U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934

    For the fiscal year ended June 30, 1999

[ ] Transition  report under Section 13 or 15(d) of the Securities  Exchange Act
    of 1934

    For the transition period from _______________ to _______________

    Commission File number 33-58694

                             FBR CAPITAL CORPORATION
                 (Name of small business issuer in its charter)

            Nevada                                                13-3465289
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation of organization)                               Identification No.)

              20 East University, Suite 304, Tempe, Arizona 85281
              ---------------------------------------------------
                    (Address of principal executive offices)

                                 (480) 967-5800
                           ---------------------------
                           (Issuer's telephone number)

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

         Securities registered under Section 12(g) of the Exchange Act:
                          Common Stock, $.005 par value

     Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X]   No [ ]

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

     Revenues for most recent fiscal year: $743,954

     The aggregate  market value of the voting stock (based on the closing price
on that date) held by  non-affiliates of the Registrant as of September 13, 1999
was approximately $2,700,000.

     Number of shares  outstanding  of each of the  issuer's  classes  of common
equity, as of the latest practicable date: At September 13, 1999, the issuer had
outstanding 13,241,031 shares of Common Stock, par value $.005 per share.

                       DOCUMENTS INCORPORATED BY REFERENCE

     The  Registrant's  definitive  proxy statement dated September 16, 1999 for
the  Annual  Meeting of  Stockholders  to be held on October 7, 1999 (Part III -
Items 10, 11, 12 and 13).

     Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL DEVELOPMENT OF BUSINESS

     FBR  Capital  Corporation  (the  "Company"  or "FBR") was  incorporated  as
Richard Barrie Fragrances,  Inc. in the State of Nevada on June 6, 1988, for the
original  purpose  of  developing,   manufacturing  and  marketing   fragrances,
cosmetics,  skin  treatment and personal care  products sold  primarily  through
department and specialty stores and drugstores.  On July 1, 1996,  following the
Asset Sale (discussed below) and approval of its stockholders, the Company filed
a Certificate of Amendment to its Articles of  Incorporation  to change its name
from "Richard Barrie Fragrances,  Inc." to "FBR Capital  Corporation." As of the
date of this report, the Company conducts its operations through its subsidiary,
Vitrix Incorporated, an Arizona corporation formed on April 26, 1996 ("Vitrix").
Unless  otherwise  indicated,  references  to the Company in this  report  shall
include Vitrix.

     Effective June 30, 1996, FBR sold  substantially  all of its properties and
rights (the "Asset Sale") to Parlux Fragrances,  Inc. During the period from the
Asset Sale to April  1999,  FBR's  operations  were  limited  to the  conduct of
administrative  activities and discussions with third parties regarding possible
business combinations.

     On April 15, 1999,  FBR acquired the  outstanding  capital  stock of Vitrix
pursuant to the terms of an Exchange  Agreement,  dated as of such date,  by and
among  FBR,  Vitrix  and  certain  of the  Vitrix  shareholders  who  agreed  to
participate in the transaction.  Under the terms of the Exchange Agreement, each
outstanding share of Vitrix common stock, no par value per share ("Vitrix Common
Stock") was converted  into a  combination  of .9225 shares of FBR common stock,
$.005 par  value  per  share  ("Common  Stock")  and  1.0736  shares of Series B
Convertible  Preferred  Stock,  $.01 par value  per  share,  of FBR  ("Preferred
Stock").  Each share of Preferred Stock is  automatically  convertible  into one
share of Common  Stock at such time as FBR has the  authorized  capital to issue
such shares.

     The aggregate consideration paid in the transaction was 8,592,826 shares of
Common  Stock and  10,000,000  shares of  Preferred  Stock (the  "Shares").  The
Exchange  Agreement also provided for the assumption of outstanding  options and
warrants to purchase an aggregate of 1,086,000  shares of Vitrix  Common  Stock,
which have been  converted into options and warrants to purchase an aggregate of
2,167,798  shares of Common Stock.  Giving effect to the issuance of the Shares,
Vitrix  shareholders  now own  approximately  80% of the  outstanding  shares of
Common Stock  (assuming  conversion of the Preferred Stock into Common Stock and
excluding outstanding options and warrants) and the shareholders of FBR existing
prior to the Exchange Agreement now own the remaining 20% of such FBR shares.

     Although FBR became the parent company of Vitrix following the consummation
of the transaction,  the acquisition was accounted for as a recapitalization  of
Vitrix and the purchase of FBR by Vitrix,  as Vitrix is the controlling  company

                                       2
<PAGE>
after the transaction.  The accompanying financial statements of FBR include the
accounts of Vitrix for all periods presented, and the accounts of FBR from April
15, 1999, the effective date of the acquisition.

     Vitrix designs, develops,  manufactures and markets a complete line of time
and labor management products targeting small to mid-sized companies of five (5)
to 2,000 employees.  Vitrix's  products are designed to improve  productivity by
automating  collection  of  time  and  attendance  data,  staff  scheduling  and
management of labor resources.  Vitrix markets its products through a nationwide
reseller network and directly to end-users.

     On September 16, 1999, the Company filed a definitive Information Statement
for its  Annual  Meeting  of  Stockholders  to be held on  October  7, 1999 (the
"Annual  Meeting").  Proposals to elect six (6)  directors,  amend the Company's
Articles of Incorporation to increase the number of authorized  shares of Common
Stock to 50,000,000  and change the Company's  name to Vitrix Inc. and adopt the
Company's  1999  Equity  Compensation  Plan  will be  considered  at the  Annual
Meeting.  Upon approval of such proposals,  the Company intends to promptly file
with the Nevada  Secretary  of State an  amendment  to the  Company  Articles of
Incorporation  to effectuate  the change in the number of authorized  shares and
Company name.  Immediately  following such filing,  the Preferred  Stock will be
automatically converted into Common Stock without any further action on the part
of the holder of such Preferred Stock.

PRODUCTS AND SERVICES

     The Company designs, develops, manufacturers and markets a line of time and
labor  management  hardware and software  products  targeting small to mid-sized
companies of up to 2,000  employees.  The Company's core product,  HourTrack 98,
was  first  introduced  in  November  1998  and  is  an  internally   developed,
proprietary  software  application  that  maintains and automates the process of
collecting  time  sheet  information  and  provides  reports  to help  companies
determine how their employees spend their time.  HourTrack 98 also automatically
accrues  vacation,   sick  and  personal  time,  and  effectively  replaces  the
traditional  punch  clock  with a fully  automated  system  designed  to provide
significant savings to its users.

     The Company offers three (3) types of business solutions:

     SOFTWARE-ONLY   SOLUTIONS  -  The  Company's  software-only  solutions  are
designed  for  environments  in which all  company  employees  have  access to a
personal computer. Clocking in and out is performed using a Windows 95, 98 or NT
computer running HourTrack. The HourTrack software is designed to provide a high
value  to  customers  due to its  low  cost,  ease  of use  and  high  level  of
functionality.

     BADGE READER  SOLUTIONS - The Company's badge reader solutions are designed
for  environments  where  there  are a  large  number  of  hourly  employees  or
individuals that do not have access to a personal computer, such as high traffic
office area or shop floors.

                                       3
<PAGE>
     BIOMETRIC  SOLUTIONS - The Company's  biometric  solutions (used in lieu of
badges or  password  systems)  are  designed to help  employers  ensure that the
person  clocking in or out is the actual  person  being  clocked in and out, and
thereby  eliminate  a common  problem  known as  "buddy-punching."  The  Company
believes that employers lose significant money as a result of employees clocking
in for each other, thereby impacting earnings. The Company's biometric solutions
include  three  (3)  hardware  options:  fingerprint  verification,   two-finger
geometry and full hand geometry.

LABOR MANAGEMENT SOLUTIONS

     The Company's flagship product,  HourTrack 98, is an internally  developed,
proprietary  software  application designed to maintain and automate the process
of collecting time sheet information and assist management in enhancing employer
productivity in the workplace.  By replacing the traditional  punch clock with a
fully automated system,  the Company believes this product produces  substantial
savings employers.

HOURTRACK 98

     All hardware options  available from Vitrix function by communicating  with
HourTrack  98. This  software is  responsible  for making sense of and reporting
data as well as maintaining and enforcing company policies. The primary features
of HourTrack 98 include time tracking,  benefit  tracking,  job tracking,  human
resource  functionality,  employee  scheduling,  messaging,  reporting  and  the
import/export of data.  HourTrack 98 also automatically  accrues vacation,  sick
and personal time.

     HourTrack 98 is currently available in two editions:

          HOURTRACK 98 SMALL BUSINESS  EDITION (SBE) - This version of HourTrack
          98 includes  all of the primary  features of the  software  (discussed
          above) and is  designed  for a  single-administrator-environment  in a
          small business.

          HOURTRACK 98 PROFESSIONAL EDITION (PRO) - This version of HourTrack 98
          contains all of the SBE features plus individualized  security,  audit
          trails and rules-based benefit accruals.  HourTrack 98 PRO is designed
          for  use in a  multiple  administrator  environment  where  user-level
          security and audit trails are important.

