SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
                                   (Mark One)

(X)   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                    EXCHANGE ACT OF 1934

For the Fiscal Year Ended June 30, 1999
                                       OR
( )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                    EXCHANGE ACT OF 1934

Commission File No. 0-25474

                            SIMS COMMUNICATIONS, INC.
                 (Name of Small Business Issuer in its charter)

                Delaware                                    65-0287558
         (State of incorporation)                        (IRS Employer
                                                        Identification No.)
       18001 Cowan, Suites C&D
           Irvine, California                                92614
    (Address of Principal Executive Office)                Zip Code

Registrant's  telephone number,  including Area Code: (949) 261-6665
Securities registered  pursuant to Section  12(b) of the Act:  None
Securities  registered pursuant to Section 12(g) of the Act:

                                        Common Stock
                                      (Title of Class)

Check 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 past 12
months (or for such shorter period that the Registrant was required to file such
reports)  and (2) has been subject to such filing  requirements  for the past 90
days.
                             X
                            YES                NO

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

The Company's revenues for the most recent fiscal year were $2,240,876.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Company,  (17,172,937 shares) based upon the average bid and asked prices of the
Company's Common Stock on September 30, 1999 was approximately $1,288,000.

As of  September  30,  1999 the Company had  17,635,639  issued and  outstanding
shares of common stock.


<PAGE>


ITEM 1.  DESCRIPTION OF BUSINESS

     SIMS  Communications,  Inc. (the "Company") was incorporated in Delaware in
August 1991 to rent cellular telephones through a stand-alone dispensing station
known as an Automated Communications Distribution Center ("ACDC"). Prior to 1996
the Company  operated  ACDC units for its own  account and also sold  franchises
which  provided  third  parties  the  right to  operate  ACDC  units at  various
franchised  locations.  At September 30, 1999, the Company was not operating any
ACDC units and the Company's  only  remaining  franchisee had four ACDC units in
operation.

      In 1996 the Company introduced four programs in an effort to diversify and
broaden  the  Company's   product  and  service  mix:  (i)  cellular   telephone
activations,  (ii) sale of pre-paid  calling cards,  (iii) sale of long distance
telephone service and (iv) rental of cellular telephones using overnight courier
service.  With the exception of the sale of pre-paid  calling cards,  these four
programs were discontinued in December 1997.

      In  December  1996 the  Company  acquired  all the issued and  outstanding
shares of Link International,  Inc. ("Link").  Link manufactures and distributes
machines which dispense  prepaid calling cards ("PCD's") and terminals which are
used by  merchants  to perform a variety of  transactions,  including  accepting
credit  cards and bank  debit  cards in  payment  for sales of  merchandise  and
services. The PCD's are full sized stand-alone vending machines and are operated
by the  Company.  All prepaid  phone cards  stored in the PCD's are "dead" (i.e.
"inactive") until each one is individually  activated once cash is received or a
customer's   credit  or  debit  card  has  been  accepted  by  the  machine  and
successfully processed. The use of inactive calling cards eliminates the risk of
fraud  or theft as well as the  need  for a large  capital  investment  which is
required by other machines that dispense only  pre-activated  (or "live") cards.
Although the PCD's accept cash and credit cards,  the PCD's require the customer
to use a personal identification number when purchasing prepaid phone cards with
a bank debit card. This particular feature serves to eliminate the expense (i.e.
"charge  backs")  associated  with the use of fraudulent or stolen credit cards.
Long  distance  time for the prepaid  calling  cards is purchased by the Company
from various  venders.  Link also markets a  proprietary  scrip  terminal  which
dispenses  a receipt to the  customer  which can be used to pay for  merchandise
and/or services.  In June 1999 the Company sold  substantially all of the assets
associated  with Link.  Although the Company did not receive any  material  cash
payment in  connection  with this sale,  the  purchaser of the assets  agreed to
assume  $70,000 in accounts  payable and  approximately  $600,000 in capitalized
lease  obligations  associated  with the  acquisition  of the  scrip  terminals.
Excluded  from the sale of Link's  assets were 117 scrip  terminals (45 of which
are in operation) and five PCD's.

      In  May  1998  the  Company  acquired  One  Medical   Services,   Inc.  in
consideration   for  142,350  shares  of  common  stock  and  187,500   warrants
exercisable  at $2.00 per share at any time prior to May 30,  2003.  The Company
has also  agreed to issue to the former  owners of One  Medical up to  1,485,000
additional  shares of common stock depending on the future operating  results of
One Medical.  The number of shares to be issued will be  determined  by dividing
the quarterly net income of One Medical (for each fiscal quarter  beginning June
30,  1998 and  ending  June  30,  2001),  by the  average  closing  price of the
Company's  common stock for the five day trading period prior to the end of each

<PAGE>

quarter. One Medical provides a financial processing and communications  network
for the Home  Medical  Equipment  (HME)  industry.  In  addition  to  processing
information and verifying  insurance  medical cards,  this network  connects HME
buyers  with a  network  of HME  vendors.  This  proprietary  network  has  been
designated  for the medical and managed  healthcare  market,  but at the present
time is being  marketed to the retail  pharmacy  industry.  As of September  30,
1999, 80  pharmacies,  13 HME service  centers,  8 HME vendors and one catalogue
vendor were members of the One Medical network.

In July 1999 the Company  licensed its rights to the One Medical Service Network
to an  unrelated  third  party for  $1,377,000,  of which  $300,000  was paid by
September  30, 1999,  $267,000 of which is to be paid by January 5, 2000 and the
remainder  of which  ($810,000)  will be paid in  accordance  with the  terms an
unsecured promissory note which bears interest at 7% per year. The principal due
on the note is to be reduced  by  license  royalties  due the  Company,  up to a
maximum of $6,000 per month, and prepaid phone card credits of $3,000 per month.
On July 30, 2002 the licensee is to make a one-time payment to the Company equal
to 25% of the then  outstanding  principal on the note. All unpaid principal and
interest is due on July 30, 2006.  The  licensee  also agreed to pay $200,000 of
accounts payable related to One Medical inventory and to assume the salaries and
other overhead  associated with the One Medical operation.  The Company uses the
prepaid phone card credits in the sale of its prepaid calling cards.

     All historical  share data in this report have been adjusted to reflect the
following  stock  splits  relating to the  Company's  common  stock:  June 1995:
2-for-1 forward split,  February 1996:  1-for-10  reverse split,  February 1998:
1-for-4 reverse split.

      As of September 30, 1999  substantially all of the Company's revenues were
generated by the Justmed.com and the Movie Vision divisions.

JustMed.com

      The JustMed.com division involves three components:

      o     The Medcard health insurance verification and billing system
      o     The JustMed.com website
      o     The Med Store

MedCard System

      In November 1998 the Company  acquired an exclusive  world wide license to
software  programs  and  related  technology  known as the MedCard  system.  The
MedCard system is an electronic  processing system which consolidates  insurance
eligibility  verification  and processes  medical claims and approvals of credit
card and debit  card  payments  in under 30  seconds  through  a  single,  small
terminal.



<PAGE>


      As of September 30, 1999 the MedCard  system was able to retrieve  on-line
eligibility and authorization  information from 77 medical  insurance  companies
and electronically  process and submit billings for its healthcare  providers to
over 1,650  companies.  These  insurance  providers  include CIGNA,  Prudential,
Oxford Health Plan,  United  Health Plans,  Blue Cross,  Medicaid,  Aetna,  Blue
Cross/Blue  Sheild and  Metrahealth.  Using the  MedCard  system,  patients  are
relieved  from  the  problems  associated  with  eligibility   confirmation  and
billings,  healthcare  providers'  reimbursements  are  accelerated  and account
receivables  are reduced.  The time it takes to collect  payments from insurance
providers  decreases from months to days. Sims obtains revenues from the sale or
lease of its processing  terminals and from fees received from every transaction
processed by means of the terminals.

Website

      The JustMed.com  website is an internet website which began functioning on
July 1, 1999. The website advertises  healthcare products and services which are
available to the general public and provides medical  information to the general
public.  Persons in need of  healthcare  products  and  services  can access the
website and order products or transfer to the more detailed websites  maintained
by the  companies  which  provide the  products  and  services.  Sims expects to
generate revenues from this website by charging providers of healthcare products
and services fees for  advertising  on the website.  Sims will also receive fees
when a person  transfers  from Sims'  website to the  websites  maintained  by a
provider of healthcare  products or services.  Sims expects that  advertisers on
its website will include  distributors  of  healthcare  equipment  and products,
hospitals, physician practice groups, and clinics.

Med Store

      The Med Store is a feature of Sims' website which allows  consumers to use
their computers to purchase a variety of healthcare products and services. Items
available for purchase  include canes,  crutches,  walkers,  bath chairs,  blood
pressure units, cold therapies,  exercise  equipment and hot and cold packs. The
Med Store became operational on July 1, 1999.

Movie Vision

      In January 1998 the Company  issued  550,000 shares of its common stock to
the  shareholders of Moviebar,  Incorporated and  Vectorvision,  Incorporated in
consideration  for the  acquisition of a business known as "Movie Vision." Movie
Vision rents video cassettes,  primarily  containing  motion  pictures,  through
automated  dispensing units in hotels. Movie Vision currently has video cassette
dispensing machines in approximately 150 hotels in the United States.

Competition

      The Company  competes with numerous other  companies  which are engaged in
the  Company's  lines  of  business.  Many of  these  competitors  have  greater
financial and marketing resources than those of the Company.


<PAGE>



Employees and Offices

      As of September 30, 1999,  the Company  employed 18 persons on a full-time
basis. Nine employees serve in management or administrative  capacities, and the
remainder are hourly workers in the Company's operations.  None of the Company's
employees  are covered by a  collective  bargaining  agreement.  The Company has
never  experienced  an  organized  work  stoppage,   strike  or  labor  dispute.
Management considers the Company's relations with its employees to be good.

      The  Company's  executive  offices are located at 18001 Cowan,  Suite C&D,
Irvine,  California  92614 and  consist of 4,900  square feet of space which are
leased at an annual rent of $70,000.  This lease on the space  expires in August
2003. The Company leases a 7,000 square foot  production and office  facility in
Orlando,  Florida  at an annual  rent of  $50,000.  The  lease on this  facility
expires in December 2005. The Company's telephone number is (949) 261-6665.

ITEM 2.  DESCRIPTION OF PROPERTIES

     See Item 1 of this report.

     ITEM 3.  LEGAL PROCEEDINGS.

      There are no material legal proceedings to which the Company is a party or
to which its properties are subject.

      Prior to 1996 the Company operated ACDC units for its own account and also
sold franchises  which provided third parties the right to operate ACDC units at
various  franchised  locations.  A former franchisee of the Company has demanded
that the Company purchase its franchise, as well as the franchisee's ACDC units,
for  approximately  $1,000,000.  The Company issued 571,429 shares of its common
stock in  settlement  of $500,000  claimed to the  franchise.  The Company  also
agreed to pay $371,619 plus interest of 10% per year to the former franchisee no
later than October 31,  1999.  The Company and the former  franchisee  agreed to
negotiate with each other to determine what, if any,  additional  amount is owed
by the Company to the former franchisee.

      A suit has been filed against the Company by a former employee for damages
totaling $200,000. The Company believes the claim is without merit and has filed
a counterclaim against the former employee charging criminal wrongdoing.

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

     Not Applicable



<PAGE>


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

      As of September 30, 1999, there were  approximately  350 beneficial owners
of the  Company's  Common  Stock.  The  Company's  Common Stock is traded on the
National  Association  of  Securities  Dealers  Automatic  Quotation  ("NASDAQ")
System.  Set forth  below are the range of high and low bid  quotations  for the
periods  indicated  as  reported  by  NASDAQ.   The  market  quotations  reflect
interdealer prices, without retail mark-up, mark-down or commissions and may not
necessarily  represent  actual  transactions.  The market  quotations  have been
adjusted to reflect a two for one forward  stock split,  which was  effective in
June 1995, a one-for ten reverse  stock split which was effective in March 1996,
and a one-for-four reverse stock split which was effective in February 1998.

               Quarter
               Ending                       High        Low

              9/30/97                      $2.31       $1.25
             12/31/97                      $5.00       $1.50
              3/31/98                      $2.87       $1.09
              6/30/98                      $2.75       $1.56

              9/30/98                      $2.88       $1.38
             12/31/98                      $2.44       $0.56
              3/31/99                      $2.25       $0.44
              6/30/99                      $1.69       $0.88

      Holders of Common Stock are  entitled to receive such  dividends as may be
declared by the Board of Directors out of funds legally available  therefor and,
in the  event of  liquidation,  to share  pro  rata in any  distribution  of the
Company's  assets after  payment of  liabilities.  The Board of Directors is not
obligated to declare a dividend.  The Company has not paid any dividends on it's
Common Stock and the Company  does not have any current  plans to pay any Common
Stock dividends.

      The provisions in the Company's Articles of Incorporation  relating to the
Company's Preferred Stock would allow the Company's directors to issue Preferred
Stock with rights to multiple  votes per share and dividends  rights which would
have  priority  over any  dividends  paid with respect to the  Company's  Common
Stock.  The issuance of Preferred Stock with such rights may make more difficult
the removal of management even if such removal would be considered beneficial to
shareholders  generally,  and  will  have the  effect  of  limiting  shareholder
participation in certain  transactions  such as mergers or tender offers if such
transactions are not favored by incumbent management.

      See Note 2 to the Company's  consolidated  financial  statements which are
included as part of this report.


<PAGE>



ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

      The following  selected  financial data should be read in conjunction with
the more  detailed  financial  statements,  related  notes and  other  financial
information included herein.

Statement of Operations Data:

                                               Years Ended June 30,
                                          1999                     1998
                                          ----                     ----

Revenues                              $2,240,876                  $980,951
Cost of Services                        (697,481)                 (523,479)
Operating and other
     Expenses                         (8,690,380)               (7,503,483)
Loss from Discontinued Operations             --                   (63,737)
                                      -----------               -----------
Net Loss                             $(7,146,985)              $(7,109,748)
                                     ============              ============

Balance Sheet Data:
                                                     June 30,
                                           1999                    1998

Current Assets                        $1,405,096                $1,088,022
Total Assets                           6,374,862                 5,602,751
Current Liabilities                    2,142,550                 2,785,015
Total Liabilities                      2,268,256                 3,372,542
Working Capital (Deficit)               (737,454)               (1,697,013)
Shareholders' Equity                   4,106,606                 2,230,209

No Common Stock dividends have been declared by the Company since its inception.

