US SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                   FORM 10-QSB


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

                  For the quarterly period ended July 31, 1999.
                        Commission File Number: 0-27382.

                            SC&T INTERNATIONAL, INC.
           ----------------------------------------------------------
           (Exact name of small business as specified in its charter)


            ARIZONA                                         86-0737579
-------------------------------                    -----------------------------
(State or other jurisdiction of                    (IRS Employer Identification)
incorporation or organization)


                7625 E. REDFIELD RD., SCOTTSDALE, ARIZONA 85260
                -----------------------------------------------
                    (Address of principal executive offices)


                                 (480) 368-9490
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or 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 [ ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares  outstanding of each of the issuer's  classes of
common equity as of August 30, 1999 latest practicable date: 4,551,064 shares of
Common Stock, par value $0.01 per share.

     Transitional Small Business Disclosure Format (Check one): Yes [ ]  No [X]
<PAGE>
                            SC&T INTERNATIONAL, INC.
                                 AND SUBSIDIARY



                                                                          Page
PART I FINANCIAL INFORMATION

Item 1 Financial Information

       Consolidated Balance Sheet as of July 31,1999                        3

       Consolidated Statements of Operations for the Three Months
           Ended July 31,1999 and July 31, 1998                             4

       Consolidated Statement of Shareholders' Equity for the Three
           Months Ended July 31, 1999                                       5

       Consolidated Statements of Cash Flows for the Three Months
           Ended July 31,1999 and July 31,1998                              6

       Notes to Consolidated Financial Statements                           7

Item 2 Management's Discussion and Analysis                                10

PART II OTHER INFORMATION

Item 1 Litigation                                                          14

Item 2 Change in Securities                                                15

Item 3 Defaults Upon Senior Securities                                     15

Item 4 Submission of Matters to a Vote of Security-Holders                 15

Item 5 Other Information                                                   16

Item 6 Exhibits & Reports on Form 8-K                                      16
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                            SC&T INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEET
                                  JULY 31, 1999
                                   (Unaudited)


ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                        $     20,765
  Accounts receivable (net of $325,112 allowance)                       195,792
  Inventories                                                         1,130,707
  Prepaid expenses and other assets                                     102,725
                                                                   ------------
     Total current assets                                             1,449,989

PROPERTY AND EQUIPMENT, net                                             469,185

OTHER ASSETS                                                             47,729
                                                                   ------------

TOTAL ASSETS                                                       $  1,966,903
                                                                   ============

LIABITITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                 $  2,100,170
  Accrued liabilities                                                   282,756
  Advances from factor                                                   28,628
  Capital lease obligations - current portion                            13,809
                                                                   ------------
     Total current liabilities                                        2,425,363

CAPITAL LEASE OBLIGATIONS - long-term portion                             7,118
                                                                   ------------

     Total liabilities                                                2,432,481
                                                                   ------------

STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value, 33,332,747
     shares authorized, 4,551,064 issued and outstanding                 45,512
  Paid in capital                                                    15,478,055
  Currency translation                                                    1,878
  Accumulated deficit                                               (15,991,023)
                                                                   ------------
     Total stockholders' equity                                        (465,578)
                                                                   ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $  1,966,903
                                                                   ============

    The accompanying notes are an integral part of these financial statements

                                        3
<PAGE>
                            SC&T INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE THREE MONTHS ENDED JULY 31, 1999 AND JULY 31, 1998
                                   (Unaudited)


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

NET SALES                                             $ 260,394     $ 1,079,982

COST OF SALES                                           287,522         950,840
                                                      ---------     -----------

   Gross profit                                         (27,128)        129,142
                                                      ---------     -----------

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    Salaries and benefits expense                       244,142         325,464
    Selling and promotion expense                       119,069         215,535
    Office and administrative expense                   236,579         485,978
    Research and development expense                        214          21,952
    Consulting fees                                         427
                                                      ---------     -----------
      Total selling, general and administrative
        expenses                                        600,004       1,049,356
                                                      ---------     -----------

