UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                   FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

[ ] TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM ______________ TO ________________

                       Commission File Number 333-5278-NY

                            AGATE TECHNOLOGIES, INC.
          (Exact name of small business issuer as specified in charter)

         Delaware                                            94-3334052
      (State or other                                      (IRS Employer
       jurisdiction                                      Identification No.)
     of incorporation)

                         46782 Lakeview Boulevard
                        Fremont, California  94538

                (Address of principal executive offices)

                                 (510) 492-5430

                           (Issuer's telephone number)

CHECK  WHETHER THE ISSUER (1) HAS FILED ALL  REPORTS  REQUIRED TO BE FILED UNDER
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: YES[X] NO[ ]

The Company had 12,932,004  shares of common stock,  par value $0.0001 per share
outstanding as of October 31, 1999.

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]


<PAGE>

INDEX

PART 1. FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

CONSOLIDATED CONDENSED BALANCE SHEETS AS OF
SEPTEMBER 30, 1999 (UNAUDITED) AND MARCH 31, 1999.                         1

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED) FOR THE THREE MONTHS AND SIX MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998.                                               2

CONSOLIDATED   CONDENSED  STATEMENTS  OF  CASH  FLOWS
(UNAUDITED)  FOR THE SIX MONTHS ENDED  SEPTEMBER  30,
1999 AND 1998.                                                             3

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER  30, 1999.                              3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)                     5

ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS

PART 2. OTHER INFORMATION

     ITEM 1. LEGAL PROCEEDING

     ITEM 2. CHANGES IN SECURITIES

     ITEM 3. DEFAULTS OF SENIOR SECURITIES

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

     ITEM 5. OTHER INFORMATION

     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


<PAGE>
<TABLE>
<CAPTION>
PART 1. FINANCIAL INFORMATION

                                AGATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  CONSOLIDATED CONDENSED BALANCE SHEETS

                                                                                September 30,               March 31,
                                                                                       1999                   1999
                                                                              --------------------      ----------------------
                                                                                  (Unaudited)
                                     ASSETS
CURRENT ASSETS
<S>                                                                                <C>                         <C>
  Cash and cash equivalents                                                        $1,121,031                  $2,012,603
  Trade accounts receivable, less allowance
  for doubtful accounts $19,457 (March 31, 1999: $27,999)                             268,425                     194,533
  Inventory                                                                           409,417                     395,279
  Other current assets and prepaids                                                    57,848                      50,048
                                                                              --------------------      ----------------------
                            TOTAL CURRENT ASSETS
  Restricted cash                                                                     115,823                     149,897
  Property, furniture and equipment, net                                               90,553                     120,412
  Other Assets                                                                         27,925                      27,925
                                                                              ====================      ======================
                                TOTAL ASSETS                                       $2,091,022                  $2,950,697
                                                                              ====================      ======================
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

  Accounts payable                                                                  $ 175,225                   $ 131,868
  Accrued liabilities                                                                 398,282                     429,313
  Long term debt, current portion                                                      60,187                     178,133
  Obligation under capital lease, current portion                                       2,449                       6,328
                                                                              --------------------      ----------------------
                          TOTAL CURRENT LIABILITIES                                                               745,642

  Long term debt, net of current portion                                                    0                       4,798
                                                                              --------------------      ----------------------
                              TOTAL LIABILITIES                                       636,143                     750,440

STOCKHOLDERS' EQUITY

Convertible  Preferred Stock,  $0.0001 par value 15,000,000 shares authorized in
  September,  1999 and 10,000,000  shares  authorized in March,  1999 Issued and
  outstanding shares:1,825,000 in

  September, 1999 and 2,075,000 in March, 1999                                            183                   7,256,589
  Liquidation Preference $6,387,500

Common Stock, $0.0001 par value

  75,000,000 shares authorized  in September, 1999 and,
  20,000,000 shares authorized in March, 1999
  Issued and outstanding shares: 12,932,004 in

  September, 1999 and 7,050,000 in March, 1999                                          1,293                   1,188,068

Additional paid in capital                                                          8,918,846                     234,663
 Accumulated other  comprehensive loss                                               (35,058)                    (30,458)
Accumulated deficit                                                               (7,430,385)                 (6,448,605)
                                                                              --------------------      ----------------------
TOTAL STOCKHOLDERS' EQUITY                                                         1,454,879                   2,200,257
                                                                              ====================      ======================
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                                        $2,091,022                  $2,950,697
                                                                              ====================      ======================


</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                    AGATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

                                                                   Three Months Ended                Six Months Ended
                                                                        September 30,                  September 30,

                                                       ----------------------------------    ----------------------------------
                                                            1999                  1998            1999              1998
                                                       ----------------   ---------------    ---------------   ----------------
<S>                                                         <C>               <C>                <C>                <C>
Net sales                                                   $380,793          $335,238           $740,524           $461,202

Cost of sales                                                176,595           103,418            228,570            165,557
                                                       ----------------   ---------------    ---------------   ----------------
Gross profit                                                 204,198           231,820            511,954            295,645

Operating Expenses

  Research and development                                   159,286           227,678            309,513            464,603
  Sales and marketing                                        258,526           213,936            543,639            481,303
  General and administrative                                 316,910           182,950            618,468            449,978
  Expense from discontinued operation
  of wholly owned subsidiary                                       -                 -                  -             37,526
                                                       ----------------   ---------------    ---------------   ----------------
Total operating expenses                                     734,722           624,564          1,471,620          1,433,409
                                                       ----------------   ---------------    ---------------   ----------------
Operating loss                                             (530,524)         (392,744)          (959,666)        (1,137,765)

