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

                                   FORM 10-QSB

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


For Quarter Ended:   May 31, 2000        Commission File Number:       0-22382

                           SECTOR COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)

               Nevada                                  56-1051491
               ------                                  ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                7601 Lewinsville Road, Ste 250, McLean, VA 22102
                ------------------------------------------------
              (Address of principal executive offices) (Zip Code)

                                 (703) 761-1500
                                 --------------
              (Registrant's telephone number, including area code)


         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  proceeding  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. [ X ] Yes [ ] No

         Indicate  the  number of  shares  outstanding  of each of the  issuer/s
classes of common stock as of the last practicable date:

    Number of Shares of Common Stock outstanding at May 31, 2000:  17,193,805


<PAGE>





                           SECTOR COMMUNICATIONS, INC.

                                      INDEX

   PART I   FINANCIAL INFORMATION

            Item 1.  Financial Statements

                Balance Sheets.............................................2-3

                Statements of Operations...................................4

                Statements of Cash Flows...................................5-6

                Notes of Consolidated Financial Statements (Unaudited).....7

            Item 2.  Managements Discussion and Analysis of Financial
                      Condition and Results of Operations..................12

   PART II  OTHER INFORMATION

            Item 6.  Exhibits and Reports on Form 8-K......................19

            Signature Page.................................................20


                                     - 1 -

<PAGE>

                          PART I FINANCIAL INFORMATION

Item 1.  Financial Statements

<TABLE>
<CAPTION>


                           SECTOR COMMUNICATIONS, INC.
                           CONSOLIDATED BALANCE SHEET

                                                           May 31,       February 29,
                                                            2000             2000
                                                        -------------   ------------
                                                                         (unaudited)
<S>                                                     <C>             <C>
         ASSETS
CURRENT ASSETS
   Cash and Cash Equivalents                            $     137,565   $    170,607
   Accounts Receivable, net of provision for
    doubtful accounts of $17,778 and $18,148                  304,452        391,681
   Prepaid Expenses                                            18,275         30,597
                                                        -------------   ------------
      Total Current Assets                                    460,292        592,885
                                                        -------------   ------------

PROPERTY AND EQUIPMENT                                      2,042,939      2,019,960
   Accumulated Depreciation                               ( 1,825,567)   ( 1,803,610)
                                                        -------------   ------------
   Net Book Value                                             217,372        216,350
                                                        -------------   ------------

OTHER ASSETS
   Deposits                                                    28,332         28,289
                                                        -------------   ------------

      TOTAL ASSETS                                      $     705,996   $    837,524
                                                        =============   ============
</TABLE>


The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.

                                      - 2 -

<PAGE>
<TABLE>
<CAPTION>
                           SECTOR COMMUNICATIONS, INC.
                           CONSOLIDATED BALANCE SHEET (continued)

                                                           May 31,       February 29,
                                                            2000             2000
                                                        -------------   ------------
                                                                         (unaudited)
<S>                                                     <C>             <C>
         LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts Payable and Accrued Expenses                $   1,807,473   $  1,818,732
   Debentures Payable                                         263,952        263,952
   Deferred Revenue                                           186,717        203,878
   Due to Related Parties                                     167,612        180,355
                                                        -------------   ------------
      Total Current Liabilities                             2,425,754      2,466,917

Rent Deposit                                                   12,248         12,248
                                                        -------------   ------------

      TOTAL LIABILITIES                                     2,438,002      2,479,165
                                                        -------------   ------------

Commitments and Contingencies

STOCKHOLDERS' EQUITY
   Preferred Stock, $.001 par value; 5,000,000
    shares  authorized, no shares issued and
    outstanding                                                     -              -
   Common Stock, $.001 par value; 40,000,000
    shares authorized, 17,193,805 shares issued
    and outstanding                                            17,194         17,194
   Additional Paid-in Capital                              14,376,350     14,376,351
   Accumulated Deficit                                    (15,838,090)   (15,748,015)
   Cumulative Foreign Currency Translation Adjustment     (   287,460)   (   287,171)
                                                        -------------   ------------
      Total Stockholders' Equity                          ( 1,732,006)   ( 1,641,641)
                                                        -------------   ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $     705,996   $    837,524
                                                        =============   ============
</TABLE>

The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.