LOSS FROM OPERATIONS                                   (627,132)       (920,214)
                                                      ---------     -----------

OTHER (INCOME) AND EXPENSES
    Interest income                                        (835)         (3,720)
    Interest expense and factoring charges                7,393             595
    Royalty income                                      (36,388)
    Other income                                         (8,479)
                                                      ---------     -----------

    Total other (income)/expense                        (38,309)         (3,125)
                                                      ---------     -----------

NET LOSS                                              $(588,823)    $  (917,089)
                                                      =========     ===========

NET LOSS PER COMMON SHARE                             $   (0.13)    $     (0.08)
                                                      =========     ===========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING            $   (0.13)    $     (0.08)
                                                      =========     ===========

   The accompanying notes are an integral part of these financial statements

                                        4
<PAGE>
                            SC&T INTERNATIONAL, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                    FOR THE THREE MONTHS ENDED JULY 31, 1999
                                   (Unaudited)

<TABLE>
<CAPTION>
                                Common Stock      Additional
                            -------------------     paid-in      Currency     Accumulated
                              Shares    Amount      capital     Translation     deficit        Total
                            ---------   -------   -----------   -----------   -----------    ---------
<S>                         <C>         <C>       <C>             <C>         <C>            <C>
Balance at April 30, 1999   3,351,064   $33,512   $15,478,055     $ 2,527     $15,402,200    $ 111,894


Issuance of common stock    1,200,000    12,000                                                 12,000


Currency translation                                                 (649)                        (649)


Net loss                                                                          588,823      588,823
                            ---------   -------   -----------     -------     -----------    ---------

Balance at July 31, 1999    4,551,064   $45,512   $15,478,055     $ 1,878     $15,991,023    $(465,578)
                            =========   =======   ===========     =======     ===========    =========
</TABLE>

    The accompanying notes are an integral part of these financial statements

                                        5
<PAGE>
                            SC&T INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE THREE MONTHS ENDED JULY 31, 1999 AND JULY 31, 1998
                                   (Unaudited)

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

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                             $(588,823)   $  (917,089)
  Adjustments to reconcile net loss to net cash
    provided by operating activities:
  Depreciation and amortization                           44,410        156,797
  Non cash expenses                                       12,000
  Changes in assets and liabilities:
    Accounts receivable                                  204,308       (320,026)
    Inventories                                          282,362        306,424
    Prepaid expenses and other current assets             87,034        (30,548)
    Other assets                                         (24,258)
    Accounts payable                                    (165,702)       (74,570)
    Accrued liabilities                                   24,961       (253,166)
                                                       ---------    -----------
        Net cash (used in) provided by operating
          activities                                    (123,708)    (1,132,178)
                                                       ---------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                     (19,100)
                                                       ---------    -----------
        Net cash (used in) provided by investing
          activities                                     (19,100)
                                                       ---------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Currency translation                                      (649)        58,782
  Payment of capital lease obligations                    (2,867)
  Advances from (repayments to) factor                   (40,109)       225,364
                                                       ---------    -----------
        Net cash (used in) provided by financing
          activities                                     (43,625)       284,146
                                                       ---------    -----------

DECREASE IN CASH AND EQUIVALENTS                        (186,433)      (848,032)

CASH AND EQUIVALENTS, BEGINNING OF PERIOD                207,198        861,560
                                                       ---------    -----------

CASH AND EQUIVALENTS, END OF PERIOD                    $  20,765    $    13,528
                                                       =========    ===========

    The accompanying notes are an integral part of these financial statements

                                        6
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

I. INTERIM REPORTING

     The  accompanying  unaudited  Consolidated  Financial  Statements  for SC&T
International,  Inc. (the  "Company")  have been prepared in accordance with the
generally accepted accounting  principles for interim financial  information and
the  instructions  to Form 10-QSB.  Accordingly,  they do not include all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements. In the opinion of management, all adjustments
(which include only normal  recurring  adjustments)  necessary to present fairly
the financial  position,  results of operations,  and cash flows for the periods
presented  have been made.  The results of operations for the three month period
ended July 31, 1998 is not necessarily  indicative of the operating results that
may be expected for the entire fiscal year ending April 30, 2000.