Interest and other income                                     24,559            35,442             42,319             71,610
Interest expense and other expense, net                      (1,309)             1,085            (6,828)              (805)
                                                       ----------------   ---------------    ---------------   ----------------
Loss before income taxes                                   (507,274)         (356,217)          (924,175)        (1,066,960)

Income Taxes                                                (37,714)                 -           (57,605)                  -
                                                       ================   ===============    ===============   ================
Net Loss                                                  $(544,988)        $(356,217)         $(981,780)       $(1,066,960)
                                                       ================   ===============    ===============   ================
Net loss per common share-basic and fully diluted           $ (0.04)          $ (0.03)           $ (0.08)           $ (0.10)
Shares used in calculating net loss per common            12,932,004        10,575,000         11,788,335         10,575,000
share-basic and fully diluted

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                    AGATE TECHNOLOGIES, INC AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

                                                                                          Six months ended
                                                                                           September 30,

                                                                              -----------------------------------------
                                                                                    1999                   1998
                                                                              -----------------      ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                             <C>                    <C>
  Net Loss                                                                      $ (981,780)            $(1,066,960)
  Adjustments to reconcile net loss to net
   cash used for operating activities

    Loss on disposal of property, equipment                                             364                 26,304
    Depreciation                                                                     40,572                 53,047

  Changes in assets and liabilities

   Accounts receivable                                                             (73,892)               (74,603)
   Inventories                                                                     (14,138)                  (879)
   Prepaid expense and other assets                                                 (7,800)               (60,923)
   Accounts Payable and accrued liabilities                                          12,326                111,790
                                                                              -----------------      ------------------

Net cash used in operating activities                                           (1,024,348)            (1,012,224)

CASH FLOW FROM INVESTING ACTIVITIES

Restricted cash                                                                      34,074               (51,040)
Acquisition of property and equipment                                              (11,678)               (24,387)
Proceeds from sale of property and equipment                                            600                 17,000
Acquisition of /Proceeds from sales of other LT assets                                    -                (1,067)
                                                                              -----------------      ------------------

Net cash provided by/(used in) investing activities                                  22,996               (59,494)

CASH FLOW FROM FINANCING ACTIVITIES

Payment of notes payable                                                          (122,744)               (24,369)
Payment of Capitalized Leases                                                       (3,878)                (4,047)
Net Proceeds from Issuance of common stock                                          241,002                      -
                                                                              -----------------      ------------------

Net Cash provided by/(used in) financing activities                                 114,380               (28,416)

Effect of exchange rate changes on cash                                             (4,600)                      -
                                                                              -----------------      ------------------
Net (Decrease) in cash and cash equivalents                                       (891,572)            (1,100,134)
Cash and cash equivalents at beginning of period                                  2,012,603              3,837,882
                                                                              -----------------      ------------------
Cash and cash equivalents at end of period                                       $1,121,031             $2,737,748
                                                                              =================      ==================


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for

  Interest                                                                            6,804                    805
  Income Tax                                                                         57,605                      -
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                AGATE TECHNOLOGIES, INC. AND SUBSIDIARIES

                              CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                               (UNAUDITED)

                                                                 CONVERTIBLE                                            ADDITIONAL
                                                               PREFERRED STOCK                 COMMON STOCK              PAID-IN
                                                             SHARES        AMOUNT         SHARES          AMOUNT         CAPITAL
                                                          ----------     ----------     ----------      ----------      ----------
<S>                                                        <C>          <C>              <C>            <C>              <C>
BALANCE AT APRIL 1, 1999                                   2,075,000    $ 7,256,589      7,050,000      $1,188,068       $ 234,663
  Net loss for the six months ended September 30, 1999
  Foreign Currency translation adjustment
  Comprehensive loss
  Issuance of common stock for cash                                                        321,336         241,002
  Conversion of preferred stock into common stock           (250,000)      (875,000)       250,000         875,000
   Exchange of Agate-California common stock                                            (7,621,336)     (2,304,070)      2,304,070
    for Agate-Delaware (formerly ARCA) common stock                                     11,432,004           1,143          (1,143)
   Exchange of Agate-California preferred stock           (1,825,000)    (6,381,589)                                     6,381,589
     for Agate-Delaware (formerly ARCA) preferred stock    1,825,000            183                                           (183)
   Issuance of Agate-Delaware common stock
    in exchange for common stock of ARCA

     upon Merger with Agate-Delaware                                                     1,500,000             150            (150)
                                                        ----------------------------------------------------------------------------

Balance at September 30, 1999                              1,825,000         $  183     12,932,004        $  1,293     $ 8,918,846
                                                        ----------------------------------------------------------------------------



                                                                         ACCUMULATED                     TOTAL
                                                                            OTHER     COMPREHENSIVE  STOCKHOLDERS'
                                                         ACCUMULATED    COMPREHENSIVE     INCOME         EQUITY
                                                           DEFICIT      INCOME (LOSS)     (LOSS)       (DEFICIT)
                                                          ----------     ----------     ----------      ----------
BALANCE AT APRIL 1, 1999                                $ (6,448,605)     $(30,458)                      $2,200,257
  Net loss for the six months ended September 30, 1999      (981,780)                 $ (981,780)         (981,780)
  Foreign currency translation adjustment                                   (4,600)       (4,600)           (4,600)
                                                                                      ===============
  Comprehensive loss                                                                  $ (986,380)
                                                                                      ===============
  Issuance of common stock for cash
  Common stock subscription receivable upon