                                      - 3 -


<PAGE>


                           SECTOR COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (UNAUDITED)
                       FOR THE THREE MONTHS ENDED MAY 31,




                                                       2000             1999
                                                 ------------     ------------
REVENUE
   Telecommunication Revenue                     $    135,249     $    145,697
   Software Sales & Maintenance                        93,334           52,540
                                                 ------------     ------------
                                                      228,583          198,237

COST OF SALES                                          64,386          116,777
                                                 ------------     ------------

GROSS PROFIT                                          164,197           81,460
                                                 ------------     ------------

OPERATING EXPENSES
   Software Development Costs                           8,009           41,957
   Sales, General & Administrative                    240,829          251,419
                                                 ------------     ------------
      Total Operating Expenses                        248,838          293,376
                                                 ------------     ------------

Loss From Operations                              (    84,641)      (  211,916)

OTHER INCOME (EXPENSE)
   Interest (Expense)                             (     5,279)      (   37,851)
   Other Income (Expense)                         (       155)         111,388
                                                 ------------     ------------
Loss Before Provision for Income Taxes            (    90,075)      (  138,379)

Provision for Income Taxes                                  -                -
                                                 ------------     ------------

Net Loss                                         $(    90,075)     $(  138,379)
                                                 ============      ===========

Net Loss Per Share                               $(      0.01)     $(     0.01)
                                                 ============      ===========

Weighted Average Common Shares Outstanding         17,193,805       13,922,028



The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.


                                      - 4 -


<PAGE>


                           SECTOR COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                       FOR THE THREE MONTHS ENDED MAY 31,



                                                      2000             1999
                                                  -----------     ------------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net Loss                                       $(  90,075)     $(   138,379)
   Adjustments to Reconcile Net Loss to Net
    Cash Provided by Operating Activities:
      Depreciation and Amortization                   23,249            85,381
      Amortization of Discount and Loan Costs              -            47,407
      Change in Assets and Liabilities:
         (Increase) Decrease in Assets
            Accounts Receivable                       87,229           188,442
            Prepaid Expenses and Deposits             12,322                23
         (Decrease) Increase in Liabilities
            Accounts Payable                       (  11,259)          145,691
            Related Party Payable                  (  12,743)      (   124,158)
            Deferred Revenue                       (  17,161)                -
                                                  -----------     ------------
Net Cash Provided (Used) by Operating
Activities                                         (   8,438)          204,407
                                                  -----------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of Fixed Assets                        (  24,386)      (    36,509)
                                                  -----------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Sale of Common Stock                                    -           100,000
                                                  -----------     ------------

Effect of Exchange Rate Changes on Cash            (     218)      (   227,734)
                                                  -----------     ------------

Net (Decrease) Increase in Cash                    (  33,042)           40,164
Cash - March 1,                                      170,607           181,877
                                                  -----------     ------------

Cash - May 31,                                    $  137,565      $    222,041
                                                  ==========      ============

SUPPLEMENTAL CASH FLOWS INFORMATION:
   Cash Paid For:
     Interest                                     $        -      $          -
                                                  ===========     ============
     Taxes                                        $        -      $          -
                                                  ===========     ============

The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.


                                      - 5 -


<PAGE>


                           SECTOR COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                FOR THE THREE MONTHS ENDED MAY 31, 2000 AND 1999




SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCIAL ACTIVITIES:

Period ended May 31, 1999:
-------------------------
   Common stock totaling  2,425,000  shares was issued in settlement of accounts
payable aggregating $97,000.



























The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.


                                      - 6 -


<PAGE>

                           SECTOR COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                              MAY 31, 2000 AND 1999

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          a) Basis of Presentation
          ------------------------
          The accompanying financial statements have been prepared in accordance
          with generally  accepted  accounting  principles for interim financial
          information  and with 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 (consisting
          only of normal recurring adjustments)  considered necessary for a fair
          presentation have been included.  Certain  reclassifications have been
          made  to  the  prior  period  to  conform  to  the  current   period's
          presentation.

          For  further  information  refer  to  the  financial   statements  and
          footnotes  included in the  Registrant's  Annual Report on form 10-KSB
          for the period ended February 29, 2000.

          The results of operations for any interim  period are not  necessarily
          indicative  of the  results to be  expected  for the full  fiscal year
          ending February 28, 2001.

          The  unaudited  consolidated  balance sheet as of May 31, 2000 and the
          consolidated  statements  of  operations  and cash flows for the three
          month  periods  ended  May 31,  2000  and 1999  are  those  of  Sector
          Communications, Inc. ("Sector") and its subsidiaries (collectively the
          "Company").  All significant  intercompany  accounts and  transactions
          have been eliminated.

          b)   Loss Per Share
          -------------------
          Loss per share is based on the  weighted  average  number of shares of
          common stock outstanding during the period.

          On July 1, 1999, the Company effected a 5 for 1 stock split. All share
          and per share  amounts  presented  in the  financial  statements  give
          retroactive effect to this stock split.