     RECLASSIFICATION
     Certain  prior  period  amounts  have been  reclassified  to conform to the
     current period presentation.

     COMMON STOCK
     On October 22, 1997, the Company's shares of common stock, which was traded
     under the symbol  SCTI,  were  de-listed  from the Nasdaq Small cap market.
     This action was taken as a direct result of the  Company's  failure to meet
     the filing  requirement  as stated in  marketplace  Rule  4310(c)(14).  The
     failure  to meet the  filing  requirement  was the  result of the  untimely
     resignation of the Company's accounting firm, Toback & Company. The Company
     has since complied with all reporting  requirements in a timely manner. The
     company has completed and filed its 10K report for the year ended April 30,
     1999

     PROXY APPROVAL
     In July, 1998 shareholders of the Company approved two motions.  The first,
     to increase  the number of  authorized  shares by  50,000,000  bringing the
     total to 75,000,000.  The second motion  approved was a reverse  split.  On
     April 23,  1999 The Company  initiated a reverse  stock split in a ratio of
     one (1) new share for eighteen (18) of its shares of common stock.

     COMMITMENTS AND CONTINGENCIES -- OPERATING LEASES
     In February 1999, the Company relocated  operations to a new location.  The
     Company has a three year lease on 8500 square feet of office and  warehouse
     space  located at  Scottsdale  Airpark in  Scottsdale,  Arizona.  The lease
     commenced on March 1, 1999 and expires on February 28, 2002.

                                        7
<PAGE>
II.  ORGANIZATION AND BASIS OF PRESENTATION

     SC&T International, Inc. (the "Company") was formed in 1993 for the purpose
     of developing  and  marketing  accessory  and  peripheral  products for the
     computer and video game  industries.  The Company's  primary  product line,
     steering   wheels  and  foot  controls  for  racing  games,   use  infrared
     connections,  eliminating  the need for computer cable hook-up  directly to
     the personal computers. Its products are compatible with SEGA, Nintendo and
     Sony  Playstation  games. The Company also markets audio speakers for PC's.
     The Company's customers include many of the major electronics  retailers in
     the United  States and  overseas.  A  substantial  portion of the Company's
     revenue is generated  internationally.  It has wholly owned subsidiaries in
     the United Kingdom and Hong Kong.

III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     CONSOLIDATION - The consolidated  financial statements include the accounts
     and   activities  of  SC&T   International,   Inc.  and  its  wholly  owned
     subsidiaries,  SC&T Europe,  Limited (United Kingdom),  SC&T Asia,  Limited
     (Hong  Kong)  and  SC&T  Europe,  NV  (Belgium),  SC&T  America,  Inc.  All
     significant intercompany  transactions and balances have been eliminated in
     consolidation.

     CASH AND CASH EQUIVALENTS includes all short-term highly liquid investments
     that are readily  convertible  to known  amounts of cash and have  original
     maturities of three months or less.

     INVENTORIES  are  stated  at the  lower of cost  (first-in,  first-out)  or
     market. Allowances are made for returned inventory to reflect estimated net
     realizable value of those items.

     PROPERTY  AND  EQUIPMENT  are  recorded  at  cost  and   depreciated  on  a
     straight-line  basis over the estimated  useful lives of the assets ranging
     from 3 to 10  years.  Depreciation  expense  is not  recorded  for  tooling
     acquired and not yet been placed in service.