Results of Operations

         The  following  table  shows  the  percentage  of the  Company's  gross
revenues  by  category  for the periods  indicated,  as well as the  anticipated
revenue percentage from each category for the year ending June 30, 2000.


<PAGE>



                                                   Percent of Gross Revenues
                                                                   Year Ending
                                           Years Ending June 30,  June 30, 2000
                                            1998         1999     (Projected)(1)
                                            ----         ----     --------------

Rental of cellular telephones directly
from Company and from ACDC Units.             11%          --             --

Sale of ACDC units and related equipment.     --           --             4%

Fees paid by cellular telephone companies
for  activation of cellular telephones.       34%          --             --

Sale of prepaid calling cards.                13%          4%             1%

Sale of long distance telephone service.       3%          --             --

Revenues from Link International.              9%         28%             --

Revenues from Moviebar                        28%         40%            15%

Revenues from One Medical Service              1%          7%            10%

Revenues from Justmed.com                      --         19%            70%

Miscellaneous Income                           1%          2%             --

(l)  There  can  be  no  assurance  that  these   percentages  will  not  change
significantly  based upon events which may not be within the Company's  control.
Projected   revenues   for  the  year  ending  June  30,   2000   constitute   a
forward-looking  statement  which is  subject to risks and  uncertainties  which
could cause actual results to differ  materially from those  projected.  Factors
that could cause or  contribute  to such  differences  include  lack of adequate
funding,  loss of major customers and inability to meet sales  projections.  The
Company  undertakes  no  obligation  to publicly  release any  revision to these
forward-looking  statements which may be made to reflect events or circumstances
after the date of this  report or to reflect  the  occurrence  of  unanticipated
events.

      Prior to 1996 the Company operated ACDC units for its own account and also
sold franchises  which provided third parties the right to operate ACDC units at
various  franchised  locations.  At  September  30,  1999,  the  Company was not
operating any ACDC units and the Company's  only  remaining  franchisee had four
ACDC units in operation.

        In 1996 the Company  introduced  four programs in an effort to diversify
and  broaden the  Company's  product and service  mix:  (i)  cellular  telephone
activations,  (ii) sale of pre-paid  calling cards,  (iii) sale of long distance
telephone service and (iv) rental of cellular telephones using overnight courier
service.  With  the  exception  of the sale of  pre-paid  calling  cards,  these
programs were discontinued in December 1997.


<PAGE>

      In  December  1996 the  Company  acquired  all the issued and  outstanding
shares of Link  International,  Inc. (see Item 1 of this  report).  Although the
Company did not receive any material cash payment in connection  with this sale,
the  purchaser of the assets  agreed to assume  $70,000 in accounts  payable and
approximately  $600,000 in capitalized  lease  obligations  associated  with the
acquisition of the script terminals.

      In  January  1998 the  Company  acquired  its Movie  Vision  Divison  from
Moviebar,  Incorporated  and  Vectorvision,  Incorporated.  Movie  Vision  rents
videocassettes,   primarily   containing  motion  pictures,   through  automated
dispensing units in hotels.

      In May 1998 the Company acquired One Medical Services, Inc. (see Item 1 of
this  report).  In July 1999 the Company  licensed its rights to the One Medical
Service Network to an unrelated  third party for  $1,377,000,  of which $300,000
was paid by September  30,  1999,  $267,000 of which is to be paid by January 5,
2000 and the remainder of which  (810,000)  will be paid in accordance  with the
terms an  unsecured  promissory  note which bears  interest at 7% per year.  The
principal  due on the note is to be  reduced  by  license  royalties  and  other
credits up to a maximum of $9,000 per month.

      In November 1998 the Company  acquried an exclusive  world wide license to
software  programs  and  related  technology  known as the MedCard  system.  The
MedCard system forms a part of the Company's JustMed.com division.

Year Ending June 30, 1999
      During the year ending June 30, 1999, the Company's revenue increased as a
result of the Company's  expansion  into  financial  processing  (Link debit and
scrip  terminals),  medical  transaction  processing  (One  Medical  and MedCard
divisions)  and automated  motion picture  rentals  (Movie Bar division).  These
business  segments  produced  revenues  of  $625,801,   $583,777  and  $888,626,
respectively  for the year ended June 30, 1999.  Comparable  revenues from these
segments for the year ended June 30, 1998 were substantially less since the full
scale  distribution  of the Link debit and scrip  terminals  did not begin until
April  1998,  and  the One  Medical  and  MedCard  divisions  did  not  commence
operations until May 1998 and November 1998, respectively.  During the summer of
1999 the Company began directing its efforts toward its Justmed.com division. As
a result of this change in focus the  Company in June 1999 sold a major  portion
of its financial  processing  division and in July 1999 the Company licensed its
rights to the One Medical division. In connection with the sale of the financial
processing division, the Company recognized $210,000 of deferred gross profit.

<PAGE>

      Selling,  Marketing  and General and  Administration  expenses  (including
depreciation) increased to nearly $5,800,000 during the year ended June 30, 1999
compared to $4,300,000 in the prior year primarily due to the following:

1)    The Company's  financial  processing,  One Medical and Movie Bar divisions
      were in operation  during all twelve  months of fiscal  1999,  compared to
      shorter periods in the prior year.
2)    The Company  acquired its MedCard  division in November 1998. As a result,
      only  operations  for the twelve  month  period  ending June 30, 1999 were
      affected by the expenses of this division.
3)    Depreciation  and  amortization  expense was  $1,056,572 in the year ended
      June 30, 1999  compared to $474,372  in the prior  period.  A  substantial
      portion of this increase was the result of depreciating  assets related to
      the Company's ACDC operations over a shorter period of time.
4)    As a result of the sale of a portion of its financial processing division,
      the Company incurred  approximately  $140,00 of commission  expense in the
      quarter ended June 30, 1999.
5)    The Company incurred  one-time  expenses related to the closing of offices
      in New Jersey and Modesto,  California  offices and in the  termination of
      offices leases Florida.
6)    The Company expensed approximately $200,000 in additional reserves against
      note receivables deemed uncollectible at June 30, 1999.

      During the year ended June 30, 1999 stock-based compensation increased 50%
compared to the prior period.  The Company  issued shares of its common stock to
pay for the services provided by employees and outside consultants  retained for
a number of  projects,  including  the  development  of the  Company's  website,
internet healthcare web portal and e-commerce business applications.

Year Ending  June 30,  1998

     During the year ending June 30, 1998 the Company's  revenues  declined as a
result of the  suspension of the Company's  ACDC program and the  termination of
the  following  programs  which  were first  introduced  in 1996:  (i)  cellular
telephone  activations,  (ii) sale of long distance  telephone service and (iii)
rental of cellular telephones using overnight courier service.

      During fiscal 1998 the Company  concentrated  on its three new  divisions:
Link,  Movievision and One Medical Service.  During the year ended June 30, 1998
revenues  from the Link and Movie Vision  divisions  were  $148,000 and $371,000
respectively. Revenues from the One Medical Service division, which was acquired
effective May 30, 1998, were not significant during fiscal 1998.

      General  and  Administrative  expenses  as well as Selling  and  Marketing
expanses increased due to the acquisition of Link, Movie Vision, and One Medical
Service,  the lease of the Company's production facility in Tampa and changes in
the management of the Company.

<PAGE>


      The following  factors also  contributed  to the Company's loss during the
year ending June 30, 1998:

      1) An expense  of  $1,687,422  as the  result of issuing  shares of stock,
options and warrants for services rendered.

      2) In  February  1998,  the  Company  settled a lawsuit  filed by a former
Master  Licensee of ACDC units  resulting in a special  charge of $424,300.  The
terms of the  settlement  require the Company to pay $115,000 over 21 months and
issue 300,000 shares of common stock to the former master licensee.

      3) In March  1997,  the  Company  entered  into a License  Agreement  with
Cancall Cellular  Communications,  Inc. ("Cancall") whereby the Company provided
Cancall with a license to operate  and/or  distribute  the Company's ACDC units,
prepaid  calling  card  machines  and  point-of-sale  terminals.  The  Licensing
Agreement  also required  Cancall to purchase a certain number of ACDC units and
point-of-sale terminals from the Company.  Between March and September 1997, the
Company sold 30 ACDC units to Cancall for  $705,000.  In payment of the $500,000
licensing fee and the 30 ACDC units,  Cancall  issued  1,807,800  shares of it's
Class B Preferred Stock to the Company.  As of September 30,1997 the Company had
valued the Cancall  Preferred  Stock at $1,310,000.  Subsequent to September 30,
1997 the Company and Cancall ( i ) agreed to rescind the licensing agreement and
the sale of the ACDC units (ii) the  equipment  previously  sold to Cancall were
returned to the Company and (iii) an expense of ($764,000) was recorded.

      4) Between June through September 1996 the Company sold 30 ACDC units to a
master  licensee in  California  resulting in gross  revenues of  $664,000.  The
Company has not  received  payment for the units and a reserve of $374,980  (the
profit for the units sold) was recorded for uncollected receivables.

      5) The Company recorded a valuation  reserve  ($200,000) for the Company's
investment  in  Smartphone,  a non  consolidated  subsidiary  which sold prepaid
cellular telephones.

      6) An increase in the ACDC depreciation and patent  amortization rates due
to technological changes in the industry.

Liquidity and Sources of Capital

      During  the year  ending  June  30,  1999 the  Company's  operations  used
approximately  $3,400,000 of cash. In order to fund its  operating  losses,  the
Company  sold  shares  of its  common  stock  and  preferred  stock  in  private
placements.

      During the year  ending June 30,  2000,  the Company may be able to reduce
expenses  as a result of  downsizing  of its  facilities  and the  reduction  in
personnel.  Although  there can be no  assurance  in this  regard,  the  Company
expects that during fiscal 2000 cash  generated by  operations,  funds  received
from its One Medical Services licensing  agreement and through the collection of
long-term notes receivable will satisfy the Company's cash requirements.

<PAGE>

      The Company does not have any available  credit,  bank  financing or other
external sources of liquidity. Due to historical operating losses, the Company's
operations have not been a source of liquidity.  In order to obtain capital, the
Company may need to sell  additional  shares of its common stock or borrow funds
from  private  lenders.  During the next  twelve  months the  Company  will need
capital to repay  outstanding debt and fund receivables and inventory  balances.
In addition, during the year ending June 30, 2000, the Company expects to suffer
losses,  in which case the  Company  will need to obtain  additional  sources of
capital in order to continue  operations.  There can be no  assurance,  however,
that the Company will be successful in obtaining additional funding.

Year 2000 Issue

      The "Year 2000" issue affects the Company's  installed  computer  systems,
network  elements,  software  applications  and other business systems that have
time-sensitive  programs  that may not properly  reflect or  recognize  the Year
2000. Because many computers and computer  applications define dates by the last
two digits of the year,  "00" may not be properly  identified  as the Year 2000.
This error could result in  miscalculations  or system  failures.  The Year 2000
issue does not materially  affect the Company's  computer  systems,  software or
other  business  systems.  The Company has conducted a review to identify  areas
that  could be  affected  and has  developed  an  implementation  plan to ensure
compliance.  The Company believes that with  modifications to existing  software
the issue will not pose  significant  operational  concerns  nor have a material
impact  on  financial   position  or  results  of   operations.   The  costs  of
modifications  is not  expected to be material and will be expensed as incurred.
However,  failures of computer systems  maintained by third parties could have a
material impact on the Company's  ability to conduct  business.  The Company has
requested that its major  independent  suppliers and support  providers  confirm
that they will be Year 2000 compliant.

ITEM 7.  FINANCIAL STATEMENTS

   See the financial statements attached to this report.

ITEM 8. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     Not applicable.

<PAGE>

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

         The Company's officers and directors are as follows:

      Name              Age             Position
      Mark Bennett      40       President and a Director
      Michael Malet     51       Executive Vice President and a Director
      Marvin Berger     55       Executive Vice President of Sales and Marketing
      David Breslow     55       Director
      Julio Curra       40       Director

      Each  director  holds  office  until his  successor is duly elected by the
stockholders.  Executive  officers  serve  at  the  pleasure  of  the  Board  of
Directors.

      The  following  sets forth  certain  information  concerning  the past and
present principal occupations of the Company's officers and directors.

      Mark Bennett has been the Company's  President since November 1997 and has
been a Director of the Company since  September  1997.  Mr. Bennett has been the
President,  Chief  Executive  Officer  and  a  Director  of  Link  International
Technologies, Inc., a subsidiary of the Company, since January 1996. Since April
1995 Mr. Bennett has also been the President of New View Technologies,  a wholly
owned  subsidiary of Link. From 1985 to 1987 Mr. Bennett was the General Manager
for  MovieBar,  a video  vending  company  servicing  the hotel and  hospitality
industry,  with installations in over 35,000 hotel rooms worldwide.  In 1987 Mr.
Bennett became Vice President of International Operations and General Manager of
MovieBar and was  subsequently  named as  President of MovieBar  Company USA. In
December 1995 Mr.
Bennett resigned his position with MovieBar to co-found Link.

      Michael Malet has been the Company's  Vice  President  since November 1997
and has been a director of the Company since  September 1997. Mr. Malet has been
the President of New View Technologies,  Inc., a wholly owned subsidiary of Link
International  Technologies,  Inc., since July 1995. From 1986 to 1987 Mr. Malet
was the President of Vending  Control  Systems,  a manufacturer of video vending
machines.  Mr.  Malet  was a  Sales  Manager  (1987-1990)  and  later  President
(1991-1995) of Keyosk  Corporation,  a Company  involved on the  development and
sale of  intelligent  on-line  vending  machines,  including the Company's  ACDC
Units.

     Marvin  S.  Berger  joined  the  Company  as Vice  President  of Sales  and
Marketing  in April 1998.  Prior to his joining the Company Mr.  Berger was Vice
President of Sales and Special Accounts with SmarTalk Telecommunications, Inc. a
company at which his involvement  began during the founding  stages.  Mr. Berger
has held marketing and management positions at IBM, Data General Corporation and
Visage Corporation.

