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:  November 30, 1999        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)


              (Former name, former address and former fiscal year,
                         if change since last report.)

         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 Outstanding
                  Date                            At November 30, 1999

          Common Stock                                 17,193,805




<PAGE>





                           SECTOR COMMUNICATIONS, INC.

                                      INDEX

   PART I   FINANCIAL INFORMATION

            Item 1.  Financial Statements

                Balance Sheets.............................................2

                Statements of Operations...................................3

                Statements of Cash Flows...................................4

                Notes of Consolidated Financial Statements (Unaudited).....5

            Item 2.  Managements Discussion and Analysis of Financial
                      Condition and Results of Operations..................10

   PART II  OTHER INFORMATION

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

            Signature Page.................................................19


<PAGE>


                           SECTOR COMMUNICATIONS, INC.
                           CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>

                                                          November 30,        February 28,
                                                             1999                 1999
                                                          --------------     ------------
                                                           (unaudited)
          ASSETS
CURRENT ASSETS
<S>                                                       <C>               <C>
   Cash and Cash Equivalents                              $      192,333    $    181,877
   Accounts Receivable, net of provision for
    doubtful accounts of $17,000                                 263,069         494,563
   Prepaid Expenses                                               10,449          22,343
                                                          ----------------    -----------
      Total Current Assets                                       465,851         698,783
                                                          ---------------    ------------

PROPERTY AND EQUIPMENT                                         2,133,285       2,145,722
   Accumulated Depreciation                                   (1,837,655)    ( 1,696,918)
                                                          --------------   -------------
   Net Book Value                                                295,630         448,804
                                                          ---------------  --------------

OTHER ASSETS
   Other Assets                                                        -          22,581
   Deposits                                                       29,302          28,041
                                                          --------------    -------------
      Total Other Assets                                          29,302          50,622
                                                          ---------------    ------------

      TOTAL OTHER ASSETS                                  $      790,783    $   1,198,209
                                                          ==============    =============

          LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts Payable and Accrued Expenses                       1,807,986       1,797,216
   Debentures Payable, Net of Discount of
    $0 and $56,309                                               263,952         207,643
   Deferred Revenue                                              154,152         335,105
   Due to Related Parties                                        138,733         182,891
                                                          --------------    -------------
      Total Current Liabilities                                2,364,823       2,522,855

Rent Deposit                                                      12,248          12,248
                                                          --------------    -------------
      TOTAL LIABILITIES                                        2,377,071       2,535,103
                                                          ---------------   -------------
Commitments and Contingencies

STOCKHOLDERS' EQUITY
   Preferred Stock, $.001 par value; 5,000,000 shares
    authorized, no shares issued and outstanding                                      -
   Preferred Stock, Series A $.001 par value,
   and 250 shares issued and outstanding                                              -
   Common Stock, $.001 par value; 40,000,000 shares
    authorized 17,193,805 and 10,922,655 shares issued
    and outstanding                                               17,194          10,923
   Additional Paid-in Capital                                 14,376,350      14,185,622
   Accumulated Deficit                                       (15,538,176)    (15,364,474)
   Cumulative Foreign Currency Translation Adjustment      (     441,656)  (     168,965)
                                                          -------------- ---------------
      Total Stockholders' Equity                            (  1,586,288)   (  1,336,894)
                                                          --------------  --------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $      790,783   $   1,198,209
                                                          ==============   =============
</TABLE>

The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.
                                     - 2 -
<PAGE>


                                    SECTOR COMMUNICATIONS, INC.
                                CONSOLIDATED STATEMENT OF OPERATIONS
                                            (UNAUDITED)
<TABLE>
<CAPTION>

                                        Three Months Ended               Nine Months Ended
                                    November 30,   November 30,     November 30,   November 30,
                                          1999           1998            1999         1999
                                    ------------  -------------    -------------   -------------
REVENUE
<S>                                  <C>           <C>              <C>            <C>
  Telecommunication Revenue          $  206,505    $   169,462      $  512,205     $   530,790
  Software Sales and Maintenance        239,405        193,375         399,789         388,945
                                    -----------   ------------     -----------    ------------
                                        445,910        362,837         911,994         919,735