     REVENUE  RECOGNITION - The Company  recognizes  revenue when the product is
     shipped.  Products have warranties covering defects. Certain customers have
     arrangements  that  provide  the right to return  unsold  merchandise.  The
     Company provides an allowance to reflect  estimated returns of product from
     customers and warranty costs. The Company may also provide price protection
     to  certain  customers.  The  Company  records  the price  protection  as a
     reduction of revenue at the time of the price reduction.

     RESEARCH  AND  DEVELOPMENT  - The costs for new  products  are  expensed as
     incurred.

     INCOME  TAXES  - The  Company  provides  for  income  taxes  based  on  the
     provisions  of  Statement  of  Financial   Accounting  Standards  No.  109,
     Accounting  for Income  Taxes,  which among  other  things,  requires  that
     recognition  of deferred  income  taxes be measured  by the  provisions  of
     enacted tax laws in effect at the date of financial statements.

                                        8
<PAGE>
     FOREIGN  CURRENCY  TRANSLATION - The foreign  subsidiaries  maintain  their
     financial  statements in the local currencies which have been determined to
     be the functional currencies. Assets and liabilities denominated in foreign
     currencies are translated  into U.S.  dollars at the rates in effect at the
     balance sheet date.  Revenues and expenses are  translated at average rates
     for the year.  Related  translation  adjustments are reported as a separate
     component of stockholders' equity, whereas, gains and losses resulting from
     foreign currency transactions are included in the results of operations.

     FINANCIAL  INSTRUMENTS - Financial  instruments  consist primarily of cash,
     accounts  receivable,  and  obligations  under  accounts  payable,  accrued
     expenses, advances from factor, and capital lease instruments. The carrying
     amounts of cash, accounts  receivable,  accounts payable,  accrued expenses
     and  advances  from  factor  approximate  fair  value  because of the short
     maturity of those instruments.  The carrying value of the Company's capital
     lease  arrangements  approximates  fair value because the instruments  were
     valued at the retail cost of the equipment at the time the Company  entered
     into the arrangements.

     USE OF ESTIMATES - The  preparation  of financial  statements in conformity
     with generally accepted  accounting  principles requires management to make
     estimates and assumptions  which 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.

     LOSS PER  SHARE - Basic  loss per  share is  computed  using  the  weighted
     average  number  of  shares of common  stock  outstanding  for the  period.
     Diluted  loss per share is computed  using the weighted  average  number of
     shares of common stock plus dilutive  potential  common shares  outstanding
     for the period.

IV. INVENTORIES

     Inventories consisted of the following at July 31, 1999:

         Finished goods                                    $   970,291
         Advances on purchases of inventory                    124,748
         In-transit items                                      140,664
         Allowance for obsolescence                           (104,996)
                                                           -----------

               Total inventory                             $ 1,130,707
                                                           ===========

     Advances on  purchases  of  inventory  are for  inventory  currently  being
     manufactured  or anticipated  to be  manufactured  in the near future.  The
     Company   relies  on  a  limited   number  of  suppliers  and  one  primary
     manufacturer  for  the  production  of  its  products.  Its  suppliers  and
     manufacturer are located in Hong Kong, China and Taiwan.

                                        9
<PAGE>
V. PROPERTY AND EQUIPMENT

     Property and equipment consisted of the following at July 31, 1999:

         Office furniture and equipment                      $  290,628
         Tools, dies and molds                                  528,030
         Computer equipment                                     172,838
         Warehouse equipment                                     11,303
                                                             ----------

         Total                                                1,002,799
         Less accumulated depreciation and amortization         533,614

         Property and equipment - net                        $  469,185
                                                             ==========