      David Breslow has been a director of the Company  since March 1999.  Since
1996 Mr.  Breslow  has been the  President  and  Executive  Director  of  United
Pharmacists Network, Inc., a corporation involved in purchasing,  management and
other  services  to  pharmacies.  Between  1976 and 1995 Mr.  Breslow  owned and
managed various pharmacies in the Los Angeles, California metropolitan area.


<PAGE>

      Julio  Curra has been a director of the  Company  since March 1999.  Since
1996 Mr.  Curra has been the  president  of  All-Line  Communications,  Inc.,  a
corporation involved in telecommunication sales. Between 1987 and 1996 Mr. Curra
was the  president  of  Julio  Curra  &  Associates,  a firm  also  involved  in
telecommunication sales.

     All of the Company's officers devote substantially all of their time on the
Company's  business.  Mr.  Breslow and Mr. Curra,  as  directors,  devote only a
minimal amount of time to the Company.

    Michael Breslow and Mr. Curra are members of the Company's audit committee.

Change in Management

     In November 1997 Melvin Leiner, Darren Marks, James Caprio and Donald Marks
resigned as officers and directors of the Company.  David Barnhill also resigned
as a director in November  1997.  In November  1997 Mark  Bennett was  appointed
President  and Michael  Malet was  appointed  Executive  Vice  President  of the
Company. Mark Bennett,  Michael Malet, Chet Howard and George Pursglove remained
directors of the Company.  In September  1998 Cornelia  Eldridge was appointed a
director of the Company.  In February  1999 Mr.  Howard,  Mr.  Pursglove and Ms.
Eldridge  resigned as directors of the Company.  In March 1999 David Breslow and
Julio Curra were appointed directors of the Company.

ITEM 10.  EXECUTIVE COMPENSATION

      The following table sets forth in summary form the  compensation  received
by (i) the  Chief  Executive  Officer  of the  Company  and  (ii) by each  other
executive  officer of the Company who received in excess of $100,000  during the
fiscal years ended June 30, 1998 and 1999.

                                          Other Annual    Restricted   Options
    Name and        Fiscal Salary  Bonus  Compensation   Stock Awards  Granted
Principal Position   Year   (1)     (2)       (3)            (4)          (5)


Mark Bennett,        1999 $128,482    --      $8,400           --      1,015,000
President and Chief  1998 $111,350    --      $8,400       $67,500       560,500
Executive Officer
Michael Malet,      1999  $112,462            $8,400            --       925,000
Vice President      1998  $100,923    --      $8,400       $58,500       457,000

(1) The dollar value of base salary (cash and non-cash) received.
(2) The dollar value of bonus (cash and non-cash) received.
(3) Any other annual  compensation not properly  categorized as salary or bonus,
    including  perquisites and other personal benefits,  securities or property.
    Amounts in the table represents automobile allowances.
(4) Amounts reflect the value of the shares of the Company's common stock issued
    as compensation for services.


<PAGE>

      The table below shows the number of shares of the  Company's  Common Stock
owned by the officers listed above,  and the value of such shares as of June 30,
1999.

      Name                                Shares            Value

   Mark Bennett                          224,900          $218,153
   Michael Malet                         157,802          $153,068

(5)  The shares of Common  Stock to be received  upon the  exercise of all stock
     options granted during the fiscal years shown in the table.

Employment Contracts

      In March 1999 the Company  entered into  employment  agreements  with Mark
Bennett and Michael Malet. Each employment agreement provides for the following:

1.    Term of three years.

2.    Annual salary of $137,500 in the case of Mr. Bennett and $120,000 in the
      case of Mr. Malet.

3.    Automobile allowance of $700 per month.

4.   Four  weeks of paid  vacations  and the right to  participate  in any group
     medical,  group life insurance or any other employee  benefit plan that the
     Company may, from time to time, maintain.

5.   Reimbursement  for any medical,  dental or optical  expenses not covered by
     any Company group healthcare plan.

6.   Disability  benefits equal to the  employee's  salary payable to the
     employee for the remaining term of the employment agreement.

7.   Premium  payments for a $1,000,000  term life insurance  policy with the
     beneficiary to be designated by the employee.

      In the event that there is a change in the  control of the Company and the
employee is terminated  without cause or the employee resigns for cause then the
Company is required to pay the Company a lump-sum amount equal to the employee's
annual salary  multiplied by 2.99. The term  "resignation for cause" means there
is a material  change in the employee's  authority,  duties or  activities.  For
purposes  of the  employment  agreement  a change in the  control of the Company
means:  (1) the  acquisition  by any  person of more  than 15% of the  Company's
common  stock;  (2) the  acquisition  by any person  more than 50% of the voting
capital stock of any  subsidiary  of the Company;  (3) the merger of the Company
with another entity if after such merger the  shareholders of the Company do not
own at least 85% of voting capital stock of the surviving  corporation;  (4) the
approval by the  shareholders  of the Company of a plan to liquidate or dissolve
the Company;  (5) the sale of substantially all of the assets of the Company; or
(6) a  change  in a  majority  of the  Company's  directors  which  has not been
approved by at least two-thirds of the incumbent directors.


<PAGE>

    If following a change in control the employee is terminated  without  cause,
all options granted to the employee  pursuant to any of the Company's  incentive
or non-qualified stock option plans will be fully vested.

Options Granted During Fiscal Year Ending June 30, l999 The following tables set
forth information  concerning the options granted,  during the fiscal year ended
June 30, 1999, to the persons named below,  and the fiscal year-end value of all
unexercised  options  (regardless  of when granted) held by these  persons.  The
options  listed below were not granted  pursuant to the  Company's  incentive or
non-qualified stock option plans.

                                         % of Total
                                            Options
                                          Granted to   Exercise
                            Options      Employees in  Price Per   Expiration
 Name                      Granted (#)   Fiscal Year     Share        Date

Mark Bennett              1,015,000          33%        $0.82       4/16/04
Michael Malet               925,000          30%        $0.82       4/16/04

(1) The potential  realizable  value of the options shown in the table  assuming
    the market price of the Company's Common Stock appreciates in value from the
    date of the grant to the end of the option term at 5% or 10%.

Option Exercises in Last Fiscal Year and Fiscal Year-End Values

                                                    Number of
                                                    Securities    Value of
                                                    Underlying    Unexercised
                                                   Unexercised   In-the-Money
                                                    Options at    Options at
                                                  June 30, 1999  June 30, 1999
             Shares Acquired                     Exercisable/   Exercisable/
Name         on Exercise(1)  Value Realized(2)  Unexercisable(3)Unexercisable(4)

Mark Bennett         --              --          1,575,500/--     $152,250/--
Michael Malet        --              --          1,382,000/--     $138,750/--


<PAGE>


(1) The number of shares  received  upon  exercise of options  during the fiscal
    year ended June 30, 1999.

(2) With respect to options  exercised  during the  Company's  fiscal year ended
    June 30,  1999,  the  dollar  value of the  difference  between  the  option
    exercise  price and the market value of the option  shares  purchased on the
    date of the exercise of the options.

(3) The total number of unexercised options held as of June 30, 1999,  separated
    between those options that were  exercisable and those options that were not
    exercisable.

(4)  For all  unexercised  options held as of June 30,  1999,  the excess of the
     market value of the stock  underlying  those  options (as of June 30, 1999)
     and the exercise price of the option.

Long Term Incentive Plans - Awards in Last Fiscal Year

      None.

Employee Pension, Profit Sharing or Other Retirement Plans

      Except  as  provided  in the  Company's  employment  agreements  with  its
executive officers,  the Company does not have a defined benefit,  pension plan,
profit sharing or other retirement  plan,  although the Company may adopt one or
more of such plans in the future.

Compensation of Directors

      Standard  Arrangements.  At present the Company does not pay its directors
for attending  meetings of the Board of Directors,  although the Company expects
to adopt a  director  compensation  policy in the  future.  The  Company  has no
standard  arrangement pursuant to which directors of the Company are compensated
for any  services  provided  as a director  or for  committee  participation  or
special assignments.

      Except as  disclosed  elsewhere  in this report no director of the Company
received any form of  compensation  from the Company  during the year ended June
30, 1999.

Stock Option and Bonus Plans

      The Company has an Incentive Stock Option Plan, Non-Qualified Stock Option
Plans and Stock Bonus Plans. A summary description of each Plan follows. In some
cases these three Plans are collectively referred to as the "Plans".

Incentive Stock Option Plan.

      The  Incentive  Stock  Option Plan  authorizes  the issuance of options to
purchase up to 1,500,000 shares of the Company's  Common Stock,  less the number
of shares  already  optioned  under both this Plan and the  Non-Qualified  Stock
Option Plan. Only officers,  and employees of the Company may be granted options
pursuant to the Incentive Stock Option Plan.


<PAGE>

      In order to  qualify  for  incentive  stock  option  treatment  under  the
Internal Revenue Code, the following requirements must be complied with:

      1. Options granted pursuant to the Plan must be exercised no later than:

      (a)   The expiration of thirty (30) days after the date on which an option
            holder's employment by the Company is terminated.

      (b)   The  expiration  of one year  after  the  date on  which  an  option
            holder's   employment  by  the  Company  is   terminated,   if  such
            termination is due to the Employee's disability or death.

      2. In the event of an option  holder's  death  while in the  employ of the
Company,  his  legatees or  distributees  may  exercise  (prior to the  option's
expiration) the option as to any of the shares not previously exercised.

      3. The total fair market value of the shares of Common  Stock  (determined
at the time of the grant of the  option) for which any  employee  may be granted
options  which  are  first  exercisable  in any  calendar  year  may not  exceed
$100,000.

      4.  Options  may not be  exercised  until one year  following  the date of
grant.  Options  granted to an employee  then owning more than 10% of the Common
Stock of the Company may not be  exercisable  by its terms after five years from
the date of grant.

      5. The  purchase  price  per share of Common  Stock  purchasable  under an
option is  determined  by the  Committee but cannot be less than the fair market
value of the Common Stock on the date of the grant of the option (or 110% of the
fair  market  value in the case of a person  owning the  Company's  stock  which
represents  more than 10% of the total  combined  voting power of all classes of
stock).

Non-Qualified Stock Option Plan.

      The Non-Qualified  Stock Option Plans authorize the issuance of options to
purchase up to 3,000,000 shares of the Company's Common Stock less the number of
shares  already  optioned  under both this Plan and the  Incentive  Stock Option
Plan. The Company's employees, directors, officers, consultants and advisors are
eligible to be granted options pursuant to the Plan,  provided however that bona
fide services must be rendered by such consultants or advisors and such services
must  not  be  in  connection  with  the  offer  or  sale  of  securities  in  a
capital-raising  transaction.  The option  exercise  price is  determined by the
Committee but cannot be less than the market price of the Company's Common Stock
on the date the option is granted.


<PAGE>

      Options granted  pursuant to the Plan not previously  exercised  terminate
upon the first to occur of the following dates:

      (a)   The  expiration  of one year  after  the  date on  which  an  option
            holder's   employment   by  the  Company  is   terminated   (whether
            termination is by the Company, disability or death); or

      (b)   The  expiration  of the option  which occurs five (5) years from the
            date the option was granted.

      In the  event of an  option  holder's  death  while in the  employ  of the
Company,  his legatees or distributees  may exercise the option as to any of the
shares not previously exercised prior to the option's expiration.

Stock Bonus Plan.

      Up to  2,400,000  shares of Common  Stock may be  granted  under the Stock
Bonus Plans.  Such shares may consist,  in whole or in part, of  authorized  but
unissued shares,  or treasury shares.  Under the Stock Bonus Plan, the Company's
employees, directors, officers, consultants and advisors are eligible to receive
a grant of the Company's shares; provided, however, that bona fide services must
be  rendered  by  consultants  or  advisors  and  such  services  must not be in
connection   with  the  offer  or  sale  of  securities  in  a   capital-raising
transaction.

Other Options

      During the year ended June 30, 1999 the Company  granted  Mark Bennett and
Michael Malet optons to purchase 1,015,000 and 925,000 shares  respectively,  of
the Company's  common  stock.  The options may be exercised at any time prior to
April 16, 2004 at an exercise  price of $0.82 per share.  These options were not
granted pursuant to the Company's Incentive or Non-Qualified stock option plans.

Other Information Regarding the Plans.

      The Plans are administered by the Company's Board of Directors.  The Board
of Directors  has the  authority to interpret  the  provisions  of the Plans and
supervise the  administration of the Plans. In addition,  the Board of Directors
is  empowered  to select  those  persons  to whom  shares or  options  are to be
granted,  to  determine  the  number of shares  subject to each grant of a stock
bonus or an option and to determine  when, and upon what  conditions,  shares or
options  granted under the Plans will vest or otherwise be subject to forfeiture
and cancellation.

      In the discretion of the Board of Directors,  any option granted  pursuant
to the Plans may include installment exercise terms such that the option becomes
fully exercisable in a series of cumulating portions. The Board of Directors may
also  accelerate  the date upon which any option (or any part of any options) is
first  exercisable.  Any shares issued  pursuant to the Stock Bonus Plan and any

<PAGE>

options granted pursuant to the Incentive Stock Option Plan or the Non-Qualified
Stock Option Plan will be forfeited if the "vesting" schedule established by the
Board of  Directors  at the time of the  grant  is not  met.  For this  purpose,
vesting  means the period  during which the employee  must remain an employee of
the Company or the period of time a  non-employee  must provide  services to the
Company.  At the time an employee ceases working for the Company (or at the time
a  non-employee  ceases to  perform  services  for the  Company),  any shares or
options not fully vested will be forfeited and  cancelled.  In the discretion of
the Board of Directors payment for the shares of Common Stock underlying options
may be paid through the delivery of shares of the Company's  Common Stock having
an aggregate  fair market value equal to the option price,  provided such shares
have  been  owned  by the  option  holder  for at least  one year  prior to such
exercise. A combination of cash and shares of Common Stock may also be permitted
at the discretion of the Board of Directors.