COST OF SALES                           125,259        177,298         358,780         444,944
                                   ------------   ------------     -----------     -----------

GROSS PROFIT                            320,651        185,539         553,214         474,791
                                   ------------   ------------     -----------     -----------

OPERATING EXPENSES
  Gold Exploration Costs                      -            701               -           4,054
  Software Development Costs            132,123         17,042         220,803         223,574
  Sales, General and Administrative     140,867        414,017         541,211       1,420,000
                                    -----------   ------------      ----------     -----------
    Total Operating Expenses            272,990        431,760         762,014       1,647,628
                                    -----------   ------------      ----------     -----------

Income (Loss) From Operations            47,661      ( 246,221)       (208,800)     (1,172,837)
                                   ------------   ------------      ----------     ------------
OTHER INCOME (EXPENSE)
  Interest (Expense)                   (  5,264)   (     5,312)      (  70,004)    (   112,599)
  Other Income (Expense)                  1,748         88,269         105,102          94,343
                                  -------------  -------------      ----------   -------------

    Total Other Income (Expense)       (  3,516)        82,957          35,098    (     18,256)
                                  -------------  -------------     -----------   -------------

Income (Loss) Before Provision
 for Income Taxes                        44,145     (  163,264)       (173,702)     (1,191,093)

Provision for Income Taxes                    -              -               -               -
                                  -------------  -------------     -----------   -------------
Net Income (Loss)                 $      44,145   $   (163,264)      $(173,702)    $(1,191,093)
                                  =============   ============       =========     ===========
Loss Per Share                    $          -    $  (    0.03)      $(   0.01)    $(     0.21)
                                  =============   ============       =========     ============

Weighted Average Number of
  Shares Outstanding                 17,193,805      6,058,225      16,099,247       5,715,730
</TABLE>



The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      - 3 -


<PAGE>


                           SECTOR COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                     FOR THE NINE MONTHS ENDED NOVEMBER 30,



                                                       1999              1998
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Loss                                         $  (173,702)   $(1,191,093)
  Adjustments to Reconcile Net Loss to Net Cash
   Provided By Operating Activities:
    Depreciation and Amortization                      246,126        561,887
    Amortization of Discount and Loan Costs             78,889        132,745
    Bad Debt                                              --           37,500
    Change in Assets and Liabilities
      (Increase) Decrease in Assets
        Accounts Receivable                            231,494        124,220
        Prepaid Expenses and Deposits                   10,633         46,774
      (Decrease) Increase in Liabilities
        Accounts Payable                               107,770         66,965
        Related Party Payable                          (44,158)      ( 50,130)
        Deferred Revenue                              (180,953)      (108,586)
                                                    -----------    -----------
Net Cash Provided (Used) By Operating Activities       276,099       (379,718)
                                                    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of Fixed Assets                             (98,419)       (80,976)
  Notes and Loans Receivable                              --           87,500
                                                    -----------    -----------
Net Cash Provided by Investing Activities              (98,419)         6,524
                                                    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Sale of Common Stock                                 100,000           --
  Sale of Debentures                                      --          430,000
                                                    -----------    -----------
                                                       100,000        430,000

Effect of Exchange Rate Changes on Cash               (267,224)           910
                                                    -----------    -----------

Net Increase in Cash                                    10,456         57,716

CASH - MARCH 1,                                        181,877        128,911
                                                    -----------    -----------
CASH - AUGUST 31,                                  $   192,333    $   186,627
                                                   ===========    ===========
SUPPLEMENTAL CASH FLOWS INFORMATION:
   Cash Paid For:
     Interest                                      $         -    $        -
                                                   ===========    ===========
     Taxes                                         $         -    $         -
                                                   ===========    ===========


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      - 4 -


<PAGE>


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                     FOR THE NINE MONTHS ENDED NOVEMBER 30,



SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCIAL ACTIVITIES:

     Period Ended November 30, 1999:

     Common  stock  totaling  2,425,000  shares  were  issued in  settlement  of
     accounts payable aggregating $97,000.