VI. ADVANCES FROM FACTOR

     The Company  entered into a new factoring  agreement in October  1998.  The
     terms  of the  agreement  provide  for  advances  up to 75% of  receivables
     factored and a 2% discount payable upon submission of invoices to factor. A
     discount  fee of 10% per day up to 90 days is charged  from date of advance
     until payment by customer.  A 15% fee is charged for accounts  unpaid after
     90 days.  Credit risk  remains with the Company  except for account  debtor
     bankruptcy.  The agreement is secured by all accounts receivable whether or
     not specifically  purchased by the factor.  The balance at July 31, 1999 of
     $28,628  represents funds advanced in excess of customer  payments received
     by factor and allowance reserve maintained by factor.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The  statements  contained  in this  report  on form  10SB  that are not  purely
historical are forward-looking  statements within the meaning of the Section 27A
of the  Securities  Act of 1933 and Section 21E of the  Securities  Act of 1934,
including  statements  regarding the Company's  "expectations,"  "anticipation,"
"intentions," "beliefs," or "strategies," regarding the future.  Forward-looking
statements include statements regarding revenue,  margins, expenses and earnings
analysis  for the  remainder  of the  fiscal  year 2000 and  thereafter;  future
products or product  development  strategy;  and liquidity and anticipated  cash
needs and availability. All forward looking statements included in this document
are based on  information  available  to the Company on the date of this report,
and the  Company  assumes  no  obligation  to  update  any such  forward-looking
statement.  It is  important to note that the  Company's  actual  results  could
differ materially from those in such forward-looking statements.

                                       10
<PAGE>
OVERVIEW

SC&T  International,  Inc. (the  "Company") was formed in June 1993. The Company
develops  and markets  accessory  and  peripheral  products for the computer and
video game industries under its PLATINUM SOUND and PER4MER registered trademarks
and its AIR RACER  trademark.  The Company's  products  include  sub-woofer  and
speaker sound enhancement  systems,  headphone & microphone  accessory items, PC
volume  controllers,  and the largest  assortment  of PC and video arcade racing
wheels and game controller products for Nintendo, Sony Playstation and IBM-PC's.

SC&T's  Per4mer line has expanded and now  comprises  products  that offer Force
Feed Back, Optical and Tilt technologies.  It has also successfully launched its
Air Racer controller, an innovative item which is a racing wheel, fight yoke and
game  controller,  all in one. SC&T plans to take a very aggressive  positioning
for its line of Per4mer products in 1999.

The Company's  multimedia  keyboards  line has been  discontinued  in favor of a
second  generation  product  targeted  at  the  corporate  market.  This  second
generation product,  which,  features an enhanced Voice Recognition product, has
been  completed,  but at this  time has not  been  introduced  into the  market.
However,  the Company is entering into license  agreements  with other  keyboard
manufacturers  which will  provide  SC&T with  additional  income  from the U.S.
technology patents it holds for this technology.

The Company  continues to reduce  operating  costs,  while  increasing  both its
distribution  base and gross margins on products sold. Over the past 2-3 months,
new an improved  retail and  reseller  alliances  have been made by the Company.
SC&T Is very  optimistic  about adding many more  customers and  increasing  the
number of products currently sold by these customers.  The Company's Chairman is
also planning a more active role in the Company's global sales operations, which
SC&T hopes will increase the number of customers for the Company.

On December  31,  1994,  the Company  purchased  SC&T  Europe,  a marketing  and
distribution  company located in Antwerp,  Belgium. The Company, in an effort to
reduce its European  operating  costs,  consolidated  its European  distribution
operations into one central facility located in the United Kingdom, in May 1997.
The Company  formed SC&T Europe  Limited,  located in  Portsmouth  England.  The
Belgium  office  was  closed  in  August,   1998.  All  current   marketing  and
distribution operations, including a United Kingdom domestic sales force, is now
being handled out of the United Kingdom operations.

The Company's  primary costs are for research and  development,  tooling for new
products, inventory, trade shows, and selling and promotion activities. Although
these  expenses were kept to a minimum during the quarter,  the Company  expects
these costs to increase at a reduced rate when  compared to the expected rate of
increase in sales. In addition,  operating  results may be influenced by factors
such as: the  demand  for the  Company's  products;  the  timing of new  product
introductions  by both the  Company  and its  competitors;  pricing  by both the
Company and its competitors;  inventory levels; the Company's ability to develop
and market new products;  the Company's  ability to manufacture  its products at
high quality levels and at commercially  reasonable costs; the timing and levels
of sales and marketing expenditures; and general economic conditions.