      Options  are  generally  non-transferable  except upon death of the option
holder.  Shares  issued  pursuant to the Stock Bonus Plan will  generally not be
transferable  until the  person  receiving  the  shares  satisfies  the  vesting
requirements imposed by the Board of Directors when the shares were issued.

      The Board of  Directors  of the Company may at any time,  and from time to
time,  amend,  terminate,  or suspend  one or more of the Plans in any manner it
deems  appropriate,  provided  that such  amendment,  termination  or suspension
cannot  adversely affect rights or obligations with respect to shares or options
previously  granted.  The  Board  of  Directors  may  not,  without  shareholder
approval:  make any  amendment  which would  materially  modify the  eligibility
requirements  for the Plans;  increase or decrease the total number of shares of
Common  Stock which may be issued  pursuant to the Plans except in the case of a
reclassification  of the Company's capital stock or a consolidation or merger of
the Company;  reduce the minimum  option price per share;  extend the period for
granting options;  or materially increase in any other way the benefits accruing
to employees who are eligible to participate in the Plans.

      The Plans are not qualified  under Section 401(a) of the Internal  Revenue
Code, nor are they subject to any provisions of the Employee  Retirement  Income
Security Act of 1974.

Summary.

      The  following  sets forth certain  information  as of September 30, 1999,
concerning the stock options and stock bonuses  granted by the Company  pursuant
to its Plans.  Each option  represents  the right to  purchase  one share of the
Company's Common Stock.

                        Total Shares  Shares Reserved   Shares       Remaining
                          Reserved    for Outstanding  Issued As  Options/Shares
Name of Plan             Under Plan      Options      Stock Bonus   Under Plan
------------             ----------    -------------- -----------  -------------

1998 Incentive Stock
 Option Plan             1,500,000        691,000          N/A        809,000
1996 Non-Qualified Stock
 Option Plan             1,500,000        607,000          N/A        893,000
1998 Non-Qualified Stock
 Option Plan             1,500,000             --          N/A      1,500,000
1996 and 1998 Stock
 Bonus Plan              1,500,000            N/A     1,497,625         2,375
1999 Stock Bonus Plan      900,000            N/A        46,571       853,429


<PAGE>



Stock Bonuses

      The Company,  in accordance  with the terms of its Stock Bonus Plans,  has
issued  shares  of Common  Stock to  certain  Company  officers,  employees  and
consultants.  The following  persons  (including  former officers and directors)
received shares of the Company's common stock as stock bonuses:

                                    Shares Issued as Stock Bonus
    Name                   1996       1997       1998      1999       2000
    ----                   ----       ----       ----      ----       ----

Mark Bennett                                    18,750
Michael Malet                        5,000      16,250
Other employees and
 consultants as a group  461,250   111,875     174,000   710,500     46,571
                         -------   -------     -------   -------     ------
                         461,250   116,875     209,000   710,500     46,571
                         =======   =======     =======   =======     ======


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth, as of September 30, 1999,  information with
respect to the only persons owning  beneficially  5% or more of the  outstanding
Common Stock and the number and percentage of  outstanding  shares owned by each
director  and officer  and by the  officers  and  directors  as a group.  Unless
otherwise  indicated,  each owner has sole voting and investment powers over his
shares of Common Stock.

                                                             Percent of
Name and Address                  Shares Owned (1)            Class (2)
----------------                     -----------------      -------------

Mark Bennett                             224,900                 1%
18001 Cowan, Suite C&D
Irvine, CA 92614

Michael Malet                            157,802                  *
18001 Cowan, Suite C&D
Irvine, CA 92614

Marvin Berger                             65,000                  *
18001 Cowan, Suite C&D
Irvine, CA  92614

David Breslow                             10,000                  *
701 N. Brand, #380
Glendale, CA  91203

Julio Curra                                   --                 --
1767 Veterans Memorial Hwy. #6
Islandia, NY  11722                      _______               ____

Officers and Directors as
  a Group (6 persons)                    462,702                 3%
                                         =======              =====

*  Less than 1%

(1)  Excludes  shares issuable prior to December 31, 1999 upon the exercise
     of options or warrants granted to the following persons.

  Name                   Options  exercisable prior to December 31, 1999
                          ----------------------------------------------

      Mark Bennett                        1,575,500
      Michael Malet                       1,382,000
      Marvin Berger                          25,000
      David Breslow                          10,000
      Julio Curra                                --

(2) Excludes any shares issuable upon the exercise of any warrants or options or
    upon the conversion of any promissory notes or other convertible securities.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      Effective January 30, 1998 the Company issued 550,000 shares of its common
stock  to  the  shareholders  of  Moviebar,   Incorporated   and   Vectorvision,
Incorporated in consideration  for the acquisition of a business known as "Movie
Vision."  Movie  Vision  rents  video  cassettes,  primarily  containing  motion
pictures,  through automated  dispensing units in hotels. Movie Vision currently
has video cassette dispensing machines in approximately 150 hotels in the United
States. For financial  statement  purposes,  the acquisition of Movie Vision was
valued at $1,100,000. Mark Bennett, the President and a director of the Company,
was shareholder of both Moviebar,  Incorporated and  Vectorvision,  Incorporated
and received 55,000 shares of the Company's common stock in connection with this
transaction.

<PAGE>

      During the fiscal  1998 the  Company  issued  18,750  shares of its common
stock to David  Markowski,  a former  officer and  director of the  Company,  in
consideration for services provided to the Company.  The Company also issued Mr.
Markowski  6,250 shares of common stock  pursuant to the  Company's  stock bonus
plan.

      See  "Stock  Option  and  Bonus  Plans"  in  Item 10 of  this  report  for
information  concerning stock options and stock bonuses granted to the Company's
present officers and directors.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

Number          Exhibit                                         Page Number

 3.1      Certificate  of Incorporation                             (1)

 3.1.1    Amendment to Articles of Incorporation                    (3)

 3.2      Bylaws of the Company                                     (1)

 23       Consents of Accountants                                 -------

 28.1     Form of 1993 Incentive Stock Option Plan                  (1)
          and 1993 Non-Statutory Stock Option Plan

 28.2     Stock Bonus Plan                                          (2

 27       Financial Data Schedule                                 -------



(1) Incorporated  by reference,  and as same exhibit number,  from  Registration
    Statement on Form SB-2 (Commission File Number 33-70546-A).

(2) Incorporated by reference,  and as same exhibit number, from Amendment No. 1
    to Registration Statement on Form SB-2 (Commission File Number 33-70546-A).

(3) Incorporated by reference,  and as same exhibit number, from Amendment No. 5
    to Registration Statement on Form SB-2 (Commission File Number 33-70546-A).



<PAGE>




                              FINANCIAL STATEMENTS



<PAGE>


                   SIMS COMMUNICATIONS, INC. AND SUBSIDIARIES



                                Table of Contents

                                                                           Page

Independent Auditors' Report............................................. F - 1

Financial Statements

   Consolidated Balance Sheet............................................ F - 3

   Consolidated Statements of Operations................................. F - 4

   Consolidated Statements of Stockholders' Equity....................... F - 5

   Consolidated Statements of Cash Flows................................. F - 6

Notes to Consolidated Financial Statements............................... F - 7


<PAGE>

                          INDEPENDENT AUDITORS' REPORT



Board of Directors and Stockholders
SIMS Communications, Inc. and Subsidiaries
Irvine, California


We  have  audited  the   accompanying   consolidated   balance   sheet  of  SIMS
Communications,  Inc.  and  Subsidiaries  as of June 30,  1999  and the  related
consolidated statements of operations,  stockholders' equity, and cash flows for
the years  ended June 30,  1999 and 1998.  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
misstatements. 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, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of SIMS Communications,
Inc. and  Subsidiaries  as of June 30, 1998 and the results of their  operations
and cash flows for the years  ended June 30,  1999 and 1998 in  conformity  with
generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements,  the Company has suffered recurring losses from operations
which raise  substantial doubt about its ability to continue as a going concern.
Management's  plan in regard to these  matters is also  described in Note 2. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.




                                         Ehrhardt Keefe Steiner & Hottman PC
August 19, 1999
Denver, Colorado


<PAGE>


                   SIMS COMMUNICATIONS, INC. AND SUBSIDIARIES


                 See notes to consolidated financial statements.

                                      F - 3
                           Consolidated Balance Sheet
                                  June 30, 1999


                                     Assets
Current assets
   Cash and cash equivalents                                         $  189,772
   Restricted cash (Note 7)                                             250,000
   Accounts receivables, less allowance for doubtful
      accounts of $31,811                                               250,913
   Inventories                                                          464,074
   Prepaid expenses                                                     100,337
   Notes receivable, current portion (Note 5)                           150,000
                                                                      ----------
         Total current assets                                         1,405,096

Property and equipment, net (Note 4)                                  2,059,602
                                                                     ----------

Other assets
   Notes receivable less allowance of $575,062 (Note 5)                 241,200
   Licensing rights, net of accumulated amortization of $38,500         885,558
   Patents, net of accumulated amortization of $189,446                 327,299
   Royalty advances (Note 3)                                            515,907
   Goodwill, net of accumulated amortization of $136,070 (Note 3)       819,299
   Other                                                                120,901
         Total other assets                                           2,910,164

Total assets                                                         $6,374,862

                        Liabilities and Stockholders' Equity
Current liabilities
   Accounts payable                                                  $  649,154
   Accrued expenses                                                     622,820
   Bank line of credit (Note 7)                                         250,000
   Notes payable (Note 8)                                               519,119
   Current obligations under capital leases (Note 8)                     43,432
   Dividends payable                                                     58,025
                                                                     ----------
         Total current liabilities                                    2,142,550

Long-term liabilities
   Obligations under capital lease (Note 8)                             125,706
                                                                     ----------

         Total liabilities                                            2,268,256
                                                                     ----------
Commitments and contingencies (Notes 2 and 14)

Stockholders'  equity (Notes 10, 11 and 12)
   Preferred stock,  Series A, B and C, $.001 par value,
     152,600 shares authorized - 50,000 (A), 100,000 (B),
     2,060  (C)  10,995  shares  issued  and  outstanding
     at June 30, 1999 (liquidation preference of $1,930,000)                 11
   Common stock $.0001 par value 40,000,000 shares authorized,
     16,727,506 issued and outstanding                                    1,673
   Additional paid in capital                                        31,668,851
   Accumulated deficit                                              (27,563,929)
                                                                    -----------
         Total stockholders' equity                                   4,106,606
Total liabilities and stockholders' equity                           $6,374,862


<PAGE>


                           Consolidated Statements of Operations


                                                        Year Ended June 30,
                                                       1999             1998
                                                    ----------       ---------
Revenue (Note 13)
   Telecommunications                             $   142,672      $   446,524
   Financial processing                               625,801          147,533
   Automated movie rentals                            888,626          371,416
   Medical transaction processing                     583,777           15,478
                                                  -----------      -----------
        Total revenue                               2,240,876          980,951
                                                  -----------      -----------

Cost of services                                      697,481          523,479
                                                  -----------      -----------

Gross profit                                         1,543,395          457,472
                                                   -----------      -----------

Operating expenses
   General and administrative                        3,560,967        2,718,064
   Depreciation and amortization                     1,057,908          474,372
   Selling and marketing                             1,164,761        1,058,252
   Stock based compensation/services                 2,540,338        1,687,422
   Loss on termination of licensing and equipment            -          764,000
      agreement (Note 6)
   Research and development                                  -           32,760
   Litigation settlement (Note 14)                           -          444,300
                                                   -----------      -----------
        Total expenses                               8,323,974        7,179,170
                                                    -----------      -----------

Operating loss                                      (6,780,579)      (6,721,698)
                                                    -----------      -----------

Other income (expense)
   Interest expense                                   (337,153)        (158,263)
   Interest income                                      28,772           28,424
   Loss on write down of investment (Note 6)                 -         (200,000)
   Other                                                     -            5,526
                                                    -----------      -----------
                                                      (308,381)        (324,313)

Loss from continuing operations before income taxes (7,088,960)      (7,046,011)

Income tax benefit (Note 9)                                  -                -
                                                    -----------      ----------

Net loss from continuing operations                 (7,088,960)      (7,046,011)

Net loss from discontinued operations (Note 16)              -          (63,737)
                                                    -----------      -----------

Net loss                                             (7,088,960)     (7,109,748)

Preferred stock dividend                                 58,025               -
                                                    -----------      ----------

Net loss applicable to common shareholders          $(7,146,985)    $(7,109,748)
                                                    ===========      ===========

Basic and diluted loss per common share from
 continuing operations                              $    (0.67)     $     (1.78)
                                                    ===========      ===========


Basic and diluted loss per common share from        $        -       $     (.01)
 discontinued operations                            ===========      ===========


Basic and diluted net loss per common share         $     (0.67)     $    (1.79)
                                                     ===========     ===========

Weighted average common shares outstanding
 (Notes 11 and 12)                                   10,602,609        3,961,389
                                                    ===========      ===========


<PAGE>



                         SIMS COMMUNICATIONS, INC. AND SUBSIDIARIES

                      See notes to consolidated financial statements.

