SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20459

                                   FORM 10-KSB

  (Mark One)

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

                  For the fiscal year ended September 30, 1999

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
                         Commission File Number 0-17580

                                 FIRETECTOR INC.

              (Exact name of Small Business Issuer in its charter)

                               Delaware 11-2941299

                (State or other jurisdiction of (I.R.S. Employer

               incorporation or organization) Identification No.)

                  262 Duffy Avenue, Hicksville, New York 11801
                    (Address of principal executive offices)
                                   (zip code)

Issuer's telephone number, including area code:  (516) 433-4700

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

Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, $.001 par value per share

                                (Title of Class)

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during the  preceding  12 months and (2) has been  subject to such  filing
requirements for the past 90 days. YES X NO

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements by reference in Part III of this Form 10-KSB ( )

     State issuer's revenues for its most recent fiscal year: $16,892,000

     The aggregate  market value of the voting stock held by  non-affiliates  of
the Registrant,  based upon the average bid and ask prices for the  Registrant's
Common Stock, $.001 par value per share, as of December 17, 1999 was $1,247,586.

      As of December 17, 1999,  the  Registrant  had 1,571,000  shares of Common
Stock outstanding.

Documents Incorporated by Reference: Definitive Proxy Statement to be filed.


<PAGE>



                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

The Company

Firetector  Inc.  ("Firetector"  or the  "Company")  is a  Delaware  corporation
organized in October 1988 to acquire controlling  interests in companies engaged
in the design,  manufacture,  sale and servicing of fire, life safety  security,
energy  management,  intercom,  audio-video  communication  and  other  systems.
Reference  to  Firetector  or the  Company  include  operations  of  each of its
subsidiaries except where the context otherwise requires.  Firetector's business
is conducted  through  subsidiaries in the New York metropolitan area and Dallas
Texas.

Firetector Products

  Firetector designs,  manufactures,  markets and sells its own proprietary life
safety and communication  systems and also engineers,  markets and sells systems
and products  manufactured by other parties.  Firetector's  proprietary  product
line  features  the COMTRAK  1720 and 2000 Life  Safety  Systems and the TELTRAK
Communications System.

In 1973, New York City passed Local Law 5 requiring that all office buildings of
100 feet or more be outfitted  with smoke  detectors,  manual pull  stations and
audio  communicating  systems for life safety and fire  reporting  purposes.  In
anticipation of the demand that this legislation  would create for equipment and
systems employing improved technology and design features, Firetector engaged in
extensive  research and development  which led to its  proprietary  COMTRAK 1720
Life Safety  System which has been  installed  in scores of buildings  since the
early 1980's.

    To meet the challenges of more stringent  code  requirements  and a sluggish
market for new construction, Firetector developed its new generation proprietary
COMTRAK 2000 Life Safety System which utilizes the latest technology to not only
meet the  current  code  requirements,  and  satisfy  the "wish list" of current
COMTRAK customers,  but many likely future code requirements as well. One of the
improvements  incorporated into the COMTRAK 2000 is a Fire Command Station which
offers a color CRT display  system along with three  sectional  displays.  These
features  provide the operator  with a wide  variety of  pertinent  information,
allowing for quicker response,  which is critical in an emergency.  In addition,
the expanded memory  capability of the new Fire Command Station enables a single
station to control multi-building projects and permits simplified operation.

    COMTRAK 1720 and 2000 Systems are operating in  approximately  100 buildings
in New York City.  Firetector  has approvals from Factory Mutual and various New
York City agencies for the COMTRAK 1720 and COMTRAK 2000 System.


<PAGE>



    TELTRAK  Communications  Systems.  In  the  early  1980s,  Firetector  began
investigating  the  intercom  market  and the  possibilities  of  utilizing  its
computerized multiplex technology for this market.  Significant  construction of
new  high-rise  housing  occurred  in the  1970s and  1980s  and  increased  the
potential demand for  technologically  advanced intercom  systems.  To meet this
demand,  Firetector developed a  micro-processor-based  combination intercom and
security system using Casey's multiplex  technology.  The TELTRAK I intercom and
security  system is capable of a variety of  accessory  functions in addition to
its basic intercom and security function. Firetector added video capabilities to
its TELTRAK I technology and created the TELTRAK II, for  installation in luxury
condominium,  cooperative and apartment buildings.  Over 16,000 TELTRAK I and II
units have been sold.  In 1991,  the  redesigned  TELTRAK III  intercom/security
station  was  introduced,   with  enhanced   features  to  expand  its  use  and
competitiveness  in the face of the  reduced  market  for  these  products.  New
features,  such as public  address,  enable  important  messages  to be given to
building occupants either locally or by groups in case of emergency.

Other Products

    In the past four years  Firetector has sought to diversify its product lines
to establish a greater base to absorb product support,  R & D and other overhead
and to provide product and customer diversification. To that end, Firetector has
augmented its established  position in marketing  engineered life safety systems
(proprietary and third party) by developing a significant business in engineered
sound  systems  for  application  to a  variety  of users  including  hospitals,
educational facilities and transit facilities (e.g. subway stations). Firetector
has developed a focused unit with a high level of  experience to penetrate  this
niche market with significant  success as a substantial  portion of Firetector's
order position derives from this effect. In addition,  Firetector  organized new
marketing  units to focus on marketing,  engineering  and servicing  systems and
products  manufactured by third parties,  particularly  national  manufacturers.
These  units  are   service   oriented   organizations   which  focus  on  close
relationships with customers and key suppliers.

    In 1993,  Firetector  acquired  assets of a company which  manufactured  and
marketed  sophisticated  products and  on-board  information  and  communication
systems  with  applications  for  municipal   transit  carriers,   long-distance
passenger  carriers and bus and train  builders.  Firetector has integrated this
operation  into its New  York  division  and has to date  supplied  products  to
customers such as ABB Traction, Sumitomo, Kawasaki,  Morrison-Knudsen,  Siemens,
the New York City Transit Authority and AMTRAK.


<PAGE>
Service

    Firetector  continues to put an increasing priority on the development of an
integrated  and  efficient  service  organization.  Sales  personnel  have  been
dedicated to securing service  contracts and are intensifying  efforts to market
service to COMTRAK and other Firetector  projects coming out of warranty and the
renewal of such contracts. To improve efficiencies and productivity,  Firetector
organized a division  to perform  cleaning  on life  safety  systems,  which was
previously  subcontracted  to an external entity.  To improve customer  service,
Firetector  maintains  an  office  in New York City  which  houses  its New York
service management.

General Sound (Texas) Company

    Firetector conducts business in Texas through its subsidiary,  General Sound
(Texas) Company, which distributes,  services, installs and designs a variety of
sound, fire alarm, intercom and security systems in the Dallas/Ft.  Worth, Texas
area.  General Sound  concentrates its sales effort on the commercial market and
schools. General Sound provides its customers, primarily electrical contractors,
with  engineered  systems,   assistance  in  design,  installation  support  and
post-installation service.

    General Sound has non-exclusive  distribution  agreements for the Dallas/Ft.
Worth area with Notifier,  Dukane, and other manufacturers.  The product mix and
dependence  on  individual  suppliers  varies  from  year to year  depending  on
customer requirements and market trends.

Research and Development

     During the fiscal years ended September 30, 1999 and 1998, Firetector spent
approximately $129,000 and $128,000,  respectively, for research and development
of Firetector's life safety and communication systems.

Customers and Suppliers

     For the  fiscal  years  ended  September  30,  1999 and 1998,  no  customer
accounted for more than 10% of Firetector's revenues.

Regulations

    Firetector believes that it is in compliance with applicable building codes,
zoning ordinances,  occupational, safety and hazard standards and other Federal,
state and local ordinances and regulations governing its business activities.