                                     - 7 -

<PAGE>

                           SECTOR COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                              MAY 31, 2000 AND 1999

NOTE 2 - PROPERTY AND EQUIPMENT

          Property and equipment consists of the following:

                                                       May 31,      February 29,
                                                        2000             2000
                                                    ------------    -----------
          Fiber Network                             $    157,837    $   157,837
          Equipment                                    1,749,218      1,724,832
          Furniture and Fixtures                          45,816         47,223
          Vehicles and Other                              90,068         90,068
                                                    ------------    -----------
                                                       2,042,939      2,019,960
          Less:  Accumulated Depreciation             (1,825,567)    (1,803,610)
                                                     -----------    -----------
                                                    $    217,372    $   216,350
                                                    ============    ===========

          Depreciation  expense for the  three-month  periods ended May 31, 2000
          and 1999 was $23,249 and $85,381, respectively.

NOTE 3 - WARRANTS

          At May 31, 2000,  the Company has  outstanding  common stock  purchase
          warrants as follows:

              Number          Exercise                           Date of
             of Shares         Price           Exercisable      Expiration
             ---------       ----------        -----------      ----------
               10,000        $    22.50          2/28/97          6/30/00
               10,000             30.00          7/20/97          6/30/00
               10,000             40.00          7/20/98          6/30/00
               ------
               30,000
               ======

NOTE 4 - STOCK OPTION PLANS

          A summary of stock  option  transactions  for the period ended May 31,
          2000 are as follows:

                  Outstanding, Beginning                  5,312,458

                  Granted                                         -
                                                          ---------
                  Outstanding, Ending                     5,312,458
                                                          =========
                  Exercisable, Ending                     5,312,458
                                                          =========
                                     - 8 -
<PAGE>

                           SECTOR COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                              MAY 31, 2000 AND 1999

NOTE 5- STOCKHOLDERS' EQUITY

          In May 1999,  the Company issued  2,425,000  shares of common stock in
          settlement of accounts payable aggregating $97,000.

          In May 1999, the Company sold 3,846,150  shares of common stock to two
          purchasers for cash proceeds of $100,000.

          On July 1, 1999, the Company effected a 5 for 1 stock split. All share
          and per share  amounts  presented  in the  financial  statements  give
          retroactive effect to this stock split.

NOTE 6- COMMITMENTS AND CONTINGENCIES

          1)   A former  employee  of  Ideous  filed  suit  against  Ideous  for
               wrongful termination. Judgement was entered against Ideous in the
               amount of  $110,850.  An appeal is  pending.  The full amount has
               been accrued in the financial statements.

          2)   An  individual  has filed suit against the  Company,  also naming
               Worldwide  Plumbing Supply,  Inc.  ("Worldwide") and Allan Kline.
               The suit  alleges  that  Mr.  Kline  represented  that he was the
               Prisident  of Sector  and would  sell  35,000  shares of  Company
               Common Stock to the  plaintiff for $20,000.  The  plaintiff  also
               alleges that Mr. Kline told the plaintiff  that Worldwide was the
               parent of Sector.  The plaintiff  issued a check to Worldwide and
               it was  cashed.  Worldwide  has  filed  an  answer.  The  Company
               maintains  that it has no knowledge  of Worldwide  and that Allan
               Kline is not the  President  of Sector.  The Company  denies each
               allegation,  believes  the suit as it relates  to the  Company is
               without  merit,  and  intends to defend  itself  vigorously.  The
               plaintiff seeks the return of $20,000.

          3)   Agricola  Metals,  Inc. filed a suit against the Company  seeking
               $31,136.  The plaintiff alleges that it had a consulting contract
               with  the  Company  and is  owed  this  amount  pursuant  to said
               contract.  The  Company  has filed an answer and denies  each and
               every allegation.

                                     - 9 -
<PAGE>

                           SECTOR COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                              MAY 31, 2000 AND 1999

NOTE 7 - GOING CONCERN

          The accompanying  consolidated financial statements have been prepared
          assuming the Company will continue as a going  concern.  As of May 31,
          2000, the Company has a working  capital  deficit of $1,965,462 and an
          accumulated  deficit of $15,838,090.  Based upon the Company's plan of
          operation,  the Company  estimates that existing  resources,  together
          with funds  generated from  operations  will not be sufficient to fund
          the  Company's  working  capital.  The  Company  is  actively  seeking
          additional  equity   financing.   There  can  be  no  assurances  that
          sufficient  financing  will be  available on terms  acceptable  to the
          Company or at all. If the Company is unable to obtain such  financing,
          the Company will be forced to scale back  operations  which would have
          an adverse effect on the Company's financial conditions and results of
          operation.

