<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
------------------------------------------------------------------------------

(Mark one)
    XX                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
----------               SECURITIES EXCHANGE ACT OF 1934

                         FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

                         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
----------               EXCHANGE ACT OF 1934

            For the transition period from ___________ to ___________

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

                       Commission File Number: 33-14982-LA

                         BREAKTHROUGH ELECTRONICS, INC.
        (Exact Name of small business issuer as specified in its charter)

         Nevada                                               88-0226208
------------------------                              ------------------------
(State of Incorporation)                              (IRS Employer ID Number)


              3179 West Sahara, Suite D-21, Las Vegas, Nevada 89102
              -----------------------------------------------------
                    (Address of principal executive offices)

                                 (702) 368-0664
                           ---------------------------
                           (Issuer's telephone number)

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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or 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       NO XX
                                                               ----     ----

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:

         710,536 Shares as of August 10, 1999.

Transitional Small Business Disclosure Format (check one):  YES       NO XX
                                                               ----     ----


<PAGE>

                         BREAKTHROUGH ELECTRONICS, INC.

                 Form 10-QSB for the Quarter ended June 30, 1999

                                Table of Contents

<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                                          PAGE
                                                                                        ----
<S>                                                                                     <C>
         Item 1.  Financial Statements                                                    3

         Item 2.  Management's Discussion and Analysis or Plan of Operation              11


PART II - OTHER INFORMATION

         Item 1.  Legal Proceedings                                                      12

         Item 2.  Changes in Securities                                                  12

         Item 3.  Defaults Upon Senior Securities                                        12

         Item 4.  Submission of Matters to a Vote of Security Holders                    12

         Item 5.  Other Information                                                      12

         Item 6.  Exhibits and Reports on Form 8-K                                       12

SIGNATURES
</TABLE>

<PAGE>

                         BREAKTHROUGH ELECTRONICS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                              STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                                 From Inception
                                                                                                                on July 31, 1986
                                         For the Three Months                     For the Six Months                 Through
                                             Ended June 30,                         Ended June 30,                   June 30,
                                   ----------------------------------     ---------------------------------     ----------------
                                        1999                1998               1999               1998                1999
                                   ---------------    ----------------    ---------------    ---------------    ----------------
<S>                                <C>                <C>                 <C>                <C>                <C>
REVENUE                            $             0    $              0    $             0    $             0    $         78,000
                                   ---------------    ----------------    ---------------    ---------------    ----------------
EXPENSES                                     1,895              11,704              6,429             11,704             889,050
                                   ---------------    ----------------    ---------------    ---------------    ----------------
   TOTAL EXPENSES                            1,895              11,704              6,429             11,704             889,050
                                   ---------------    ----------------    ---------------    ---------------    ----------------
NET (LOSS) OR PROFIT               $       (1,895)    $       (11,704)    $       (6,429)    $      (11,704)    $      (811,050)
                                   ---------------    ----------------    ---------------    ---------------    ----------------
                                   ---------------    ----------------    ---------------    ---------------    ----------------

BASIC LOSS PER SHARE               $          0.00    $           0.02    $          0.01    $          0.02
                                   ---------------    ----------------    ---------------    ---------------
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING                                710,536             500,000            710,536            500,000
                                   ---------------    ----------------    ---------------    ---------------
                                   ---------------    ----------------    ---------------    ---------------
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       3
<PAGE>