<PAGE>
Competition

    Firetector's business is competitive;  some of Firetector's  competitors may
have greater  financial  resources and may offer a broader line of fire and life
safety products.  Firetector also faces  competition in the servicing of systems
which it sells. Accordingly,  even though Firetector may sell and install a fire
and life  safety  control  and  communications  system,  it may not  receive the
contract to service  that  system.  Firetector,  however,  believes  that it can
effectively  compete with any entity which  conforms with  applicable  rules and
regulations.

Employees

    Firetector and its subsidiaries  have 120 full time employees,  including 43
New York hourly employees that are covered by a Collective  Bargaining Agreement
expiring June 2002.

Business Conditions

    Firetector  believes that its labor and material  sources are sufficient and
that other than normal competitive factors, and what is discussed above or under
"MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN OF  OPERATION",  Firetector's
operations and industry do not have any special characteristics which may have a
material impact upon its future financial performance.

Patents and Trademarks

    The  Company  does  not  have  any  patents  on its  systems,  but,  it uses
proprietary  technology  which  it  seeks  to  protect  as  trade  secrets.  The
"Firetector",  "Casey Systems" and "COMTRAK"  trademarks are registered with the
United States Patent and Trademark Office.

ITEM 2. DESCRIPTION OF PROPERTY

    The Company leases approximately 14,800 square feet of office, manufacturing
and warehouse  space in  Hicksville,  New York under a five year lease  expiring
February 29, 2000, with a five year renewal option. The rental schedule provides
for  monthly  rent of  $11,950  during the final  year of the  initial  term and
$15,785  during the final  year of the  renewal  term.  However  the  Company is
exploring  the lease of new office,  manufacturing  and  warehouse  space in the
central Long Island, New York area.


<PAGE>

     The Company had a lease for  approximately  3,000 square feet of office and
warehouse  space in New York City.  The lease term ran from May 13, 1994 through
May 12, 2004.  The lease  agreement  provided for annual rental fees of $51,941.
The Company  moved to a new location in New York City with  approximately  4,000
square feet for a total cost  (including  electricity) of $84,000 per year. This
new lease can be terminated  by the Company  giving ninety days notice or by the
landlord giving ninety days notice.

    The Company  leases a 7,700  square foot  office and  warehouse  facility in
Richardson,  Texas, a suburb of Dallas, pursuant to a lease that was extended in
October,  1997 to expire on April 30,  2003  providing  for annual rent on a net
basis of $51,700 escalating  annually to $61,200 in the final year of the lease.
The  Company  has a 24 month  renewal  option on the lease which would allow for
rent at the prevailing market rate and tenant responsibility for any increase in
common  area  expenses  over the 1997 base year.  Management  believes  there is
sufficient space at this facility for its current and intended business.

ITEM 3. LEGAL PROCEEDINGS

In the normal  course of its  operations,  the Company has been or, from time to
time, may be named in legal actions seeking monetary damages.  While the outcome
of these matters cannot be estimated with certainty, Management does not expect,
based  upon  consultation  with  legal  counsel,  that they will have a material
effect on the Company's business or financial condition.

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

     None

<PAGE>

                                     PART II

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

     Firetector's  Common Stock has been traded on the National  Association  of
Securities  Dealer's Inc. Automated  Quotation System ("NASDAQ") since April 11,
1989 under the "FTEC" symbol. The following table shows the high and low bid and
ask quotations for each fiscal quarter from December 31, 1997 through  September
30,  1999 which  quotations  were  obtained  from the  National  Association  of
Securities Dealers Inc. The prices have been adjusted to reflect the effect of a
one for three (1:3) reverse split which became effective on September 24, 1998.

Common Stock

Quarter Ended                        BID                         ASK
                             High           Low           High          Low
                            ---------------------------------------------------
December 31, 1997            1 1/8          5/8          13/16          22/32
March 31, 1998               1 1/4          3/4         1 5/16           7/8
June 30, 1998                1 1/4         25/32        1 5/16           3/16
September 30, 1998           1 1/4          1/4          11/2            7/16
December 31, 1998            1 3/8          1/16        1 1/2            7/8
March 31, 1999               2 3/16       1 1/32        2 1/4          1 3/32
June 30, 1999                2 1/8        1 1/8         2 3/16         1 3/16
September 30, 1999           3 3/4        1 5/16        3 7/8          1 13/32

     The above  quotations  represent  prices  between  dealers,  do not include
retail  markups,   markdowns  or  commissions  and  may  not  represent   actual
transactions.  As of  December  17,  1999,  there  were 452  record  holders  of
Firetector's Common Stock.

     On December 17, 1999 the bid and ask prices for the Common Stock were 1 3/8
and 1 1/2, respectively.

     The Company has not paid any cash dividends on its Common Stock. Payment of
cash dividends in the  foreseeable  future is not  contemplated  by the Company.
Whether dividends are paid in the future will depend on the Company's  earnings,
capital  requirements,  financial  condition  along  with  economic  and  market
conditions,  industry  standard  and other  factors  considered  relevant to the
Company's  Board of  Directors.  Payment of dividends is  restricted  in certain
cases by the Company's credit facilities. Accordingly, no assurance can be given
as to the amount or timing of future dividend payments, if any.


<PAGE>

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

LIQUIDITY AND CAPITAL RESOURCES

     In June 1998,  the Company  entered into a new three-year  credit  facility
with Citizens Business Credit Company of Boston,  Mass. (the "Credit Facility").
The  Credit  Facility  provides  for an  increased  revolving  line of credit of
$3,000,000 through June, 2001. The Credit Facility has an interest rate of prime
plus 3/4% on  outstanding  balances.  Advances  under the  Credit  Facility  are
measured  against a  borrowing  base  calculated  on  eligible  receivables  and
inventory.  The Credit  Facility is secured by all assets of the Company and all
of its operating  subsidiaries,  as well as a $300,000 letter of credit provided
by  Mirtronics,  Inc., an Ontario  corporation  which is the  Company's  largest
stockholder  ("Mirtronics").  The letter of credit is expected to be released by
the lender in January, 2000 based on the terms of the Credit Facility.

     The Credit Facility includes various  covenants,  which among other things,
impose  limitations on declaring or paying  dividends,  acquisitions and capital
expenditures. The company is also required to maintain certain financial ratios.
At September 30, 1999,  the Company was not in default with any of its financial
covenants and at such time owed $2,040,590 under the credit facility.

     Net cash provided by operations  for the twelve months ended  September 30,
1999 amounted to $3,000 as compared to cash being used by operations of $283,000
for the  comparable  prior period.  The primary reason for the limited amount of
cash  provided by  operations  was due to an increase  in trade  receivables  of
approximately  $730,000  resulting  from a $2.6  million  increase  in sales and
higher inventory related to increased backlog of orders. This inventory increase
was funded by an increase in accounts payable. The Company anticipates improving
its future cash position  through  continuation  of the  negotiation  of certain
terms with its customers prior to the beginning of a project,  the monitoring of
its terms during a project and completing projects in timely fashion,  resulting
in faster final payments.  It is the intention of the Company to closely monitor
this program throughout fiscal 2000.

     The ratio of the Company's current assets to current liabilities  increased
to  approximately  2.83 to 1 at September 30, 1999 compared to 2.79 at September
30, 1998.

     Firetector's terms of sale are net 30 days. However,  the normal receivable
collection  period is 60-120  days,  exclusive  of  retainage,  because  certain
governmental  regulations  and the Company's  frequent status as a subcontractor
(entitled to pro rata payments as the general  project is completed)  extend the
normal  collection  period.  Firetector  believes  this is a  standard  industry
practice.  Firetector's receivable experience is consistent with the industry as
a whole and will likely continue until the economic environment  improves.  This
could be considered an area of risk and


<PAGE>



concern.  However, due to the proprietary nature of Firetector's  systems,  many
projects require  Firetector's  cooperation to secure a certificate of occupancy
and/or to  activate/operate  a life safety system,  thus assisting  Firetector's
collection  of  a  significant   portion  or  even  total  payment,   even  when
Firetector's  immediate  account debtor's  (contractor)  creditors have seized a
project.