                                           F - 4
                          Consolidated Statements of Stockholders' Equity
                                 Years Ended June 30, 1999 and 1998
<TABLE>
<S>                                          <C>       <C>     <C>      <C>     <C>       <C>      <C>         <C>         <C>

                                                    Preferred Stock
                                          Series A and B        Series C        Common Stock
                                                                                                Additional
                                         Number of          Number of         Number of         Paid-in   Accumulated
                                           Shares   Amount   Shares   Amount  Shares    Amount  Capital     Deficit        Total

Balance June 30, 1997                    125,250   $   125     --    $  --   2,120,499  $ 212  15,134,683 $(13,307,196)  $1,827,824
Issuance of common stock in connection
  with acquisitions(Notes 3 and 12)           --        --     --       --     692,350     69   1,327,691           --    1,327,760
Issuance of common stock for cash
  (ranging from $.80 to $1.00) net
   offering costs of $633,421 (Note 12)       --        --     --       --   2,246,500    225   1,475,855           --    1,476,080
Issuance of  common  stock for conversion
  of notes  payable  to  investors  in
  connection with a Regulation S offering,
  net of expenses of $162,956 (Note 12)       --        --     --       --     846,827     85     936,959           --      937,044
Issuance of common stock in exchange for
  services (Note 12)                          --        --     --       --   1,015,749    102   1,696,134           --    1,696,236
Unearned compensation expense (Note 12)       --        --     --       --          --     --    (136,475)          --     (136,475)
Issuance of common stock upon conversion of
  notes payable and interest (Note 12)        --        --     --       --     506,791     50     707,039           --      707,089
Issuance of common stock upon conversion of
  former officer notes payable and accrued
  salaries (Note 12)                          --        --     --       --     230,317     23     419,174           --      419,197
Issuance of common stock in connection with
 litigation settlement (Notes 12 and 16)      --        --     --       --     300,000     30     309,270           --      309,300
Imputed value of stock option grants in
  exchange for consulting and other
  services (Note 12)                          --        --     --       --          --     --     775,902           --      775,902
Net loss                                      --        --     --       --          --     --          --   (7,109,748)  (7,109,748)
                                         -------      ---     ---      ---    ---------   ---   ----------  -----------   ----------
Balance - June 30, 1998                  125,250      125      --       --    7,959,033   796   22,646,232 (20,416,944)   2,230,209

Issuance of common stock for cash
  ranging from $.44 to $1.00 per share,
  net of $307,925 of offering costs           --       --      --       --    3,636,879   364    2,552,748          --    2,553,112
Issuance of preferred stock at $1,000 per
 share, net of $253,154 and issuance of
 common stock for offering costs              --       --   1,745        2      134,769    13    1,446,830          --    1,446,845
Issuance of common stock for services and
  equipment                                   --       --      --       --    2,607,950   261    2,340,162          --    2,340,423
Issuance of common stock for accounts payable --       --      --       --      150,700    15      123,415          --      123,430
Imputed value of stock option grants in
 exchange for consulting and other services   --       --      --       --           --    --      424,671          --      424,671
Issuance of common stock for conversion of
  notes payable,franchise deposits and
  accrued interest                            --       --      --       --    2,109,975   211    1,672,786          --    1,672,997
Issuance of common stock and warrants in
 connection with MedCard acquisition          --       --      --       --      100,000    10      461,894          --      461,904
Conversion of Preferred Stock           (116,000)    (116)     --       --       28,200     3          113          --           --
Dividend on Series C Preferred Stock          --       --      --       --           --    --           --     (58,025)     (58,025
Net loss for the year ended June 30, 1999     --       --      --       --           --    --           --  (7,088,960)  (7,088,960)
                                          ------------------------------------------------------------------------------------------
Balance - June 30, 1999                    9,250    $   9   1,745     $  2    6,727,506 $1,673  $31,668,851 $(27,563,929)$4,106,606
                                      ==========    ======  ======    ====    ========= ======  =========== ============  =========
</TABLE>

<PAGE>


                         SIMS COMMUNICATIONS, INC. AND SUBSIDIARIES

                         Notes to Consolidated Financial Statements


                                           F - 30
                               Consolidated Statements of Cash Flows


                                                           Year Ended June 30,
                                                          1999            1998
                                                         ------           -----
Cash flows from operating activities
   Net loss                                           $(7,088,960)  $(7,109,748)
                                                      -----------    -----------
   Adjustments to reconcile net loss to net cash
    used in operating activities
     Depreciation                                         812,816       400,552
     Amortization                                         245,092        73,820
     Imputed value of options granted for services        424,671       127,661
      and interest
     Impairment of investment                                   -        200,000
     Termination of licensing and equipment                     -        764,000
agreement
     Provision for uncollectible notes receivable         178,387       400,902
     Officer salaries converted to equity                       -       419,197
     Stock issued for services, interest, and in
      connection with litigation settlement             2,425,072     1,869,061
     Changes in assets and liabilities
       Accounts and other receivables                    (126,156)      167,832
       Inventories                                        (11,601)       51,574
       Prepaid expenses                                    (7,670)      113,193
       Royalty advances                                  (515,907)            -
       Accounts payable                                   229,526      (147,349)
       Accrued expenses                                    40,425      (103,339)
       Franchise deposits and customer deposits                 -       (11,493)
                                                       ----------     ----------
                                                        3,694,655     4,325,611
         Net cash used in operating activities         (3,394,305)   (2,784,137)
                                                       ----------    ----------

Cash flows from investing activities
   (Advances) repayments on notes receivable, net               -       (54,372)
   Acquisition costs paid, net of cash acquired          (462,154)     (424,095)
   Capital expenditures                                   (57,398)      (34,122)
   Change in other assets                                   5,851        62,664
                                                       ----------     ----------
         Net cash used in investing activities           (513,701)     (449,925)
                                                       ----------     ----------

Cash flows from financing activities
   Proceeds from issuance of long-term debt               537,892       805,459
   (Payments on) proceeds from officer advances                 -       (65,809)
   Payments under capital lease obligation               (127,216)      (10,200)
   Proceeds from issuance of common and preferred       3,999,957     2,820,781
stock, net
   Payments on long-term debt                            (326,733)     (348,191)
         Net cash provided by financing activities      4,083,900     3,202,040

Net increase (decrease) in cash                           175,894       (32,022)

Cash and cash equivalents at beginning of year            263,878       295,900
                                                       ----------    ----------

Cash and cash equivalents at end of year               $  439,772    $  263,878
                                                       ==========    ==========

Supplemental disclosure of cash flows information
     Cash paid during the year for interest was $164,167 (1999
     and $169,345 (1998).

Non-cash investing and financing activities (Note 15)


<PAGE>



Note 1 - Organization and Significant Accounting Policies

Organization

Sims  Communications,  Inc. and  Subsidiaries  was  incorporated in the state of
Delaware  on  August  15,  1991.   The  Company   provides  low  cost,   turnkey
point-of-sale   (POS)   transaction   automation   solutions  to  retailers  and
pharmacies.  These  solutions  include a  comprehensive  network of  transaction
processing  applications using its patented,  intelligent DebitLink POS terminal
with custom  software.  Functions  include  processing  on-line  credit card and
medical  reimbursement  approvals,  processing  automated home medical equipment
product  orders  and  payments,  processing  credit  card  and ATM  charges  and
payments, cash-backs, activating prepaid phone cards, obtaining prepaid cellular
phone  service,  securing  check  guarantees  and  authorizations  and  tracking
customer  affinity  programs.  Additionally,  the Company  rents  videocassettes
through its automated  dispensing units. Most recently,  the Company has evolved
such that while the primary business is still telecommunications;  the Company's
telecommunications  expertise and technology have been applied to the healthcare
industry  in  general  and  electronic  processing  of medical  claims,  on-line
insurance eligibility verification and e-commerce, specifically. And, as a means
to establish and gain  recognition for SIMS' new identity,  the Company included
in its proxy, a ballot to change the name of SIMS Communications, Inc. to MEDCOM
USA,  Incorporated.  Upon  acceptance of the proposed name change,  MedCom USA's
ticker symbol on The Nasdaq Stock Market will be "EMED."

Principles of Consolidation

The   consolidated   financial   statements   include   the   accounts  of  SIMS
COMMUNICATIONS,  Inc. and its wholly owned  subsidiaries  SIMS  Franchise  Group
Inc., SIMS Communications International,  Inc., Link International Technologies,
Inc.,  New View  Technologies,  Inc. and  JustMed.com,  Inc.  Additionally,  the
consolidated  financial  statements include the accounts of One Medical Service,
Inc., Moviebar Company USA, Inc., and Vector Vision, Inc. since their respective
date of acquisition. The financial statements also include the operations of the
Company's  MedCard  division from the date of the  acquisition  of the exclusive
licensing   rights  (Note  3).  All   significant   intercompany   balances  and
transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting   principles  requires  management  to  make  certain  estimates  and
assumptions  that affect the reported  amounts of assets and  liabilities at the
date of the  financial  statements  and the  reported  amounts of  revenues  and
expenses during the reporting  period.  Management  believes that such estimates
have been based on reasonable  assumptions and that such estimates are adequate,
however, actual results could differ from those estimates.


<PAGE>




Note 1 - Organization and Significant Accounting Policies (cont'd)

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of
three months or less to be cash equivalents.

Inventories

Inventories  consist  primarily  of  automated  video  dispensing  units,  video
cassette  players,   movie  video  cassettes,   debitlink  terminals  and  other
associated  miscellaneous  parts and  equipment and are recorded at the lower of
cost or market determined by the first-in, first-out method.

Property and Equipment

Property and  equipment is stated at cost.  Equipment  under  capital  leases is
valued at the lower of fair  market  value or net  present  value of the minimum
lease payments at inception of the lease. Depreciation is provided utilizing the
straight-line  method over the estimated useful lives for owned assets,  ranging
from 5 to 7 years,  and the related  lease term for leasehold  improvements  and
equipment  under capital  leases.  Expenditures  for maintenance and repairs are
charged to expense as incurred.

Net loss Per Common Share

Basic  earnings per share is calculated by dividing net income  attributable  to
common shareholders by the weighted average number of common shares outstanding.
Dilutive earnings per common share is computed similarly,  but also gives effect
to the impact  convertible  securities,  such as convertible debt, stock options
and warrants,  if dilutive,  would have on net income and average  common shares
outstanding  if converted at the beginning of the year. The Company has incurred
losses in each of the periods  covered in these  financial  statements,  thereby
making the inclusion of convertible securities and stock options in the 1999 and
1998  dilutive  earnings  per  share  computations  antidilutive.   Accordingly,
convertible securities and stock options have been excluded from the calculation
of dilutive  earnings per share.  Basic and dilutive  earnings per share are the
same for each period presented.

Antidilutive securities excluded from dilutive earnings per share.

         Security                 Price            Shares      Expiration Date

Stock options and warrants    $0.44 - $13.00    10,127,429     7/1999-12/2006
Convertible Preferred Stock   $1.28 - $  1.50    1,249,271         10/2001


<PAGE>




Note 1 - Organization and Significant Accounting Policies (cont'd)

Licensing Rights

Licensing rights capitalized in connection with the MedCard licensing  agreement
are being amortized over the length of the agreement of fifteen years.

Goodwill

The excess of the cost of the net tangible and identifiable intangible assets of
acquired businesses is stated at cost and is being amortized over seven years.

Revenue Recognition

Revenues from the sale of equipment are recognized  upon delivery of service and
technology  processing  revenue is recognized when  transactions  are completed.
Automated  movie rental  revenues are  recognized at the time of rental and upon
delivery of prepaid movie cards (where applicable).

Patents

Patent  costs are  those  costs  related  to filing  for  patents  and the value
allocated to patents based upon the  acquisition  of Link  Technologies  and its
subsidiaries.  They are amortized on the straight-line basis over their expected
economic life of seven years.

Fair Value of Financial Instruments

The  carrying  amounts  of  financial   instruments   including  cash  and  cash
equivalents,  receivables,  accounts payable, and accrued expenses  approximates
fair value at June 30, 1999 because of the  relatively  short  maturity of these
instruments.

The carrying  amounts of debt issued  approximates  fair value because  interest
rates  on  these  instruments  approximate  market  interest  rates  and all are
classified as current maturities.

Income Taxes

The Company uses the asset and liability  method of accounting for income taxes.
Under the asset and liability  method,  deferred tax assets and  liabilities are
recognized for the future tax consequences  attributable to differences  between
the financial  statement carrying amounts of existing assets and liabilities and
their  respective tax basis.  Deferred tax assets and  liabilities  are measured
using  enacted tax rates  expected  to be  recovered  or settled.  The effect on
deferred tax assets and  liabilities  of a change in tax rates is  recognized in
income in the period that includes the enactment date.


<PAGE>




Note 1 - Organization and Significant Accounting Policies (cont'd)

Impairment of Long-Lived Assets

The Company  follows the Statement of Financial  Accounting  Standards (SFAS No.
121) "Accounting for the Impairment of Long-Lived  Assets." Under the provisions
of this statement, the Company has evaluated its long-lived assets for financial
impairment  and  will  continue  to  evaluate  them  as  events  or  changes  in
circumstances  indicate that the carrying amount of such assets may not be fully
recoverable.

The Company evaluates the  recoverability of long-lived assets not held for sale
by measuring the carrying  amount of the assets against  estimated  undiscounted
cash flows associated with them. At the time such evaluations  indicate that the
future  undiscounted cash flows of certain  long-lived assets are not sufficient
to recover the carrying value of such assets,  assets are adjusted to their fair
values.

Research and Development

Research  and  development  costs  consist  primarily  of costs  related  to the
conceptual  formation,  design,  tooling and  development  of prototypes and are
expensed as incurred.

Concentration of Credit Risks

Financial  instruments that potentially  subject the Company to concentration of
credit risk consist primarily of temporary cash investments and receivables. The
Company  places  its  cash  investments  with  high  credit  quality   financial
institutions  and,  by policy  limits the amount of credit  exposure  to any one
institution.  The  Company  grants  credit to hotels that the Company has placed
automated  movie  rental  units in. The  Company  periodically  performs  credit
analysis  and  monitors  the  financial  condition  of its  clients  in order to
minimize  credit  risk.  Additionally,  the  Company  attempts to limit its note
receivable credit risk by maintaining sufficient collateral.

Reclassifications

Certain   accounts  in  the  June  30,  1998  financial   statements  have  been
reclassified to conform to the June 30, 1999 presentation.



<PAGE>




Note 2 - Continued Operations

The  accompanying  financial  statements  have been  prepared on a going concern
basis  which   contemplates   the  realization  of  assets  and  liquidation  of
liabilities in the ordinary  course of business.  During the year ended June 30,
1999, the Company continued to suffer recurring losses from operations in excess
of $7,000,000, resulting in an accumulated deficit of approximately $27,500,000.
Subsequent to June 30, 1999,  the Company has raised  approximately  $400,000 in
private  placement  offerings and is continuing  to look for  additional  equity
capital.  Additionally,  the  Company  has  entered  into an  Exclusive  License
Agreement with an outside party for its One Medical  Services,  Inc.  subsidiary
whereby it will receive  $567,000 over the next six months and an 8% 7-year note
payable  in the amount of  $810,000  (see Note 17).  There can be no  assurances
however  that the Company will be  successful  in  obtaining  additional  equity
financing,  if needed, or if available on terms satisfactory to the Company,  or
be able to generate  significant  profits from the operations  described  above.
Although the Company's  common stock is currently listed on the NASDAQ Small Cap
Market ("NASDAQ"),  there is no assurance that the Company's stock will continue
to be listed.  The National  Association of Securities  Dealers,  Inc.  ("NASD")
requires  for  continued  inclusion  on the NASDAQ  Small Cap  Market,  that the
Company must maintain $2,000,000 in tangible net worth and that the bid price of
the Company's common stock must be at least $1.00. If delisted from NASDAQ,  the
Company's  stock would  trade in the  unorganized  interdealer  over-the-counter
market  through  the  OTC  Bulletin  Board  which  provides  significantly  less
liquidity  than  NASDAQ.  Securities  which are not traded on NASDAQ may be more
difficult to sell and may be subject to more price volatility than NASDAQ listed
securities. The consolidated financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.