     Both  editions of  HourTrack  (SBE and PRO) are  available  as  stand-alone
solutions or bundled in a "kit" format as the QuickSwipe Kit,  QuickTouch Kit or
TelePunch Kit.

QUICKSWIPE KIT

     The  QuickSwipe  kit is an  all-in-one  package that contains the software,
badge  reader,  cables  and  badge  cards  necessary  to  implement  a time  and
attendance  system.  The Company  offers four different  badge systems,  each of
which is available as a QuickSwipe Kit to simplify the  implementation of a time
and attendance system.

                                       4
<PAGE>
QUICKTOUCH KIT

     The QuickTouch kit is an all-in-one  package that contains the software and
necessary hardware to implement a biometric time and attendance solution.  Three
(3)  biometric  options are available  including  fingerprint  verification  and
two-finger geometry verification.

HANDPUNCH KIT

     The HandPunch  Kit is an all-in-one  package that contains the software and
necessary  hardware to  implement a  convenient  and secure time and  attendance
solution.  This affords the customer a lower cost, high reliability entry to the
time and attendance market, particularly where "buddy punching" is an issue. The
Company believes that hand punch  technology  growth over the past 18 months has
been significant.

TELEPUNCH KIT

     The Company's first telephony  solution,  TelePunch,  was introduced in May
1999 in response to strong  customer  feedback  requesting a solution for remote
management issues.  Telepunch is designed to provide a solution for environments
where remote employees have the need to clock-in or clock-out at a specific site
or for a specific  task or job category  change  during the  workday.  TelePunch
offers a complete  hardware/software  solution that allows employees to clock in
and out via use of a standard  telephone or mobile phone.  Through the use of an
access code and standard telephone keypad, employees are clocked in to a central
server location.  For security  purposes and to deal with "buddy  punching," the
system also has the capability of recording caller ID information.

MARKETING

     The Company markets and sells its products to small and mid-sized companies
in markets in the United  States and foreign  countries  through its  nationwide
reseller network and directly to end users.  End-users  include companies in the
manufacturing and service industries, and in the public and private sectors. The
Company believes that the market for time and labor management products consists
of the following three (3) business segments:

               SMALL  BUSINESSES.  This segment is  comprised of companies  with
          fewer than 20 employees and only a single  administrator  who performs
          time sheet edits and prepares employee hours for payroll.

               MID-SIZED BUSINESSES. This segment is comprised of companies with
          20 to 500  employees.  These  companies  normally have two (2) or more
          administrators who perform time sheet edits and prepare employee hours
          from a single office.  In many cases  multiple  stations are necessary
          for  clocking in and out,  however,  all data is  administered  from a
          central location.

               ENTERPRISE BUSINESSES.  Enterprise businesses generally have over
          500 employees with multiple  satellite  offices,  each  of which  have
          one (1) or more administrators. Payrolls are performed at a central or

                                       5
<PAGE>
          headquarter   office.  An  enterprise   customer  is  analogous  to  a
          collection  of Mid-Sized  Businesses  requiring a central  location to
          collect and store data.

     The Company is currently  developing an enterprise-class  software solution
designed to meet the time and  attendance  needs of enterprise  businesses.  The
Company  believes  that this product will be available for release in the fourth
quarter  of the  calendar  year,  although  no  assurance  can be given that the
Company will be able to meet this schedule.

     The Company  believes there are over 2.4 million  businesses that fall into
the  small  to  mid-sized  businesses  market  segment.  According  to  industry
statistics,  approximately 80% of the businesses that fall into these two market
segments  could  benefit  from  the  automation  of the  collection  of time and
attendance.  At an average solution cost of approximately  $1,200,  the small to
mid-sized market represents approximately $2.3 billion in potential sales.

SALES

     The Company offers its products  through a nationwide  reseller network and
directly  to end  users  via the  Internet  at the  Vitrix  Online  Store  or by
contacting a Vitrix sales  representative.  The Company  provides support in the
form of training and provision of internally generated marketing materials.

     The  Company's   sales   strategy  is  to  continually   evaluate   revenue
opportunities via all channels of distribution to further develop and expand its
direct/indirect  product sales  marketing  program.  In the future,  the Company
expects to maintain a marketing  strategy of utilizing a combination of reseller
and direct product sales as part of its long-term strategy. The Company believes
that growth in its  reseller  network will exceed 250 by the last half of fiscal
year  2000.  The  Company  also  intends  to  expand  sales via  maximizing  the
opportunities  through the web and the Vitrix On Line Store for direct  ordering
of products,  although no assurance can be given that any such efforts will come
to fruition or otherwise be successful.

     DIRECT  SALES.  Vitrix sales  representatives  generally  provide  presales
technical and pricing information to potential customers. In addition, from time
to time sales representatives present Vitrix solutions at a customer's facility.
Marketing materials, sample CDs and technical documents are normally provided by
the  Company's  inside sales staff to customers  who desire to research the best
solutions.

     Vitrix Online Store. The Vitrix Online Store, which commenced  operation on
the Internet in August 1998, provides customers with an easy and complete option
to  purchase   products   online.   By   visiting   the   Company's   web  site,
http://store.vitrix.com,  any Vitrix  product can be purchased  directly  online
from  anywhere  in the world,  24 hours a day, 7 days a week.  The Online  Store
enables  the  Company  to meet  the  needs of  existing  customers  looking  for
accessories,  and international customers who, due to time zone differences, are
unable to speak directly with a Company sales  representative.  Vitrix  recently
introduced  the Vitrix  Affiliate  Program,  whereby any entity who features the
Company's banner and links business to the Online Store can receive compensation
in the form of a referral fee.

                                       6
<PAGE>
RESELLER NETWORK

     Since the  automation  of time and labor  management  can be a big step for
certain  businesses,  a local  reseller's role can be vital. It often requires a
great deal of planning and a strategy for deployment that might include employee
training and the  coordination  of a company's  Human  Resources and  Management
Information System departments.  Because of this potential complexity, customers
may prefer a face-to-face  meeting or a visit to their  facilities.  The Company
looks to the reseller to provide this pre- and post-sales support.

     Currently,  it is not feasible for the Company to support installation with
every  customer  directly.  Accordingly,  having a strong  reseller  network  is
critical to the  Company's  long-term  business  and growth  strategy.  Time and
Attendance  vendors  often  service  their own  geographical  region by visiting
customer sites and  recommending  a solution that best fits a customer's  needs.
The Company focuses its efforts on attracting  qualified resellers and providing
them with the  appropriate  knowledge and tools  necessary to  effectively  sell
Vitrix's products.

     During the next 12 months,  as the Company's  reseller  network grows,  the
Company intends to increase the commission  structure for productive  resellers,
as well as  actively  recruit an  additional  100-150  resellers  globally.  The
Company's  strategy  with respect to resellers  is to  continually  evaluate the
productivity and  effectiveness  of its resellers,  with the goal of achieving a
small  number of highly  productive  revenue  producers.  Toward  that end,  the
Company has developed ads that target resellers,  which are currently running in
various  reseller  trade  magazines.  The  Company  also  has  planned  to  hold
educational training classes around the country that will be freely available to
educate resellers with respect to Vitrix solutions.

     The  Company  intends  to  aggressively  recruit  resellers,   value  added
resellers ("VARs"), and select distributors to sell and support its products. To
that end, the Company intends to implement  several programs to introduce to the
reseller channel over the next several months.

SERVICES AND SUPPORT

     The  Company  maintains  a  professional   service  and  technical  support
organization  which provides a suite of maintenance and  professional  services.
These  services are designed to support the Company's  customers  throughout the
product life cycle. The professional  services include  implementation  support,
technical  and  business  technical  consulting,  as  well  as  integration  and
optimization.   Maintenance  service  options  are  delivered  through  Vitrix's
centralized support operation or through local service personnel.  The Company's
educational  services  offer a full  range of  curriculums  which are  delivered
through  local  training at the Company's  Tempe,  Arizona  headquarters  or via
computer based training  courses.  When necessary,  the Company also may provide
software customization services to meet any unique customer requirements.