     Period Ended November 30, 1998:

     Common  stock  totaling  126,530  shares  was  issued  to  retire a debt of
     $39,013.

     Common stock  totaling  325,000  shares was issued in  connection  with the
     preferred stock conversion described in Note 7.

     Common stock  totaling  300,000  shares was issued in  connection  with the
     placement of the convertible  debentures described in Note 8. A discount of
     $255,000 has been ascribed to these shares.
















The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      - 5 -

<PAGE>


                           SECTOR COMMUNICATIONS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                NOVEMBER 30, 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 28, 1999.

          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 29, 2000.

          The unaudited  consolidated  balance sheet as of November 30, 1999 and
          the consolidated  statements of operations and cash flows for the nine
          and three month periods ended  November 30, 1999 and 1998 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.


                                              - 6 -


<PAGE>

                           SECTOR COMMUNICATIONS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                NOVEMBER 30, 1999

NOTE 2 - PROPERTY AND EQUIPMENT

          Property and equipment consists of the following:

                                                November 30,   February 28,
                                                   1999             1999
                                               -------------  ------------
             Fiber Network                      $    157,837   $   157,837
             Equipment                             1,838,157     1,850,594
             Furniture and Fixtures                   47,223        47,223
             Vehicles and Other                       90,068        90,068
                                               -------------  ------------
                                                   2,133,285     2,145,722
             Less:  Accumulated Depreciation      (1,837,655)   (1,696,918)
                                                 -----------   -----------
                                                $    295,630  $    448,804
                                                ============  ============

          Depreciation  expense for the  nine-month  periods ended  November 30,
          1999 and 1998 was $246,126  and  $278,367,  respectively,  and for the
          three month periods  ended  November 30, 1999 and 1998 was $77,678 and
          $113,572, respectively.

NOTE 3 - WARRANTS

          At  November  30,  1999,  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


                                              - 7 -


<PAGE>

                                    SECTOR COMMUNICATIONS, INC.
                                      NOTES TO FINANCIAL STATEMENTS
                                               (UNAUDITED)
                                            NOVEMBER 30, 1999

   NOTE 4 -    STOCK OPTION PLANS

          A summary of stock option  transactions  for the period ended November
          31, 1999 are as follows:

            Outstanding, Beginning                         3,311,000

            Granted Under the 1999 Non-cash
            compensation Plan at
            Exercise Prices of
            $0.0312 - $0.0438                              1,188,958
                                                           ---------

           Outstanding, Ending                             4,499,958
                                                           =========
           Exercisable, Ending                             4,499,958
                                                           =========

          The  Company  accounts  for its stock  option  transactions  under the
          provisions of APB No. 25. The following pro forma information is based
          on  estimating  the fair value of grants based upon the  provisions of
          SFAS No. 123. The fair value of each option  granted during the period
          indicated  has  been  estimated  as of the  date of  grant  using  the
          Black-Scholes option pricing model with the following assumptions:

            Risk Free Interest Rate                           5.25%
            Life of the Options                             5 years
            Expected Dividend Yield                             -0-
            Expected Volatility                                262%
            Weighted Fair Value of Options Granted            $0.04

          Accordingly,  the  Company's pro forma net loss and net loss per share
          assuming  compensation  cost was  determined  under SFAS No. 123 would
          have been the following:

                                                 Nine Months Ended November 30,
                                                 -------------------------------
                                                            1999        1998
                                                       ---------    -----------
              Net Loss                                 $(240,432)   $(1,315,200)
              Net Loss Per Basic Share                  (   0.01)    (    0.23)