NOTE 8 - SEGMENT INFORMATION

          The  Company's  foreign  operations  are  conducted by Global,  Sector
          Bulgaria and Ideous.

                                                   May 31,          May 31,
                                                    2000              1999
                                                -------------   -------------
          Revenues from external customers:
            Telecommunications                  $     135,249   $     145,697
            Software                                   93,334          52,540
                                                -------------   -------------
                                                $     228,583   $     198,237
                                                =============   =============

          Interest expense:
            Corporate                           $       5,279   $      37,851
                                                =============   =============

          Depreciation and amortization:
            Telecommunications                  $      20,124   $      73,668
            Software                                    3,125           6,713
            Corporate                                       -           5,000
                                                -------------   -------------
                                                $      23,249   $      85,381
                                                =============   ==============
                                     - 10 -

<PAGE>
                           SECTOR COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                              MAY 31, 2000 AND 1999

NOTE 8 - SEGMENT INFORMATION (Continued)

                                                   May 31,          May 31,
                                                    2000              1999
                                                -------------   -------------
          Segment profit (loss) before taxes:
            Telecommunications                  $  (    7,033)  $      75,365
            Software                               (   37,763)    (    52,186)
            Corporate                              (   45,279)    (   161,558)
                                                -------------   -------------
                                                $  (   90,075)  $ (   138,379)
                                                =============   =============

          Segment assets:
            Telecommunications                   $    347,124   $     579,264
            Software                                  313,998         339,165
            Corporate                                  44,847          62,061
                                                -------------   -------------
                                                 $    705,996   $     980,490
                                                 ============   ==============
          Expenditure for segment assets:
            Telecommunications                   $     24,386   $      33,268
            Software                                        -           3,241
            Corporate                                       -               -
                                                -------------   -------------
                                                $      24,386   $      36,509
                                                =============   =============

          The  following  geographic  area data for trade  revenues  is based on
          product  or  service  delivery  location  and  property,   plant,  and
          equipment is based on physical location.

                                                  May 31,          May 31,
                                                    2000              1999
                                                -------------   -------------
          Revenues from external customers:
            United States                       $          -    $           -
            Switzerland                                93,334          52,540
            Bulgaria                                  135,249         145,697
                                                -------------   -------------
                                                $     228,583   $     198,237
                                                =============   =============

          Segment assets:
            Switzerland                         $     313,998   $     339,165
            Bulgaria                                  347,124         579,264
            United States                              44,874          62,061
                                                -------------   -------------
                                                $     705,996   $     980,490
                                                =============   =============

                                     - 11 -

<PAGE>

Item 2.        Management's  Discussion and Analysis of Financial Condition
               and Results of Operations

     Sector includes certain  estimates,  projections and other  forward-looking
statements  in its  reports,  presentations  to  analysts  and  others and other
material  disseminated  to the public.  There can be no  assurance  as to future
performance  and  actual  results  may  differ  materially  from  those  in  the
forward-looking  statements.  Factors that could cause actual  results to differ
materially from estimates or projections contained in forward-looking statements
include:  (i) the effects of vigorous competition in the markets in which Sector
operates;  (ii) the cost of entering new markets  necessary to provide  products
and  services;  (iii) the impact of any unusual  items  resulting  from  ongoing
evaluations of Sector's business strategies; (iv) requirements imposed on Sector
and its  competitors  by the Bulgarian  Telecommunications  Company  (BTC);  (v)
unexpected  results of litigation filed against Sector; and (vi) the possibility
of one or more of the  markets  in  which  Sector  competes  being  affected  by
variations  in  political,  economic or other  factors such as monetary  policy,
legal and regulatory  changes or other external factors over which Sector has no
control.


RESULTS OF OPERATIONS

     Telecommunication   Revenue  -  Sector   continues   to  earn  all  of  its
telecommunications revenue from Sector BG (i) providing direct-dial services for
international long distance calls to a select group of hotels and resorts in the
cities of Sofia and  Plovdiv  in  Bulgaria;  (ii) from the  sales,  integration,
installation, and maintenance of customer-owned digital phone systems (primarily
through  its  distributor  agreement  with  Mitel);  and (iii) from  usage-based
percentages  of Sector  BG-owned  digital phone systems  through  shared revenue
agreements with some of its customers.

     Sector's  telecommunications  revenue  decreased  by $ 10,448 or 7.17% from
$145,697  for the three  months  ended on May 31,.  199 to $135,249 for the same
period  ended May 31,2000.  Management  believes the decrease in revenue was the
result of a decrease in overall occupancy of its hotel customers.