RESULTS OF OPERATIONS

Revenues

     Total revenues in 1999 were $16.9  million,  an increase of 18% compared to
revenues of $14.3  million in 1998.  This  increase was  primarily  due to a 28%
increase  in product  revenues  in 1999 to $12.8  million as  compared  to $10.0
million in 1998. This increase was attributed to significant construction in the
New York  City  Metropolitain  area for both  transit  and  commercial  projects
including  several large  audio/visual  projects for a museum, an auction house,
and a major  airport  facility.  The  Company's  Texas  operation  also realized
increased sales for fire alarm systems from school construction projects.

     Service  revenues  decreased  4% in 1999 to  $4,097,000.  The  decrease  in
service  revenues  reflects  lower than normal  call-in  maintenance  service on
Firetector systems and other systems.

Gross Profit

     Gross  profit  dollars  from  product  revenues  increased  29% in  1999 to
$4,233,000 as a result of the 28% increase in product sales. Gross profit margin
on product revenues remained essentially  unchanged at 33.0% in 1999 compared to
32.7% in 1998, as  competitive  pricing  offset the volume  contribution  to the
fixed overhead.

     Gross  profit  margin on service  revenues  decreased in 1999 from 37.2% to
29.1%.  This decrease reflects the effect of lower call-in  maintenance  service
revenue  in 1999 on  essentially  fixed  overhead.  Service  revenues  were also
adversely  impacted by flood damage to the New York City service  administrative
office and a sudden  unplanned  relocation of that office.  Insurance claims are
pending.

Selling, General and Administrative Expenses

     Selling,  General and Administrative  Expenses increased by 7% in 1999 over
1998 as a result of the Company's expanded  marketing  program.  This effort has
resulted in higher  revenues and the Company has achieved an  improvement in new
order bookings and record backlog of orders, as noted below.


<PAGE>


Income Before Tax

Operating  income  increased in 1999 to $510,000  compared to $261,000 in fiscal
1998.  The  improvement  in operating  income was primarily the result of higher
product  revenues  in 1999.  However,  the  improvement  was  limited by reduced
call-in  service  revenues,   increased  selling,   general  and  administrative
expenses,  and higher  depreciation and amortization.  In addition,  there was a
decrease in interest expense and other income (includes interest income) in 1999
due to a reduction in notes payable to and notes receivable from Mirtronics from
a Debt  Matching  Agreement  in 1998.  (See Note 2 -  Transactions  With Related
Parties) and certain cash repayments during 1999.

Tax Provisions

     The  Company's  current  income tax  provision  represents  state and local
income taxes and the  alternative  minimum tax for Federal income  purposes.  In
addition  deferred  taxes  were  provided  in  1999  due to a  reduction  in the
Company's  deferred  tax asset.  Firetector  retains  approximately  $310,000 of
additional net operating loss carry forwards,  the accounting  benefits of which
have been realized.

Order Position

     Firetector's order position,  excluding service, increased to $10.3 million
at  September  30,  1999 from $9.6  million at  September  30,  1998  reflecting
management's  recent intensified  marketing  efforts.  The higher order position
reflects the receipt in 1999 of significant new orders from several major subway
complexes,  a major transportation  center, and an airport facility.  Due to the
fact  that the  Company's  products  are sold and  installed  as part of  larger
construction  or mass transit  projects,  there is typically a delay between the
booking of the contract and its revenue realization. The order position includes
and the Company  continues  to bid on projects  that might  include  significant
subcontractor  labor,  and  expects  to be active in  seeking  orders  where the
Company would act as a prime contractor.

Plan of Operations

     During  fiscal  2000,  Management  intends  to  continue  to  focus  on its
intensified  marketing  programs  that  were  begun in 1998 and to  continue  to
contain or monitor fixed  overhead as well as to reduce  variable  costs through
improved   efficiency  and   productivity.   Enhancements  in  recent  years  to
Firetector's  management  information  systems  and  methods  of  approving  and
monitoring  project costs have improved  Management's  ability to pinpoint waste
and/or third party (supplier or customer) cost  responsibility.  Management will
also focus its efforts in 2000 to improve  accounts  receivable  collections  in
order to reduce the number of days sales outstanding.


<PAGE>

Year 2000

         The Company has  conducted an  evaluation  of the actions  necessary in
order to ensure  that its  computer  systems  will be able to  function  without
disruption  with respect to the  application of dating systems in the Year 2000.
As a result of these  evaluations the Company has upgraded and replaced  certain
of its  computer  information  and other  computer  systems  so as to be able to
operate  without  disruption  due to Year  2000  issues.  The  Company  has also
purchased and installed new software for its computer information system that is
Year 2000  compliant.  The  upgraded  computer  information  system is presently
performing all tasks and is accepting dates in the year 2000. Certain peripheral
personal  computers used outside the main computer  information system have also
been upgraded or replaced.. Performance of the Company's proprietary products is
not date sensitive.  However,  date  information is displayed on certain console
equipment.  The Company has completed  software  changes so that its proprietary
equipment is also compliant with respect to display  information and the Company
is installing these software upgrades to customer equipment in buildings as part
of normal  maintenance  service.  The  Company  estimates  that the costs of its
remedial  actions  taken or to be taken will not be  material  to the results of
operations or financial  condition.  In addition,  the Company believes that all
the remedial  actions being  implemented by the Company will be completed by the
time  necessary to avoid dating  systems  problems.  However,  disruptions  with
respect to the  computer  systems of vendors or  customers,  which  systems  are
outside the control of the  Company,  could impair the ability of the Company to
obtain necessary materials or products or to sell to or service their customers.
The Company  continues  to review Year 2000 issues with its major  suppliers  of
product and its service providers.  However,  there can be no guarantee that the
systems of other  companies on which the  Company's  systems rely will be timely
converted, or that a failure to convert by another company, or a conversion that
is  incompatible  with the Company's  systems would not have a material  adverse
effect on the Company.

INFLATION

The impact of inflation on the  Company's  business  operations is not material.
Casey's labor costs are normally controlled by union contracts covering a period
of three years and its material costs have remained  relatively  stable. In July
of this year,  after a brief work stoppage  (strike),  the Company and its union
agreed to a new three year contract  that  provides for wage  increases of 5% in
each year. The Company will try to mitigate the effect of this increase in labor
costs by price increases, if possible, and certain staff reductions.


<PAGE>




ITEM 7.  FINANCIAL STATEMENTS

     The consolidated  financial  statements  required to be filed hereunder are
indexed at Page 15 and are incorporated herein by reference.

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

None


<PAGE>
                                 PART III

         Incorporated by reference to the Registrant's Definitive Proxy.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

Exhibit No.            Description of Exhibit                 Page No.

3.1    Certificate of Incorporation of the Company, as
       amended (Exhibit 3.1)(1)

3.2    By-Laws of the Company (2)

4.1    Specimen Common Stock Certificate (2)

10.1   Credit Agreement dated June 23, 1998  between
       Firetector Inc. as Borrower and Citizens Business Credit Company
       as Lender (4)

10.2   Debt Matching  Agreement dated as of September 30, 1998 between
       Firetector Inc. and Mirtronics Inc. (4)

10.3   Amended  Debt/Equity  Agreement dated February 19, 1998 between
      Firetector Inc. and Mirtronics Inc. (4)

10.4   1997 Non-Qualified Stock Option Plan (Exhibit 10.6)(3)

22.1   Subsidiaries of the Registrant (Exhibit 22.1)(1)

27     Financial Data Schedule

- --------
     (1) Reference is made to the correspondingly  numbered Exhibit to Amendment
No. 1 to the  Company's  Registration  Statement on Form S-2,  Registration  No.
33-51472,  filed with the Commission on December 23, 1992, which is incorporated
herein by reference.