                                       11
<PAGE>
OPERATING RESULTS OF THE COMPANY FOR THE THREE MONTH PERIOD ENDED JULY 31,1999
AND 1998.

NET SALES

Net  sales for the three  months  ended  July  31,1999  decreased  approximately
$816,000  or 76%  compared to the three  months  ended July  31,1998.  The sales
decrease is attributed to the Company's  seasonal slow sales and decreased sales
from the Company's UK subsidiary.

GROSS PROFIT (LOSS)

The  Company's  gross  loss  for the  three  months  ended  July  31,  1999  was
approximately  $27,000 in contrast to a gross profit of  approximately  $129,000
for the three months ended July 31, 1998.  This gross loss is primarily due to a
gross loss by the Company's UK subsidiary of approximately $90,000. Gross profit
margins are affected by several  factors,  including the product mix between the
Company's products.  The Company anticipates new products will initially sell at
higher  gross profit  margins.  However,  there can be no assurance  that higher
margins will be maintained over the life of the product.

PAYROLL AND PAYROLL TAXES

The  Company's  payroll and payroll tax  expense  decreased  from  approximately
$325,000 for the three months ended July 31, 1998 to approximately  $244,000 for
the three months ended July 31, 1999. This reduction  represents a 25% reduction
in salaries and related expenses.  The Company has continued to reduce personnel
while increasing employee productivity. The Company is required to employ a base
staff of qualified personnel to maintain its operations.

SELLING AND PROMOTION

The  Company's  selling and  promotion  expenses  decreased  from  approximately
$216,000 for the three months ended July 31, 1998 to approximately  $119,000 for
the three months ended July  31,1999.  This  decrease  represents a 45% decrease
from the same period ended July 31, 1998.

OFFICE AND ADMINISTRATION

The Company's office and  administrative  expenses  decreased from approximately
$486,000 for the three months ended July 31,1998 to  approximately  $237,000 for
the three months ended July 31,1999, or approximately 51%. Major cost reductions
were made in legal expense, occupancy costs, and general overhead expenses.

RESEARCH, DEVELOPMENT AND CONSULTING FEES

Expenses  related to research,  development  and consulting  fees decreased from
approximately  $23,000 for the three months ended July 31, 1998 to approximately
$214 for the three month period ended July 31, 1999. This decrease  represents a
99% decrease from the same period the prior year.

                                       12
<PAGE>
OTHER INCOME/EXPENSE

Other income increased to approximately  $38,000 for the three months ended July
31, 1999 from approximately  $3000 for the same period ended July 31, 1998. This
increase represents a $35,000 increase. This increase can be directly attributed
directly to royalty  income  from the  Company's  multimedia-telephony  keyboard
technology.

NET LOSS

The  Company  experienced  a net loss of  approximately  $588,000  for the three
months ended July 31, 1999 compared to a net loss of approximately  $917,000 for
the  three  months  ended  July  31,  1998.   This   represents  a  decrease  of
approximately   $329,000,  or  36%.  The  decrease  represents  aggressive  cost
reductions made by management of the Company. Total operating expenses decreased
from  approximately  $1,050,000 for the three months ended July 31, 1998 to only
approximately $600,000 for the three months ended July 31, 1999. This represents
a decrease of 43% for the three  months ended July 31, 1999 from the same period
ended July 31, 1998.

