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 October 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 December 10, 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 [X]  No [ ]
<PAGE>
                            SC&T INTERNATIONAL, INC.
                                 AND SUBSIDIARY


                                                                           Page
                                                                           ----
PART I FINANCIAL INFORMATION

Item 1 Financial Information

       Consolidated Balance Sheets                                           3

       Consolidated Statements of Operations                                 4

       Consolidated Statements of Cash Flows                                 5

       Notes to Consolidated Financial Statements                            6

Item 2 Management's Discussion and Analysis                                  9

PART II    OTHER INFORMATION

Item 1 Litigation                                                           13

Item 2 Change in Securities                                                 14

Item 3 Defaults Upon Senior Securities                                      14

Item 4 Submission of Matters to a Vote of Security-Holders                  14

Item 5 Other Information                                                    14

Item 6 Exhibits & Reports on Form 8-K                                       14
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                            SC&T INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS

                                   (Unaudited)
                                                                     October 31,
                                                                        1999
                                                                   -------------
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                        $        573
  Accounts receivable (net of $325,112 allowance)                       190,093
  Inventories                                                         1,042,098
  Prepaid expenses and other assets                                     101,154
                                                                   ------------
     Total current assets                                             1,333,918

PROPERTY AND EQUIPMENT, net                                             425,311

OTHER ASSETS                                                             47,118
                                                                   ------------

TOTAL ASSETS                                                       $  1,806,347
                                                                   ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                 $  2,152,309
  Accrued liabilities                                                   234,982
  Advances from factor                                                   20,029
  Capital lease obligations - current portion                            13,809
                                                                   ------------
     Total current liabilities                                        2,421,129

CAPITAL LEASE OBLIGATIONS - long-term portion                             2,915
                                                                   ------------

     TOTAL LIABILITIES                                                2,424,044
                                                                   ------------

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                                               (16,143,142)
                                                                   ------------
     TOTAL STOCKHOLDERS' EQUITY                                        (617,697)
                                                                   ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $  1,806,347
                                                                   ============

   The accompanying notes are an integral part of these financial statements

                                       3
<PAGE>
                            SC&T INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  Three Months Ended             Six Months Ended
                                                      October 31,                   October 31,
                                               --------------------------    --------------------------
                                                  1999           1998           1999           1998
                                               -----------    -----------    -----------    -----------
<S>                                            <C>            <C>            <C>            <C>
NET SALES                                      $    69,344    $ 1,846,697    $   330,323    $ 2,926,679

COST OF SALES                                       37,758      1,145,391        325,342      2,096,231
                                               -----------    -----------    -----------    -----------

   Gross profit                                     31,586        701,306          4,981        830,448
                                               -----------    -----------    -----------    -----------

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    Salaries and benefits expense                   44,374        332,264        288,516        657,728
    Selling and promotion expense                   57,010        376,993        176,079        592,528
    Office and administrative expense              117,351        241,664        353,930        727,642
    Research and development expense                 2,937         14,663          3,151         36,615
    Consulting fees                                      0          6,749              0          7,176
                                               -----------    -----------    -----------    -----------
Total selling, general and administrative
  expenses                                         221,672        972,333        821,676      2,021,689
                                               -----------    -----------    -----------    -----------

LOSS FROM OPERATIONS                              (190,086)      (271,027)      (816,695)    (1,191,241)
                                               -----------    -----------    -----------    -----------

OTHER (INCOME) AND EXPENSES
    Interest income                                      0              0           (797)        (3,720)
    Interest expense and factoring charges           4,924          3,667         12,278          4,262
    Royalty income                                 (15,569)      (112,201)       (51,957)      (112,201)
    Other income                                   (26,799)      (230,711)       (35,277)      (230,711)
                                               -----------    -----------    -----------    -----------

Total other (income)/expense                       (37,444)      (339,245)       (75,753)      (342,370)
                                               -----------    -----------    -----------    -----------

NET INCOME (LOSS)                              $  (152,642)   $    68,218    $  (740,942)   $  (848,871)
                                               ===========    ===========    ===========    ===========

NET LOSS PER COMMON SHARE                      $     (0.03)   $      0.02    $     (0.16)   $     (0.25)
                                               ===========    ===========    ===========    ===========
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING                        4,551,064      3,351,064      4,551,064      3,351,064
                                               ===========    ===========    ===========    ===========
</TABLE>

    The accompanying notes are an integral part of these financial statements

                                        4
<PAGE>
                            SC&T INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