    Issuance of common stock for cash                                                                       241,002
   Conversion of preferred stock into common stock
   Exchange of Agate-California common stock
    for Agate-Delaware (formerly ARCA) common stock

   Exchange of Agate-California preferred stock
    for Agate-Delaware (formerly ARCA) preferred stock

   Issuance of Agate-Delaware common stock
    in exchange for common stock of ARCA

     upon Merger with Agate-Delaware

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

BALANCE AT SEPTEMBER 30, 1999                           $ (7,430,385)    $ (35,058)                      $1,454,879
                                                        ----------------------------------------------------------------------------



</TABLE>
<PAGE>





                    AGATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

NOTE A- ORGANIZATION AND CONSOLIDATION

Agate Technologies Inc., a Delaware corporation and its subsidiaries are engaged
in the  design,  development  and  marketing  of  proprietary  data  storage and
management  software  solutions and products for computing  environments  in the
home and business  enterprise  markets.  The consolidated  financial  statements
include its wholly owned subsidiaries,  Agate Technologies (California), Inc; ei
Corporation;  ATI  Malaysia  Sdn Bhd;  and Agate  Cayman  International  Ltd. ei
Corporation was  incorporated on June 25, 1999, and commenced  operations in mid
August,  1999.  Agate  Cayman  International  was  recently  formed as a holding
company for its  international  operations.  Operations  of ATI Malaysia Sdn Bhd
have been discontinued but it remains a legal entity.

All material  intercompany accounts and transactions have been eliminated in the
financial statements.

NOTE B- INTERIM ADJUSTMENTS AND USE OF ESTIMATES

The  accompanying  consolidated  financial  statements have been prepared by the
Company  pursuant to the rules and  regulations  of the  Securities and Exchange
Commission for interim financial  statements.  Therefore they do not include all
the disclosures required by generally accepted accounting principles.

While the Company  believes that the disclosures  presented are adequate to make
the  information  not  misleading,  it  is  suggested  that  these  Consolidated
Condensed  Financial  Statements  be  read in  conjunction  with  the  financial
statements and notes included in the Company's audited  financial  statements as
of and for  the  fiscal  years  ended  December  31,  1998,  and  1997,  and the
three-month  period ended March 31, 1999,  included in the Form 8-K/A-1 filed by
the Company on August 13, 1999.

The unaudited  financial  information  furnished herein reflects all adjustments
consisting  of normal  recurring  items which in the opinion of  management  are
necessary and fairly state the company's  financial  position and the results of
its operations for the periods presented. Operating results for the three months
and six months ended September 30, 1999, are not  necessarily  indicative of the
results that may be expected for the entire fiscal year ending March 31, 2000.

NOTE C - BACKGROUND TO ACQUISITION TRANSACTION IN JUNE 1999

On June 29,  1999,  all  former  shareholders  of  Agate  Technologies  Inc.,  a
California Corporation which is now named Agate Technologies (California),  Inc.
("Agate-California"),  were issued shares in ARCA Corp, a New Jersey corporation
("ARCA"), with no known assets or liabilities,  in exchange for the contribution
of their  Agate-California  shares.  Each common  shareholder  received 1.5 ARCA
common shares for each Agate-California share exchanged. Each Series A Preferred
shareholder  received an equal number of ARCA Series A Preferred  Shares,  which
had substantially identical rights,  preferences,  privileges, and restrictions,
except that each share is convertible into 1.5 ARCA common shares.  As a result,
shareholders of  Agate-California  owned in excess of 90% of ARCA's  outstanding
shares  and  Agate-California  became a wholly  owned  subsidiary  of ARCA.  The
transaction  between  ARCA and  Agate-California  is being  considered  to be an
acquisition of ARCA by Agate-California.

On June 30, 1999, ARCA was merged into its other wholly-owned subsidiary,  Agate
Technologies,  Inc.,  a  Delaware  corporation  ("Agate-Delaware"),  in order to
re-incorporate  ARCA in Delaware.  Agate-Delaware  has Series A Preferred  Stock
that has identical rights, preferences, privileges and restrictions, to the ARCA
Series  A  Preferred  Stock.  Each  ARCA  shareholder   received  one  share  of
Agate-Delaware in exchange for each ARCA share.

NOTE D- Net Loss per Share

Basic and diluted net loss per common share are presented in conformity with FAS
No. 128 "Earnings per Share"("FAS 128") for all periods presented. In accordance
with FAS 128,  basic and  diluted  loss per share  has been  computed  using the
weighted average number of shares of common stock outstanding during the period.
The  weighted  average  number of common  shares  outstanding,  for all  periods
presented,  has given  effect to the  exchange of 1.5 common  shares of ARCA for
each  common  share  of  Agate-California  (see  note  C  above).  Common  stock
equivalents  associated  with stock options have been excluded from the weighted
average  shares  outstanding  since  the  effect  of these  securities  would be
anti-dilutive.

Summary of Significant Accounting Policies

The summary of significant  accounting  policies is included in the notes to the
consolidated  financial  statements for the  three-month  period ended March 31,
1999, and the fiscal years ended December 31, 1998, and 1997, which were audited
and appear in the Form 8K/A-1 filed by the Company on August 13, 1999.

ITEM 2.