LIQUIDITY AND CAPITAL RESOURCES

The Company's  working  capital  decreased from  $1,122,000 for the three months
ended July 31, 1998 to a deficit of $975,374 for the three months ended July 31,
1999.  This decrease is due directly to the Company's net loss from  operations.
The  Company  is  required  to pay the costs of  stocking  inventory  before the
Company receives orders and payment from its customers. Typically, the Company's
customers do not pay the Company for its products  until  approximately  60 days
following delivery and billing. As a result, the receipt of cash from operations
typically  lags  substantially  behind the payment of the costs for purchase and
delivery  of the  Company's  products.  The  Company  has been unable to attract
additional  sources of capital due to it's de-listing and must rely on factoring
of it's  accounts  receivable  which  dramatically  increase  costs and  reduces
working capital.

BUSINESS OUTLOOK AND RISK FACTORS

SC&T  management  will  continue a major cost  reduction  program  which will be
maintained  into  2000.  These  efforts  have  already  improved  the  Company's
operations.  Management  believes  there is a growing  acceptance  in the global
marketplace  for  the  Company's  expanding  product  line.  SC&T  Products  are
currently sold in over 25 countries worldwide. The Company plans four to six new
product  introductions by the end of 1999, which will expand its current line up
of Per4mer products. Management is working on new programs. They are designed to
increase  profit  opportunities  for its customers,  and SC&T is hopeful that it
will enhance sales  revenues,  while reducing  future  operating  expenses.  The
Company has developed new manufacturing alliances which has reduced costs due to
increased  volumes and  economies  of scale.  The Company  expects  further cost
reductions  throughout  this  year.  Total  revenue  and  product  mix  could be
materially  and adversely  affected by many factors some of which are beyond the
control of the Company.  Those factors include, but are not limited to, turnover
in the  Company's  sales  force,  competition  from  existing  or new  products,
production  delays,  the Company's  ability to penetrate new markets and attract
new customers,  unexpected  postponement or cancellation of significant  orders,
lack of market acceptance of the Company's products,  manufacturing  defects and
seasonality of sales and general economic conditions.

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<PAGE>
The Company  believes the  accessory  and  peripheral  products  markets for the
personal  computer  and video  gaming  industries  has a strong  outlook.  These
markets are characterized by sales growth, rapid technological change,  frequent
introduction of new products,  product upgrades and evolving industry standards.
The  Company  strives to  provide  market-leading  solutions  that  address  the
personal computer user interested in upgrading  existing  equipment.  Due to the
risk  factors  discussed  and  to  other  factors  that  generally  affect  high
technology companies, there can be no assurance that the Company will be able to
successfully penetrate these markets in the future.

The  Company's  10K report for the year ended  April  30,1999  contained a going
concern qualification. The Company does not dispute this qualification.  Without
a substantial  increase in revenues the Company will require  additional working
capital through external sources to continue to fund its operations.  Management
plans  to  actively  explore  debt  and  equity  financing  as well  as  holding
discussions with potential merging partners to obtain required financing.


                           PART II - OTHER INFORMATION

ITEM I. LITIGATION

PENDING OR THREATENED LITIGATION

     a. Home Arcade v. the Company

     In  September  of 1997,  Home  Arcade  filed suit in San Jose,  California,
     against the Company re a license dispute.  The Company has denied breaching
     the contract and instructed  counsel to vigorously  defend the case. Due to
     the recent filing of the case,  counsel has not yet been able to develop an
     opinion  with  regard to the timing or likely  results of this  litigation.
     However, management believes it has committed no wrongdoing. The company is
     preparing for litigation at this time.

     b. Jack Of All Games v. the Company

     In June of 1997, Jack Of All Games Entertainment, Inc., sued the Company in
     Cincinnati,  Ohio,  for breach of contract  regarding a purchase  order for
     5,000  steering  wheels.  Jack Of All Games is  seeking  $179,272.80,  plus
     interest and attorneys fees.  Management  intends to vigorously defend this
     case or  settle  it based on the  provision  of  replacement  product.  The
     parties had previously agreed to a product exchange and the Company expects
     a product exchange to occur. This litigation should be concluded within the
     year,  and if settled  through  arbitration,  the  maximum  exposure to the
     company would be reduced to $ 100,000.