                                                           Six Months Ended
                                                              October 31,
                                                       -------------------------
                                                         1999          1998
                                                       ---------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                             ($740,942)   ($  848,871)
  Adjustments to reconcile net loss to net cash
    provided by operating activities:
  Depreciation and amortization                           88,820        208,712
  Non cash expenses                                       11,351              0
  Changes in assets and liabilities:
    Accounts receivable                                  210,007     (1,220,360)
    Inventories                                          370,971        470,033
    Prepaid expenses and other current assets             88,605       (152,577)
    Other assets                                         (23,647)       (42,348)
    Accounts payable                                    (113,562)       821,643
    Accrued liabilities                                  (22,812)      (368,193)
                                                       ---------    -----------
      Net cash (used in) provided by operating
        activities                                      (131,209)    (1,131,961)
                                                       ---------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                     (19,638)        71,549
                                                       ---------    -----------
      Net cash (used in) provided by investing
        activities                                       (19,638)        71,549
                                                       ---------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Currency translation                                         0         58,782
  Payment of capital lease obligations                    (7,070)             0
  Advances from (repayments to) factor                   (48,708)       215,067
                                                       ---------    -----------
      Net cash (used in) provided by financing
        activities                                       (55,778)       273,849
                                                       ---------    -----------

INCREASE (DECREASE) IN CASH AND EQUIVALENTS             (206,625)      (786,563)

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

CASH AND EQUIVALENTS, END OF PERIOD                    $     573    $    74,997
                                                       =========    ===========

    The accompanying notes are an integral part of these financial statements

                                        5
<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  periods  ended
October 31, 1999 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.

                                        6
<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.  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.

                                        7
<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 October 31, 1999:

          Finished goods                                       $   941,379
          Advances on purchases of inventory                       124,748
          In-transit items                                          80,967
          Allowance for obsolescence                              (104,996)
                                                               -----------
                Total inventory                                $ 1,042,098
                                                               ===========

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.

                                        8
<PAGE>
V. PROPERTY AND EQUIPMENT

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

        Office furniture and equipment                         $   290,628
        Tools, dies and molds                                      528,030
        Computer equipment                                         172,964
        Warehouse equipment                                         11,303
                                                               -----------
        Total                                                    1,002,925
        Less accumulated depreciation and amortization             577,614
                                                               -----------
        Property and equipment - net                           $   425,311
                                                               ===========

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 October 31, 1999 of $20,029  represents  funds  advanced in excess of
customer payments received by factor and allowance reserve maintained by factor.

                                        9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

The  statements  contained  in this  report on Form  10QSB  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.

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.

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.  The
Company has entered 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 has not been issuing many news releases  over the past months.  This
should not be interpreted  The Company has not been moving forward in continuing
to  significantly  reduce costs and  identifying  new market  opportunities  and
products for introduction.

The  Company  is not  enamoured  with  the  price  wars and  continuing  lack of
profitability associated with the retail PC and Video Gaming accessory category.
Despite  suffering  losses much less than those of the  competition  The Company
will not rely on this category for its future success.

The  Company  has  redirected  its  marketing  focus in  support of VM Labs Inc.
revolutionary  new NUON  technology  for DVD  players and  Set-Top  boxes.  As a
strategic  licensed  partner  of VM  Labs  the  Company  will  target  the  more
lucrative,  high volume, OEM channel for its accessory products, and it hopes to
report new sales alliances shortly.

                                       10
<PAGE>
Over the last five months the Company has  surveyed  and  identified  new market
opportunities  it feels confident has greater  revenue  potential than currently
exists in the PC and Video  Gaming  arena.  The areas  identified  relate to the
automotive and emergency  outdoor survival  categories.  These categories have a
combined  presence of over 400,000 retail  outlets  compared to the under 50,000
that make up the current Video Game and PC arena.

The Company  has made its  product  presentations  to  numerous  major  national
companies,  who have expressed  genuine interest in the new products.  Seven new
products are under development that specifically address these industries,  with
introductions  to the North American  market over the next quarter.  The Company
plans an aggressive focus on the OEM, Private Label segment of this market, with
the secondary target being the retail side of the business.

In an  ongoing  effort to keep up with the  times,  identify  new  markets,  and
address the growing sales revenues being derived from the Internet,  the Company
is also  planning a  corporate  name  change  which  will  easily  identify  the
Company's  new product  marketing  direction.  The name change should take place
shortly.

The Company is working  towards a new round of capital  funding  which will fuel
and support the new marketing initiatives and product development programs.  The
Company is confident it will succeed with these efforts.

The last two years  have been a rough  road for both the  Company  and its loyal
following  of  investors.  SC &T's  management  is  optimistic  about the future
capability of its new products to extend the Company the  opportunity to reach a
level of profitability over the next year.