                         BREAKTHROUGH ELECTRONICS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                                    Deficit
                                                                                                                  Accumulated
                                                        Common Stock                        Additional               During
                                           ----------------------------------------          Paid-In             Development
                                                Shares                  Amount                Capital                Stage
                                           ------------------    -------------------    -------------------    ------------------
<S>                                        <C>                   <C>                    <C>                    <C>
Sale Stock - Insiders
July 31, 1986                                          11,394    $                11    $            22,777
Deficit 1986                                                                                                   $            (152)
                                           ------------------    -------------------    -------------------    ------------------
Balance December 31, 1986                              11,394                     11                 22,777                 (152)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Sale Stock - Insiders
April 10, 1987                                          7,750                      8                 15,492
Issuance Stock - Insiders
Technology Rights                                     130,000                    130                  (130)
Sale Stock - Public
October 2, 1987                                        20,150                     20                201,480
Sale Stock - Public
November 2, 1987                                       24,500                     25                179,433
Exercise Stock Warrants
December 17, 1987                                         406                      0                  6,093
Issuance Stock - Services
December 27, 1987                                      28,000                     28                 55,972
Deficit 1987                                                                                                            (103,524)
                                           ------------------    -------------------    -------------------    ------------------
Balance December 31, 1987                             222,200                    222                481,117             (103,676)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Exercise Stock Warrants
February 1, 1988                                        2,240                      2                 30,654
Deficit 1988                                                                                                            (188,157)
                                           ------------------    -------------------    -------------------    ------------------
Balance December 31, 1988                             224,440                    224                511,771             (291,833)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Deficit 1989                                                                                                            (359,617)
                                           ------------------    -------------------    -------------------    ------------------
Balance December 31, 1989                             224,440                    224                511,771             (651,450)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Issuance Stock
Debt Exchange                                          50,000                     50                 99,950
Deficit 1990                                                                                                              (9,108)
                                           ------------------    -------------------    -------------------    ------------------
Balance December 31, 1990                             274,440                    274                611,721             (660,558)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Deficit 1991                                                                                                                (159)
                                           ------------------    -------------------    -------------------    ------------------
Balance December 31, 1991                             274,440                    274                611,721             (660,717)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Deficit 1992                                                                                                                 (85)
                                           ------------------    -------------------    -------------------    ------------------
</TABLE>


          See accountants' audit report and notes to financial statements.
                                       4
<PAGE>

                         BREAKTHROUGH ELECTRONICS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                                  (UNAUDITED)

<TABLE>
<S>                                        <C>                   <C>                    <C>                    <C>
Balance December 31, 1992                             274,440                    274                611,721             (660,802)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Issue Stock
Technology Acquisition                                 30,000                     30                  2,970

Issue Stock
Technology Acquisition                                  9,500                     10                    940

Issue Stock
Debt Exchange                                          50,000                     50                 49,092

Deficit 1993                                                                                                                (335)
                                           ------------------    -------------------    -------------------    ------------------
Balance December 31, 1993                             363,940                    364                664,723             (661,137)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Issue Stock
Technology Acquisition                                 30,000                     30                   (30)

Insider Loans Payable Forgiven                                                                       97,253
Deficit 1994                                                                                                            (114,047)
                                           ------------------    -------------------    -------------------    ------------------
Balance December 31, 1994                             393,940                    394                761,946             (775,184)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Issuance Stock
Stock Issuance
Services                                               53,000                     53                   (53)
Debt Forgiveness Insider to Paid In
Capital                                                                                              16,361

Deficit 1995                                                                                                             (11,097)
                                           ------------------    -------------------    -------------------    ------------------
Balance December 31, 1995                             446,940                    447                778,254             (786,281)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Deficit 1996                                                                                                                    $
                                           ------------------    -------------------    -------------------    ------------------
Balance December 31, 1996                             446,940                    447                778,254             (786,281)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Deficit 1997                                                                                                              (6,000)
                                           ------------------    -------------------    -------------------    ------------------
Balance December 31, 1997                             446,940                    447                778,254             (792,281)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Stock Issuance Services                               171,198                    171                 16,949

Stock Cancellations                                 (118,139)                  (118)                    118

Deficit 1998                                                                                                             (12,340)
Balance December 31, 1998                             500,000                    500                795,321             (804,621)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
Stock Issuance Services                                10,536                     11                    (1)

Stock Sale                                            200,000                    200                 11,800

Balance June 30, 1999                                 710,536    $               711    $           807,120    $        (809,155)
                                           ------------------    -------------------    -------------------    ------------------
                                           ------------------    -------------------    -------------------    ------------------
</TABLE>