              Weighted Average Option Price Per Share
                  Granted                              $    0.04     $       -
                  Exercised                                    -             -
                  Cancelled                                    -             -
                  Outstanding at End of Period              0.25           6.83
                  Exercisable at End of Period              0.25           6.83
              Weighted Average Remaining Life
                Of Options Outstanding                 52 months       88 months


                                      - 8 -


<PAGE>

                                    SECTOR COMMUNICATIONS, INC.
                                  NOTES TO FINANCIAL STATEMENTS
                                           (UNAUDITED)
                                        NOVEMBER 30, 1999

NOTE 5- STOCKHOLDERS' EQUITY

          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 - DEBENTURES PAYABLE

          On April 15, 1998,  the Company sold  $500,000 in principal  amount of
          its 6%  Convertible  Promissory  Notes due July 30, 1999 (the "Notes")
          pursuant to Regulation S under the  Securities Act for net proceeds of
          $430,000.  In addition,  the two  purchasers,  Amex Corp.  Limited and
          Danvers  Investment Corp.,  each a British Virgin Island  corporation,
          with an address in Zurich,  Switzerland,  each received 150,000 shares
          of Common  Stock.  These  shares have been valued at $255,000  and are
          recorded as discount on debt in the financial statements. The discount
          is being amortized over the life of the notes.  Upon  conversion,  any
          unamortized discount  attributable to the conversion amount is charged
          to additional paid in capital.

          Effective May 26, 1998,  each holder has the full right to convert its
          Note in the principal  amount of $250,000,  plus accrued  interest (at
          the rate of 6% per annum),  in whole or in part, into shares of Common
          Stock at a  conversion  price equal to the lesser of (1) $2.98  (which
          was 80% of the  closing  bid prices of the  Common  Stock on April 15,
          1998) or (2) 80% of the average closing bid prices of the Common Stock
          for the five trading days immediately preceding the conversion date.

          During the year ended  February  28,  1999,  the  holders of the notes
          elected to convert an aggregate of $236,048  principal amount of notes
          into 4,386,000 shares of common stock.  Unamortized discount amounting
          to  $99,144  has been  charged  to  additional  paid in  capital  upon
          conversion.







                                      - 9 -



<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  increased by $ 37,043 or 21.85% from
$169.462  for the three  months  ended on November  30, 1998 to $206,505 for the
same period ended November 30, 1999. Management believes the increase in revenue
was the result of an increase of the customer base previously maintained.

     Software Sales and  Maintenance - Sector's  software sales and  maintenance
revenue  increased by $46,030 or 23.8% from  $193,375 for the three months ended
on November 30 1998 to $239,405 for the same period ended November 30, 1999 (all
figures are net of payments to third party  distributors).  Management  believes
the  increase in sales for the three  months  ending  November  30, 1999 was the
result of more increases in sales, however, 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 $52,039 or 29.35%
from  $177,298  for the three  months ended on November 30, 1998 to $125,259 for
the same period ended November 30, 1999.  Most of the decrease was  attributable
to the decrease in costs  associated with the  distribution  and sale of the HIS
new  software  products  caused  by the  long  term  decrease  in  the  revenues
associated with such sales.


                                       10
<PAGE>

     Software Development Costs - Software development costs consisted primarily
of  salaries,  related  benefits,  consultants  fees and other  costs.  Sector's
software  development  costs  increased by $115,081 or 675% from $17,042 for the
three  months  ended on November 30 1998 to $132,123  for the same period  ended
November 30, 1999. The increase was  attributable to an infusion of capital into
HIS to fund its software development.

     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 $158,770 or 36.77% from $431,760 for
the three months ended on November 30 1998 to $272,990 for the same period ended
November  30,  1999.  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.  To continue to operate Sector at the currently  reduced
level of  operating  expenses  may  severely  impact  the  ability  of Sector to
continue as a viable on-going concern.

     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 November 30, 1998.

     Interest  Expense - Interest  expense  for the three  month  period  ending
November 30, 1999  decreased by $48 as compared to the expense in the same three
month period in 1998. The decrease in interest expense was nominal,  and the low
rate was primarily 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.