     (2) Reference is made to the correspondingly  numbered Exhibit to Amendment
No. 1 to the  Company's  Registration  Statement on Form S-1,  Registration  No.
22-26050,  filed with the Commission on January 23, 1989,  which is incorporated
herein by reference.

     (3)  Reference  is  made to the  correspondingly  numbered  Exhibit  to the
Company's  Annual Report on Form 10-KSB for the Fiscal Year Ended  September 30,
1997, which Exhibit is incorporated herein by reference.

     (4)  Reference  is  made to the  correspondingly  numbered  Exhibit  to the
Company's  Annual Report on Form 10-KSB for the Fiscal Year Ended  September 30,
1998, which Exhibit is incorporated herein by reference.


     (b)  Reports on Form 8-K

None
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange  Act of 1934,  the  Company has duly caused this Report to be signed on
its behalf by the undersigned, hereunto duly authorized.

                              FIRETECTOR INC.

                              (Registrant)

                          By: /s/ Daniel S. Tamkin
                              ------------------------------
                              Daniel S. Tamkin,
                              Chief Executive Officer and
                              Director

Dated: December 29, 1998

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

SIGNATURE                          TITLE                             DATE

/s/Daniel S. Tamkin              Chairman,                     December 28, 1999
- ----------------------         Chief Executive Officer
 Daniel S. Tamkin                and Director

/s/Joseph Vitale                 President, Chief Operating
-----------------------          Officer and Director          December 28, 1999
  Joseph Vitale

/s/John A. Poserina              Vice President,               December 28, 1999
----------------------           Chief Financial Officer
 John A. Poserina                Treasurer, Secretary,
                                 and Director


/s/Henry Schnurbach              Director                      December 28, 1999
------------------------
  Henry Schnurbach


/s/Dennis P. McConnell           Director                      December 28, 1999
------------------------
 Dennis P. McConnell


<PAGE>



                       Index to Consolidated Financial Statements

                        Firetector Inc. and Subsidiaries

                                     Item 7

Report of Independent Auditors ..........................................

Audited Consolidated Financial Statements

Consolidated Balance Sheet-September 30, 1999 ...........................

Consolidated Statements of Income

 Years Ended September 30, 1999 and 1998 ................................

Consolidated Statements of Stockholders' Equity

 Years Ended September 30, 1999 and 1998 ................................

Consolidated Statements of Cash Flows

 Years Ended September 30, 1999 and 1998 ................................

Notes to Consolidated Financial Statements ..............................


<PAGE>


                         Report of Independent Auditors

The Board of Directors and Stockholders
Firetector Inc.

We have audited the accompanying  consolidated  balance sheet of Firetector Inc.
and its  subsidiaries  as of  September  30, 1999 and the  related  consolidated
statements of income,  stockholders'  equity, and cash flows for each of the two
fiscal years in the period ended September 30, 1999. These financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  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  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
consolidated  financial  statement  presentation.  We  believe  that our  audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated statements referred to above present fairly, in
all material  respects,  the consolidated  financial position of Firetector Inc.
and its  subsidiaries as of September 30, 1999 and the  consolidated  results of
their  operations  and their cash flows for each of the two fiscal  years in the
period  ended  September  30,  1999,  in  conformity  with  generally   accepted
accounting principles.

New York, NY

December 3, 1999                       MOORE STEPHENS, P.C.


<PAGE>

                         Part I - FINANCIAL INFORMATION

                        FIRETECTOR INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET




                                                                   September 30,
                                                                       1999
                                                                   ------------
ASSETS

 CURRENT ASSETS
   Cash and cash equivalents                                          $233,000
   Accounts receivable, principally trade, less allowance
      for doubtful accounts of $221,000                              5,533,000
   Inventories                                                       2,255,000
   Deferred taxes                                                      262,000
   Prepaid expenses and other current assets                           175,000
                                                                   -------------
 TOTAL CURRENT ASSETS                                                8,458,000
                                                                   -------------


 PROPERTY, PLANT AND EQUIPMENT -at cost, less
    accumulated depreciation of $982,000                               280,000

 OTHER ASSETS                                                          210,000

 DEFERRED TAXES                                                         40,000
                                                                   -------------
 TOTAL ASSETS                                                       $8,988,000
                                                                   =============

    See accompanying Notes to the Consolidated Financial Statements

<PAGE>
                        FIRETECTOR INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET


                                                                   September 30,
                                                                        1999
                                                                   -------------
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

 Note payable to Mirtronics                                            $432,000
 Other notes payable - principally to related party                      70,000
 Accounts payable and accrued expenses                                2,128,000
 Unearned service revenue                                               342,000
 Current portion of capital lease obligations                            16,000
                                                                   -------------
TOTAL CURRENT LIABILITIES                                             2,988,000
                                                                   -------------


 Note payable to bank                                                 2,041,000
 Notes payable - principally to related party,
  less current portion                                                  182,000
 Capital lease obligations, less current portion                         21,000
                                                                   -------------
TOTAL LIABILITIES                                                     5,232,000
                                                                   -------------
COMMITMENTS AND CONTINGENCIES (NOTES 5 and 12)

STOCKHOLDERS' EQUITY

 Convertible preferred stock, 2,000,000 shares authorized-
    $1.00 par value; none issued and outstanding
 Common stock, 10,000,000 shares authorized, $.001
    par value; issued and outstanding 1,571,097 shares                    2,000
 Capital in excess of par                                             5,159,000
 Deficit                                                             (1,405,000)
                                                                   -------------
TOTAL STOCKHOLDERS' EQUITY                                            3,756,000
                                                                   -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            8,988,000
                                                                   =============

 See accompanying Notes to the Consolidated Financial Statements
<PAGE>
                        FIRETECTOR INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME


                                              For the Years ended  September 30,
                                                   1999                 1998
                                              -------------         ------------

Net sales                                      $12,795,000          $10,025,000
Service revenue                                  4,097,000            4,274,000
                                              -------------         ------------
Total revenues                                  16,892,000           14,299,000
                                              -------------         ------------


Cost of sales                                    8,562,000            6,745,000
Cost of service                                  2,873,000            2,682,000
Selling, general and administrative              4,485,000            4,198,000
Interest expense                                   240,000              260,000
Depreciation and amortization expense              228,000              206,000
Other (income) - net                                (6,000)             (53,000)
                                              -------------         ------------
                                                16,382,000           14,038,000
                                              -------------         ------------
Income from  operations before provision
   for income taxes                                510,000              261,000

Provision  for income taxes:
  Current                                          128,000               50,000
  Deferred                                          72,000
                                              -------------         ------------
                                                   200,000               50,000
                                              -------------         ------------
Net Income                                        $310,000             $211,000
                                              =============         ============
Earnings Per Common Share
 Basic Earnings Per Share                           $0.20                $0.15
 Diluted  Earnings Per Share                        $0.18                $0.11
                                                    =====                =====

Weighted Average Number of Common
 Shares Outstanding                              1,571,097            1,420,045

Weighted Average Number of Common and
 Potential Dilutive Common Shares Outstanding    1,723,653            2,145,202




See accompanying Notes to the Consolidated Financial Statements


<PAGE>


                        FIRETECTOR INC. and SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

                     YEARS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
                                         TOTAL
                                     STOCKHOLDERS'          PREFERRED          STOCK           COMMON             STOCK
                                         EQUITY               SHARES           AMOUNT          SHARES             AMOUNT
                                  --------------            ---------         ----------     -----------         --------
<S>                                  <C>                    <C>               <C>             <C>                 <C>
Balance at September 30, 1997        $3,910,000             $675,000          $675,000        3,523,287           $4,000