Note 3 - Acquisitions

Moviebar Company USA, Inc. and Vector Vision, Inc.

In January 1998, the Company  purchased the net assets of Moviebar  Company USA,
Inc.  and all of the  outstanding  stock  of  Vector  Vision,  Inc.,  valued  at
$1,126,714  in  exchange  for  550,000  shares of the  Company's  common  stock.
Additionally,  the  Company  issued  options to  purchase  25,000  shares of the
Company's  common  stock at $ 2.20 per  share  (Notes 10 and 11).  The  acquired
companies rent motion picture video cassettes through automated dispensing units
that are located in hotels  throughout the United States.  The  acquisition  was
accounted for under the purchase method of accounting.


<PAGE>




Note 3 - Acquisitions (cont'd)

Moviebar Company USA, Inc. and Vector Vision, Inc. (cont'd)

The  aggregate  purchase  price has been  allocated to the net assets  purchased
based on the fair market values at the date of acquisition, as follows:

      Cash                                                   $   6,518
      Accounts receivable                                       90,928
      Inventory                                                 24,500
      Property and equipment                                 1,127,768
      Accounts payable                                        (123,000)
                                                             ---------
                                                            $1,126,714

The common stock issued in connection  with the  acquisition was recorded at the
market value of the stock at the date of the acquisition of $2.00 per share.

No pro forma  statements of operations  are presented as the effect would not be
material to the Company's operations.

One Medical Services, Inc.

In June 1998, the Company  purchased all of the outstanding stock of One Medical
Services,  Inc.,  ("One  Medical")  valued at $1,067,398 in exchange for 142,350
shares of the  Company's  common  stock and  additional  consideration  detailed
below.  Additionally,  the Company issued options to purchase  187,000 shares of
the  Company's  common  stock at $ 2.00 per share (Notes 10 and 11). The Company
has also  agreed to issue to the former  owners of One  Medical up to  1,485,000
additional  shares of common stock depending on the future operating  results of
One Medical.  One Medical,  has developed,  in conjunction  with the Company,  a
communications  and  transaction  platform  which allows  pharmacies,  insurance
companies,  medical  providers and suppliers to process  transactions  through a
Debit Link terminal for such items as ordering,  medical reimbursement  approval
and payment.  The  acquisition  was accounted  for under the purchase  method of
accounting.


<PAGE>




Note 3 - Acquisitions (cont'd)

One Medical Services, Inc. (cont'd)

The  aggregate  purchase  price has been  allocated to the net assets  purchased
based on the fair market values at the date of acquisition, as follows:

      Cash                                               $   13,047
      Fixed Assets                                            2,282
      Contract Values                                       100,000
      Goodwill                                              952,069
                                                         ----------
                                                         $1,067,398


      Acquisition costs                                  $  443,660
      Promissory note assumed                               182,108
      Fair value of common stock and options issued         441,630
                                                         ----------
                                                         $1,067,398

The common  stock issued in  connection  was recorded at the market value of the
stock at the date of the acquisition of $1.60 per share.

No pro forma  statements of operations  are presented as the effect would not be
material to the Company's operations.

Subsequent to June 30, 1999,  the Company has licensed the One Medical  Services
technology to an outside party (see Note 17).

MedCard Management Systems, Inc.

In November,  1998, the Company purchased  certain assets of MedCard  Management
Systems,  Inc.  of  Islandia,  New York  ("MedCard"),  along with the  exclusive
licensing rights to the MedCard name and the MedCard System software and network
for fifteen years. The term of the agreement may be extended after fifteen years
for ten  successive  one-year  periods.  The MedCard  System is a  comprehensive
electronic   processing   system   that   consolidates   insurance   eligibility
verification and processes medical claims and approval of credit card/debit card
payments within 30 seconds.  Consideration for the transaction  included cash of
$450,000,  100,000 shares of restricted  common stock valued at $1.28 per share,
which  approximated  market,  and options to purchase  350,000  shares of common
stock with an imputed  value of  $333,904.  At June 30, 1999,  licensing  rights
related  to the  agreement  totaled  $885,558  net  of  $38,500  of  accumulated
amortization.


<PAGE>




Note 3 - Acquisitions (cont'd)

MedCard Management Systems, Inc. (cont'd)

In connection with the acquisition of the licensing rights,  the Company entered
into a royalty agreement  requiring future royalty payments based on sales (Note
14). The Company has provided  additional  funding  related to these  operations
that are recorded as royalty  advances.  As of June 30, 1999,  royalty  advances
totaled $515,907.


Note 4 - Property and Equipment

Property and equipment consist of the following:
                                                           June 30,
                                                             1999
   Property and equipment
      Vehicles                                           $   20,608
      Furniture and fixtures                                137,209
      Machinery and equipment                             3,497,529
      Software                                              100,450
      Less accumulated depreciation                      (1,696,194)
                                                         ----------
                                                         $2,059,602

Note 5 - Notes Receivable

The Company made  advances to and entered into a joint  venture  agreement  with
Commonwealth Group International, Inc. and Frederick C. Sayle. The $150,000 note
receivable  bears  interest  at a rate  of 10% per  annum,  with  principal  and
interest  originally payable by February 1, 1998.  Additionally,  the Company is
entitled to 16.7% of the gross revenues from agreements with Commonwealth  Group
International,  Inc. which include cable television and cellular  communications
licenses owned by CGI-UKRAINE Ltd and ASWEST,  Commonwealth Group International,
Inc.  joint  venture  partners.  The Company has received  interest on the notes
through  June 30,  1999 and  believes  that  both  principal  and  interest  are
collectible at June 30, 1999.

As of June 30,  1997,  the Company had sold  equipment to a customer for a total
sales price of $664,000. The total amount of $664,000 is payable under the terms
of a note  receivable  which bears  interest at 8.5%.  Principal and interest is
payable  commencing  by  December  31,  1997 in equal  monthly  installments  of
approximately  $14,000 through November 30, 2002. No payments have been received
as of June 30,  1999.  Accordingly,  the Company has  impaired  the  outstanding
balance to $241,200,  which  represents the value of the underlying  assets,  by
recording an allowance of $575,062.


<PAGE>




Note 6 - Investments

During the year ended June 30,  1998,  the Company  terminated  a licensing  and
equipment  agreement with a Canadian  Company that had  originally  been entered
into in the year  ended June 30,  1997 in  exchange  for  preferred  stock.  The
equipment was returned to the Company,  the preferred  stock was returned to the
Canadian  Company and a loss  provision for $764,000 was provided for during the
year ended June 30, 1998.


Note 7 - Bank Line of Credit

The Company  maintains a secured  revolving line of credit with a bank for up to
$250,000.  The  balance  at  June  30,  1999  was  approximately  $250,000.  The
line-of-credit is secured by a restricted  certificate of deposit with a balance
at June 30, 1999 of approximately $250,000. The line-of-credit bears interest at
5.77% payable monthly.  The line-of-credit  expired June 5, 1999 and on July 13,
1999, the Company  voluntarily  redeemed the  certificate of deposit and applied
the proceeds toward  repayment of the credit line principal and accrued interest
in full.


Note 8 - Notes Payable and Capital Leases
                                                                     June 30,
                                                                        1999
8.0% convertible notes payable - individuals, interest
 payable quarterly, principal due at maturity date
 ranging from August 1997 to May 1998. Debt includes
 conversion  to common stock feature with conversion
 rates ranging from $1.25 to $2.50 per share.
 Currently in default                                                 94,000

Note payable -  individual,  non-interest  bearing -
 payable in monthly  installments  of $1,500 through                  37,500
 June 2000.

Note payable - franchisee, bearing interest at 10%
  principal and interest due October 31, 1999; debt
 includes  conversion  to common  stock  feature  at
 $.875 per share.                                                    317,619

Convertible  Bridge  Financing  Note - corporation,
  bearing  interest at 4%, principal and interes
  due July 28, 1999. Debt includes conversion to
 common stock feature at $.70 per share.                              70,000
                                                                    --------
Total current maturities                                            $519,119


<PAGE>

Note 8 - Notes Payable and Capital Leases (cont'd)

Capital Leases

The  Company  leases  various  office  equipment  which  are  accounted  for  as
capitalized  leases. The following is a schedule of future minimum capital lease
payments  together with the net present value of the minimum lease obligation as
of June 30, 1999.

         Year Ending June 30,

               2000                                        $68,843
               2001                                         67,818
               2002                                         67,818
               2003                                         15,797
               2004                                          3,814
                                                             -----
               Total                                       224,090
               Less interest                              (54,952)
                                                          -------
                                                          169,138
               Less current portion                       (43,432)
                                                        ---------
                                                         $125,706
                                                         ========

The assets recorded under capital leases are as follows:

        Furniture, fixtures and equipment                $162,630
        Less accumulated depreciation                     (13,379)
                                                         ---------
                                                         $149,251

Depreciation  expense for equipment  under capital lease was $70,418 and $14,679
for the years ended June 30, 1999 and 1998, respectively.


Note 9 - Income Taxes

Deferred  tax  liabilities  and assets are  determined  based on the  difference
between the financial  statement and tax basis of assets and  liabilities  using
enacted tax rates in effect for the year in which the  differences  are expected
to reverse. The measurement of deferred tax assets is reduced, if necessary,  by
the  amount of any tax  benefits  that,  based on  available  evidence,  are not
expected to be realized.


<PAGE>




Note 9 - Income Taxes (cont'd)

The principal temporary  differences that will result in deferred tax assets and
liabilities  are certain  expenses and losses  accrued for  financial  reporting
purposes  not  deductible  for tax  purposes  until paid,  depreciation  for tax
purposes in excess of  depreciation  for  financial  reporting  purposes and the
deferral of franchise costs and franchise sales revenues for financial reporting
purposes which are recognized for tax purposes in the period paid. The effect of
the differences  outlined above generated a long-term deferred tax asset that is
fully  impaired  because of a lack of profitable  operating  history.  The fully
impaired  asset,  computed  at a 34  percent  tax  rate at  June  30,  1999  was
approximately  $8,800,000.  Accordingly,  there  is no net  deferred  tax  asset
reflected in the accompanying consolidated financial statements.

The differences between the federal income tax rate and the effective income tax
rate as reflected in the accompanying statements of operations are:

                                                                Year Ended
                                                                  June 30,
                                                            1999          1998

Statutory federal income tax rate (benefit)               (34.0)%       (34.0)%
Valuation allowance for net operating loss                 34.0          34.0
                                                           ----          ----

Effective tax rate (benefit)                                  --%            --%

The deferred tax asset consists of the following:
                                                                  June 30,
                                                                    1999

      Total long-term deferred tax asset                         $8,800,000
      Valuation allowance
                                                                 (8,800,000)

                                                                 $       --

At June 30, 1999,  the Company has  approximately  $26,000,000  of net operating
loss  carryforwards  for  income tax  reporting  purposes  which  expire in 2007
through 2014.  During 1995,  1998 and 1999,  there were  transactions  involving
changes in  ownership  which  restrict the  utilization  of net  operating  loss
carryforwards in the future.


<PAGE>




Note 10 - Stock Option and Bonus Plans

The Company's Incentive Stock Option Plans, Non-Qualified Stock Option Plans and
Stock Bonus Plans are  collectively  referred to as the "Plans".  The  following
sets forth certain  information as of June 30, 1999 concerning the stock options
and stock  bonuses  granted by the Company  pursuant  to the Plans.  Each option
represents the right to purchase one share of the Company's Common Stock.


                                   Total        Shares      Shares    Remaining
                                   Shares    Reserved for   Issued      Shares/
                                  Reserved    Outstanding   as Stock    Options
                                 Under Plan    Options       Bonus   Under Plans

1998 Incentive Stock Option Plan  1,500,000    691,000         N/A      809,000
1996 Non-Qualified Stock          1,500,000    607,000         N/A      893,000
   Option Plan
1998 Non-Qualified Stock          1,500,000         --         N/A    1,500,000
   Option Plan
1996 and 1998 Stock Bonus         1,500,000        N/A    1,497,625       2,375
   Plans
1999 Stock Bonus Plan               500,000        N/A           --     500,000

                                                          --

Incentive Stock Option Plan.

The 1998  Incentive  Stock  Option Plan  authorizes  the  issuance of options to
purchase up to 1,500,000  shares of the Company's  Common  Stock.  The Incentive
Stock Option Plan will remain in effect until 2008 unless terminated  earlier by
action of the Board.  Only officers,  directors and key employees of the Company
may be granted options pursuant to the Incentive Stock Option Plan.

Non-Qualified Stock Option Plans

The  Non-Qualified  Stock Option Plans  collectively  authorize  the issuance of
options to purchase up to 3,000,000  shares of the Company's  Common Stock.  The
Company's employees,  directors, officers, consultants and advisors are eligible
to be granted  options  pursuant to the Plans,  provided  however that bona fide
services must be rendered by such consultants or advisors and such services must
not be in connection  with the offer or sale of securities in a  capital-raising
transaction. The option exercise price and expiration date are determined by the
Committee.