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FORWARD LOOKING STATEMENTS

The  statements  contained  in this  report on Form  10-QSB  that are not purely
historical are forward looking  statements  within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of
1934, including statements regarding Agate's  expectations,  hopes,  intentions,
beliefs, or strategies regarding the future.  Forward looking statements include
the  Company's  statements  regarding  liquidity,  anticipated  cash  needs  and
availability,  and anticipated  expense levels in  "Management's  Discussion and
Analysis of Financial  Condition  and Results of  Operations".  Forward  looking
statements  contained herein or in other statements made by the Company are made
based on  management's  expectations  and beliefs  concerning  future events and
trends  impacting  the Company and are subject to  uncertainties  and risks that
could  cause  actual  results  of the  Company to differ  materially  from those
matters  expressed  in or implied by  forward-looking  statements.  The  Company
believes  that the  following  factors,  among  others,  could affect its future
performance  and cause actual results of the Company to differ  materially  from
those expressed in or implied by forward looking statements made by or on behalf
of the Company:  (a) the effect of changes in interest  rates (b) the demand for
its products and the stability of its suppliers  (c)  uninsurable  risks and (d)
general  economic  conditions.  Other risks  which could also so affect  Company
performance and results are discussed in the "Risks  Factors"  section below. In
this report, the words "anticipates, "believes", "expects", "intends", "future",
"hope" and similar expressions identify forward looking statements.  Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof.

BACKGROUND OF COMPANY

Agate Technologies,  Inc., a Delaware  corporation (the "Company"),  is engaged,
through its  subsidiary,  Agate  Technologies  (California),  Inc., a California
corporation  ("Agate-California"),  in designing,  developing,  and marketing of
proprietary  software for data management and storage solutions and products for
the PC market.  The Company also licenses  customized  hot swap,  plug and play,
software  as  integrated  solutions  to  major  OEMs and PC  manufacturers.  The
Company's proprietary  technology products (software and hardware subsystems and
services) are centered around interchangeable  storage and are designed to offer
users  high  system  availability,  mobility,  and  inter-operability  across PC
platforms.   The  Company's   general  strategy  is  to  provide  "Data  Ready",
cost-effective  solutions  which  offer  users in home and  corporate  computing
environments with easy data accessibility and data mobility, compared to today's
high end systems.

The Company  incorporated a new  subsidiary,  ei  Corporation,  which  commenced
operations in mid August 1999 to spearhead the marketing and distribution of the
group's products through selective channels. Agate International Cayman Ltd. was
also  formed  during the  current  quarter as a holding  company for the group's
international operations.

The Company has  incurred  losses from  operations  since  inception  and had an
accumulated  deficit of  $7,430,385  as at September  30, 1999.  The  cumulative
losses were a result of significant research and development costs and sales and
marketing expenses.  Currently,  about 54% of the Company's assets of $2,091,022
are represented by cash or cash equivalents.

RESULTS OF OPERATIONS

For the three-month and six-month periods ended September 30, 1999

GENERAL - During the quarter ended September 30, 1999, the Company completed its
incorporation of two subsidiaries, ei Corporation and Agate International Cayman
Ltd.,  to  strategically  position the group's  activities  and  strengthen  its
operations and marketing focus to optimize  business  opportunities in different
segments.  ei Corporation was formed to establish the group's  penetration  into
retail  distribution  and marketing of the group's  product and services.  Agate
International  Cayman Ltd, was formed as a holding company to handle the group's
international operations.

REVENUE - Revenue for the quarter  ended  September 30, 1999,  was $380,793,  an
increase  of 14% as compared to $335,238  for the quarter  ended  September  30,
1998. For the six-month  period ended September 30, 1999,  revenue  increased by
61% to $740,524  compared to $461,202 in the  corresponding  period in September
30, 1998.

Product revenues  increased 28% in the most recent quarter to $279,019  compared
to $218,412 for the quarter ended September 30, 1998. Licensing revenue, however
decreased  13% to $101,774  for the  quarter  ended  September  30,  1999,  from
$116,826 in the quarter  ended  September  30,  1998.  The decrease in licensing
revenue during the current quarter was due to end-of-life  status of various OEM
notebook  projects and the Company's focus towards  bundling of its products for
retail and  distribution  to expand and broaden its revenue.  It is not expected
that licensing  revenue would contribute  significantly to revenue growth in the
future,  as the Company move towards bundling and distribution of products.  The
Company's general strategy is to focus on building channel  distribution for its
products and services which provide cost-effective  solutions to the everyday PC
user in home and corporate environments.

The Company,  through its wholly owned  subsidiary,  ei  Corporation,  commenced
productization of the group's  technology and services for introduction into VAR
and distribution  channels. The products include the HotData family and software
products,  "ProSwap" and "Hot Shadow".  With the extension of the Company's move
into distribution through ei Corporation, the Company hopes to achieve a broader
revenue base.

Revenue  growth  for the  Company,  with the  move  into  distribution,  will be
dependent upon several factors,  including  especially  market acceptance of the
Company's products.  As described under "Liquidity and Capital Resources" below,
the Company  will need to raise  additional  financing  for working  capital and
marketing during 2000.

GROSS  MARGIN - Gross margin for the three and six months  ended  September  30,
1999, were $204,198 (54% of revenue) and $511,954 (69% of revenue). Gross margin
for the three and six months ended  September  30, 1998,  were  $231,820 (69% of
revenue) and $295,645  (64% of  revenue).  The decrease in gross  margins in the
current  quarter  was due to the higher  proportion  of  licensing  and  service
revenues in the quarter ended September 30, 1998. The Company expects  licensing
and service  revenues,  as a  proportion  of total  revenue,  to decrease in the
future, in line with its strategy of expanding into distribution.