Issuance of shares from exercise
  of options                            552,000                                               1,840,000            2,000
Debt restructing                       (675,000)            (675,000)         (675,000)
Retirement of  Shares                  (552,000)                                               (650,000)          (1,000)
Reverse stock split (1 for 3)                 0                                              (3,142,190)          (3,000)
Net Income                              211,000
                                     -----------            ---------         ---------      -----------         --------
Balance at September 30, 1998        $3,446,000                   $0                $0        1,571,097           $2,000

Net Income                              310,000
                                     -----------            ---------         ---------      -----------         --------
Balance at September 30, 1999        $3,756,000                   $0                $0        1,571,097           $2,000
                                     ============           =========         =========      ===========         ========
</TABLE>
(continued)
<PAGE>
                        FIRETECTOR INC. and SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
                     YEARS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (continued)

                                      CAPITAL          RETAINED
                                      IN EXCESS         EARNINGS
                                       OF PAR         (DEFICIT)
                                     -----------     ------------

Balance at September 30, 1997        $5,157,000      ($1,926,000)

Issuance of shares from exercise
  of options                            550,000
Debt restructing
Retirement of  Shares                  (551,000)
Reverse stock split (1 for 3)             3,000
Net Income                                               211,000
                                     -----------     ------------
Balance at September 30, 1998        $5,159,000      ($1,715,000)

Net Income                                               310,000
                                     -----------     ------------
Balance at September 30, 1999        $5,159,000      ($1,405,000)
                                     ===========     ============
See accompanying Notes to the Consolidated Financial Statements

<PAGE>

                        FIRETECTOR INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                 For the Years Ended September 30,
                                                                      1999                  1998
                                                                  -----------           -----------
OPERATING ACTIVITIES
<S>                                                                 <C>                  <C>
Net income                                                          $310,000             $211,000
 Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
  Depreciation and amortization                                      228,000              225,000
  Provision for doubtful accounts                                     72,000              113,000
 Changes in operating assets and liabilities:
  Accounts receivable                                               (736,000)          (1,160,000)
  Inventories, prepaid expenses and other current assets            (388,000)             (44,000)
  Deferred taxes                                                      72,000
  Accounts receivable from affiliated companies                                           493,000
  Other assets                                                        17,000              (13,000)
  Accounts payable and accrued expenses                              390,000              395,000
  Unearned service revenue                                            (1,000)               6,000
  Due to affiliated companies                                         39,000             (509,000)
                                                                  -----------           ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                    3,000             (283,000)
                                                                  -----------           ----------
INVESTING ACTIVITIES
  Purchases of property, plant and equipment                         (62,000)             (54,000)
                                                                  -----------           ----------
NET CASH (USED IN) INVESTING ACTIVITIES                              (62,000)             (54,000)
                                                                  -----------           ----------
FINANCING ACTIVITIES

  Borrowings under new revolving credit agreement                                       1,716,000
  Principal payments on revolving line of credit, long-term
    debt, notes payable and capital lease obligations               (105,000)          (2,004,000)
  Proceeds from revolving line of credit and notes payable           292,000              151,000
  Issuance of common stock in connection with exercise of option                          552,000
  Repurchase of common stock                                                             (552,000)
                                                                  -----------           ----------
NET CASH PROVIDED BY/(USED IN)  FINANCING ACTIVITIES                 187,000             (137,000)
                                                                  -----------           ----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                 128,000             (474,000)

Cash and cash equivalents at beginning of year                       105,000              579,000
                                                                  -----------           ----------
Cash and cash equivalents at end of year                            $233,000             $105,000
                                                                  ===========           ==========
</TABLE>


See accompanying Notes to the Consolidated Financial Statements

<PAGE>
<TABLE>
<CAPTION>
                                                                 For the Years Ended September 30,
                                                                      1999                  1998
                                                                  -----------           -----------

SUPPLEMENTAL CASH FLOW INFORMATION:

<S>                                                               <C>                    <C>
Cash paid during the year for:
  Income taxes                                                      $73,000              $211,000
  Interest                                                         $192,000              $159,000
</TABLE>


      SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

     During the years ended  September 30, 1999 and 1998,  the Company  incurred
capital  lease  obligations  of  $26,000  and  $11,000  respectively,   for  the
acquisition of equipment.

     In the year ended  September 30, 1998, the Company  restructured  preferred
stock and notes  payable to Mirtronics by the issuance of $845,000 of new notes.
(See Note 2 - Transactions With Related Parties).

See accompanying Notes to the Consolidated Financial Statements

<PAGE>
1. Summary of Significant Accounting Policies

Use 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 September 30, 1999, and reported amounts of
revenues and expenses  during the fiscal year.  Actual results could differ from
those estimates.

Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its  subsidiaries,  all of which  are  wholly  owned.  The  principal  operating
subsidiaries  are: Casey Systems Inc.  ("Casey"),  General Sound (Texas) Company
("GenSound"),  Pyrotech Service Inc.  ("Pyrotech"),  Systems Service  Technology
Corp.   ("SST")  and  Amco   Maintenance   Corporation   ("AMCO").   Significant
intercompany  items and transactions have been eliminated in consolidation.  The
Company  is  a  subsidiary  of  Mirtronics,  Inc.  ("Mirtronics"),   an  Ontario
publicly-held corporation.

Business

The Company operates in one industry segment: the design, manufacture, marketing
and  service  of a variety  of data  communications  product  and  systems  with
applications   in  the  fire  alarm,   life   safety,   transit,   security  and
communications industry.

Revenue Recognition

Sales are recognized when product is shipped to customers.  Service revenue from
maintenance  contracts is recognized on a straight-line  basis over the terms of
the  respective  contract,  which is generally  one year.  Non-contract  service
revenue is recognized when services are performed.

Inventories

Inventories are priced at the lower of cost (first-in,  first-out) or market and
consist primarily of raw materials.

Property and Equipment

Property  and  equipment  are stated at  historical  cost.  Leases  meeting  the
criteria for  capitalization  are recorded at the present  value of future lease
payments.

Depreciation  and  amortization  of machinery  and  equipment  and furniture and
fixtures are provided primarily by the straight-line method over their estimated
useful lives. The Company depreciates  machinery and equipment over periods of 3
to 10 years and  amortizes  leasehold  improvements  and assets  acquired  under
capitalized  leases over the life of the lease or their  economic  useful  life,
whichever is shorter.

Other Assets

Other assets are comprised principally of the excess of cost over the fair value
of the assets  acquired,  and  selected  assets  and  service  contracts  in the
formation of SST. The excess of cost over the fair value of the assets  acquired
approximates  $123,000 (net of accumulated  amortization of $51,000) and relates
principally to the 1990 acquisition of GenSound.  This amount is being amortized
over forty  years under the  straight  line  method.  The  acquisition  costs of
selected assets and service  contracts  ($201,000) are being amortized under the
straight  line method over periods of three to fifteen  years,  which  commenced
April 1, 1994.

The Company evaluates the periods of goodwill  amortization to determine whether
later events and  circumstances  warrant revised  estimates of useful lives. The
Company  also  evaluates  whether  the  carrying  value of  goodwill  has become
impaired.

Income Taxes

The Company  accounts for income taxes under  Statement of Financial  Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes". Under SFAS No. 109, the
asset  and  liability  method  is used to  determine  deferred  tax  assets  and
liabilities based on differences  between  financial  reporting and tax bases of
assets and  liabilities  and are  measured  using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.

Earnings Per Share

SFAS No. 128 "Earnings Per Share" requires companies to report basic and diluted
earnings per share  ("EPS")  computations.  Basic EPS  excludes  dilution and is
based on the  weighted-average  common shares  outstanding and diluted EPS gives
effect to potential  dilution of securities  that could share in the earnings of
the Company. Diluted EPS reflects the assumed issuance of shares with respect to
the Company's employee stock options,  non-employee stock options,  warrants and
convertible  notes and  preferred  stock.  The EPS and Weighted  Average  Shares
Outstanding  reflect a 1 for 3 reverse  split of common stock that was effective
in September 1998.