                                       7
<PAGE>
MANUFACTURING AND SOURCES OF SUPPLY

     The duplication of the Company's software and the printing of documentation
are outsourced to suppliers.  The Company  currently has four suppliers who have
been  certified to the  Company's  manufacturing  specifications  to perform the
software duplication process. Although most of the parts and components included
within the Company's  products are available  from multiple  suppliers,  certain
parts and components are purchased from single suppliers. The Company has chosen
to source  these  items  from  single  suppliers  because it  believes  that the
supplier  chosen is able to  consistently  provide the Company  with the highest
quality product at a competitive price on a timely basis.  While the Company has
to date been able to obtain adequate supplies of these parts and components, the
Company's  inability to transition to alternate sources on a timely basis if and
as  required  in the  future  could  result in delays or  reductions  in product
shipments which could have a material adverse effect on the Company's  operating
results

PRODUCT DEVELOPMENT

     The  Company's  product  development  efforts are focused on enhancing  and
increasing the performance of its existing  products and developing new products
and  interfaces to third party  products on a timely basis for the  increasingly
sophisticated needs of its customers. During fiscal 1999, and 1998, research and
development  expenses  were  $232,250 and  $117,515,  respectively.  The Company
intends to continue to commit  resources to enhance and extend its product lines
and  develop  interfaces  to third  party  products.  Although  the  Company  is
continually  seeking to further enhance its product offerings and to develop new
products  and  interfaces,  there can be no  assurance  that these  efforts will
succeed, or that, if successful,  such product enhancements or new products will
achieve widespread market acceptance, or that the Company's competitors will not
develop and market  products  which are  superior to the  Company's  products or
achieve greater market acceptance. The Company also depends upon the reliability
and viability of a variety of software  development tools owned by third parties
to  develop  its  products.  If  these  tools  are  inadequate  or not  properly
supported,  the Company's  ability to release  competitive  products in a timely
manner could be adversely impacted.

     The Company is currently  developing an enterprise-class  software solution
designed to meet the time and  attendance  needs of enterprise  businesses.  The
Company  believes  that this product will be available for release in the fourth
quarter  of the  calendar  year,  although  no  assurance  can be given that the
Company will be able to meet this schedule.

PROPRIETARY RIGHTS

     The Company  relies on a combination  of  trademarks,  trade secret law and
contracts to protect its proprietary technology.  The Company generally provides
software products to end-users under non-exclusive shrink-wrap licenses or under
signed  licenses,  both of which may be  terminated  by  Vitrix if the  end-user
breaches the terms of the license.  These  licenses  generally  require that the
software be used only  internally  subject to certain  limitations,  such as the
number of  employees,  simultaneous  users,  computer  model and serial  number,
features and/or  terminals for which the end-user has paid the required  license
fee.  The Company  authorizes its resellers  to sublicense  software products to

                                       8
<PAGE>
end-users under similar terms. In certain circumstances,  the Company also makes
master software licenses  available to end-users which permit either a specified
limited number of copies or an unlimited  number of copies of the software to be
made  for  internal  use.  Some  customers   license  software   products  under
individually negotiated terms. Despite these precautions,  it may be possible to
copy or otherwise  obtain and use the Company's  products or technology  without
authorization.  In addition, effective copyright and trade secret protection may
be unavailable or limited in certain foreign countries.

COMPETITION

     The  Company  provides  time and  attendance,  data  collection  and  labor
management  solutions that enables businesses to optimize their labor resources.
The labor management industry is highly  competitive.  Competition is increasing
as  competitors  in  related  industries,  such as human  resources  management,
payroll  processing and employee  resource  planning  ("ERP") enter the time and
attendance market.  Advances in software  development tools have accelerated the
software development process and, therefore,  can allow competitors to penetrate
certain of the Company's  markets.  Although the Company believes it has certain
technological  and other  advantages over its current  competitors,  maintaining
those  advantages will require  continued  investment by the Company in research
and development and marketing and sales programs. There can be no assurance that
the  Company  will have  sufficient  resources  to make such  investments  or to
achieve  the  technological  advances  necessary  to  maintain  its  competitive
advantages. Increased competition could adversely affect the Company's operating
results through price reductions and/or loss of market share.

     The Company competes primarily on the basis of price/performance,  quality,
reliability and customer service. In the time and attendance market, the Company
competes against firms that sell automated time and attendance  products to many
industries,  against firms that focus on specific industries,  and against firms
selling  related  products,   such  as  payroll   processing,   human  resources
management,  or ERP systems. Many of the Company's  competitors,  such as Kronos
Corporation,  Stromberg (formerly known as Jason Data Systems) and Time America,
are  substantially  larger and have access to  significantly  greater  financial
resources than the Company.  Competitive market conditions could have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.

EMPLOYEES

     As of June  30,  1999,  the  Company  had  sixteen  employees.  None of the
Company's  employees is  represented by a union or other  collective  bargaining
agreement,  and the Company  considers  its  relations  with its employees to be
good. The Company has encountered intense competition for experienced  technical
personnel for product development,  technical support and sales and expects such
competition  to continue in the future.  Any  inability  to attract and retain a
sufficient  number of qualified  technical  personnel could adversely affect the
Company's ability to produce, support and sell products in a timely manner.

                                       9
<PAGE>
ITEM 2. PROPERTIES.

     The Company leases  approximately 2,000 square feet in Tempe,  Arizona. The
Company's  rental  expense for this  facility  in fiscal 1999 was  approximately
$35,000.  In  September  1999 the Company  entered  into a lease  agreement  for
approximately  5,000  square  feet in Tempe,  Arizona  estimated  to commence in
November 1999. The Company considers its facilities, including the new lease, to
be  adequate  for its current  requirements  and that  additional  space will be
available as needed in the future.

ITEM 3. LEGAL PROCEEDINGS.

     The Company is from time to time involved in legal proceedings arising from
the normal course of business. As of the date of this report, the Company is not
currently involved in any legal proceedings.

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

None.
                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The Company's Common Stock is traded on the NASD's  over-the-counter market
on the  electronic  bulletin  board (the "OTC Bulletin  Board") under the symbol
"FBRR." The quoted prices reflect  inter-dealer  prices without retail  mark-up,
mark-down, or commissions and may not represent actual transactions.

     Set forth below are the high and low sales  prices of the Common  Stock for
the periods indicated as reported by the OTC Bulletin Board:

                                   FISCAL 1999

         Period                       High               Low
         ------                       ----               ---

     First quarter                    $0.44             $0.19
     Second quarter                    0.38              0.13
     Third quarter                     0.69              0.38
     Fourth quarter                    0.58              0.39

                                   FISCAL 1998

         Period                       High               Low
         ------                       ----               ---

     First quarter                    $0.56             $0.25
     Second quarter                    0.88              0.25
     Third quarter                     0.56              0.25
     Fourth quarter                    0.56              0.25

     As of  September  13, 1999 there were 174 holders of the  Company's  Common
Stock.

     The Company has never paid any cash  dividends,  and the present  policy of
the Company is to retain earnings for use in its business.

                                       10
<PAGE>
ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

RESULTS OF OPERATIONS

     The following selected financial  information is derived from the Company's
historical  financial  statements  and should be read in  conjunction  with such
financial  statements  and notes  thereto  set forth  elsewhere  herein  and the
"Forward-Looking  Statements"  explanation  included  herein.  The  accompanying
financial  statements  of FBR  include  the  accounts  of Vitrix for all periods
presented,  and the accounts of FBR from April 15, 1999,  the effective  date of
the merger.

                         SELECTED FINANCIAL INFORMATION

                                                         Years Ended June 30,
                                                      --------------------------
                                                        1999              1998
                                                        ----              ----
Total Revenues                                        $743,954          $269,677
Costs of Revenues                                      249,309            95,884
Gross Profit                                           494,645           173,793
Sales and Marketing Expense                            288,559           206,214
Research and Development Expense                       232,250           117,515
General and Administrative Expense                     226,749           105,073
Net Loss                                               269,302           284,259
Basic Loss per Share                                      0.02              0.03

COMPARISON OF THE FISCAL YEARS ENDED JUNE 30, 1999 AND JUNE 30, 1998

     REVENUES.  Revenue  for  fiscal  year  ended  June 30,  1999,  rose 176% to
$743,954,  compared  to revenue of  $269,677  for the fiscal year ended June 30,
1998.  This  growth was  principally  the result of an increase in the number of
resellers and an increase in sales activity of the Company's key resellers.  The
Company was also able to complete  several  larger dollar value sales during the
fiscal  year.  The Company  experienced  an  increased  customer  demand for its
software-only and badge reader solutions, which resulted in an increase in sales
volume. The Company also added additional inside  salespersons and increased its
advertising and promotional expenditures by 73% over the previous year.

     GROSS  PROFIT.  Gross profit as a percentage  of revenues was 67% in fiscal
1999 and 64% in fiscal 1998. The  improvement in gross profit as a percentage of

                                       11
<PAGE>
revenues in fiscal 1999 was primarily attributable to an increase in the average
price of the products sold. The average price per unit sold was increased due to
several larger dollar value sales occurring during the year.

     EXPENSES.  Sales and marketing expenses were $288,559,  or 39% of revenues,
in fiscal 1999 and $206,214, or 76% of revenues, in fiscal 1998. The decrease in
sales and  marketing  expense as a  percentage  of  revenues  in fiscal  1999 is
attributable  to greater  sales  volume.  The  increase  in sales and  marketing
expense in fiscal 1999 is primarily due to increased  labor costs resulting from
the hiring of additional  salespeople and increased  advertising and promotional
expense.

     Research and  development  expenses were $232,250,  or 31% of revenues,  in
fiscal 1999 and $117,515,  or 44% of revenues,  in fiscal 1998.  The decrease in
research and  development  expense as a percentage of revenues in fiscal 1999 is
attributable  to greater sales volume.  The increase in research and development
expenses in fiscal 1999 is  attributable to increased labor costs as a result of
the Company's commitment to enhance existing products and develop new products.