          See accountants' audit report and notes to financial statements.
                                       5
<PAGE>

                         BREAKTHROUGH ELECTRONICS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                 BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              June 30,                   December 31,
                                                                                1999                        1998
                                                                       ------------------------     -----------------------
<S>                                                                    <C>                          <C>
CURRENT ASSETS
Cash                                                                   $                  5,861     $                   780
                                                                       ------------------------     -----------------------
                                                                       ------------------------     -----------------------

CURRENT LIABILITIES
Accrued Taxes                                                                             7,580                       7,580
Accounts Payable                                                                          1,500                       2,000
                                                                       ------------------------     -----------------------
TOTAL LIABILITIES                                                                         9,080                       9,580
                                                                       ------------------------     -----------------------
                                                                       ------------------------     -----------------------

STOCKHOLDERS' EQUITY (DEFICIT)

Common Stock, Authorized 50,000,000 Shares at
$.001 Par Value, 710,536 and 500,000 Issued and
Outstanding respectively                                                                    711                         500
Additional Paid In Capital                                                              807,120                     745,821
Retained Deficits                                                                     (811,050)                   (804,621)
                                                                       ------------------------     -----------------------
TOTAL STOCKHOLDERS' DEFICIT                                                             (3,291)                     (7,580)
                                                                       ------------------------     -----------------------
                                                                       ------------------------     -----------------------

TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY                                                                 $                  5,861     $                   780
                                                                       ------------------------     -----------------------
                                                                       ------------------------     -----------------------
</TABLE>


           See accountants' audit report and notes to financial statements.
                                       6
<PAGE>

                         BREAKTHROUGH ELECTRONICS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                                 From Inception
                                                                                                                on July 31, 1986
                                         For the Three Months                    For the Six Months                  Through
                                            Ended June 30,                         Ended June 30,                    June 30,
                                -------------------------------------    -----------------------------------    ------------------
                                     1999                 1998                1999                1998                 1999
                                ---------------    ------------------    ---------------    ----------------    ------------------
<S>                             <C>                <C>                   <C>                <C>                 <C>
CASH FLOWS PROVIDED
BY OPERATIONS

Net Income (Loss)               $       (1,895)    $         (11,704)    $       (6,429)    $       (11,704)    $        (811,050)

Increase (Decrease):

Other Assets                                  0                     0                  0                   0                     0

Accrued Expenses                              0                     0                  0                   0                 7,580

Accounts Payable                              0               (4,000)                500             (4,000)                 1,500
                                ---------------    ------------------    ---------------    ----------------    ------------------
Net Cash Flow (Outlay) From
Operations                              (1,895)              (15,704)            (6,929)            (15,704)             (801,970)
                                ---------------    ------------------    ---------------    ----------------    ------------------
                                ---------------    ------------------    ---------------    ----------------    ------------------
CASH FLOWS FROM
FINANCING ACTIVITIES

Proceeds From:

Sale of Common Stock                          0                     5                210                   5                   711

Paid in Capital                               0                17,115             11,800              17,115               807,120
                                ---------------    ------------------    ---------------    ----------------    ------------------
                                              0                17,120             12,010              17,120               807,831
                                ---------------    ------------------    ---------------    ----------------    ------------------
                                ---------------    ------------------    ---------------    ----------------    ------------------
NET INCREASE
(DECREASE) IN CASH                      (1,895)                 1,416              5,081               1,416                 5,861

CASH AT THE BEGINNING
OF PERIOD                                 7,756                     0                780                   0                     0
                                ---------------    ------------------    ---------------    ----------------    ------------------
CASH AT END OF PERIOD           $         5,861    $            1,416    $         5,861    $          1,416    $            5,861
                                ---------------    ------------------    ---------------    ----------------    ------------------
                                ---------------    ------------------    ---------------    ----------------    ------------------
</TABLE>


        See accountants' audit report and notes to financial statements.
                                       7
<PAGE>