During the quarter  ended  September  30, 1999,  licensing  and service  revenue
represented  27% of  total  revenue  compared  to 35% of  total  revenue  in the
comparable  quarter  ended  September  30, 1998,  while for the six months ended
September 30, 1999, such revenues  represented 48% of total revenue  compared to
35% in the comparable six-month period in 1998.

Cost of sales for the bundled products consists  primarily of cost of materials,
inward freight,  and packaging and for software  products,  it includes software
packaging, documentation and physical media costs.

In a continuing effort to maintain and improve margins in a competitive industry
environment,  management has focused on quality,  flexibility,  and product cost
reductions.  From  time-to-time,  margins  are  adversely  affected  by  pricing
pressures.  The Company  emphasizes  product cost reductions in its research and
development  activities and frequently  reviews its supplier  relationships with
the view to obtaining  the best prices  available.  In addition,  the Company is
considering  effecting  further cost  reductions by relocating its logistics and
shipment to lower cost centers in Asia.

TOTAL  OPERATING  EXPENSE - For the quarter  ended  September  30,  1999,  total
operating expenses were $734,722 compared to $624,564 for the comparative period
ended  September 30, 1998.  Operating  expenses for the  six-month  period ended
September 30, 1999,  were  $1,471,620  compared to $1,433,409  for the six-month
period ended September 30, 1998.

SALES AND MARKETING  EXPENSE - Sales and marketing  expenses  increased 21% from
$213,936  in 1998 to  $258,526  in 1999  for the  quarter  ended  September  30.
Expenses  for the first six months  ended  September  30,  1999,  were  $543,639
compared to $481,303 in the six months ended September 30, 1998. The increase in
the second quarter of 1999 is mainly the result of increased sales and marketing
activities as the Company`s  subsidiary  company,  ei  Corporation  gears up its
marketing efforts in the retail and VAR channels.

The Company does not intend to increase its sales & marketing headcount but will
continue  work  through a select  network of external  sales  representative  to
complement  its  lead  generation  efforts.  It is  anticipated,  however,  that
marketing  expenses  will grow as the  Company  promotes  its  products  through
co-operative  marketing  programs,  trade show  participation  and select  media
coverage. There is no assurance, however, that the Company will be successful in
its efforts and the extent of the Company's  marketing  penetration will largely
depend on market  acceptance  of the  Company's  products and the success of its
promotional  efforts.  The Company will need to raise  financing in 2000 to fund
the revenue growth.

GENERAL  AND  ADMINISTRATIVE   EXPENSE  -  General  and  administrative  expense
increased to $ 316,910 in the three months ended  September 30, 1999 compared to
$182,950 in the comparative  period ended  September 30, 1998.  Expenses for the
six-month period ending September 30, 1999 were $618,468 compared to $449,978 in
the  comparable  six-month  period ending  September  30, 1998.  For the current
quarter and the  six-month  period ended  September  30, 1999,  the  significant
increase in expenses was mainly due to acquisition costs and higher professional
(legal,  audit,  and other) fees resulting from the  acquisition of ARCA and the
Company's new reporting  requirements as a public  company.  These expenses were
$134,086 in the quarter  ended  September  30, 1999,  compared to $55,355 in the
comparable quarter ended September 30, 1998.

RESEARCH AND DEVELOPMENT  EXPENSE - Research and Development  expenses decreased
30% from  $227,678 in the  three-month  period  ending  September  30, 1998,  to
$159,286 in the  three-month  period ended  September 30, 1999.  Expenses in the
six-month period ended September 30, 1998, were $464,603 compared to $309,513 in
the  corresponding  six-month  period ended  September  30, 1999.  This decrease
primarily was due to a headcount decrease in certain development areas resulting
from the  completion of projects  associated  both with newly  released  bundled
products and more mature OEM  software  products.  The Company will  continue to
streamline its development  resources focusing on the software  development team
while outsourcing any hardware development  requirements to outside contractors.
To extend its software development and minimize costs, the Company plans to site
part of its development team in Asia. The Company is continuing to invest in the
enhancement  of product  lines  aimed at sales  opportunities  that the  Company
believes will expand its installed base of customers.

Research  and  development  expenses are  anticipated  to be  maintained  at the
present  level and could  vary  depending  on  phases in the  Company's  product
development efforts.

INTEREST  AND OTHER INCOME - Interest  and other  Income  consists  primarily of
interest  income  earned  on cash and cash  equivalents,  income  received  from
sublease and fixed asset disposal.

Interest  and other  income  decreased  to $ 24,559 in the  three  months  ended
September 30, 1999, compared to $35,442 in the three months ended June 30, 1998.
For the six-month period ended September 30, 1999, interest and other income was
$42,319  compared to $71,610 for the six-month  period ended September 30, 1998.
The drop in interest and other income for the current  quarter was primarily due
to reduced interest earnings stemming from a lower cash balance.

INTEREST  AND OTHER  EXPENSE - Interest  and Other  Expense  represent  interest
expenses and loss from sale of fixed assets.

For the six-month  period ended September 30, 1999,  interest and other expenses
increased to $6,828  compared to $805 in the comparable  six-month  period ended
September  30, 1998.  The increase was due to a higher usage of the bank line of
credit to finance the working capital requirements.

LIQUIDITY AND CAPITAL RESOURCES

The discussion  below regarding  liquidity and capital  resources should be read
together with the information  included in the year-end  Consolidated  Financial
Statements.

As at September 30, 1999, the Company's principal sources of liquidity consisted
of cash and cash  equivalents  of $1,121,031  compared to $2,012,603 as at March
31, 1999. The Company's net cash used in operating activities was $1,024,348 for
the six months ended  September  30, 1999,  compared to  $1,012,224  for the six
months ended September 30, 1998.