     Software Sales and  Maintenance - Sector's  software sales and  maintenance
revenue  increased  by $40,794 or 77.64% from $52,540 for the three months ended
on May 31, 1999 to $93,334 for the same period  ended May 31,2000  (all  figures
are net of  payments  to third  party  distributors).  Management  believes  the
increase in sales for the three months  ending May 31, 2000 was the result of an
increase in the average size of each sale, The Company  continues to be affected
by the lack of capital  available to HIS to (1) fund an adequate  level of sales
and  marketing  expense  and (2)  fund  the  software  and  development  expense
necessary to upgrade existing product lines or to develop new applications.

     Costs of Sales - The Cost of Sales of Sector decreased by $52,391 or 44.86%
from $116,777 for the three months ended on May 31, 1999 to $64,386 for the same
period ended May 31, 2000. Most of the decrease was attributable to the decrease
in costs  associated  with  payments  due to the BTC  resulting  from the  lower
revenues and to reduced depreciation charges of fixed assets.


                                     - 12 -

<PAGE>

     Software Development Costs - Software development costs consisted primarily
of  salaries,  related  benefits,  consultants  fees and other  costs.  Sector's
software  development  costs decreased by $33,948 or 80.91% from $41,957 for the
three  months  ended on May 31, 1999 to $8,009  for  the same  period  ended May
31, 2000. The  decrease  was  attributable  the  lack of  capital  available  to
HIS/Ideous to fund a higher level of software development costs.

     Operating  Expenses - Operating expenses  consisted  primarily of personnel
costs,   including  salaries,   benefits  and  bonuses  and  related  costs  for
management, finance and accounting, legal and other professional services. Total
operating expenses of Sector decreased by $10,590 or 4.21% from $251,419 for the
three months ended on May 31, 1999 to $240,829 for the same period ended May 31,
2000. These reductions in operating  expenses are expected to continue  inasmuch
as  Sector  has   substantially   reduced  its  corporate   overhead   expenses.
Additionally,   the  HIS-related  operating  expenses  have  been  substantially
reduced.

     Administrative  Costs and Other Costs- Management  expects that Sector BG's
general and administrative costs, not taking into consideration any expansion of
the current network, to remain at current levels.

     Management expects Sector's general and administrative costs,  exclusive of
any addition of new employees,  to remain at or below the levels  experienced in
the three months ended on May 31, 2000.

     Interest  Expense - Interest  expense for the three month period ending May
31,2000  decreased by $32,572 as compared to the expense in the same three month
period  in  1999.  The  decrease  in  interest  expense  was the  result  of the
conversion of convertible debentures issued in early in fiscal 1999.

     Management  expects that interest  expense could  increase in the future to
the degree  Sector  borrows funds in order to finance any  continuing  operating
cash flow deficits and implements any capital expenditure plans.



LIQUIDITY AND CAPITAL RESOURCES

     During the  quarter  ending May 31,  2000,  the Company  financed  Sector's
operations   primarily  through  sales  revenue  generated  from  the  Company's
subsidiaries.

     Sector has in the past and is  currently  experiencing  negative  cash flow
from operations. The funding of future operations will require further infusions
of capital.


                                     - 13 -
<PAGE>

     If  additional  funds are raised by the  Company  through  the  issuance of
equity  securities,  securities  convertible  into  or  exercisable  for  equity
securities,  or an equity securities  exchange,  the percentage ownership of the
then current  stockholders of the Company will be reduced. The Company may issue
preferred  stock with rights,  preferences or privileges  senior to those of the
Common Stock.  There can be no assurance  that the Company will be successful in
its efforts to obtain  adequate  capital nor if any such  additional  capital is
made available to the Company that it will be on terms and  conditions  that are
not   extremely   dilutive  to  the  present   holders  of  the  Common   Stock.
Discontinuance of the listing of the Common Stock on the NASDAQ Small Cap Market
has occurred. Sector is currently listed on the NASDAQ Over the Counter Bulletin
Board.


FORWARD-LOOKING STATEMENTS

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations  contains  forward-looking  statements.  There are certain  important
factors  that  could  cause  results  to  differ  materially  from  those in the
forward-looking  statements  contained  in  the  above  discussion.  Among  such
important  factors are (i) the timely creation of versions of Sector's  products
for the  Microsoft  Windows NT and Unix  operating  systems,  (ii) the impact of
Microsoft  Windows NT, Unix and other  operating  systems on the Open VMS market
upon which  Sector's  current  products  are  dependent,  (iii) the  reliance on
distributors to continue reselling Sector's products, (iv) the ability of Sector
to successfully expand the distribution of its products through new and unproven
channels, including resellers,  integrators,  distributors and direct sales, (v)
the risks associated with Sector's engineering effort needed to develop products
for Microsoft  Windows NT and Unix, (vi) the impact of competitive  products and
pricing,  (vii) the  uncertainty  of the labor market and local  regulations  in
Switzerland, Bulgaria and the United Kingdom, (vii) Sector's ability to hire and
retain research and development  personnel with  appropriate  skills in a highly
competitive  labor  market,  and  (viii)  such  risks and  uncertainties  as are
detailed  from time to time in the  Company's  public  reports,  including  this
Report.