The Company thanks its investors and  shareholders  for their continued  support
while the Company positions itself for the launch of its new line of products.

OPERATING RESULTS OF THE COMPANY FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED
OCTOBER 31, 1999 AND 1998.

NET SALES

Net sales for the three months and six months ended  October  31,1999  decreased
approximately $1,777,000 (96%) and $2,596,000 (89%) compared to the same periods
ended  October  31,1998.  The sales  decrease  is  attributed  to the  Company's
seasonal  slow  sales  and  continued  decreased  sales  from the  Company's  UK
subsidiary.

PAYROLL AND PAYROLL TAXES

The  Company's  payroll and payroll tax  expense  decreased  from  approximately
$332,000 and $658,000 for the three months and the six months ended  October 31,
1998 to  approximately  $44,000 and $289,000 for the three months and six months
ended  October 31, 1999.  This  reduction  represents a 87% and 56% reduction in
salaries and related  expenses for the three months and six months ended October
31,  1999.  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.

                                       11
<PAGE>
SELLING AND PROMOTION

The  Company's  selling and  promotion  expenses  decreased  from  approximately
$377,000 and $593,000 for the three months and six months ended October 31, 1998
to approximately  $57,000 and $176,000 for the three months and six months ended
October  31,1999.  This  decrease  represents a 85% decrease from the same three
month period ended  October 31, 1998 and a 70% decrease  from the same six month
period ended October 31, 1998.

OFFICE AND ADMINISTRATION

The Company's office and  administrative  expenses  decreased from approximately
$242,000  and $728,000  for the three and six months  ended  October  31,1998 to
approximately  $117,000  and  $354,000 for the three months and six months ended
October 31,1999.  This represents  approximately a 52% and 51%for these periods.
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  $21,400  and $43,800  for the three and six month  periods  ended
October  31, 1998 to  approximately  $2900 and $3200 for the three and six month
periods ended October 31, 1999. This decrease  represents a 86% and 93% decrease
from the same periods the prior year.

OTHER INCOME/EXPENSE

Other income decreased to approximately $37,000 and $76,000 for the three months
and six months ended October 31, 1999 from  approximately  $339,000 and $342,000
for the same periods ended October 31, 1998. This decrease represents a $302,000
and a $342,000 decrease.

NET LOSS

The Company  experienced a net loss of  approximately  $153,000 and $741,000 for
the three months and six months ended  October 31, 1999 compared to a net profit
of approximately $68,000 and a net loss of approximately  $849,000 for the three
months and six months ended  October 31,  1998.  The net loss for the six months
ended October 31, 1999 is primarily due to a loss by the Company's UK subsidiary
of approximately $281,000. Total operating expenses decreased from approximately
$972,000 and  $2,022,000  for the three months and six months ended  October 31,
1998 to only  approximately  $222,000 and  $822,000  for the same periods  ended
October 31, 1999. This represents a decrease of 77% and 59% for the three months
and six months ended  October 31, 1999 from the same periods  ended  October 31,
1998.

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital decreased from $1,122,000 for the six months ended
October 31, 1998 to a deficit of $1,087,212 for the six months ended October 31,
1999.  This decrease is due directly to the  Company's net loss from  operations
and  decreased  sales.  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.

                                       12
<PAGE>
BUSINESS OUTLOOK AND RISK FACTORS

The Company  will  continue  to cut costs to improve  future  operations.  In an
effort to reduce operating costs the Company is in the process of closing its UK
subsidiary.  The Company will continue to market and sell its products in Europe
through a UK distributor.  Efforts over the past year have already significantly
reduced the Company's  operating  costs.  The Company has developed new products
and is targeting  new  marketing  channels  (see  Overview  Section) it strongly
believes will result in profitability  over the next twelve months.  There is no
assurance the Company will achieve  profitability,  but it is confident it is on
the right track.  The Company has already held  discussions  with  potential new
customers,  where its new product  concepts were presented and based on feedback
for these new  products,  the Company is very  optimistic.  The Company plans to
introduce  these new products over a ninety day period,  commencing in December,
1999.  The Company  requires  additional  working  captial,  and is looking to a
private placement of company stock to raise the required cash.

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 1. 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. 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.

c. 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. The Company plans
an arbitration hearing within the next 60 days.

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<PAGE>
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.

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.

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<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     Exhibits.

        27        Financial Data Schedule

     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.

                                       15
<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.

SC&T INTERNATIONAL, INC.

Signature                        Capacity                      Date
---------                        --------                      ----

/s/ James Copland                Chairman of the Board         December 13, 1999
-----------------------------    and Chief Executive Officer
     James Copland

                                       16