INC.


                                         By:   /s/ Keith A. Peterson
                                           -------------------------------
                                               Keith A. Peterson
                                               Chairman, President and
                                               Chief Executive Officer

                                         Date: December 10, 1999


     Pursuant to  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 and on the dates indicated.

<TABLE>
<CAPTION>

      Signature                    Capacity                                  Date
      ---------                    --------                                  ----
<S>                          <C>                                     <C>


/s/ Keith A. Peterson        Chairman, President and                  December 10, 1999
----------------------       Chief Executive Officer
Keith A. Peterson            (Principal Executive Officer)



/s/ Timothy G. Johnson       Executive Vice President,                December 10, 1999
----------------------       Chief Operating Officer and
Timothy G. Johnson           Director



/s/ Joseph K. O'Brien        Chief Financial Officer and              December 10, 1999
----------------------       Secretary (Principal Financial
Joseph K. O'Brien            and Accounting Officer)


/s/ Robert A. Brown          Director                                 December 10, 1999
----------------------
Robert A. Brown

/s/ Edward A. Foehl          Director                                 December 10, 1999
----------------------
Edward A. Foehl

/s/ Frank G. Magdlen         Director                                 December 10, 1999
----------------------
Frank G. Magdlen


</TABLE>

                                       33

<PAGE>

                                    EXHIBIT INDEX




Exhibit                      Description                                  Page
-------                      -----------                                  ----

23.1      Consent of Deloitte & Touche LLP, Independent Auditors            35

27        Financial Data Schedule                                           36

99.1      Certain Factors to Consider in Connection with
             Forward-Looking Statements                                     37






                                       34