     General and administrative  expenses were $226,749,  or 30% of revenues, in
fiscal 1999 and $105,073,  or 39% of revenues,  in fiscal 1998.  The decrease in
general and administrative expense as a percentage of revenues in fiscal 1999 is
attributable to greater sales volume. The increase in general and administrative
expenses in fiscal 1999 is primarily  attributable  to the hiring of  additional
management  personnel  and  an  increase  in  accounting  fees  in  relation  to
converting the accounting records of Vitrix to a June fiscal year end.

     Other  expense was $16,389 in fiscal 1999 and $29,250 in fiscal  1998.  The
decrease is a due to a reduction in interest  expense as result of conversion on
debt to equity during fiscal 1999 and 1998. (See "Item 12 Certain  Relationships
and Related Transactions.")

LIQUIDITY AND CAPITAL RESOURCES

     Working capital as of June 30, 1999 was $205,657, as compared to $59,959 at
June 30, 1998. Cash and cash equivalents at those dates amounted to $376,365 and
$96,775, respectively.

     OPERATIONS.  Net cash used by  operations  decreased  to  $87,624 in fiscal
1999,  compared to net cash used by operations  of $216,436 in fiscal 1998.  The
improvement  was  attributable  to an increase  in accounts  payable and accrued
liabilities and the conversion of accrued interest on notes to equity.

     INVESTMENT ACTIVITIES. For the fiscal year ended June 30, 1999, the Company
generated  cash of  approximately  $207,000  from the merger  with  Vitrix.  The
Company used $26,472 and $10,607,  to purchase  property and equipment in fiscal
1999 and 1998, respectively.

     FINANCING ACTIVITIES.  The Company was able to raise approximately $191,000
and  $103,000  through  the  issuance  of Common  Stock in fiscal 1999 and 1998,
respectively.

                                       12
<PAGE>
     The  Company  believes  that,  with its current  working  capital and funds
generated through operations, it will have sufficient working capital to address
the  anticipated  growth of demand and market for its  products  for the next 12
months.  The Company may, however,  seek to obtain additional  capital through a
line of credit at a financial  institution or through  additional debt or equity
offerings during this time period.  The raising of additional  capital in public
markets will primarily be dependent upon  prevailing  market  conditions and the
demand for the Company's  products and services.  No assurance can be given that
the Company will be able to raise additional  capital,  or that such capital, if
available, will be on acceptable terms.

INFLATION AND SEASONALITY

     The Company does not believe that its operations are significantly impacted
by inflation. The Company's business is not seasonal in nature.

YEAR 2000 COMPLIANCE

     The Company has reviewed its computer  systems to identify those areas that
could be adversely affected by the Year 2000 ("Y2K") issue. The Y2K issue is the
result of computer  programs  being written using two digits rather than four to
define  the  applicable  year.  The  Company  has  determined  that  all  of its
information  systems  are Y2K  compliant.  The  compliance  effort  to date  has
resulted in immaterial  cost to the Company.  Although the Company  expects that
any future  expenditures  made in connection  with Y2K  conversions  will not be
material,  the Company may experience material  unanticipated problems and costs
caused by undetected errors or defects in its systems.

     As a result of this  uncertainty,  we are formulating a contingency plan to
address the possible effects of problems encountered as a result of Y2K issues.

     The Company  believes that some of its customers may be impacted by the Y2K
problem,  which could in turn impact the Company  sales  efforts with respect to
such customers and the Company's results of operations.

     The Company  has  completed  an inquiry of key vendors to assess  their Y2K
readiness.  Based on this inquiry, the Company is not aware of any problems that
would  materially  affect its  business,  results  of  operations  or  financial
condition. However, the inability of such vendors to meet Y2K requirements could
materially  impact the Company's ability to procure materials from these vendors
and to meet its obligations to supply products to its customers.

     The Company is  currently  formulating  a  contingency  plan to address the
possible effects of problems  encountered as a result of Y2K issues,  and expect
that this plan will be complete by October 1999. The Company expects the cost of
this plan to be immaterial.

     The Company's products it offers for sale are all Year 2000 compliant.

                                       13
<PAGE>
FORWARD-LOOKING INFORMATION

     This Annual Report on Form 10-K contains certain forward-looking statements
and  information  which we believe  are within the meaning of Section 27A of the
Securities Act of 1933, as amended,  and Section 21E of the Securities  Exchange
Act of 1934, as amended.  The forward looking statements contained herein can be
identified  by the  use  of  forward-looking  terminology  such  as  "believes,"
"expects," "may," "will," "should," or "anticipates," or the negative thereof or
other  variations  thereon  or  comparable  terminology,  or by  discussions  of
strategy that involve risks and uncertainties. The Company wishes to caution the
reader that these forward-looking  statements that are not historical facts, are
only predictions.  No assurances can be given that the future results indicated,
whether expressed or implied,  will be achieved.  While sometimes presented with
numerical  specificity,  these projections and other forward-looking  statements
are based upon a variety of assumptions relating to the business of the Company,
which,  although  considered  reasonable  by the  Company,  may not be realized.
Because  of the  number  and  range  of  assumptions  underlying  the  Company's
projections  and  forward-looking  statements,  many of  which  are  subject  to
significant  uncertainties  and  contingencies  that are beyond  the  reasonable
control of the Company, some of the assumptions inevitably will not materialize,
and  unanticipated  events and circumstances may occur subsequent to the date of
this report. These forward-looking  statements are based on current expectations
and the Company assumes no obligation to update this information. Therefore, the
actual  experience  of the Company and the  results  achieved  during the period
covered by any particular  projections or forward-looking  statements may differ
substantially from those projected.  Consequently,  the inclusion of projections
and other forward-looking  statements should not be regarded as a representation
by the Company or any other person that these estimates and projections  will be
realized, and actual results may vary materially. There can be no assurance that
any of these  expectations  will be realized or that any of the  forward-looking
statements contained herein will prove to be accurate.

ITEM 7. FINANCIAL STATEMENTS.

     The financial  statements and schedules are included herewith commencing on
page F-1.

                                       14
<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors
FBR Capital Corporation
Tempe, Arizona

We have audited the accompanying  balance sheet of FBR Capital Corporation as of
June 30, 1999, and the related  statements of operations,  stockholders'  equity
and cash  flows for the years  ended  June 30,  1998 and 1999.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of FBR Capital  Corporation as of
June 30,  1999,  and the  results of its  operations  and its cash flows for the
years  ended June 30,  1998 and 1999,  in  conformity  with  generally  accepted
accounting principles.

BDO SEIDMAN, LLP

Los Angeles, California
July 28, 1999

                                       F-1
<PAGE>
                             FBR CAPITAL CORPORATION
                                  BALANCE SHEET
                                  JUNE 30, 1999


                                     ASSETS

CURRENT ASSETS:
  Cash and cash equivalents (Note 1)                                  $ 376,365
  Accounts receivable - trade, net (Note 1)                              42,596
  Inventory (Note 1)                                                     28,397
  Prepaid expenses and other current assets                              10,591
                                                                      ---------
    TOTAL CURRENT ASSETS                                                457,949

PROPERTY AND EQUIPMENT, NET (NOTES 1 AND 2)                              60,865
                                                                      ---------
    TOTAL ASSETS                                                      $ 518,814
                                                                      =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt (Note 3)                          $  28,848
  Accounts payable                                                      146,084
  Accrued liabilities                                                    64,125
  Deferred revenue (Note 1)                                              13,235
                                                                      ---------
    TOTAL CURRENT LIABILITIES                                           252,292

LONG-TERM DEBT, LESS CURRENT PORTION (NOTE 3)                            14,466
                                                                      ---------
    TOTAL LIABILITIES                                                   266,758
                                                                      ---------


COMMITMENTS: (NOTE 5)                                                        --

STOCKHOLDERS' EQUITY: (NOTE 6)
  Preferred Stock, $.01 par value, 10,000,000 shares authorized,
    issued and outstanding                                              100,000
  Common stock, $.005 par value, 16,666,667 shares authorized,
    13,241,031 shares issued and outstanding                             66,205
  Contributed capital                                                   956,468
  Accumulated deficit                                                  (870,617)
                                                                      ---------
    TOTAL STOCKHOLDERS' EQUITY                                          252,056
                                                                      ---------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $ 518,814
                                                                      =========

                   The Accompanying Notes are an Integral Part
                           of the Financial Statements

                                      F-2
<PAGE>
                             FBR CAPITAL CORPORATION
                            STATEMENTS OF OPERATIONS

                                                        YEARS ENDED JUNE 30,
                                                    ----------------------------
                                                        1999           1998
                                                    ------------    -----------

Revenues:
  Product sales                                     $    730,641    $   267,697
  Services revenue                                        13,313          1,980
                                                    ------------    -----------
    TOTAL REVENUES                                       743,954        269,677

COST OF REVENUES                                         249,309         95,884
                                                    ------------    -----------

GROSS PROFIT                                             494,645        173,793
                                                    ------------    -----------