     In addition to the factors described above,  factors that may contribute to
future fluctuations in quarterly operating results include,  but are not limited
to: (i) the development and  introduction of new operating  systems that require
additional development efforts; (ii) the introduction or enhancement of products
by Sector or its competitors; (iii) changes in the pricing policies of Sector or
its  competitors;  (iv)  increased  competition;  (v)  technological  changes in
computer and  telecommunications  systems and environments;  (vi) the ability of
Sector to timely develop,  introduce and market new products and services; (vii)
Sector's  quality  control of products and services sold;  (vii) Sector's market
readiness  to deploy  systems  management  products  for  distributed  computing
environments;  (ix) Sector's market  readiness to deploy new  telecommunications
services;   (x)  market  acceptance  of  new  services,   products  and  product
enhancements;  (xi) customer order deferrals in anticipation of new products and
product  enhancements;  (xii)  Sector's  success  in  expanding  its  sales  and
marketing  programs;  (xiii) personnel changes;  (xiv) foreign currency exchange
rates; (xv) mix of products sold; and (xvi) general economic conditions.


                                     - 14 -
<PAGE>

     Sector's  future  revenues will also be difficult to predict.  Accordingly,
any significant  shortfall of revenues in relation to management's  expectations
or any material delay of customer orders would have an immediate  adverse effect
on its business,  operating results and financial condition.  As a result of all
of the foregoing factors, management believes that period-to-period  comparisons
of Sector's results of operations are not and will not necessarily be meaningful
and should not be relied upon as any indication of future performance.

     Management of Growth;  Dependence on Key Personnel.  In the future,  Sector
will be required to continue to improve its financial and  management  controls,
reporting  systems and  procedures  on a timely  basis and to expand,  train and
manage its employee  work force.  There can be no assurance  that Sector will be
able to  effectively  manage  such  growth.  Its  failure  to do so would have a
material  adverse  effect  on its  business,  operating  results  and  financial
condition.  Competition  for  qualified  sales,  technical  and other  qualified
personnel is intense and there can be no  assurance  that Sector will be able to
attract,  assimilate  or retain  additional  highly  qualified  employees in the
future.  If Sector is unable to hire and  retain  such  personnel,  particularly
those in key positions, its business,  operating results and financial condition
would be materially adversely affected.  Sector's future success also depends in
significant  part upon the  continued  service of its key  technical,  sales and
senior  management  personnel.  The loss of the services of one or more of these
key employees  could have a material  adverse effect on its business,  operating
results and  financial  condition.  Additions of new and  departures of existing
personnel,  particularly  in key positions,  can be disruptive and can result in
departures of existing personnel,  which could have a material adverse effect on
Sector's business, operating results and financial condition.

     Uncertainty  in  Developing  Products for New Operating  Systems.  Sector's
software products operate  primarily on the Open VMS operating system.  Sector's
current product development activities are primarily directed towards developing
new  products  for  the  Windows  NT  and  UNIX  operating  systems,  developing
enhancements to its current  products and porting new products and  enhancements
to other  operating  systems.  Sector has made and  intends to  continue to make
substantial  investments  in porting its products to new  operating  systems and
Sector's  future success will depend on its ability to  successfully  accomplish
such ports.

     The process of porting existing  products and product  enhancements to, and
developing  new  products  for, new  operating  systems  requires a  substantial
capital  investment,  the devotion of  substantial  employee  resources  and the
cooperation  of the owners of the  operating  systems to which the  products are
being  ported  or  developed.  For  example,  the  added  focus on  porting  and
development  work for the  Windows NT market  has  required,  and will  require,
Sector to hire additional personnel with expertise in the Windows NT environment
as well as devote its engineering resources to these projects.  The diversion of
engineering  personnel to this area  may cause Sector to be delayed in its other


                                     - 15 -
<PAGE>


product  development  efforts.  Furthermore,  operating  system  owners  have no
obligation  to assist in these  porting or  development  efforts and may instead
choose to enter into  agreements  with other third party software  developers or
internally develop their own products.  In particular,  the failure to receive a
source  license to certain  portions of the  operating  system,  either from the
operating system owner or a licensee thereof,  would prevent Sector from porting
its products to, or developing products for, such operating system. There can be
no assurance that Sector's  current or future porting efforts will be successful
or, even if successful, that the operating system to which Sector elects to port
to or develop products will achieve or maintain market  acceptance.  The failure
of Sector to port its  products  to new  operating  systems  or to select  those
operating  systems  that  achieve and maintain  market  acceptance  could have a
material adverse effect on Sector's  business,  operating  results and financial
condition.