Cash  Equivalents

The Company  considers  all highly  liquid  investments  with
maturities of three months or less when purchased to be cash equivalents.

Concentration of Credit Risk

The Company's  operations  are located in two large U.S.  cities (New York City,
New York and Dallas, Texas), each of which is an independent market. The Company
grants  credit  to its  customers,  principally  all of  which  are  general  or
specialized construction  contractors,  none of which individually constitutes a
significant  portion  of  outstanding  receivables.  Approximately  85% of  such
outstanding  receivables  at  September  30, 1999 are due from  customers in New
York.

At September 30, 1999,  the Company had  approximately  $235,000 based on checks
that had not  cleared  the  financial  institutions  that are subject to insured
amount limitations. The Company does not require collateral to support financial
instruments subject to credit risk.


Stock Options and Similar Equity Instruments

The Company  adopted the  disclosure  requirements  of  Statement  of  Financial
Accounting   Standards   ("SFAS")   No.   123,   "Accounting   for   Stock-Based
Compensation," for stock options and similar equity  instruments  (collectively,
"Options") issued to employees;  however, the Company will continue to apply the
intrinsic  value based  method of  accounting  for options  issued to  employees
prescribed by Accounting  Principles  Board ("APB") Opinion 25,  "Accounting for
Stock  Issues  to  Employees,'  rather  than  the fair  value  based  method  of
accounting prescribed by SFAS No. 123. SFAS No. 123 also applies to transactions
in which an entity  issues its equity  instruments  to acquire goods or services
from  non-employees.  Those transactions must be accounted for based on the fair
value of the consideration  received or the fair value of the equity instruments
issued, whichever is more reliably measured. (see Note 12).

2. Transactions with Related Parties

In  consideration  of collateral  support for a previous credit facility for the
Company  and  various  loans over  several  years,  the  Company  had granted to
Mirtronics  options to purchase the Company's  Common Stock.  Mirtronics had the
right to acquire up to an  aggregate  of  613,333  shares of common  stock at an
exercise  price of $.90 per share,  a portion of which were held for the benefit
of the  Company's  Chairman.  These  options were to expire on December 31, 1998
(See  Note  12).  In  addition,  the  Company  had  previously  entered  into  a
Debt/Equity Agreement with Mirtronics,  that provided for the retirement of debt
and the issuance to  Mirtronics  of 225,000  ($675,000  before effect of 1 for 3
reverse  split) shares of Preferred  Stock,  which could also be converted  into
450,000 shares of common stock.

In February 1998, the Company and Mirtronics  reached an agreement to reorganize
the options,  convertible  debt and preferred  stock held by Mirtronics so as to
reduce the potential  dilution of these  securities by 366,667  shares of common
stock.  Under this  agreement,  Firetector  redeemed the $675,000 of Convertible
Preferred  Stock and  $170,000 of  convertible  debt for an  aggregate  price of
$845,000. These securities were convertible into 563,333 shares of common stock.
In satisfaction  thereof,  Firetector  issued a $620,000  Convertible  Note with
interest at 10% (payable  upon demand and  convertible  into  413,333  shares of
common stock at a conversion  price of $1.50 per share until December 31, 2002),
and a $225,000  Note  (without a  convertible  feature),  with  interest at 10%,
payable upon demand.  The foregoing notes are limited as to repayment based upon
covenant  requirements  and  borrowing  availability  under  the  terms  of  the
Company's  Credit  Facility.   Also  in  connection  with  this  reorganization,
Mirtronics   exercised  613,333  options  for  common  stock  for  an  aggregate
consideration of $552,000 and Firetector simultaneously  repurchased and retired
216,667 of the newly issued shares for $552,000.

In September  1998,  the Company  entered into a Debt  Matching  Agreement  with
Mirtronics  whereby an aggregate of $508,619 due by Mirtronics to Firetector was
applied  to  reduce  the  notes  payable  and  interest  due  by  Firetector  to
Mirtronics.  As a  consequence  of this debt  matching  agreement,  the $225,000
Non-Convertible  note with  interest  of $13,870 was  satisfied  in full and the
$620,000  Convertible Note with interest of $38,219 was reduced to a new balance
of $392,973. In addition,  the right to convert this note into 413,333 shares of
common  stock was  surrendered  in  consideration  for a new warrant to purchase
310,000  shares of common stock (the "1998  warrants").  These 1998 warrants are
exercisable at anytime until December 31, 2003 at an exercise price of $1.02 per
share.

In  consideration  of collateral  support for the Company's  Credit  Facility in
1994, the Company granted Gentura Capital  Corporation,  an Ontario Corporation,
("GCC") options for 166,667 unregistered shares of the Company's common stock at
$.90 per share through  December 31, 1999. In July 1996, GCC exercised 33,334 of
these options at $.90 per share. Subsequent to September 30, 1999, GCC exercised
the  outstanding  balance of these options for $120,000 and the Company  reduced
its note payable to  Mirtronics  for a like amount.  An officer of GCC is also a
director of Mirtronics (See Note 12).

At the  termination of employment of an  officer/director  of the Company (other
than for  cause),  the  officer  was  granted  the right to cause the Company to
repurchase  up to 8,437  shares of common stock from the  officer/director  at a
price of $38.88 per share by means of a seven year  installment  promissory note
bearing interest of 4% per annum. On December 1, 1996 the officer  exercised the
option and,  commencing January 1, 1997, the Company repurchased 8,437 shares at
a price of $38.88 payable monthly over seven years at an interest rate of 4% per
annum.  In  October  1991,  the  Company,  as a  provision  of a  new  four-year
employment  agreement  with the  officer/director,  granted  options to purchase
2,917 shares of common stock at $1.00 per share  exercisable  through  March 15,
2001.

3. Property, Plant and Equipment

Property  and  equipment  (including  those  arising  from  capital  leases) are
summarized as follows:

                                                   September 30,
                                                       1999
                                                   ------------
  Machinery and equipment                          $1,052,000
  Furniture and fixtures                              126,000
  Equipment under capitalized leases                   42,000
  Leasehold improvements                               42,000
                                                   ------------
                                                    1,262,000
  Less accumulated depreciation
   and amortization                                   982,000
                                                   ------------
                                                     $280,000

Annual   amortization  of  equipment  under  capital  leases  is  included  with
depreciation and amortization expense.

Depreciation expense was $173,000 and $168,000 for the years ended September 30,
1999 and 1998, respectively.

4. Long-Term Debt

In 1998, the Company entered into a new revolving  credit facility with Citizens
Business Credit Company of Boston, Mass (the "Credit Facility').  The new credit
facility  provides for a $3,000,000  revolving  line of credit through June 2001
and carries an interest rate of prime plus 3/4% on outstanding  balances  (9.25%
at September 30, 1999).  The Credit  facility  limits  capital  expenditures  to
$250,000 in each year. At September 30, 1999  $2,041,000 was  outstanding  under
this  facility.  Advances  under the  credit  facility  are  measured  against a
borrowing base  calculated on eligible  receivables  and  inventory.  The credit
facility is secured by all of the assets of the Company and all of its operating
subsidiaries,  as well as a $300,000  letter of credit  provided by  Mirtronics,
which is expected to be released by the lender in January 2000 based on terms of
the Credit Facility.

The Credit Facility includes certain  restrictive  covenants,  which among other
things,  impose  limitations on declaring or paying dividends,  acquisitions and
capital expenditure.  The Company is also required to maintain certain financial
ratios.  At  September  30,  1999,  the Company was not in default of any of its
financial covenants.