During the six months ended September 30, 1999, the Company received $241,002 in
proceeds from issuance of common stock. The Company used $1,024,348 in operating
activities,  incurred  $11,678  in the  acquisition  of  equipment,  and  repaid
$122,744 in bank loans and notes payable and $3,878 in capitalized  leases.  The
net  decrease  in cash was  $891,572.  The  Company  had  $1,121,031  in cash on
September 30, 1999, excluding cash held in restricted accounts.

The Company has available a revolving  line of credit of up to $2,000,000  based
on a borrowing  base formula of 70% of eligible  accounts  receivable and 30% of
inventory  (capped at $250,000),  with 50% of the outstanding  loan amount to be
secured by cash deposit.

The Company's future liquidity and capital  requirements will depend on numerous
factors,  including  without  limitation  the progress of the Company's  product
development  programs,  the  resources  the Company  devotes to  developing  and
marketing its products,  and the extent to which the Company's products generate
market acceptance and demand.

The Company  believes  that its cash is adequate to last through March 31, 2000,
if the amount of cash used in  operating  activities  during the second  half of
fiscal  2000 is the same as that used in the first half.  The  Company  believes
such cash would last longer if  necessary  through  active cash  management  and
expense  reductions  The Company is  beginning  to actively  seek debt or equity
financing.  There can be no assurance  that the Company will succeed in its fund
raising  efforts  or that  any  monies  raised  will be on terms  which  are not
materially adverse to the Company.

OTHER FACTORS AFFECTING FUTURE RESULTS:

RECENT  AND  EXPECTED  LOSSES.  From  inception,  the  Company  has  never  been
profitable.  There  can be no  assurance  that it ever  will  generate  positive
revenues  from its operating  activities,  or that it will achieve and sustain a
profit  during any future  period.  Failure to achieve  significant  revenues or
profitability  would  materially  and adversely  affect the Company's  business,
financial condition, and results of operations.

MARKET  ACCEPTANCE  OF BUNDLED  PRODUCTS.  The  Company  is  phasing  out of the
business of licensing software to OEMs and is introducing  bundled products into
the VAR, retail, and OEM channels through ei Corporation.  The Company's bundled
products are relatively  new and unproven.  There can be no assurance that there
is a  viable  market  for  these  products.  The  Company's  marketing  arm,  ei
Corporation,  is also new.  Even if there is a viable  market for the  Company's
bundled products, there can be no assurance that ei Corporation can successfully
penetrate  such market.  In this regard,  unless the Company  raises  additional
financing as described below, ei Corporation's  efforts will be constrained by a
lack of resources to adequately promote the bundled products.

NEED FOR ADDITIONAL  CAPITAL.  Although the Company anticipates that its current
cash balance  will be  sufficient  to meet the  Company's  capital  requirements
through  March of 2000,  there can be no  assurance  that the  Company  will not
require  additional  sources of cash at an earlier date. This will depend on the
revenues  generated  in  the  upcoming  periods,  and  the  timing  of  required
expenditures.  The Company anticipates  requiring additional cash in fiscal 2001
and is  beginning  active  efforts  to raise  such  financing.  There  can be no
assurance that capital will be available on terms acceptable to the Company,  if
at all. The Company's  operations would be severely  constrained if it is unable
to raise financing during 2000.

CONCENTRATION  OF CONTROL.  The Company is controlled in the majority by Francis
Khoo and  Vincent  and  Shirley  Ooi  through  their  individual  ownership  and
ownership  through Pacific Rim. As a result,  these  shareholders may be able to
exercise significant  influence over all matters involving shareholder approval,
including  the  election of  directors  and  approval of  significant  corporate
transactions.

DEPENDENCE  ON KEY  PERSONNEL.  The Company's  success  depends to a significant
extent upon a number of key management  employees,  in particular,  upon Francis
Khoo and Vincent and Shirley Ooi.  Loss of the services of any one of them would
be materially detrimental.  The Company has key person life insurance on some of
these  individuals,  but  there  can be no  assurance  that  proceeds  from  the
insurance  would be sufficient.  There can be no assurance that the Company will
be  successful  in  retaining  these  individuals  and other key  technical  and
management personnel.

PERSONNEL RECRUITMENT.  The Company intends to recruit a chief operating officer
who will be critical to the success of the  company.  There can be no  assurance
that such person will be located.  Also the Company needs to retain  current and
recruit  additional  engineering  talent  which is  difficult  in the  intensely
competitive job market of Silicon Valley. If the Company is unable to obtain and
retain highly skilled individuals to fulfill technical and managerial functions,
the Company's business and financial condition may be materially affected.

SUPPLY  RELATIONSHIPS WITH THIRD PARTIES. The Company will be dependent upon the
hardware  products of third  parties for its products  that are  "bundled"  with
other products for sale. There is no assurance that the relationship between the
Company and the third  parties will  continue to be  beneficial  to the Company.
There can be no  assurance  that the third  parties  will  continue  to  produce
products in the future that retain  their  current  level of market  acceptance,
that the products  will  continue to be available in adequate  quantities at the
times required by the Company, or that the third party products will not contain
defects or errors.  The Company may  experience  lost  revenues due to the third
party's  delay in  correcting  defects  in their  products,  delay in getting an
adequate supply of their products to the Company,  or from any resulting loss of
market share.

UNEXPLORED MARKETS. The Company is actively looking for new OEMs and markets and
distribution channels for its newly released products. There can be no assurance
that the Company will be successful in these regards.