COSTS AND EXPENSES:
  Sales and marketing                                    288,559        206,214
  Research and development                               232,250        117,515
  General and administrative                             226,749        105,073
                                                    ------------    -----------
    TOTAL COSTS AND EXPENSES                             747,558        428,802
                                                    ------------    -----------

NET LOSS FROM OPERATIONS                                (252,913)      (255,009)
                                                    ------------    -----------

OTHER INCOME (EXPENSE):
  Interest expense                                       (24,112)       (35,543)
  Interest income                                          7,723          6,293
                                                    ------------    -----------
                                                         (16,389)       (29,250)
                                                    ------------    -----------
NET LOSS                                            $   (269,302)   $  (284,259)
                                                    ============    ===========

BASIC LOSS PER SHARE (NOTE 1)                       $      (0.02)   $     (0.03)
                                                    ============    ===========

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING         16,473,873      9,123,236
                                                    ============    ===========

                   The Accompanying Notes are an Integral Part
                           of the Financial Statements

                                      F-3
<PAGE>
                             FBR CAPITAL CORPORATION
                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
                                     PREFERRED STOCK        COMMON STOCK      CONTRIBUTED  ACCUMULATED
                                    SHARES     AMOUNT      SHARES    AMOUNT     CAPITAL      DEFICIT      TOTAL
                                    ------     ------      ------    ------     -------      -------      -----
<S>                                <C>        <C>        <C>        <C>        <C>          <C>         <C>
Balance at July 1, 1997            4,809,734  $ 48,097   4,132,921  $  20,665  $ 186,558    $(317,056)  $ (61,736)
  Issuance of  stock to employees
   and directors                     257,664     2,577     221,406      1,107     (1,459)          --       2,225
  Sale of stock                    2,469,283    24,693   2,121,812     10,609     65,898           --     101,200
  Forgiveness of related party
    debt and interest                     --        --     136,876         --    136,876
  Net loss                                --        --          --   (284,259)  (284,259)
                                  ----------  --------  ----------  ---------  ---------    ---------   ---------


Balance at June 30, 1998           7,536,681    75,367   6,476,139     32,381    387,873     (601,315)   (105,694)
  Conversion of related party
    debt and interest              1,463,319    14,633   1,257,404      6,287    243,650           --     264,570
  Sale of  stock, net of
     costs of $9,063               1,000,000    10,000     859,283      4,296    176,622           --     190,918
  Merger with Vitrix Incorporated  4,648,205    23,241     148,323    171,564
  Net loss                                --        --          --   (269,302)  (269,302)
                                  ----------  --------  ----------  ---------  ---------    ---------   ---------

Balance at June 30, 1999          10,000,000  $100,000  13,241,031  $  66,205  $ 956,468    $(870,617)  $ 252,056
                                  ==========  ========  ==========  =========  =========    =========   =========
</TABLE>

                   The Accompanying Notes are an Integral Part
                           of the Financial Statements

                                      F-4
<PAGE>
                             FBR CAPITAL CORPORATION
                            STATEMENTS OF CASH FLOWS

                                                           YEARS ENDED JUNE 30,
                                                         -----------------------
                                                           1999         1998
                                                         ---------    ---------
Increase (Decrease) in Cash and Cash Equivalents:
  Cash flows from operating activities:
  Net Loss                                               $(269,302)   $(284,259)
  Adjustments to reconcile net loss to net
    cash used by operating activities:
    Depreciation                                            28,678       20,367
    Non-cash interest expense                               64,570       26,876
    Accrued interest assumed in merger                     (11,645)

  Changes in Assets and Liabilities:
    Accounts receivable-trade                               (7,429)      (5,213)
    Inventory                                              (11,352)       7,426
    Prepaid expenses and other current assets               (7,477)      (3,114)
    Accounts payable                                       100,015       13,854
    Accrued liabilities                                     13,083        7,627
    Deferred revenue                                        13,235           --
                                                         ---------    ---------
      NET CASH USED BY OPERATING ACTIVITIES                (87,624)    (216,436)
                                                         ---------    ---------

  CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                     (26,472)     (10,607)
    Cash acquired in merger                                207,678           --
                                                         ---------    ---------
      NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES     181,206      (10,607)
                                                         ---------    ---------

  CASH FLOWS FROM FINANCING ACTIVITIES:
    Repayment of capital leases                             (4,910)          --
    Proceeds from issuance of stock                        190,918      103,425
                                                         ---------    ---------
      NET CASH PROVIDED BY FINANCING ACTIVITIES            186,008      103,425
                                                         ---------    ---------

Net change in cash and cash equivalents                    279,590     (123,618)
Cash and cash equivalents at beginning of period            96,775      220,393
                                                         ---------    ---------
Cash and cash equivalents at end of period               $ 376,365    $  96,775
                                                         =========    =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid                                          $   3,142    $   2,710
                                                         =========    =========

  Income taxes paid                                      $      --    $      --
                                                         =========    =========

NONCASH INVESTING AND FINANCING ACTIVITIES:
  Assets acquired by entering into capital leases        $  28,724    $      --
                                                         =========    =========

  Conversion of related party notes and accrued
    interest to equity                                   $ 264,570    $ 136,876
                                                         =========    =========

                   The Accompanying Notes are an Integral Part
                           of the Financial Statements

                                      F-5
<PAGE>
                             FBR CAPITAL CORPORATION
                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
                                     NOTE 1
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF OPERATIONS
                             AND USE OF ESTIMATES:
--------------------------------------------------------------------------------

NATURE OF BUSINESS AND MERGER:

FBR Capital  Corporation (the Company or FBR) was incorporated as Richard Barrie
Fragrances,  Inc.  in the  State of  Nevada on June 6,  1988,  for the  original
purpose of developing,  manufacturing and marketing fragrances,  cosmetics, skin
treatment  and personal  care products sold  primarily  through  department  and
specialty  stores and  drugstores.  On July 1, 1996,  following the  transaction
described below, the Company filed a Certificate of Amendment to its Articles of
Incorporation to change its name from "Richard Barrie Fragrances,  Inc." to "FBR
Capital  Corporation",  as authorized by the  stockholders  of the Company.  For
purposes of these Notes to Financial Statements,  the Company shall also include
Vitrix (defined below).

Effective June 30, 1996, the Company sold  substantially  all of the assets (the
Asset Sale),  properties and rights owned by the Company in connection  with its
fragrance business to Parlux Fragrances, Inc. Since the Asset Sale in June 1996,
the  Company's  operations  have been  limited to the conduct of  administrative
activities  and  conducting   discussions  with  respect  to  possible  business
combinations.

On  April  15,  1999 FBR  acquired  the  outstanding  capital  stock  of  Vitrix
Incorporated  (Vitrix).  The merger was consummated in accordance with the terms
of an Exchange  Agreement  dated April 15,  1999,  by and among FBR,  Vitrix and
certain of the Vitrix  shareholders  who agreed to  participate  in the  merger.
Under the terms of the  Exchange  Agreement,  each  outstanding  share of Vitrix
common  stock was  converted  into a  combination  of .9225 shares of FBR common
stock and 1.0736  shares of Series B  Convertible  Preferred  Stock of FBR. Each
share of FBR Preferred Stock is automatically  convertible into one share of FBR
Common  Stock at such  time as FBR has the  authorized  capital  to  issue  such
shares.  The aggregate  consideration paid in the merger was 8,592,826 shares of
FBR common stock and 10,000,000  shares of Preferred Stock (the  "Shares").  The
Exchange  Agreement also provided for the assumption of outstanding  options and
warrants to purchase an aggregate of 1,086,000  shares of Vitrix  common  stock,
which have been  converted  into  options and  warrants  to purchase  FBR Common
Stock, subject to adjustment for the appropriate exchange ratio.

Giving  effect to the  issuance  of the  Shares,  the  Vitrix  shareholders  own
approximately  80% of the  outstanding  shares  of FBR  Common  Stock  (assuming
conversion  of the  Preferred  Stock  into FBR  Common  Stock) and the prior FBR
shareholders  own the remaining 20% of the outstanding FBR shares.  Although FBR
is the parent company of Vitrix following the  transaction,  the transaction was
accounted for as a recapitalization of Vitrix and a purchase of FBR by Vitrix as
Vitrix is the controlling  company after the merger. The accompanying  financial
statements of FBR include the accounts of Vitrix for all periods presented,  and
the accounts of FBR from April 15, 1999, the effective  date of the merger.  The
Company intends to change its name from FBR Capital Corporation to Vitrix, Inc.,
pending shareholder approval.

Vitrix  Incorporated,  an Arizona corporation formed on April 26, 1996, develops
time and labor management solutions that help its customers improve productivity
by  automating  data  collection,  staff  scheduling  and  management  of  labor
resources.  Its  proprietary  software  applications  are  targeted  to small to
mid-size  companies  and are sold via the Internet from the Vitrix Online Store,
resellers and directly through Vitrix's sales representatives.