     Risks Associated With International Operations. International revenue (from
sales  outside  the  United  States  and  Canada)  accounted  for a  significant
percentage of Sector's total revenues for fiscal 1999.  Management believes that
Sector's  success  depends  upon  continued   expansion  of  its   international
operations.  Sector currently has sales offices in Bulgaria and Switzerland. Any
International  expansion  may require  Sector to  establish  additional  foreign
offices,   hire  additional  personnel  and  recruit  additional   international
resellers.  This may require  significant  management  attention  and  financial
resources and could adversely affect Sector's operating  margins.  To the extent
that  Sector is unable to effect  these  additions  efficiently  and in a timely
manner,  its growth,  if any, in  international  sales will be limited,  and its
business,  operating  results and financial  condition  could be materially  and
adversely  affected.  There  can be no  assurance  that  Sector  will be able to
maintain or increase  international  market demand for its products.  Sector, as
noted  earlier  cannot  and  will  not  expand  or  contribute  further  to  any
maintenance of the operations of its HIS subsidiary in Switzerland.

     As of May 31, 2000, the Company's Swiss subsidiary  employed  engineers and
contractors  located in Zurich who perform certain product development work. The
Company's  Bulgarian   subsidiary   operates   autonomously  from  Sofia.  These
international  operations  subject  Sector  to a  number  of risks  inherent  in
developing  products and services  outside of the United  States,  including the
potential loss of developed  technology,  imposition of  governmental  controls,
export license requirements,  restrictions on the export of critical technology,
political and economic instability, trade restrictions, difficulties in managing
international operations and lower levels of intellectual property protection.


                                     - 16 -
<PAGE>

     Sector's  international  business  will also involve a number of additional
risks, including lack of acceptance of localized products,  cultural differences
in the conduct of business,  longer accounts receivable payment cycles,  greater
difficulty in accounts receivable  collection,  seasonality due to the slow-down
in European business activity during Sector's second fiscal quarter,  unexpected
changes in  regulatory  requirements  and  royalty  and  withholding  taxes that
restrict the repatriation of earnings, tariffs and other trade barriers, and the
burden of complying with a wide variety of foreign laws. Sector's  international
sales will be generated primarily through its international distributors and are
expected  to be  denominated  in  local  currency,  creating  a risk of  foreign
currency  translation  gains and losses.  To the extent  profit is  generated or
losses are incurred in foreign countries, Sector's effective income tax rate may
be materially and adversely affected. In some markets,  localization of Sector's
products  is  essential  to  achieve  market   penetration.   Sector  may  incur
substantial  costs and experience  delays in localizing its products,  and there
can be no assurance  that any localized  product will ever generate  significant
revenue. There can be no assurance that any of the factors described herein will
not have a material  adverse effect on Sector's future  international  sales and
operations  and,  consequently,  its business,  operating  results and financial
condition.

     Sector's  future  financial  performance  will  depend in large part on the
growth of its  telecommunications  service business in Eastern Europe as well as
its ability to expand  horizontally the scope of its business activities in that
region.  As a result of  competition,  technological  change  or other  factors,
Sector's business, operating results and financial condition could be materially
and adversely affected.

     Rapid   Technological   Change  and   Requirement   for  Frequent   Product
Transitions.  The  market  for  Sector's  products  is  characterized  by  rapid
technological  developments,  evolving  industry  standards and rapid changes in
customer requirements.  The introduction of products embodying new technologies,
the  emergence  of new industry  standards  or changes in customer  requirements
could render Sector's existing products obsolete and unmarketable.  As a result,
Sector's  future  success  will  depend  upon its ability to continue to enhance
existing  products,  respond to changing  customer  requirements and develop and
introduce,  in a timely manner,  new products that keep pace with  technological
developments  and emerging  industry  standards.  There can be no assurance that
Sector's products or services will achieve market acceptance, or will adequately
address the changing needs of the  marketplace or that Sector will be successful
in  developing  and  marketing  enhancements  to its  existing  products  or new
products  incorporating  new  telecommunication  technology  on a timely  basis.
Sector  has  in  the  past   experienced   delays  in  the  development  of  its
telecommunications  services and there can be no assurance  that Sector will not
experience  further delays in connection  with its current  service  offering or
future  service  development  activities.  If Sector is  unable to  develop  and
introduce new products, or enhancements to existing products, in a timely manner
in response to changing  market  conditions or customer  requirements,  Sector's
business,  operating  results and financial  condition  will be  materially  and
adversely affected.  Because Sector has limited resources,  Sector must restrict
its business  development  efforts to a relatively  small number of products and
services.  There can be no assurance  that these efforts will be successful  or,
even if  successful,  that any  resulting  products or  operating  systems  will
achieve market acceptance.