<PAGE>




Note 10 - Stock Option and Bonus Plans (cont'd)

Non-Qualified Stock Option Plans (cont'd)

The following is a summary of options granted:
<TABLE>
<S>                                <C>    <C>    <C>    <C>    <C>    <C>


                                 Incentive   Non-Qualified   Options and
                                  Stock         Stock         Warrants      Weighted                                Weighted Average
                                  Options      Options        Issued Not    Average     Weighted                     Exercise Price
                                    and          and          Related to    Exercise    Average      Currently         - Currently
                                  Warrants     Warrants        a Plan         Price    Fair Value   Exercisable        Exercisable
                                  --------     --------       -----------   --------   ----------   -----------       -------------

Outstanding June 30, 1997          737,250      10,000          197,015     $   5.62                   944,265               5.62
                                                                                                      --------           -------
 Options and warrants expired     (225,000)          -                -        (8.00)
 Options and warrants granted    1,556,500      250,000         745,500         2.00         1.17
                                 ---------    ---------      ----------     ---------   ---------

Outstanding June 30, 1998        2,068,750      260,000         942,515         2.64                  3,271,265              2.64
                                                                                                      ---------           -------
 Options and warrants expired            -            -               -            -
 Options and warrants granted      691,000            -       6,165,164         1.03          .69
                                  --------    ---------       ---------       -------    --------

Outstanding June 30, 1999        2,759,750      260,000       7,107,679      $  1.55                  9,360,096          $   1.60
                                 =========    =========      ==========     ========                  =========          ========

</TABLE>

<TABLE>

    <S>                             <C>           <C>                <C>                        <C>             <C>

                                                                      June 30, 1999
                              --------------------------------------------------------------------------------------------------
                                             Options and Warrants Outstanding            Options and Warrants Exercisable


                                                                Weighted Average                              Weighted
                                 Number     Weighted Average   Remaining Contractual          Number           Average
                              Outstanding    Exercise Price           Life                 Exercisable      Exercise Price

Range of Exercisable Price
$ 0.44 - $ 3.00                9,065,114          1.14                3.12                   8,297,781           1.16
$ 4.00 - $ 8.00                1,011,065          4.74                3.94                   1,011,065           4.74
$10.00 - $13.00                   51,250         11.76                 .47                      51,250          11.76
                            -------------    ---------             -------                   ---------         ------
                              10,127,429          1.55                3.57                   9,360,096           1.60
                            ============    ==========            ========                 ===========         ======
</TABLE>



<PAGE>




Note 10 - Stock Option and Bonus Plans (cont'd)

Non-Qualified Stock Option Plans (cont'd)

The Company  accounts for stock based  compensation in accordance with Financial
Accounting  Standards  Board  Statement  No.  123,  "Accounting  for Stock Based
Compensation," ("FAS 123") which encourages,  but does not require, companies to
recognize  compensation  expense  for grants of stock,  stock  options and other
equity instruments to employees. FAS 123 requires the recognition of expense for
such  grants,   described   above,  to  acquire  goods  and  services  from  all
nonemployees.  Additionally,  although expense  recognition is not mandatory for
issuances to employees,  FAS 123 requires companies that choose not to adopt the
new fair value  accounting  rules to disclose  pro forma net income and earnings
per share information using the new method.

The Company has adopted the disclosure-only  provisions of FAS 123. Accordingly,
no  compensation  cost has been recognized for the issuances of stock options to
employees.  For the years ended June 30, 1999 and 1998, employees of the Company
were issued options to purchase a total of 3,281,000 and 1,806,500 shares of the
Company's  common  stock,  respectively,  at rates  ranging from $.81 to $13 per
share expiring from September 1999 to December 2006.

Had  compensation  cost for the Company's  issuances of stock options during the
years  ended June 30, 1999 and 1998 been  determined  based on the fair value at
the date of grant  consistent with the provisions of FAS 123, the Company's 1999
and 1998 net loss and loss per share would have been  increased to the pro forma
amounts indicated below:

                                                       June 30,

                                                 1999             1998
                                            -----------        ---------

       Net loss - as reported                $(7,088,960)    $(7,109,748)
       Net loss - pro forma                  $(9,469,523)    $(9,227,346)
       Net loss per share - as reported      $      (.67)    $     (1.79)
       Net loss per share - pro forma        $      (.89)    $     (2.33)

The Company utilizes the  Black-Scholes  options-pricing  model to calculate the
fair value of each individual issuance of options or warrants with the following
assumptions used for grants during the year ended June 30, 1999; dividends yield
of 0.0%; expected average annual volatility of 133.86%; average annual risk-free
interest rate of 6.0%; and expected terms averaging 3 years.


<PAGE>




Note 10 - Stock Option and Bonus Plans (cont'd)

Stock Bonus Plan

Up to  2,000,000  shares of Common  Stock may be granted  under the Stock  Bonus
Plan.  Such shares may consist,  in whole or in part, of authorized but unissued
shares, or treasury shares. Under the Stock Bonus Plan, the Company's employees,
directors, officers, consultants and advisors are eligible to receive a grant of
the  Company's  shares;  provided,  however,  that  bona fide  services  must be
rendered by  consultants or advisors and such services must not be in connection
with the offer or sale of securities  in a  capital-raising  transaction.  As of
June 30, 1999,  1,497,625  shares of the Company's common stock have been issued
under the Stock Bonus Plan.

Note 11 - Stockholders' Equity

Common Stock

The Company is authorized to issue 40,000,000  shares of $.0001 par value Common
Stock.

Preferred Stock

The  Company  is  authorized  to issue up to  300,000  shares of $.001 par value
Preferred  Stock.  The  Board of  Directors  has the  authority  to  divide  the
Preferred  Stock into series and,  within the  certain  limitations,  to set the
relevant terms of such series created.

In April  1995,  the  Company  established  the  Series A  Preferred  Stock  and
authorized the issuance of up to 50,000 shares. Each share of series A Preferred
Stock is entitled  to a dividend at the rate of $1.60 per share when,  as and if
declared by the Board of Directors.  Dividends not declared are not  cumulative.
Additionally,  each share of Series A Preferred  Stock is  convertible  into .20
shares of the  Company's  Common Stock at any time after July 1, 1999.  Upon any
liquidation or dissolution of the Company,  each  outstanding  share of Series A
Preferred  Stock is  entitled  to  distribution  of $20 per  share  prior to any
distribution to the holders of the Company's  common stock. As of June 30, 1999,
the Company has 9,250 shares of Series A Preferred Stock issued and outstanding.

In March  1996,  the  Company  established  the  Series B  Preferred  Stock  and
authorized  the  issuance  of up to  100,000  shares.  Each  share  of  series B
Preferred Stock is entitled to a dividend at the rate of $.15 per share when, as
and if  declared  by the Board of  Directors.  Dividends  not  declared  are not
cumulative.  Additionally, each share of Series B Preferred Stock is convertible
into  one  share  of  the  Company's  Common  Stock.  Upon  any  liquidation  or
dissolution of the Company,  each outstanding  share of Series B Preferred Stock
is entitled to distribution of $1.00 per share prior to any  distribution to the
holders  of the  Company's  common  stock.  As of June 30,  1999,  all  Series B
Preferred shares had been converted and there were no shares outstanding.


<PAGE>




Note 11 - Stockholders' Equity (cont'd)

Preferred Stock (cont'd)

In  November,  1998,  the  Company's  board of  directors  amended the  original
certificate  of  designation  for its Series C Preferred  Stock ("Series C") and
authorized  the  issuance  of up to 2,060  shares.  Each  share of the  Series C
Preferred  Stock is entitled to a dividend at the rate of $.06 per share and has
a stated  value of $ 1,000 per  share.  Dividends  on all shares of the Series C
Preferred  Stock shall begin to accrue and accumulate from the date of issuance.
Additionally,  each share of Series C Preferred Stock is convertible into shares
of the  Company's  Common  Stock  at an  adjustable  conversion  rate.  Upon any
liquidation or dissolution of the Company,  each  outstanding  share of Series C
Preferred Stock is entitled to distribution of the stated amount per share prior
to any distribution to the holders of the Company's common stock. From November,
1998 to  January,  1999,  the  Company  sold  1,700  shares  of its 6%  Series C
Preferred  Stock to a group of  institutional  investors for  $1,700,000  net of
$253,154 in offering  costs.  For each preferred  share,  the Company will issue
warrants on certain dates.  The warrants  entitle the holder to purchase  common
stock at prices ranging from $1.27 to $1.50 per share. While the Company has the
right to redeem the preferred  shares at any time; the  redemption  price varies
from 110% to 125% of face value depending on the redemption  date. In connection
with the  preferred  stock  sales,  the Company  issued 45 shares of  preferred,
14,769 shares of common and 37,500 warrants to purchase common at prices ranging
from $1.27 to $1.50 per share to the placement  agent. In addition,  the Company
issued  120,000  shares  of common  stock to the  investment  banking  group and
200,000 warrants to purchase common stock at prices of $2.50 to $5.00 per share.
The dividend  attributable  to the Series C preferred  stock was $58,025 at June
30, 1999.

For the years  ended June 30,  1999 and 1998,  the  Company  did not declare any
dividends.

Equity Transactions

During the year ended June 30, 1999, the following equity transactions occurred:

The Company sold 3,636,879 shares of common stock at prices ranging from $.44 to
$1 per  share in  private  placements  raising  $2,553,112  net of  $307,925  in
offering costs.

The  Company  issued  2,141,800  shares of its common  stock for  $1,908,978  of
services and equipment received

The Company  issued 150,700 shares of its common stock for $123,430 for services
previously rendered.

The  Company  issued  2,109,975  shares of its common  stock in order to convert
$1,672,997  worth of long-term  debt,  notes  payable,  franchisee  deposits and
accrued interest into stockholders' equity.


<PAGE>




Note 11 - Stockholders' Equity (cont'd)

Equity Transactions (cont'd)

The Company  issued 466,150 shares of its common stock valued at $431,445 to its
employees under the Company's Stock Bonus Plan.

The Company  issued  100,000  shares of its common  stock  valued at $128,000 in
connection  with the  acquisition  of certain  assets of MedCard  including  the
exclusive  licensing  rights to the MedCard name and the MedCard System software
and network. Additionally, the Company issued options to purchase 350,000 shares
of the common stock at $1.34 per share. The options expire in November, 2001 and
have an imputed  value of $333,904  which was  allocated as part of the purchase
price of the licensing rights acquired (Note 2).

The Company  issued  options to purchase  150,000  shares of its common stock at
$.59 per share to a company retained as its investment banker in connection with
any future  offerings.  As no such offering took place, the imputed value of the
options, $77,730, has been charged to stock based compensation at June 30, 1999.

The Company  issued  options to purchase  50,000  shares of its common  stock at
$1.50  per  share  in  connection  with a loan  advanced  to the  Company  by an
individual.  The imputed  value of the  options,  $40,101,  has been  charged to
interest expense during the year ended June 30, 1999.

The Company  issued  options to purchase  420,000  shares of its common stock at
rates  ranging from $.82 to $2.50 per share.  These  options  expire  September,
2001.  $306,840 of expense has been  recognized  based on imputed values ranging
from $.61 to $1.50 per option.

During the year ended June 30, 1998, the following equity transactions occurred:

The Company acquired all of the outstanding stock of Vector Vision, Inc. and the
net assets of MovieBar  Company USA,  Inc.  valued at $1,100,000 in exchange for
550,000 shares of the Company's common stock (Note 3). Additionally, the Company
issued options to purchase 25,000 shares of the Company's common stock at $2.20.
These  options  expire  January  2003.  These  options have an imputed  value of
$26,714  that was  allocated  to the value of the assets as part of the purchase
price.

The Company  acquired all of the  outstanding  stock of One Medical Service Inc.
valued at $227,760 in exchange for 142,350 shares of the Company's  common stock
(Note 3). Additionally, the Company issued options to purchase 187,500 shares of
the  Company's  common  stock at $2.00.  These  options  expire May 2003.  These
options  have an imputed  value of $213,870  that was  allocated  as part of the
purchase price to goodwill.


<PAGE>




Note 11 - Stockholders' Equity (cont'd)

Equity Transactions (cont'd)

The Company  issued  2,246,500  shares of the  Company's  common  stock at rates
ranging from $ .80 per share to $ 1.00 per share in private  placements  raising
$1,476,080 net of $254,546 in offering  related expenses and $407,657 of imputed
option  value.  Additionally,  the Company  issued  options to purchase  354,000
shares of the Company's common stock at rates ranging from $.80 to $2.00.  These
options expire May 2000 and January 2002. These options have an imputed value of
$407,657 that was included in offering expenses.

The Company sold $1,100,000 of convertible notes to investors in connection with
a Regulation S offering  raising  $937,044 net of $162,956 in related  expenses.
These notes were converted to 846,827 shares of the Company's common stock.

During the year ended June 30, 1998, the following equity transactions occurred:

The Company issued 1,015,749 shares of the Company's common stock for $1,696,236
of professional  services and consulting  received.  265,000 shares of the stock
issued has a two year vesting period. As such, $136,475 of unearned compensation
expense  has been  recorded  and will be  amortized  to expense  over a one-year
period.  Additionally,  the Company issued options to purchase 110,000 shares of
the Company's  common stock at rates ranging from $1.00 to $5.00.  These options
expire January 2003.  $127,661 of expense has been  recognized  based on imputed
values ranging from $.84 to $1.33 per option.

The Company converted  $707,089 of convertible debt and accrued interest payable
to 506,791 shares of the Company's stock at rates ranging from $.40 to $1.60 per
share.

The Company  issued  230,317  shares of its common  stock in repayment of former
officer notes and accrued salaries of $419,197.

The Company  issued  300,000  shares of its common  stock  valued at $309,300 in
connection with the litigation settlement with a former Instafone master license
holder (Note 16).

Note 12 - Stock Splits

In  February  1998,  the  Company  declared  a 1  for  4  reverse  stock  split.
Accordingly,  all  weighted  average  share,  per share and  option  information
throughout the  consolidated  financial  statements has been restated to reflect
these split.