TECHNOLOGICAL  CHANGE AND MARKET  COMPETITION.  Competition  in the data storage
industry is intense, and the industry is characterized by changing  technologies
and customer demands for new products.  Third parties could develop products and
technologies  which cause those of the Company to become  obsolete.  Most of the
Company's  competitors  have  significantly   greater  financial,   development,
marketing  and  other  resources  than the  Company.  In  light  of the  intense
competition in the industry,  there can be no assurance that the Company will be
successful in its ability to enhance current  products and develop and introduce
future  products that will achieve market  acceptance.  The Company's  future is
largely  dependent on  development  of new  products.  While these  products are
largely  developed,  there  can be no  assurance  that  these  products  will be
successfully or timely completed.

IMPACT OF THE YEAR 2000  ISSUE  The  Company  has  determined  that its  current
computer systems are Year 2000 ready and would function properly with respect to
dates in the year 2000 and beyond. However, the Company has plans to replace its
current  computer  systems  to meet the  needs of the  business  as the  Company
continues  to grow.  The  replacement  system will be Year 2000  compliant.  The
Company  has  yet  to  initiate   discussions   with  all  of  its   third-party
relationships to ensure that those parties have appropriate plans to remedy Year
2000 issues where their systems impact the Company's  operation.  The Company is
assessing  the  extent to which  its  operations  are  vulnerable  should  those
organizations fail to properly remedy their computer systems.  While the Company
believes  its planning  efforts are adequate to address its Year 2000  concerns,
there can be no  guarantee  that the  systems  of other  companies  on which the
Company's  operations rely will be converted on a timely basis and will not have
a material  effect on the Company.  The cost of the Year 2000  initiative is not
expected to be material to the Company's  results of operations or its financial
position.

MINIMAL  MARKET  IN AGATE  STOCK.  Prior to its  take-over  by  Agate-California
shareholders  on June 29,  1999,  ARCA stock was very thinly  traded.  The three
market makers sold less than 10,000 shares during the first five months of 1999.
During the quarter ended  September 30, 1999,  the market  remained thin as only
16,650 Company  shares were traded.  There can be no assurance that any material
trading market will develop for the Company's stock. Such lack of active trading
may cause a  hesitance  to  purchase  Company  shares  on the part of  potential
shareholders due to the perceived iliquidity of the shares, thereby perpetuating
the lack of a market in the stock and a corresponding  artificial  depression in
value of Company stock.

INTELLECTUAL PROPERTY. The Company has copyrighted its software executable code.
However,  to protect the  remainder of its  intellectual  property,  the Company
currently  relies  primarily  on trade  secret law and the  Company's  perpetual
innovation  of its products.  The nature of the  Company's  product line is such
that the products are  susceptible to reverse  engineering by  competitors.  The
Company  has applied for a patent to protect  some of its  technology;  however,
there can be no assurance that such patent will be granted,  and if it should be
granted,  that it will be sufficient  to be effective  against  competitors.  In
addition, there can be no assurance that a third party has not filed or will not
file applications for patents or obtain additional  proprietary rights that will
prevent,  limit,  or interfere with the Company's  ability to make, use, or sell
its  products.  In the event the Company found it necessary to acquire a license
to a product  from a third party,  there can be no  assurance  that such license
would  be  available,  or if  available,  that it would  be  available  on terms
acceptable to the Company,  or that the Company could successfully  redesign its
products to avoid infringement of the third party's patent.

SUPPLY OF PUBLIC STOCK.  Currently only 550,000 shares are available for trading
in the public  market  under SEC  rules.  Six months  after June 29,  1999,  the
closing  date of the ARCA  acquisition,  an  additional  450,000  shares  become
available.  Eleven and one-half  months  after such  closing date an  additional
450,000  shares  become  available,  and twelve  months after such closing date,
another  13,500,000 shares become available for trading.  The large availability
of shares for trading  could  affect the market  adversely  and drive the market
price down.

SUBORDINATION. The Company's common stock is subordinate to its 1,850,000 shares
of outstanding Series A Preferred Stock. In addition, the Company's common stock
will be subordinate to any future  preferred  stock that the Company creates and
issues.  No vote of the  Company's  common  shareholders  is  required  to issue
preferred stock.

MANUFACTURING.  The Company's  custom ASIC HotChip is sole sourced.  The Company
attempts to reduce the adverse impact a problem with the supplier could cause by
maintaining a safety stock; however,  there can be no assurance that the Company
would be able to replace the supplier before its safety stock ran out.

PART 2. OTHER INFORMATION

ITEM 1   LEGAL PROCEEDINGS

                  NONE

ITEM 2. CHANGES IN SECURITIES

                  NONE

ITEMS 3  DEFAULTS ON SENIOR SECURITIES

                  NONE

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

                  NONE

ITEM 5   OTHER INFORMATION

                  NONE

ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

(a) (1) The  financial  statements  filed as part of this  Report  at Item 1 are
listed in the Index to Financial Statements and Financial Statement Schedules on
page 2 of this Report.

(a)(2)            The  following  exhibits  are filed  with or  incorporated  by
                  reference into this Quarterly Report on Form 10-QSB:

3.01  Registrant's  Articles  of  Incorporation  as  amended  to date are hereby
incorporated  by  reference  from  Exhibit O to  Exhibit  10.19 to  Registrant's
Current Report on Form 8-K, dated June 4, 1999, and filed June 10, 1999.

3.02  Registrant's  bylaws,  as amended to date  (incorporated  by  reference to
Registrant's Current Report on Form 8-K, dated June 4, 1999), and filed June 10,
1999.