                         BREAKTHROUGH ELECTRONICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
                         NOTES TO FINANCIAL STATEMENTS
                       FOR THE PERIOD ENDED JUNE 30, 1999

NOTE 1 -- ACCOUNTING POLICIES

         Organization of the Company

         Breakthrough Electronics, Inc., formerly Golden Queens Mining
Company, was incorporated on July 31, 1986 under the laws of the' State of
Nevada. The Company changed its name to Breakthrough Electronics, Inc. on
June 10, 1987. The change was in response to the Company's new business focus
of developing an electronic telephone screening device then known as
"Phoneguard". Phoneguard was acquired through the issuance of common stock
with no acquisition cost assigned. The Company is still in the development
stage, as it has virtually no revenue to date.

         The Company is authorized to issue up to 50,000,000 shares of common
stock, $.001 par value. Over the years, the Company has raised capital under
both public offerings as well as private stock sales. The Company intended to
utilize capital raised to complete the research and development of
Phoneguard, and then implement a marketing plan thereafter. As of the
reporting date, the Company has expended all of the capital raised, without
completing the intended task. As of the reporting date, the Company has
ceased any and all operations, and its technology has rapidly become
outdated. Currently, the Company's sole business focus, is the contemplation
of acquiring, or being acquired by, an existing company via either purchase
or merger. The Company has begun preliminary discussions with potential
candidate companies, but has not as of the date of this report come to any
contractual arrangement.

         The financial statements reflect certain capital equipment items
which have been fully expensed either from previous depreciation expense or
loss on asset abandonment. The total original expenditures for all capital
equipment has been included in losses to date, and is not segregated in the
statement of cash flows.


                                       8
<PAGE>

                         BREAKTHROUGH ELECTRONICS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                       FOR THE PERIOD ENDED JUNE 30, 1999

NOTE 2 -- COMMON STOCK PUBLIC OFFERING

         On October 2 and November 2, 1987 the Company completed a public
offering which raised $ 201,500 and $ 245,000 through the sale of 503,750 and
612,500 units respectively. Each unit consisted of 4 shares of common stock
and 1 warrant to purchase common stock. on December 17, 1987, 162,500
warrants were exercised to purchase 40,625 shares of common stock for a total
of $ 6,094. Four warrants entitled the shareholders to purchase 1 share of
common stock at $.15 per share. The Company incurred approximately $ 65,000
in costs related to this offering.

        On December 28, 1987 the Company issued a Notice of Call of Warrants
to the shareholders. The call price of the warrant was $.001 per warrant. All
warrants which were not exercised or tendered back to the Company by February
1, 1988 expired.

        On February 1, 1988, 895,976 warrants were exercised to purchase
223,994 shares of common stock for $30,656.

NOTE 3 -- INCOME TAXES

        The company has the following net operating loss and research credit
carryforwards expiring as follows:

<TABLE>
<CAPTION>
                                   Net Operating Loss        Research Credit
<S>                                <C>                       <C>
December 31, 2001                  $           152           $
             2002                          105,804
             2003                          196,227              8,730
             2004                          114,047
</TABLE>

        The company has filed annual corporate tax returns through the tax year
1993 only.


                                       9
<PAGE>

                         BREAKTHROUGH ELECTRONICS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                       FOR THE PERIOD ENDED JUNE 30, 1999

NOTE 4    GENERAL INFORMATION

        The company entered into an agreement with Cipher Voice, Inc.,(CVI)
whereby it granted CVI an exclusive license to the use of the Company's
Phoneguard technology. The license agreement provided for a profit sharing
arrangement based on anticipated future sales of the Phoneguard. CVI also
raised capital through a public offering during 1994. The intent of CVI was
to attempt to complete the research and development of Phoneguard. As was the
case with the Company, CVI never completed its intended task, and expended
all of its capital and has ceased operations as of the reporting date. CVI
has subsequently been purchased by a third party unrelated company. Both the
Company and CVI were founded by Barry Rose, who at one time served as
President of both CVI and the Company.