Annual maturities of Loans and Notes Payable are as follows:

                                     Bank                 Other Notes
                                     Loan                   Payable
                                  -----------             -----------
               2000                                        $504,000
               2001               $2,041,000                 59,000
               2002                                          57,000
               2003                                          48,000
               2004                                          16,000
                                  ------------            -----------
               Total              $2,041,000               $684,000
                                  ============            ===========

At September 30, 1999, the notes payable to Mirtronics  totaled $432,000.  While
these  notes are  payable on demand,  they are  subordinate  to and subject to a
payment  restriction under the Company's Credit Facility with its bank (See Note
2).

5. Leases

The Company  leases  certain  office and  warehouse  space  under  noncancelable
operating   leases  expiring  at  various  times  through  2004.  The  Company's
Hicksville,  New York facility  lease expires in February  2000.  The Company is
exploring  the lease of new office,  manufacturing  and  warehouse  space in the
central  Long Island,  New York area.  The Company  also leases  certain  office
equipment and vehicles under noncancelable capital and operating leases expiring
in various years through fiscal 2003.

The  following  is a schedule  of future  minimum  payments,  by year and in the
aggregate,  under non  cancelable  capital and operating  leases with initial or
remaining terms of one year or more at September 30, 1999:

                                                Capital Leases  Operating Leases

2000                                                $20,000          $130,000
2001                                                  9,000            71,000
2002                                                  5,000            64,000
2003                                                  5,000            37,000
                                                    --------         ---------
Total minimum lease payments                         39,000          $302,000
                                                                     =========
Less amount representing interest                     2,000
                                                    --------
Present  value of net minimum  lease  payments
 (including  current portion of $17,000)            $37,000
                                                    ========

Rental   expense   amounted  to  $258,000   and  $237,000  for  1999  and  1998,
respectively.

6. Significant Customers

During fiscal 1999 and 1998, no customer accounted for more than 10% of sales.

7. Income Taxes

During the year ended  September 30, 1999, the Company  recorded a tax provision
of  $200,000  compared  to $50,000  for the year ended  September  30,  1998.  A
reconciliation  of such with the  amounts  computed by  applying  the  statutory
federal income tax rate is follows:

                                                        Year ended September 30,
                                                               1999        1998
                                                             --------   --------
Statutory federal income tax rate                              34%        34%
Computed expected tax from income                            173,000    $89,000
Increase in taxes resulting from:
State and local income taxes, net of Federal tax benefit      77,000     31,000
Alternative minimum tax                                       11,000      7,000
Nondeductible expenses                                         8,000      2,000
                                                            ---------   --------
Actual tax applicable to income                              269,000    129,000
 Increase (decrease) in taxes resulting from:
 Benefit of future tax deductible items                      (69,000)
 Reduction in valuation allowances to give effect to
  use of net operating loss carryforwards                              (136,000)
 Reduction of state tax benefit for future use of net
  operating losses                                                       57,000
                                                            ---------  ---------
Provision                                                   $200,000    $50,000
                                                            =========  =========

The Company  provided  $32,000 and  $25,000  for state and local  franchise  and
capital  taxes for the years ended  September  30, 1999 and 1998,  respectively.
These  expenses  have been  included  in  selling,  general  and  administrative
expenses for each of the years presented.

The Company has accumulated approximately $310,000 of net operating losses as at
September 30, 1999 which may be used to reduce  taxable  income and income taxes
in future years.  The  utilization of these losses to reduce future income taxes
will  depend  on the  generation  of  sufficient  taxable  income  prior  to the
expiration of the net operating loss carryforwards in 2010.

The  Company  has  recorded a deferred  tax asset of  approximately  $302,000 at
September 30, 1999 related to its net operating loss  carryforwards  and certain
book  provisions  to be  deducted  in future tax  returns.  In 1998 the  Company
expected  to  realize  all of the  deferred  tax  asset.  As a  consequence  the
valuation  allowance  was  decreased  by  $136,000 to zero during the year ended
September 30, 1998.  The expected  realization  was based on  experiencing  four
consecutive years of profits.  Management  anticipates  profitable operations to
continue at a level that will result in the  utilization of the entire  deferred
tax asset.

8.  Stock Split

On September 24, 1998, the Company  effected a one for three reverse stock split
of the outstanding shares of common stock of the Company.  All references in the
accompanying  financial  statements to the number of common shares and per share
amounts have been restated to reflect the reverse stock split.

9. Earnings Per Share

Shown below is a table that presents for 1999 and 1998 the  computation of basic
earnings per share, diluted earnings per share, weighted shares outstanding, and
weighted average shares after potential  dilution.  All earnings per share data,
stock option data, and weighted shares  outstanding give effect to the Company's
1 for 3 reverse stock split that was effective in September 1998.

                                                       Year Ended
Basic EPS Computation                           1999               1998

  Net Income available to common
   shareholders                                  $310,000          $211,000
  Weighted average outstanding shares           1,571,097         1,420,045

  Basic EPS                                        $.20              $.15
                                                  ======           =======

Diluted EPS Computation
  Income available to common
    shareholders                                 $310,000          $211,000
  Impact of convertible notes                                        26,000
  Diluted net income                              310,000           237,000
  Weighted-average shares                       1,571,097         1,420,045
    Plus:  Incremental shares from
            assumed conversions
    Non Employee Stock Options                    130,725           251,724
    Convertible preferred stock                                     172,602
    Convertible debt                                                254,795
    Employee Stock Options                         21,831            46,036
    Warrants*
                                                ----------        ----------
  Dilutive potential common shares                152,556           725,157
                                                ----------        ----------
  Adjusted weighted-average shares              1,723,653         2,145,202
                                                ----------        ----------
  Diluted EPS                                      $.18              $.11
                                                ==========        ==========

*Warrants  convertible  into 33,334 shares were  antidilutive in the years ended
September 30, 1999 and 1998, respectively.


10. Other Matters

a.   Product  development  costs  charged to income  approximated  $129,000  and
     $128,000, for the years ended September 30, 1999 and 1998, respectively.

Selling,  general and  administrative  expenses include  provisions for doubtful
accounts  amounting to $72,000 and  $113,000  for the years ended  September 30,
1999 and 1998, respectively.

11. Employee Stock Options, Options, and Warrants

On April 30, 1997, the Company and its shareholders adopted a nonqualified stock
option plan ("1997  Plan"),  which  expires  September  30,  2002,  except as to
options then outstanding  under the 1997 Plan. Under the 1997 Plan, the Board of
Directors  may grant options to eligible  employees at exercise  prices not less
than 100% of the fair market  value of the common  shares at the time the option
is granted.  The number of shares of Common  Stock that may be issued  shall not
exceed an aggregate of up to 10% of its issued and outstanding  shares from time
to time.  Options vest at a rate of 20% per year  commencing one year after date
of grant. Issuances under the 1997 Plan are to be reduced by options outstanding
under a 1990  nonqualified  stock  option  plan  (replaced  by the  1997  Plan).
Effective September 30, 1998, all outstanding  employee stock options were reset
to an exercise price of $1.00 per share.

The Company  applies the instrinsic  value base method of accounting for options
issued to employees  rather than the fair value based method of  accounting.  If
the Company had elected to recognize  compensation  expense  based upon the fair
value at the  grant  date for  awards  under  these  plans  consistent  with the
methodology  prescribed by SFAS 123, the Company's net income and net income per
share would be reduced to the pro forma amounts indicated below:

                                                   1999              1998
Net Income:
       As reported                              $310,000          $211,000
       Pro forma                                 294,000           211,000

Fully diluted earnings per common share:
        As reported                               $0.18              $011
        Pro forma                                  0.17              0.11



These pro forma amounts may not be  representative  of future  disclosures since
the  estimated  fair value of stock  options is  amortized  to expense  over the
vesting  period for  purposes of future pro forma  disclosures,  and  additional
options  may be granted in future  years.  The fair value of these  options  was
estimated at the date of grant using the Black-Scholes option-pricing model with
the following  weighted  average  assumptions  for both 1999 and 1998:  dividend
yield of zero;  expected volatility of 85% and 92% and expected life of 4 years.
The weighted  average  risk fee interest  rates for 1999 and 1998 were 5.40% and
6.30%,  respectively.  The weighted average fair value of options granted during
1999,  for which the exercise price equaled the market price on the grant dates,
was $1.125. The option price for all employee stock options outstanding prior to
fiscal 1999 was reset to $1.00 effective September 30,1998.