4.0               Exhibit 3.01 above is hereby incorporated by reference.


27.00    Financial Data Schedule

(b)      Reports on Form 8-K

A Report on Form 8-K dated  June 28,  1999,  was filed  July 9,  1999.  The Form
reported the following items:

         Item 1. Changes in Control of Registrant
         Item 2. Acquisition and Disposition of Assets
         Item 4. Change in Registrant's Certifying Accountant
         Item 7. Financial Statements and Exhibits
         Item 8. Change in Fiscal Year

However, no financial  statements were provided at the time of filing due to the
impracticality  of providing such  statements.  These financial  statements were
contained  in  Amendment 1 to this Form 8-K which was filed on August 13,  1999,
and the financial  data  statement was contained in Amendment 2 to this Form 8-K
which was filed on August 18, 1999.

                               SIGNATURES

     In accordance with the requirements of the Exchange Act, the Registrant has
duly caused this report to be signed on its behalf by the undersigned  thereunto
duly authorized.

                                          AGATE TECHNOLOGIES, INC.

Date:    November 11, 1999                     ______________________________
                                          By: Francis CS Khoo
                                              Chairman of the Board and CEO


<PAGE>
<TABLE>
<CAPTION>
Exhibit 1:  Earnings Per Share Schedule                         Version 1
                                                               10/25/1999

                            AGATE TECHNOLOGIES, INC.

EARNINGS PER SHARE SCHEDULE - REVISED  (11/08/99)  Three months ended  September
30, 1999

Calculation of Net Income

<S>                                                                                                <C>
Net Income (Loss)                                                                                  $(544,988)

Weighted Average Shares Outstanding                                                                12,932,004

                                                                                               ---------------
Net Income (Loss) Per Share                                                                           $(0.04)

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

Calculation of Weighted Average Number of Shares

    Date           Activity            Shares         Revised          Days      Total  Ratio     Weighted
                                                                   Outstanding    Days            Average
                                                                                                 Number of
                                                                                                 Shares O/S

     3/31/99 Balance b/f                7,050,000      10,575,000             88     91 88/91      10,226,374

     6/28/99 Issued                       321,336         482,004

                                   -------------------------------
                                        7,371,336      11,057,004              1     91  1/91         121,506

     6/29/99 ARCA transaction           3,685,668

                                   ---------------
                                   ---------------
                                       11,057,004

     6/29/99 ARCA                       1,500,000       1,500,000

                                   -------------------------------
                                       12,557,004      12,557,004

     6/29/99 Issued                       375,000         375,000

                                   -------------------------------
     6/30/99                           12,932,004      12,932,004              2     91  2/91         284,220

                                                                  ===============              ===============
     3/31/99 Balance c/f                                                      91                   10,632,099
                                                                  ===============              ===============


      7/1/99 Balance b/f               12,932,004      12,932,004             92     92 92/92      12,932,004


                                   ==============================================              ===============
     9/30/99 Balance c/f               12,932,004      12,932,004             92                   12,932,004
                                   ==============================================              ===============



<PAGE>



Exhibit 1:  Earnings Per Share Schedule                                                                                Version 1
                                                                                                                      10/25/1999

                                                     AGATE TECHNOLOGIES, INC.

                                             EARNINGS  PER  SHARE   SCHEDULE   -
                                                   REVISED (11/08/99) Six months
                                                   ended September 30, 1999

Calculation of Net Income

Net Income (Loss)                                                                               $(981,780)

Weighted Average Shares Outstanding                                                             11,788,335

                                                                                           ----------------
Net Income (Loss) Per Share                                                                        $(0.08)

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

Calculation of Weighted Average Number of Shares

    Date          Activity           Shares        Revised        Days      Total   Ratio     Weighted
                                                               Outstanding   Days              Average
                                                                                              Number of
                                                                                             Shares O/S

     3/31/99 Balance b/f              7,050,000    10,575,000            88    183 88/183        5,085,246

     6/28/99 Issued                     321,336       482,004

                                 -----------------------------
                                      7,371,336    11,057,004             1    183  1/183           60,421

     6/29/99 ARCA transaction         3,685,668

                                 ---------------
                                 ---------------
                                     11,057,004

     6/29/99 ARCA                     1,500,000     1,500,000

                                 -----------------------------
                                     12,557,004    12,557,004

     6/29/99 Issued                     375,000       375,000

                                 -----------------------------
     6/30/99                         12,932,004    12,932,004             2    183  2/183          141,333

                                                              ==============               ================
     3/31/99 Balance c/f                                                 91    183               5,287,000
                                                              ==============               ================


      7/1/99 Balance b/f             12,932,004    12,932,004            92    183 92/183        6,501,335


                                 ===========================================               ================
     9/30/99 Balance c/f             12,932,004    12,932,004            92    183               6,501,335
                                 ===========================================               ================


                                 ===========================================               ================
                                     12,932,004    12,932,004           183    183              11,788,335
                                 ===========================================               ================




<PAGE>



AGATE TECHNOLOGIES, INC. AND SUBSIDIARIES     EXHIBIT-27: FINANCIAL DATA SCHEDULE                Version 1
                                          6-ME SEPTEMBER 30, 1999                               10/25/1999

Exhibit 27FDS: Financial Data Schedule

AGATE TECHNOLOGIES INC., AND SUBSIDIARIES

THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AGATE TECHNOLOGIES, INC. AND SUBSIDIARIES FOR THE

SIX MONTHS ENDED SEPTEMBER 30, 1999

AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</TABLE>