<PAGE>




Note 13 - Business Segments

The  Company  has  four  reportable  segments:   telecommunications,   financial
processing,  automated  movie rentals and medical  transaction  processing.  The
telecommunications  segment  is  responsible  for the  sales and  processing  of
cellular  telephone  activations and rentals,  prepaid  cellular phone cards and
other telecommunications  related services. The financial processing segment has
developed,  in conjunction with the Company's intelligent "Debit Link" system, a
monetary transaction processing platform that eliminates the need for ATM's used
primarily in major fast food chains.  The automated  movie rentals segment rents
videocassettes  through automated dispensing units in hotels,  primarily located
in the states of Florida  and  California.  The medical  transaction  processing
segment has developed,  in  conjunction  with the Company's  intelligent  "Debit
Link" system, a communications and transaction  processing platform which allows
pharmacies to access on-line credit card and medical reimbursement  approval and
automated  product ordering and payment.  This segment also includes the MedCard
System, a comprehensive electronic processing system that consolidates insurance
eligibility  verification  and  process  medical  claims and  approval of credit
card/debit  card  payments  within 30 seconds.  The  accounting  policies of the
segments  are  the  same  as  those  described  in the  summary  of  significant
accounting  policies.  The Company's  reportable segments are strategic business
units that offer different products and services.

They are managed separately because each business requires different  technology
and marketing strategies.

Operating results and other financial data are presented for the four reportable
segments of the Company for the years ended June 30, 1999 and 1998.  Net revenue
includes  sales  to  external  customers  within  that  segment.  There  are  no
significant  transfers  between  segments.  Cost of goods  sold  includes  costs
associated with net revenue within the segments.  Depreciation  and amortization
includes expenses related to depreciation and amortization directly allocated to
the segment.  Segment income (loss) does not include general and  administrative
expenses, other income (expense) items or income taxes.  Identifiable assets are
those  assets  used in segment  operations,  which  consist  primarily  of cash,
receivables, inventory, prepaid expenses, machinery, equipment, licensing rights
and goodwill. Corporate assets are principally patents.


<PAGE>




Note 13 - Business Segments (cont'd)



<PAGE>
<TABLE>


  <S>                   <C>          <C>           <C>          <C>           <C>           <C>

                      Tele-                    Automated     Medical
                     Communi-     Financial      Movie     Transaction    Corporate
                     cations     Processing      Rental     Processing    and Other    Consolidated

June 30, 1998:

Net revenues       $  446,524    $ 147,533      $ 371,416    $  15,478     $      -      $ 980,951

Cost of services   $  245,468    $ 128,133      $ 145,040    $   4,838     $      -      $ 523,479

Depreciation and
 amortization      $  245,700    $      -       $  94,058    $       -     $134,614      $ 474,372

Segment profit
 (loss)            $  (44,644)   $  19,400      $ 132,318    $  10,640    $(134,614)     $ (16,900)

Identifiable
  assets           $2,224,685    $ 467,962     $1,450,122   $1,058,714     $401,268     $5,602,751

June 30, 1999:

Net revenues       $  142,672    $ 625,801      $ 888,626    $ 583,777     $     -      $2,240,876

Cost of services   $   86,252    $ 236,517      $ 243,512    $ 131,200     $     -      $  697,481

Depreciation and                                              $ 136,458
 amortization      $  504,686    $ 117,768      $ 223,839                  $ 75,157     $1,057,908

Segment profit
  (loss)           $ (448,266)   $ 271,516      $ 412,275     $ 316,119    $(75,157)    $  476,487

Identifiable
 assets             $1,812,851   $ 573,362     $1,197,108    $2,464,242    $327,279     $6,374,862

</TABLE>


Note 14 - Commitments and Contingencies

Operating Leases

The  Company  leases  administrative   offices  and  warehouse  locations  under
noncancelable  operating  leases in California  and Florida.  The minimum annual
rent  generally  increases  each year by an amount based in the  Consumer  Price
Index.  The Company is also generally  responsible for paying its portion of the
common area maintenance, real estate taxes and insurance expenses. Additionally,
the Company also leases various office equipment under  noncancelable  operating
leases  with terms up to 5 years.  Rental  expense  for the years ended June 30,
1999 and 1998 was $279,550 and $113,275, respectively.


<PAGE>




Note 14 - Commitments and Contingencies (cont'd)

Operating Leases (cont'd)

Future minimum lease commitments at June 30, 1999 are as follows:

           Year Ending June 30,

                 2000                                    $  287,000
                 2001                                       238,000
                 2002                                       236,000
                 2003                                       192,000
                 2004                                       119,000
                 Thereafter                                 105,000
                                                         ----------
                                                         $1,177,000

Employment Agreements

The Company has entered into three-year  employment agreements with its two most
senior  officers.  The  agreements  entitle the officers to an annual  salary of
$137,500 and $120,000, respectively. As additional compensation, each officer is
entitled  to receive an  incentive  bonus  computed  based upon  annual  Company
revenues from operations and is entitled to other benefits, including such items
as an automobile  allowance,  health and life  insurance,  vacation and sick pay
benefits.

The Company has also  entered  into a three year  employment  agreement  with an
officer of a subsidiary of the Company  commencing on June 1, 1998.  The officer
is entitled to a salary of $96,000 per year.  As  additional  compensation,  the
officer is entitled to receive incentive bonus stock options computed based upon
annual  performance  criteria and is entitled to other benefits,  including such
items as an automobile allowance,  health and life insurance,  vacation and sick
pay benefits.  As part of an Exclusive Licensing Agreement with an outside party
dated July 20, 1999, the Company and the executive  terminated  this  employment
agreement (Note 17).

Additionally, the Company has entered into three year employment agreements with
another officer and three key employees.  These agreements  amount to a total of
$259,000 in base  compensation.  In  connection  with these  agreements,  43,274
shares of the Company's common stock and options to purchase up to 44,000 shares
of the Company's  common stock at rates ranging from $1.00 to $2.00 were issued.
These agreements are automatically renewable for a period of two years after the
third anniversary date. As additional compensation,  each individual is entitled
to receive an incentive bonus computed based upon annual performance criteria as
determined  in the  applicable  agreements  and is  entitled  to  certain  other
benefits, including such

<PAGE>



Note 14 - Commitments and Contingencies (cont'd)

Employment Agreements (cont'd)

items as an automobile allowance,  health and life insurance,  vacation and sick
pay  benefits.  Two of the  agreements  entitle  the  individual  to  additional
compensation of $ 92.50 for each POS transaction  automation  terminal placed in
service  or sold.  Effective  June 10,  1999,  the  Company  and the  three  key
employees terminated the employment agreements.

Royalty Agreement

In connection with the acquisition of the licensing  rights of MedCard (Note 3),
the Company entered into a royalty agreement with the licensor. The Company will
pay the licensor 25% of monthly  revenues,  less direct costs,  generated by the
licensed  software.  Royalties on net revenues in excess of $1,000,000 per month
shall be paid at 10%  instead of 25%.  The  agreement  requires  the  Company to
advance  $550,000 of royalty  fees  payable to the licensor and then retain as a
credit 40% of the future monthly royalty payments until the advance is offset in
full.

The Company has entered into an agreement  with Telemac,  Inc., the developer of
the software for real time billing.  This agreement  provides for the Company to
pay Telemac 7% of gross receipts based on cellular telephone rentals.

Additionally, the Company has an agreement with an individual requiring payments
based  upon the net  profits of Cellex  Communications,  Inc.  (Cellex).  20% of
Cellex's net profits are to be remitted to this individual pursuant to the terms
of the  agreement.  As of June 30, 1998,  Cellex has remitted  $22,818 in profit
participation payments to this individual.  Effective December 1997, the Company
discontinued  the operations of Cellex (Note 16). As of June 30, 1999, no monies
had been remitted for profit participation for the current year.

Consulting Agreements

The  Company  has  entered  into  various  consulting  agreements  with  outside
consultants.  These  agreements  entitle the  consultant  to issuances of common
stock and  options  as well as cash  compensation  in  exchange  for  consulting
services relating to such things as raising  additional debt and equity capital,
sales development,  investor and public relations and general strategic business
consulting.  For the year ended June 30,  1999,  the  Company  issued  2,123,300
shares of common stock and options to acquire  360,000 shares of common stock at
rates ranging from $.82 to $2.00 per share in exchange for  consulting  services
valued at  $2,134,296.  As of June 30,  1999,  75,000  shares  remained  payable
pursuant to the terms of two of the consulting agreements.  No other outstanding
obligations  existed as of June 30, 1999  pursuant to the terms of the remaining
consulting agreements.  For the year ended June 30, 1998, the Company has issued
483,551  shares of common stock and options to acquire  100,000 shares of common
stock at rates  ranging from 1.00 to 5.00 per share in exchange  for  consulting
services valued at $ 1,029,412.


<PAGE>



Note 14 - Commitments and Contingencies (cont'd)

Litigation

During the year ended June 30, 1998, an action was brought  against  subsidiary,
Vector  Vision,  Inc.  The  litigation  alleged  the  former  employee  was owed
approximately  $80,000 in  un-reimbursed  expenses  and monies  advanced  to the
company.  The Company settled the matter for approximately  $50,000. As security
for the settlement,  the Company gave the individual a collateral  assignment of
revenue  generated  from a location using the Company's  automated  movie rental
system as well as related  equipment  and  agreed to have a judgment  of $80,000
entered  against them should they default in payment.  As of June 30, 1999,  the
Company owed $8,000 to the former employee under the settlement agreement;  this
amount is included in accrued expenses.

During  February  1998,  the Company  reached a settlement  with a former master
license  holder (the  "license  holder") for Holland,  Belgium and Germany.  The
Company  issued  300,000 shares of common stock valued at $309,300 and agreed to
pay  $135,000 in cash,  resulting in a special  charge of $424,300.  At June 30,
1998, $90,000 was due to license holder and included in accrued expenses. During
the fiscal year ended June 30, 1999, the Company made $15,000 in payments to the
license holder in accordance  with the settlement  agreement.  On April 7, 1999,
the license holder converted the balance of the amount due ($75,000) into 70,755
shares of the Company's common stock (see Note 11).

Additionally, in the fiscal year ended June 30, 1998, a franchisee demanded that
the Company repurchase his franchises for approximately $1,000,000 or a suit for
breach of the  franchise  agreement  would be filed.  On February 19, 1999,  the
Company  negotiated a settlement with the franchisee  whereby the Company issued
571,429 shares of common stock to satisfy $500,000 of the  franchisee's  deposit
liability (see Note 11). In addition,  the Company issued a 10% Promissory  Note
for $317,619 in favor of the franchisee due October 31, 1999 (see Note 8).

A suit has been filed  against  the  Company by a former  employee  for  damages
totaling $200,000.  Management believes the claim is without merit and has filed
a counterclaim against the plaintiff charging criminal wrongdoing.

The Company is also involved in various claims and legal actions  arising in the
ordinary  course  of  business.  In the  opinion  of  management,  the  ultimate
disposition  of these  matters  will not have a material  adverse  effect on the
Company's financial position, results of operations, or liquidity.



<PAGE>



Note 15 - Statements of Cash Flows

During the year ended June 30, 1999:

The  Company   acquired   $860,810  of  fixed  assets  through  capital  leases,
satisfaction of notes receivable and for stock.

The  Company  accrued  dividends  payable of  $58,025 on the Series C  Preferred
Stock.

The  Company  incurred  various  noncash  transactions  in  connection  with the
acquisition of the MedCard licensing rights (Note 3).

The Company converted $500,000 of franchise deposits,  $1,068,348 of convertible
notes and  interest  payable and  $123,430 of accounts  payable  into  2,260,675
shares of common stock.

The Company converted $327,661 of franchise deposits into notes payable.

The Company  converted  116,000  shares of Series A and B  Preferred  Stock into
21,950 shares of common stock.

The Company sold $635,237 of fixed assets by  transferring  the related  capital
leases to the acquiring entity.

During the fiscal year ended June 30, 1998:

The Company acquired $44,096 of fixed assets through capital leases.

The Company  converted  $707,089 of  convertible  notes and interest  payable to
506,791 shares of common stock.

The Company converted  $419,197 of officer notes payable and salaries to 230,317
shares of common stock.

The Company  incurred  various  noncash  transactions  related to their business
acquisitions (Note 3).

The Company  transferred  $603,652 of ACDC units and equipment from inventory to
fixed assets in anticipation of placing these units at Company owned sites.

The Company terminated a licensing and equipment agreement which resulted in the
return of  $441,000  of ACDC  units and  equipment  into  fixed  assets  and the
reversal of $105,000 of deferred revenue.


<PAGE>



Note 16 - Discontinued Operations

Effective  December 1997, the Company  decided to discontinue  the operations of
Cellex  communications  Inc.,  which  provided  cellular  activation and prepaid
cellular time services.  The Company expects no additional  revenues or expenses
and has no material  remaining  assets or liabilities.  For the years ended June
30,  1999 and 1998,  there was a loss on the  disposal  of the  segment  and the
discontinued operations resulted in a charge of $63,737.

Note 17 - Subsequent Event

On July 20, 1999, the Company  entered into an agreement with a corporation  for
the exclusive  licensing  rights to market the One Medical Service  system.  The
Company  received  $200,000  upon  execution of the document and will receive an
additional  $367,000 over the following six months.  The Company also received a
7-year 8% unsecured note receivable as part of the  transaction.  The note shall
be paid off by monthly  royalty  payments  to the  Company  and other  scheduled
payment amounts over its term. The  corporation  also agreed to assume more than
$200,000 of the Company's  accounts  payable  related solely to inventory and to
take financial responsibility of the day-to-day operations and overhead.




<PAGE>






                                   SIGNATURES


    In accordance  with Section 13 or 15(a) of the Exchange Act, the  Registrant
has caused this Report to be signed on its behalf by the undersigned,  thereunto
duly authorized on the 8th day of October, 1999.

                                       SIMS COMMUNICATIONS, INC.

                                       By  /s/  Mark Bennett
                                          Mark Bennett, President

                                       By /s/ Ian Hart
                                          Ian Hart, Principal Financial Officer
                                          and Chief  Accounting Officer

         In accordance with the Exchange Act, this Report has been signed by the
following persons on behalf of the Registrant in the capacities and on the dates
indicated.

Signature                            Title                    Date

 /s/ Mark Bennett
Mark Bennett                        Director          October 8, 1999

 /s/ Michael Malet
Michael Malet                       Director          October 8, 1999

 /s/ David Breslow
David Breslow                       Director          October 8, 1999


Julio Curra                         Director




<PAGE>


                                   FORM 10-KSB

                                   (EXHIBITS)

                            SIMS Communications, Inc.
                             18001 Cowan, Suites C&D
                                Irvine, CA 92614