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

Transactions involving stock options are summarized as follows:

                                                              Weighted Average
                                                             Exercise Price of
                            Stock Options Outstanding       Options Outstanding
Balance September 30,1997            218,875                       1.06
 1 for 3 Reverse Stk Split          (145,917)                      3.18
Balance September 30, 1998            72,958                       1.00
 Options granted                      35,000                       1.13
Balance September 30, 1999           107,958                       1.04


There  were  54,136  exercisable  options  at  September  30,  1999  and  42,709
exercisable options at September 30, 1998.

The following table summarizes  information concerning currently outstanding and
exercisable stock options.

                   Outstanding at        Weighted Average     Exercisable at
Exercise Price   September 30, 1999      Contractual Life     September 30, 1999
$1.00                 27,250                 1.5 years             27,250
  1.00                16,125                 1.5 years             12,094
  1.00                 4,500                 2.3 years              2,250
  1.00                25,083                 3.0 years             12,542
  1.13                35,000                 5.0 years              - 0 -

Mirtronics  is the  largest  shareholder  of the  Company.  In  1994  and  1995,
Mirtronics  provided  financial  assistance to the Company by way of a Letter of
Credit in support of the  Company's  Credit  Facility,  further  advances to the
Company,  and an exchange of debt for equity.  In connection with this financial
assistance,  the Company granted  Mirtronics options to acquire common stock and
issued  Series 1 Preferred  Stock in exchange for debt.  In February  1998,  the
Company and Mirtronics  agreed to restructure the options,  convertible debt and
preferred stock, and in September 1998, the Company and Mirtronics  entered into
a Debt  Matching  Agreement  to  offset  obligations  with  each  other  and for
Mirtronics to surrender the conversion  option on 413,333 shares of common stock
for a new warrant for 310,000 shares of common stock.  (See Note 2 - Transaction
with Related Parties).

In February 1994, the Company  issued options to purchase  166,667  unregistered
shares of common stock at a $.90 per share to GCC in  consideration of providing
an income guaranty to support the Company's Credit Facility.  Options for 33,334
shares were exercised in July 1996 (also see Note 2 - Transactions  with Related
Parties) and options for 133,333 were exercised subsequent to September 30, 1999
in December 1999.

In May 1995, the Company  granted  Judson  Enterprises,  Ltd.  33,334 options to
purchase  common stock at a price of $3.00 per share in exchange for  investment
banking  services.  In April 1997,  the Company  entered  into an  agreement  to
exchange 16,667 of these options for 16,667 new options to purchase common stock
at a price  of  $4.50.  Based  on  calculations  done  in  accordance  with  the
requirements of SFAS 123, stock based  compensation  expense resulting from this
transaction was immaterial.

Transactions involving non-employee stock options and warrants are summarized as
follows:

Weighted Average
                                Options and Warrants        Exercise Price of
                                    Outstanding            Options Outstanding

Balance September 30,1997            2,377,500                     .34
 Exercised/Expired                   1,847,500                     .30
 1 for 3 Reverse Stk Split            (353,333)                   1.30
 Effect of Debt Matching               310,000                    1.02
Balance September 30, 1998             486,667                    1.17
Balance September 30, 1999             486,667                   $1.17

All of these options were exercisable at the end of the periods indicated in the
above schedule.

The following table summarizes  information concerning currently outstanding and
exercisable non-employee stock options and warrants.

                     Outstanding at      Weighted Average       Exercisable at
Exercise Price     September 30, 1999    Contractual Life     September 30, 1999
  .90                   143,333             .2 years               143,333
  3.00                   16,667            1.5 years                16,667
  4.50                   16,667            2.5 years                16,667
  1.02                  310,000            4.3 years               310,000


12. Contingencies

In the normal  course of its  operations,  the Company has been or, from time to
time, may be named in legal actions seeking  monetary  damages.  Management does
not expect,  based upon consultation with legal counsel,  that any material item
exists that will affect the Company's business or financial condition.

3. Other

Approximately  36%  of  the  Company's   employees  are  covered  by  collective
bargaining agreements. The present contract expired in June 1999. A new contract
has been agreed to and will expire June 2002. The final formal document for this
agreement is still being formalized and will be signed at a later date.

Effective  January 1, 1996,  the Board of  Directors  instituted a 401K plan for
nonunion  employees.  The  plan  includes  a  profit  sharing  provision  at the
discretion of the Board of Directors.  In 1999 a profit sharing  contribution of
$28,000 was charged to expense. There was no contribution related to 1998.

14. Fair Value of Financial Instruments

SFAS No. 107, "Disclosures about Fair Values of Financial Instruments", requires
disclosing fair value to the extent practicable for financial  instruments which
are  recognized  or  unrecognized  in the balance  sheet.  The fair value of the
financial instruments disclosed herein is not necessarily  representative of the
amount  that  could be  realized  or  settled,  nor does the fair  value  amount
consider the tax consequences of realization or settlement.

For certain financial  instruments,  including cash and cash equivalents,  trade
receivables and payables,  and short-term debt, it was assumed that the carrying
amount  approximated  fair  value  because of the near term  maturities  of such
obligations.  The fair value of long-term debt was  determined  based on current
rates at which the Company could borrow funds with similar remaining maturities,
which amount approximates its carrying value.

15.  Authoritative Pronouncements

In February  1998,  the FASB issued SFAS No. 132,  "Employers  Disclosure  about
Pensions and Other Postretirement Benefits", which is effective for fiscal years
beginning after December 15, 1997. The modified  disclosure  requirements do not
have a  material  impact  on the  Company's  results  of  operations,  financial
position or cash flows.

The FASB has  issued  Statement  of  Financial  Accounting  Standards  No.  133,
Accounting  for  Derivative  Instruments  and Hedging  Activities.  SFAS No. 133
establishes  accounting  and  reporting  standards for  derivative  instruments,
including  certain  derivative  instruments  embedded in other contracts and for
hedging  activities.  SFAS  No.  133  requires  that  an  entity  recognize  all
derivatives  as either  assets or  liabilities  in the  statement  of  financial
position and measure those instruments at fair value. The accounting for changes
in the fair value of a derivative  depends on the intended use of derivative and
how it is designated, for example, gain or losses related to changes in the fair
value of a derivative  not  designated as a hedging  instrument is recognized in
earnings  in the period of the  change,  while  certain  types of hedging may be
initially  reported  as a  component  of  other  comprehensive  income  (outside
earnings) until the consummation of the underlying transaction.

SFAS No. 133 is  effective  for all fiscal  quarters of fiscal  years  beginning
after June 15,  2000.  Initial  application  of SFAS No. 133 should be as of the
beginning  of a fiscal  quarter;  on that date,  hedging  relationships  must be
designated  anew and  documented  pursuant  to the  provisions  of SFAS No, 133.
Earlier  application  of all of the  provisions  of  SFAS  No.  133 is not to be
applied retroactively to financial statements of prior periods. The Company will
evaluate  the  new  standard  to  determine  any  required  new  disclosures  or
accounting.

16.  Reclassifications

Certain  reclassifications  have  been  made  to the  prior  period's  financial
statements in order to conform them to the classifications  used for the current
year.