                                      F-6
<PAGE>
                             FBR CAPITAL CORPORATION
                    NOTES TO FINANCIAL STATEMENTS (Continued)

--------------------------------------------------------------------------------
                                     NOTE 1
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF OPERATIONS
                       AND USE OF ESTIMATES: (CONTINUED)
--------------------------------------------------------------------------------

PERVASIVENESS OF ESTIMATES:

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS:

Cash and cash  equivalents  are  considered to be all highly liquid  investments
purchased with an initial maturity of three (3) months or less.

ACCOUNTS RECEIVABLE - TRADE:

The Company provides for potentially uncollectible accounts receivable by use of
the  allowance  method.  The  allowance  is provided  based upon a review of the
individual   accounts   outstanding,   and  the   Company's   prior  history  of
uncollectible  accounts  receivable.  As  of  June  30,  1999  a  provision  for
uncollectible accounts has been established in the amount of $2,427.

INVENTORY:

Inventory is stated at the lower of cost (first-in, first-out method) or market.

PROPERTY AND EQUIPMENT:

Property and equipment are recorded at cost. Depreciation is provided for on the
straight-line  method over the estimated useful lives of the assets. The average
lives  range from three to five years.  Maintenance  and  repairs  that  neither
materially add to the value of the property nor appreciably prolong its life are
charged to expense as incurred.  Betterments  or renewals are  capitalized  when
incurred. Property and equipment are reviewed each year to determine whether any
events or circumstances  indicate that the carrying amount of the assets may not
be recoverable.  Such review includes estimating future cash flows. Property and
equipment  costs are  expensed  when  determined  not  realizable.  Depreciation
expense was $28,678 and $20,367, respectively, for the years ended June 30, 1999
and 1998.

The  Company is the  lessee of  computer  equipment,  with an  original  cost of
approximately $29,000, under three (3) capital lease agreements expiring through
November 2001. The assets and liabilities under the capital lease agreements are
recorded at the lower of the present value of the minimum lease  payments or the
fair value of the assets.  The assets are being depreciated over their estimated
productive lives.  Depreciation of the assets under the capital lease agreements
is included in depreciation expense as noted above.

                                      F-7
<PAGE>
                             FBR CAPITAL CORPORATION
                    NOTES TO FINANCIAL STATEMENTS (Continued)

--------------------------------------------------------------------------------
                                     NOTE 1
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF OPERATIONS
                       AND USE OF ESTIMATES: (CONTINUED)
--------------------------------------------------------------------------------

SOFTWARE DEVELOPMENT COSTS:

The Company capitalizes  software development costs in accordance with Statement
of Financial  Accounting Standards No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed."  Capitalization of software
development costs begins upon the establishment of technological  feasibility of
the product.  The  establishment  of  technological  feasibility and the ongoing
assessment of the recoverability of these costs requires considerable  judgement
by  management  with  respect to certain  external  factors  including,  but not
limited to, anticipated  future gross product revenue,  estimated economic life,
and changes in software and hardware  technology.  Amortization  of  capitalized
software  development  costs begins when the products are  available for general
release  to  customers  and is  computed  on a  product-by-product  basis  using
straight-line  amortization  with  useful  lives of five years or, if less,  the
remaining  estimated  economic life of the product.  Amounts related to internal
software  development  that  could be  capitalized  under  this  statement  were
immaterial.

REVENUE RECOGNITION AND DEFERRED REVENUE:

The Company  derives its revenues  from the sale of frontline  labor  management
systems as well as sales of  application  software,  parts and  components.  The
Company's  systems consist of fully  integrated  software and  intelligent  data
collection   terminals.   The  Company  also   derives   revenues  by  providing
maintenance,  professional and educational services to its direct customers. The
Company  recognizes  revenues from sales of its systems,  application  software,
parts and components at the time of shipment, unless the Company has significant
obligations  remaining.  When  significant  obligations  remain,  revenue is not
recognized  until  such  obligations  have  been  completed  or  are  no  longer
significant.  The Company  recognizes  revenues  from its  sales-type  leases of
systems at time of shipment.  Service  revenues are recognized  ratably over the
contractual period or as the services are performed.

The  Company  provides  installation  services  and  certain  warranties  to its
customers. It also provides, without additional charge, certain software product
enhancements for customers  covered under software  maintenance  contracts.  The
provision for these expenses are made at the time revenues are recognized.

DEFERRED INCOME TAXES:

Deferred  income taxes are provided on an asset and  liability  method,  whereby
deferred tax assets are  recognized  for deductible  temporary  differences  and
operating loss and tax credit  carryforwards  and deferred tax  liabilities  are
recognized for taxable  temporary  differences.  Temporary  differences  are the
differences between the reported amounts of assets and liabilities and their tax
basis.  Deferred tax assets are reduced by a valuation  allowance  when,  in the
opinion of management,  there is uncertainty of the utilization of the operating
losses in future  periods.  Deferred tax assets and liabilities are adjusted for
the effects of changes in tax laws and rates on the date of enactment.

FAIR VALUE OF FINANCIAL INSTRUMENTS:

The carrying values of cash, cash  equivalents,  accounts  receivable,  accounts
payable and current notes payable  approximate  their fair values because of the
short maturity of these  instruments.  With respect to long-term debt,  based on
the  borrowing  rates  currently  available  to the Company for similar bank and
equipment loans and capitalized  leases,  the amounts  reported  approximate the
fair value of the respective financial instruments.

                                      F-8
<PAGE>
                             FBR CAPITAL CORPORATION
                    NOTES TO FINANCIAL STATEMENTS (Continued)

--------------------------------------------------------------------------------
                                     NOTE 1
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF OPERATIONS
                       AND USE OF ESTIMATES: (CONTINUED)
--------------------------------------------------------------------------------

LOSS PER SHARE:

Basic loss per share of common  stock was  computed by dividing  the net loss by
the weighted average number of shares outstanding of common and preferred stock.
The common and preferred stock amounts in the accompanying  financial statements
have been  restated  to give effect to the  exchange  ratio  established  in the
Exchange  Agreement between FBR and Vitrix.  The preferred stock was included in
the  calculation  due to its  automatic  conversion  into common  stock once the
Company has sufficient authorized common stock to issue the shares. (See Note 6)

Diluted  earnings per share are computed based on the weighted average number of
shares of common stock and dilutive  securities  outstanding  during the period.
Dilutive  securities are options and warrants that are freely  exercisable  into
common stock at less than the prevailing market price.  Dilutive  securities are
not  included in the  weighted  average  number of shares when  inclusion  would
increase the earnings per share or decrease the loss per share. At June 30, 1999
and 1998, options and warrants to purchase 2,278,298 and 1,102,577 shares of the
Company's  common stock were not included in the  determination  of diluted loss
per share as their effect was anti-dilutive.

STOCK-BASED COMPENSATION:

The Company has elected to follow  Accounting  Principles  Board Opinion  No.25,
"Accounting   for  Stock  Issued  to   Employees"   (APB  25)  and  the  related
interpretations  in accounting  for its employee  stock  options.  Under APB 25,
because the  exercise  price of  employee  stock  options  equals or exceeds the
market  price of the  underlying  stock on the date of  grant,  no  compensation
expense is recorded.  The Company has adopted the disclosure-only  provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation."


--------------------------------------------------------------------------------
                                     NOTE 2
                             PROPERTY AND EQUIPMENT:
--------------------------------------------------------------------------------

At June 30, 1999 property and equipment consists of:

      Computers and  equipment                           $ 118,407
      Furniture and fixtures                                 6,144
                                                         ---------
                                                           124,551
      Less: accumulated depreciation                       (63,686)
                                                         ---------
                                                         $  60,865
                                                         =========

                                      F-9
<PAGE>
                             FBR CAPITAL CORPORATION
                    NOTES TO FINANCIAL STATEMENTS (Continued)

--------------------------------------------------------------------------------
                                     NOTE 3
                                 LONG-TERM DEBT
--------------------------------------------------------------------------------

At June 30, 1999 long-term debt consists of the following:

      10% convertible subordinated promissory note to an
        individual, currently in default, see description below.       $ 19,500

      Capital leases payable, interest at rates ranging from
        20% to 24%, payable in monthly installments of principal
        and interest, maturing through November 2001                     23,814
                                                                       --------
                                                                         43,314
      Less: current portion                                             (28,848)
                                                                       --------
      Long-term debt                                                   $ 14,466
                                                                       ========

During 1996,  Vitrix entered into a debt  financing  agreement for $310,000 with
T.P.B.  Investment Limited  Partnership (TPB), which is owned by a member of the
Company's Board of Directors.  On June 20, 1998, TPB converted debt of $110,000,
together with accrued interest thereon of approximately  $27,000, to contributed
capital.

On March 3, 1999,  TPB agreed to convert  the  remaining  principal  and accrued
interest outstanding on its notes. The agreement calls for the conversion of the
remaining  $200,000  principal  and accrued  interest of $64,570 in exchange for
2,720,723 shares of the Company's common and preferred stock.