        It is uncertain, as of the issuance date of these financial
statements, as to the marketability or value of the research and development
efforts of the Company or CVI. Management has indicated that it feels that
given the rapid advancements ongoing in the technology field, as well as the
passage of time, that there is limited or no value to the technology. If the
Company were to be acquired by another entity, consideration should be given
to any residual value of the research and development to date.

        During 1995, the company and Barry Rose agreed to an arrangement
whereby Rose returned 11,813,850 shares of common stock to the company in the
form of Treasury Stock.

        During August 1998, the Company obtained consents from a majority of
stockholders authorizing a reverse split of the Company's Common Stock, on a
1 for 100 basis. The split became effective during February 1999. All
references to shares outstanding and earnings per share have been adjusted to
reflect the effect of the reverse split on a retroactive basis.


                                      10
<PAGE>

                                 PART I - ITEM 2

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

        (1)       CAUTION REGARDING FORWARD-LOOKING INFORMATION

         This quarterly report contains certain forward-looking statements
and information relating to the Company that are based on the beliefs of the
Company or management as well as assumptions made by and information
currently available to the Company or management. When used in this document,
the words "anticipate," "believe," "estimate," "expect" and "intend" and
similar expressions, as they relate to the Company or its management, are
intended to identify forward-looking statements. Such statements reflect the
current view of the Company regarding future events and are subject to
certain risks, uncertainties and assumptions, including the risks and
uncertainties noted. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described herein as anticipated, believed,
estimated, expected or intended. In each instance, forward-looking
information should be considered in light of the accompanying meaningful
cautionary statements herein.

        (2)       RESULTS OF OPERATIONS

         Breakthrough Electronics, Inc. (Company) was incorporated as "Queens
Mining Company" on July 31, 1986 under the laws of the State of Nevada,
primarily for the purpose of exploration, development and production of
certain mining properties located in Esmeralda County, Nevada. In July, 1987,
the Company changed its name to "Breakthrough Electronics, Inc.," terminated
its activities in the mining business, and began efforts to develop and
market electronic products, including a telephone device designed to screen
telephone calls, acquired from its then President.

         The Company has had no operations or significant assets or
liabilities over the past several years. Accordingly, the Company is
dependent upon management and/or significant shareholders to provide
sufficient working capital to preserve the integrity of the corporate entity
during this phase. It is the intent of management and significant
shareholders to provide sufficient working capital necessary to support and
preserve the integrity of the corporate entity.

        (3)       LIQUIDITY AND CAPITAL RESOURCES

         The Company has no operations, and essentially no assets or
liabilities and, accordingly is fully dependent upon its controlling
shareholder for operating capital. During the period(s) presented herein, the
Company was dormant and no advances were made or expenses paid on the
Company's behalf.

         The Company has no specific plans or future capital requirements due to
its dormant state. However, the Company will seek to enter into a business
acquisition or reorganization with an enterprise, as yet unidentified. At such
time as the Company enters into a transaction, of which there can be no
assurance, the Company will require additional capital.


                                      11
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

 None.

ITEM 2 - CHANGES IN SECURITIES

 None.

ITEM 3 - DEFAULTS ON SENIOR SECURITIES

 None.

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

 The Company has held no regularly scheduled, called or special meetings
 of shareholders during the reporting period.

ITEM 5 - OTHER INFORMATION

 None.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

 None.


                                      12
<PAGE>

                                   SIGNATURES

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

                                       BREAKTHROUGH ELECTRONICS, INC.


        August 14, 1999                /s/ Lawrence A. Sapperstein
                                       ----------------------------------------
                                       Lawrence A. Sapperstein
                                       President and Chief Accounting Officer


                                       BREAKTHROUGH ELECTRONICS, INC.


        August 14, 1999                /s/ Lawrence Grobstein
                                       ----------------------------------------
                                       Lawrence Grobstein
                                       Secretary/Treasurer


                                      13