                                     - 17 -
<PAGE>


     Sector may also be subject to additional competition due to the development
of new  technologies  and increased  availability of domestic and  international
transmission  capacity.  For example, even though fiber-optic networks,  such as
that of  Sector,  are now  widely  used for voice and data  transmission,  it is
possible that the  desirability of such networks could be adversely  affected by
changing  technology.  The  telecommunications  industry is in a period of rapid
technological  evolution,  marked by the introduction of new product and service
offerings and  increasing  satellite and fiber optic  transmission  capacity for
services  similar to those  provided by Sector.  Sector cannot  predict which of
many possible future product and service offerings will be important to maintain
its competitive  position or what  expenditures  will be required to develop and
provide such products and services.

     Dependence  on  Proprietary  Technology;  Risks of  Infringement.  Sector's
success  depends  upon  its  proprietary  technology.  Sector  will  rely  on  a
combination  of  copyright,  trademark  and trade secret  laws,  confidentiality
procedures and licensing  arrangements  to establish and protect its proprietary
rights.  Sector does not have any patents  material to its  business  and has no
patent  applications filed. As part of its  confidentiality  procedures,  Sector
will  generally  enter  into  non-disclosure   agreements  with  its  employees,
distributors and corporate partners,  and license agreements with respect to its
software,   documentation  and  other  proprietary  information.  Despite  these
precautions,  it may be possible for a third party to copy or  otherwise  obtain
and use Sector's  products or technology  without  authorization,  or to develop
similar technology independently. Policing unauthorized use of Sector's products
is  difficult  and although  Sector is unable to  determine  the extent to which
piracy of its software products exists,  software piracy can be expected to be a
persistent  problem.  Sector will make source code  available for certain of its
products and the  provision of such source code may increase the  likelihood  of
misappropriation or other misuses of Sector's intellectual  property. In selling
its products,  Sector will also rely in part on "shrink wrap"  licenses that are
not signed by licensees and,  therefore,  may be unenforceable under the laws of
certain  jurisdictions.   In  addition,  effective  protection  of  intellectual
property  rights is unavailable or limited in certain foreign  countries.  There
can be no assurance that Sector's protection of its proprietary rights including
any patent that may be issued,  will be adequate  or that  Sector's  competitors
will not independently  develop similar technology,  duplicate Sector's products
or design  around any patents  issued to Sector or other  intellectual  property
rights.

     Sector is not aware  that any of its  products  infringes  the  proprietary
rights of third parties. There can be no assurance,  however, that third parties
will not claim such  infringement  by Sector  with  respect to current or future
products.  Sector expects that software product  developers will increasingly be
subject to such claims as the number of  products  and  competitors  in Sector's
industry segment grows and the functionality of products in the industry segment
overlaps.  Any such  claims,  with or  without  merit,  could  result  in costly
litigation that could absorb  significant  management  time,  which could have a
material adverse effect on Sector's  business,  operating  results and financial
condition.  Such claims  might  require  Sector to enter into royalty or license
agreements.  Such  royalty  or  license  agreements,  if  required,  may  not be
available  on terms  acceptable  to Sector  or at all.  If such  agreements  are
entered into they could have a material  adverse effect upon Sector's  business,
operating results and financial condition.

                                     - 18 -
<PAGE>


                          PART II - OTHER INFORMATION


ITEM 2 - LEGAL PROCEEDINGS.

   No proceedings other than as previously disclosed.




ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibit Index

     No.     Description
     --      -----------
     27      Financial Data Schedule


(b)  Reports on Form 8-K

     Registrant  filed a  Current  Report on Form 8-K on April 6, 2000 to report
the  Company  entered  into a letter of intent with the owners of Kress EOOD and
Piero 97,  confirming  an  agreement  in  principle  to  acquire  the  Bulgarian
companies.

     Since the time of that 8-K  filing,  the  parties  have  decided  not to go
forward with the transaction.



                                     - 19 -
<PAGE>


                                   SIGNATURES

    Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


                                   SECTOR COMMUNICATIONS, INC.
                                        (Registrant)



                                   By       /s/ Theodore Georgelas
                                        --------------------------
                                           President, and Director
Date: July 18,2000

















                                     - 20 -