On January 13, 1994, FBR entered into a series of 10%  convertible  subordinated
promissory  notes due  January 15, 1996  totaling  $5,157,750.  On June 30, 1996
simultaneous with the closing of the Asset Sale, FBR completed an exchange offer
in the  aggregate  principal  amount of $5,040,750  with certain  holders of the
notes. On October 21, 1996, FBR completed the  extinguishments of $97,500 of the
notes in exchange  for cash and,  common  stock  warrants  (Note 6). The Company
believes  the  remaining  note  holder  will  also  accept a  settlement  of the
obligation on terms not requiring the full cash payment of the amount due. As of
June 30, 1999, accrued interest on the note was $12,374.

On April 14, 1999 the Company  entered into an agreement  with an institution in
which the Company has the right to demand the  institution  to purchase  100,000
shares of the  Company's  common stock at $.35 per share in order to satisfy the
convertible  note's  outstanding  principal  and interest  due.  This  agreement
expires on January 31, 2001 or the date the note is satisfied in full.

                                      F-10
<PAGE>


                             FBR CAPITAL CORPORATION
                    NOTES TO FINANCIAL STATEMENTS (Continued)

--------------------------------------------------------------------------------
                                     NOTE 3
                           LONG-TERM DEBT (CONTINUED)
--------------------------------------------------------------------------------

As of June 30, 1999 future  minimum  lease  payments due under the capital lease
agreements, are as follows:

         YEAR ENDING
           JUNE 30
         -----------
             2000                                                    $ 13,827
             2001                                                      13,333
             2002                                                       3,388
                                                                     --------

      Total minimum lease payments                                     30,548
      Less:  amount representing interest                              (6,734)
                                                                     --------
      Present value of net minimum lease payments                      23,814
      Less: current maturities of capital lease obligations            (9,348)
                                                                     --------
            Long-term maturities of capital lease obligations        $ 14,466
                                                                     ========

--------------------------------------------------------------------------------
                                     NOTE 4
                                  INCOME TAXES:
--------------------------------------------------------------------------------

As of June 30, 1999 deferred tax assets consist of the following:

      Federal loss carryforwards                                    $ 190,000
      State loss carryforwards                                         45,000
                                                                    ---------
                                                                      235,000
      Less:  valuation allowances                                    (235,000)
                                                                    ---------
                                                                    $      --
                                                                    =========

The Company has  established a valuation  allowance  equal to the full amount of
the deferred tax assets  primarily  because of uncertainty in the utilization of
net operating loss carryforwards.

As a result of stock  ownership  changes  during  1997 and 1998,  the  Company's
ability to utilize net operating losses in the future could be limited, in whole
or part,  under Internal Revenue Code Section 382. The Company was treated as an
S-Corporation  for income tax purposes through May 13, 1997. As of June 30, 1999
the  Company's  federal  net  operating  loss  carryforwards  was  approximately
$600,000, and begins expiring in 2012.

The Company's tax expense  (benefit)  differed from the statutory rate primarily
due to the $100,000  change in the deferred tax asset  valuation  allowance from
June 30, 1998.

                                      F-11
<PAGE>
                             FBR CAPITAL CORPORATION
                    NOTES TO FINANCIAL STATEMENTS (Continued)

--------------------------------------------------------------------------------
                                     NOTE 5
                                  COMMITMENTS:
--------------------------------------------------------------------------------

The  Company   currently   leases  office  space  in  Tempe,   Arizona  under  a
non-cancelable  operating  lease  agreement  which expires in May 2001.  For the
years  ended  June  30,  1999  and  1998,   expense  under  the   aforementioned
non-cancelable operating lease agreements was approximately $35,000 and $20,000,
respectively.

Future  minimum  lease  payments due under the operating  lease  agreement is as
follows:

                                                YEAR ENDING
                                                  JUNE 30
                                                -----------
                    YEAR
                    ----
                    2000                         $ 36,484
                    2001                           34,249
                                                 --------
                                                 $ 70,733
                                                 ========

--------------------------------------------------------------------------------
                                     NOTE 6
                              STOCKHOLDERS' EQUITY:
--------------------------------------------------------------------------------

SERIES B PREFERRED STOCK:

The Series B Preferred  Stock  automatically  converts  into  common  stock on a
one-for-one basis when the Company has the available  authorized common stock to
complete the  conversion for all  10,000,000  shares  outstanding as of June 30,
1999.

STOCK OPTIONS:

On July 13, 1999, the Board of Directors  authorized the  implementation  of the
1999 Equity Compensation Plan, subject to shareholder approval.  The plan allows
for the  award of  incentive  stock  options,  non-statutory  stock  options  or
restricted  stock  awards  to  certain  employees,  directors,  consultants  and
independent  contractors.  The Company has  reserved an  aggregate  of 3,000,000
shares of common stock for distribution  under the plan. The exercise price will
be determined by the Board of Directors.  Incentive  stock options granted under
the plan may be granted to employees  only,  and may not have an exercise  price
less than the fair market value the common  stock on the date of grant.  Options
may be exercised on a one-for-one  basis,  with a maximum term of ten (10) years
from the date of grant.

Pursuant to the Exchange  Agreement,  the outstanding options of Vitrix prior to
the merger were converted  into options to purchase  common stock of the Company
at the exchange ratio (1.9961 to 1) established in the Exchange  Agreement.  The
table below combines the option  activity of FBR and Vitrix based on post-merger
number of options.

                                      F-12
<PAGE>
                             FBR CAPITAL CORPORATION
                    NOTES TO FINANCIAL STATEMENTS (Continued)

--------------------------------------------------------------------------------
                                     NOTE 6
                        STOCKHOLDERS' EQUITY (CONTINUED):
--------------------------------------------------------------------------------

STOCK OPTIONS (CONTINUED):

A summary of the activity of the plan follows:

                                                  NUMBER OF     WEIGHTED AVERAGE
                                                   OPTIONS       EXERCISE PRICE
                                                   -------       --------------

Outstanding at June 30, 1997                       414,361           $ 0.23
Granted                                             39,923             0.11
                                                 ---------           ------

Outstanding at June 30, 1998                       454,284             0.22
Granted                                          1,295,489             0.11
Forfeited                                         (119,768)            0.11
                                                 ---------           ------

Outstanding at June 30, 1999                     1,630,005           $ 0.14
                                                 =========           ======

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of June 30, 1999 is as follows:

<TABLE>
<CAPTION>
                                   OPTIONS OUTSTANDING                    OPTIONS EXERCISABLE
                      ---------------------------------------------   ---------------------------
                                    WEIGHTED AVG.
                                     REMAINING
                       NUMBER OF    CONTRACTURAL      WEIGHTED AVG.   NUMBER OF     WEIGHTED AVG.
      EXERCISE PRICE    SHARES     LIFE (IN YEARS)   EXERCISE PRICE     SHARES     EXERCISE PRICE
      --------------   ---------   ---------------   --------------     ------     --------------
<S>   <C>              <C>             <C>               <C>            <C>            <C>
          $2.25           15,000       4.25              $ 2.25          15,000        $ 2.25
      $.11 - $.4375    1,615,005       9.40              $ 0.12         664,846        $ 0.14
</TABLE>

Approximately  250,000  options  granted prior to June 30, 1998 were  originally
issued with an exercise price of $.31 per share. In March 1999, the options were
repriced at $.11 per share  pursuant to a resolution  of the Board of Directors.

The stock options  issued to employees  have an exercise price not less than the
fair  market  value of the  Company's  common  stock on the  date of  grant.  In
accordance  with  accounting  for such options  utilizing  the  intrinsic  value
method,  there is no related  compensation  expense  recorded  in the  Company's
financial   statements  for  the  years  ended  June  30,  1999  and  1998.  Had
compensation cost for stock-based compensation been determined based on the fair
value of the options at the grant dates  consistent with the method of SFAS 123,
the  Company's  net loss for the years  ended June 30,  1999 and 1998 would have
been reduced to the pro forma amounts presented below:

                                      F-13
<PAGE>
                             FBR CAPITAL CORPORATION
                    NOTES TO FINANCIAL STATEMENTS (Continued)

--------------------------------------------------------------------------------
                                     NOTE 6
                        STOCKHOLDERS' EQUITY (CONTINUED):
--------------------------------------------------------------------------------

STOCK OPTIONS (CONTINUED):

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

NET LOSS:
As reported                             $ (269,302)    $ (284,259)
                                        ==========     ==========

Pro forma                               $ (282,157)    $ (289,809)
                                        ==========     ==========

The fair value of option  grants is estimated as of the date of grant  utilizing
the  Black-Scholes  option-pricing  model with the  following  weighted  average
assumptions  for all  grants,  expected  life of  options  of three  (3)  years,
risk-free interest rates of eight percent (8%), and a zero percent (0%) dividend
yield.  The  weighted  average  fair value at date of grant for options  granted
during the years ended June 30, 1999 and 1998 approximated $.03.

WARRANTS:

During the year ended June 30, 1998,  the Company  granted  warrants to purchase
622,793 (post-merger figures) shares of the Company's common stock. Each warrant
entitles the holder to purchase  one share of common stock at an exercise  price
of $.022 per share. The warrants expire in June 2001.