     c. The Company v. Toback & Company

     In June 1999 SC&T filed suit against Toback & Company  seeking  substantial
     damages for the firms  untimely  resignation  in September  of 1997.  These
     actions  caused the  de-listing  of SC &T's  shares  from the NASDAQ  Stock
     Exchange.  The Company  alleges  Toback's  actions  were  premeditated  and
     unnecessary,  causing severe damage to the Company.  The Company is seeking
     damages  against Toback & Company in this regard.  The Company  believes it
     will prevail in it's action against Toback & Company.

                                       14
<PAGE>
     d. The Company v. Santiago Villa

     SC&T has  filed  suit  against  its  former  landlord  seeking  to  collect
     approximately  $20,000 in escrow funds not disbursed to the Company when it
     vacated it's former offices.  The Company  believes it will prevail in this
     action.

UNASSERTED CLAIMS and ASSESSMENTS

The Company has a wheel product which includes "force-feedback"  technology as a
new version to its racing wheel. The Company has been contacted by Atari.  Atari
expressed  a desire to  evaluate  the  Company's  force-feedback  technology  to
determine  whether  it  violates a patent  possessed  by Atari.  The  Company is
presumptively  protected under the circumstances  because the Company obtained a
license  for the  force-feedback  technology  from  another  company,  Immersion
Corporation.  Immersion  Corporation  has  indemnified  the  Company  for patent
infringement  liability.  However,  should Atari successfully  enjoin Immersion,
sales of the  Company's  force-feedback  racing wheel would be impacted,  or the
Company might have to seek a license from Atari.

ITEM 2. CHANGES IN SECURITIES

         None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         None

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY-HOLDERS

In July, 1998 Shareholders  approved a motion to issue an additional  50,000,000
common stock from  25,000,000 to 75,000,000  and to allow the Company to reverse
common stock outstanding at a time deemed necessary by the Board of Directors.

                                       15
<PAGE>
ITEM 5. OTHER INFORMATION

YEAR 2000 READINESS STATEMENT

The  year  2000  (Y2K)  is an  issue  putting  at  risk  systems,  products  and
specialized  hardware  utilizing date sensitive  computer chips or software with
two-digit date fields will fail to properly recognize the year 2000. As a direct
result of this  concern the Company has upgraded all hardware and software to be
Y2K  compliant.  Management  has taken  these  measures  to insure all  computer
hardware  and  software  will be able to function  as the year 2000  approaches.
However,  there is no assurance all the suppliers and vendors of the Company are
Y2K compliant, and therefore it is possible some business interruption may occur
as a result.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

       Reports on Form 8-K;

          On June  17,  1998,  the  Registrant  filed  with the  Securities  and
          Exchange  Commission  a Report on Form 8-K  dated  June 17,  1998,  to
          change the Company's fiscal year from March 31 to April 30.

          On April 30,  1999,  the  registrant  filed  with the  Securities  and
          Exchange  Commission  a Report on Form 8-K dated  April 30, 1999 which
          reported the engagement of King,  Weber & Associates,  P.C. as its new
          audit firm.

          On April 23,  1999,  the  registrant  filed  with the  Securities  and
          Exchange  Commission a report on Form 8-K, dated April 23, 1999, which
          reported  a  reverse  stock  split in a ratio of one (1) new share for
          eighteen (18) of its shares of common stock.

                                       16
<PAGE>
                                   SIGNATURES


     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 date indicated.

SIGNATURE                               CAPACITY                      DATE
---------                               --------                      ----

SC&T INTERNATIONAL, INC.



 /s/ James Copland                 Chairman of the Board         August 30, 1999
-----------------------------      and Chief Executive Officer
     James Copland



 /s/ Ricky S. Greenberg            Director of Finance           August 30, 1999
-----------------------------
   Ricky S. Greenberg

                                       17