     Gold  Exploration  Costs and Activities - In connection  with the change in
Sector's strategic  direction,  Management had previously decided to curtail any
significant  future gold exploration  activities and has relinquished any rights
it may have previously had to its claims in the Ketchum Project. Management does
not expect Sector to incur  significant  costs in the future related to any gold
exploration properties or other gold exploration related activities

LIQUIDITY AND CAPITAL RESOURCES

     During fiscal 1999,  the Company  financed  Sector's  operations  primarily
through (i) funds it received from the sale of  securities  in offshore  private
placements in accordance  with Regulation S of the Securities Act (See Note 6 to
the  Financial  Statements  herein).  Additionally,  the Company sold  3,846,150
shares in May 1999 to two  purchasers  for cash  proceeds of $100,000;  and (ii)
sales revenue generated from the Company's subsidiaries.


                                       11
<PAGE>

     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.

     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


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<PAGE>

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.

     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


                                       13
<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 November 30, 1999, 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.

     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


                                       14
<PAGE>

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.


                                       15
<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.

                                       16
<PAGE>

                          Part II - Other Information

   Item 2 - Legal Proceedings.

   The Company is party to the following Legal Proceedings:

A.   Indira Shetty v. World Wide Plumbing et al.

1.   Supreme Court of the State of New York, county of Queens

2.   Filed August 30, 1999

3.   Defendants -  World-wide  Plumbing  Supply,  Inc,  Allan Kline,  and Sector
     Communications, Inc.

4.  Plaintiff alleges Allan Kline represented he was the President of Sector and
    would sell  Plaintiff  35,000  shares of stock for $  20,000.00.  Mr.  Kline
    allegedly told  Plaintiff  that  World-Wide  Plumbing  Supply,  Inc. was the
    parent company of Sector.  Plaintiff  issued a check to World-wide  Plumbing
    and it was  cashed.  World-wide  is a an entity in the New York area and has
    filed an answer.  Sector has no knowledge of World-Wide  Plumbing and denies
    each and every  allegation of  wrongdoing.  Sector pled that Allan Kline was
    not the President of Sector and has no knowledge of any of the facts.

5. Plaintiff seeks his $ 20,000.00.

This case is presently being litigated.


B  Svennson v. Sector Communications, Inc.

1.   U.S. District Court for the Eastern District of Virginia

2.   Filed December 8, 1988

3.   Ebbe Svennson is the Plaintiff. Sector Communications, Inc is the defendant

4.   This is an action brought by Svennson to recover fees allegedly owed to him
     by Sector.  It was  Plaintiff's  contention that he met with S. Allan Kline
     and  others,  and was hired to obtain  funds and broker  transactions  with
     European  investors.  5. $  1,750,000  and 400,00  shares of Sector  common
     stock.

Defendant Sector  Communications,  Inc., contested each and every allegation and
was prepared for trial. Plaintiff dismissed said action in June, 1999.


                                       17
<PAGE>

C.   USIS International Capital Corp. v. Sector Communications, Inc and S. Allan
     Kline

1.   Supreme court of the State of New York, County of New York

2.   Filed August 14, 1998

3.   USIS International Capital Corp.  (Plaintiff);  Sector Communications,  Inc
     and S. Allan Kline (Defendants)

4.   Plaintiff  alleged  breach of  contract,  fraud,  misrepresentation,  stock
     manipulation and insider trading violations.

5.   $2,500,000.

Defendant  Sector  Communications,  Inc.  motioned the Court for  dismissal  for
Plaintiff's  failure to properly  serve the complaint upon it; the Court granted
an order to serve the complaint and appear and  Plaintiff  thereafter  failed to
comply; the Court dismissed the lawsuit on September 28, 1999.


                                       18
<PAGE>




    Item 6 - Exhibits and reports on Form 8-K

(a)  Exhibit Index

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


(b)  Reports on Form 8-K
       None




                                   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






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