In addition,  the Company has outstanding  warrants to purchase 12,500 shares of
the  Company's  common stock at $2 per share.  The warrants  expire  October 25,
1999.

                                      F-14
<PAGE>
ITEM 8. CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON   ACCOUNTING  AND
        FINANCIAL DISCLOSURE.

     On May 13, 1999, the Company,  with the approval of its board of directors,
dismissed Arthur Andersen LLP ("Arthur  Andersen") and engaged BDO Seidman,  LLP
("BDO Seidman") as its independent  public  accountants for the year ending June
30, 1999. The dismissal of Arthur Andersen was the result of a change in control
of the Company.

     Arthur  Andersen's  reports on the Company's  financial  statements for the
past two (2) years  contained no adverse  opinion and no  disclaimer of opinion,
nor were such reports  qualified or modified as to  uncertainty,  audit scope or
accounting  principles.  In the  Company's  two most recent fiscal years and the
subsequent  interim periods  preceding the dismissal of Arthur  Andersen,  there
were  no  disagreements  with  Arthur  Andersen  on  any  matter  of  accounting
principles or practices,  financial  statement  disclosure or auditing  scope or
procedure,  which  disagreements,  if not resolved to the satisfaction of Arthur
Andersen,  would have caused it to make a reference to the subject matter of the
disagreements in connection with its reports.

     During  the  Company's  two most  recent  fiscal  years and the  subsequent
interim periods preceding the engagement of BDO Seidman, neither the Company nor
any party  acting on its behalf has  consulted  with BDO Seidman  regarding  (i)
either the  application  of accounting  principles  to a specified  transaction,
either  completed  or  proposed,  or the type of  audit  opinion  that  might be
rendered  on the  Company's  financial  statements,  or (ii) any matter that was
either the  subject of a  "disagreement"  (as defined in Item  304(a)(1)(iv)  of
Regulation S-K and related  instructions) or a "reportable event" (as defined in
Item 304(a)(i)(v) of Regulation S-K).

                                       15
<PAGE>
                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS.

     Incorporated by reference to pages 2 through 5 of the Company's  definitive
Information  Statement for the 1999 Annual Meeting of Stockholders to be held on
October 7, 1999,  under the following  captions:  "Director  Compensation,"  and
"Executive Compensation.'

ITEM 10.  EXECUTIVE COMPENSATION.

     Incorporated by reference to pages 2 through 5 of the Company's  definitive
Information  Statement for the 1999 Annual Meeting of Stockholders to be held on
October 7, 1999,  under the following  captions:  "Director  Compensation,"  and
"Executive Compensation.'

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

     Incorporated by reference to page 8 of the Company's definitive Information
Statement for the 1999 Annual Meeting of  Stockholders  to be held on October 7,
1999, under the following  caption:  "Security  Ownership of Certain  Beneficial
Owners and Management."

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Incorporated  by reference  form pages 8 and 9 of the Company's  definitive
Information  Statement for the 1999 Annual Meeting of Stockholders to be held on
October 7, 1999 under the following caption:  "Certain Relationships and Related
Transactions."

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  Exhibits.  The exhibits as indexed  below are included as part of this
          Form 10-KSB.

     (b)  Reports on Form 8-K.

          The Company filed the  following  Reports on Form 8-K during the three
     months ended June 30, 1999:

          (1) Form 8-K filed on April 30,  1999,  to report the  acquisition  of
     Vitrix Incorporated.

          (2) Form 8-K filed on May 20, 1999,  to report the  engagement  of BDO
     Seidman,  LLP as the Company's auditors for the fiscal year ending June 30,
     1999, and the dismissal of Arthur Andersen LLP.

          (3) Form 8-K/A filed on June 29, 1999  amending  the Form 8-K filed on
     April 30, 1999, and including required  financial  statements and pro forma
     financial information for Vitrix Incorporation.

                                       16
<PAGE>
                                   SIGNATURES

         In accordance  with Section 13 or 15(d) of the Securities  Exchange Act
of 1934,  the  Registrant  caused  this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                          FBR CAPITAL CORPORATION (Registrant)

                                          /s/ Philip R. Shumway
                                          --------------------------------------
                                          Philip R. Shumway, President

Dated: September 16, 1999

     In accordance  with the  Securities  Exchange Act of 1934,  this Report has
been signed below by the following  persons on behalf of the  Registrant  and in
the capacities and on the dates indicated.

Signatures                           Title                         Date
----------                           -----                         ----

/s/ Philip R. Shumway      President, CEO and Director        September 16, 1999
----------------------     (Principal Executive Officer)
Philip R. Shumway

/s/ Craig J. Smith         Chief Financial Officer            September 16, 1999
----------------------     (Principal Financial Officer)
Craig J. Smith

/s/ Michael A. Wolf        Chairman of the Board              September 16, 1999
----------------------
Michael A. Wolf

/s/ Todd R. Belfer         Director                           September 16, 1999
----------------------
Todd R. Belfer

/s/ Lise M. Lambert        Director                           September 16, 1999
----------------------
Lise M. Lambert

/s/ Lise M. Lambert        Director                           September 16, 1999
----------------------
Bahan Sadegh

/s/ Hamid Shojaee          Director                           September 16, 1999
----------------------
Hamid Shojaee

                                       17
<PAGE>
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT                                                                   BY REFERENCE       NO. IN
NUMBER   DESCRIPTION                                                      FROM DOCUMENT     DOCUMENT
------   -----------                                                      -------------     --------
<S>      <C>                                                              <C>                 <C>
3.1      Registrant's Articles of Incorporation                                   A           3.1

3.1.1    Registrant's Amendment to its Articles of Incorporation, dated
         November 7, 1988                                                         A           3.1.1

3.1.2    Registrant's Amendment to its Articles of Incorporation,
         dated June 25, 1991                                                      B           3.1.2

3.1.3    Registrant's Certificate of Reverse Stock Split, dated
         February 15, 1994                                                        C           3.1.3

3.1.4    Registrant's Certificate of Designation of Series A Preferred
         Stock, dated June 27, 1996                                               D           3.1.4

3.1.5    Registrant's Amendment to Articles of Incorporation, dated
         June 25, 1996                                                            D           3.15

3.1.6    Registrant's Certificate of Designation of Series B Preferred
         Stock, dated March 31, 1999                                        Filed herewith    --

3.2      Amended Bylaws of the Registrant                                         C           3.2

4.1      Registrant's Form of Common Stock Certificate                            A           4.1

4.6      Registrant's  Form of 10%  Convertible  Subordinated  Promissory
         Note issued to  purchasers of the  Registrant's  securities in a
         private placement of the Registrant's securities which closed
         on December 14, 1993 and January 13, 1994                                E           4.7

4.7      Registrant's Form of Warrant to purchase shares of
         Registrant's Common Stock at an exercise price of $.90 per
         share dated February 3, 1994                                             E           4.8

4.7.1    Schedule  of  omitted  documents  in the  form of  Exhibit  4.7,
         including material detail in which such documents differ from
         Exhibit 4.7.                                                             E           4.8.1
</TABLE>

                                       18
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT                                                                   BY REFERENCE       NO. IN
NUMBER   DESCRIPTION                                                      FROM DOCUMENT     DOCUMENT
------   -----------                                                      -------------     --------
<S>      <C>                                                              <C>                 <C>
10.2     Stock Option Agreement, dated September 20, 1993, between
         Registrant and Patrick McEnany                                           E           10.17

10.2.1   Amendment to Stock Option Agreement, dated February 21, 1995,
         between Registrant and Patrick McEnany                                   G           -

10.3     Asset Purchase Agreement between the Company and Parlux
         Fragrances, Inc., dated January 31, 1996                                 F           10.17

10.4     Registration Rights Agreement between the Company and Parlux
         Fragrances, Inc., dated June 28, 1996                                    F           10.18

10.5     Exchange  Agreement,  dated April 15, 1999, between the Company,
         Vitrix Incorporated ("Vitrix") and the shareholders of Vitrix
         signatory thereto                                                        H           2

10.6     Employment Agreement, dated February 16, 1999, between Vitrix
         and Philip R. Shumway                                              Filed herewith    --

10.7     1999 Equity Compensation Plan                                      Filed herewith    --

27       Financial Data Schedule                                            Filed herewith    --
</TABLE>

----------
A.   Form S-18 Registration Statement No. 33-25704-NY.
B.   Form 10-K Annual  Report of the  Registrant  for the fiscal year ended June
     30, 1991.
C.   Form 10-KSB Annual Report of the  Registrant for the fiscal year ended June
     30, 1994
D.   Form 8-K Current Report reporting event on June 28, 1996.
E.   Form 10-QSB Quarterly Report of the Registrant for the fiscal quarter ended
     December 31, 1993.
F.   Form 10-QSB Quarterly Report of the Registrant for the fiscal quarter ended
     December 31, 1995.
G.   Form 10-KSB Annual Report of the  Registrant for the fiscal year ended June
     30, 1996
H.   Form 8-K Current Report reporting event on April 15, 1999.

                                       19