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, 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)
1801 Century Park East, 23rd Fl., Los Angeles, CA 90067
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(310) 772-0715
--------------
(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 November 30, 2000: 17,368,805.
As of the date of filing 27,360,514 shares were outstanding.
<PAGE>
SECTOR COMMUNICATIONS, INC.
INDEX
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Balance Sheets............................................ 2-3
Statements of Operations.................................. 4
Statements of Cash Flows.................................. 5-6
Notes to Consolidated Financial Statements (Unaudited).... 7
ITEM 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations..................13
PART II OTHER INFORMATION
ITEM 1 - Legal Proceedings.................................... 24
ITEM 2 - Changes In Securities................................ 24
ITEM 5 - Other information.................................... 24
ITEM 6. Exhibits and Reports on Form 8-K..................... 25
Signature Page................................................ 26
-1-
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements
SECTOR COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEET
November 30, February 29,
2000 2000
------------- -----------
(unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 134,863 $ 170,607
Accounts Receivable, net of provision for
doubtful accounts of $24,315 and $18,148 188,315 391,681
Prepaid Expenses 56,564 30,597
------------- -----------
Total Current Assets 379,742 592,885
------------- -----------
PROPERTY AND EQUIPMENT 1,842,643 2,019,960
Accumulated Depreciation (1,622,582) ( 1,803,610)
------------- -----------
Net Book Value 220,061 216,350
------------- -----------
OTHER ASSETS
Deposits 29,421 28,289
------------- -----------
TOTAL ASSETS $ 629,224 $ 837,524
============= ============
The Accompanying Notes are an Integral Part of These Consolidated Financial
Statements.
2
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SECTOR COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEET, continued
November 30, February 29,
2000 2000
------------- -----------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses 2,762,694 1,818,732
Debentures Payable 263,952 263,952
Deferred Revenue 155,262 203,878
Due to Related Parties 157,904 180,355
------------- -----------
Total Current Liabilities 3,339,812 2,466,917
Rent Deposit 12,248 12,248
------------- -----------
TOTAL LIABILITIES 3,352,060 2,479,165
------------- -----------
Commitments and Contingencies
STOCKHOLDERS' DEFICIT
Preferred Stock, $.001 par value; 5,000,000
shares authorized, no shares issued and
outstanding - -
Common Stock, $.001 par value; 500,000,000
shares authorized 17,368,805 and 17,193,805
shares issued and outstanding 17,369 17,194
Common Stock subscribed 820,500 -
Additional Paid-in Capital 14,441,954 14,376,351
Accumulated Deficit (17,716,912) (15,748,015)
Cumulative Foreign Currency Translation
Adjustment ( 285,747) ( 287,171)
------------- -----------
Total Stockholders' Deficit ( 2,722,836) ( 1,641,641)
------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 629,224 $ 837,524
============= ============
The Accompanying Notes are an Integral Part of These Consolidated Financial
Statements.
3
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<TABLE>
<CAPTION>
SECTOR COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
November 30, November 30, November 30, November 30,
2000 1999 2000 1999
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
REVENUE
Telecommunication Revenue $ 108,133 $ 206,505 $ 337,345 $ 512,205
Software Sales and
Maintenance 78,999 239,405 287,501 399,789
----------- ----------- ------------ -----------
187,132 445,910 624,846 911,994
COST OF SALES 54,650 125,259 170,151 358,780
----------- ----------- ------------ -----------
GROSS PROFIT 132,482 320,651 454,695 553,214
----------- ----------- ------------ -----------
OPERATING EXPENSES
Software Development Costs 6,004 132,123 17,166 220,803
Sales, General and Administrative 1,247,769 140,867 1,735,540 541,211
----------- ----------- ------------ -----------
Total Operating Expenses 1,253,773 272,990 1,752,706 762,014
----------- ----------- ------------ -----------
Loss From Operations (1,121,291) 47,661 (1,298,011) (208,800)
OTHER INCOME (EXPENSE)
Interest (Expense) ( 5,279) ( 5,264) ( 15,837) ( 70,004)
Financing Cost ( 668,729) - ( 668,729) -
Other Income (Expense) ( 274) 1,748 13,680 105,102
----------- ----------- ------------ -----------
Loss Before Provision for Income
Taxes (1,795,573) 44,145 (1,968,897) (173,702)
Provision for Income Taxes - - - -
----------- ----------- ------------ -----------
Net Loss $(1,795,573) $ 44,145 $(1,968,897) $ (173,702)
=========== =========== ============ ===========
Loss Per Share $ ( 0.10) $ - $ ( 0.11) $ ( 0.01)
=========== =========== ============ ===========
Weighted Average Number of Shares
Outstanding 17,368,805 17,193,805 17,296,896 16,099,249
</TABLE>
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 NINE MONTHS ENDED NOVEMBER 30,
2000 1999
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $( 1,968,897) $( 173,702)
Adjustments to Reconcile Net Loss to Net Cash
Provided By Operating Activities:
Depreciation and Amortization 72,796 246,126
Allowance for doubtful accounts 7,289 -
Impairment of loan 640,500 -
Amortization of Discount and Loan Costs - 78,889
Stock based compensation 65,779 -
Change in Assets and Liabilities
(Increase) Decrease in Assets
Accounts Receivable 197,199 231,494
Prepaid Expenses and Deposits ( 27,099) 10,633
Loans receivable (640,500) -
(Decrease) Increase in Liabilities
Accounts Payable 943,962 107,770
Related Party Payable ( 22,451) ( 44,158)
Deferred Revenue ( 48,616) ( 180,953)
------------ ------------
Net Cash Provided (Used) By Operating Activities ( 780,038) 276,099
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Fixed Assets ( 77,117) ( 98,419)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of Common Stock - 100,000
Common Stock Subscribed 820,500 -
------------ ------------
820,500 100,000
------------ ------------
Effect of Exchange Rate Changes on Cash 911 ( 267,224)
------------ ------------
Net (Decrease) Increase in Cash ( 35,744) 10,456
CASH - MARCH 1, 170,607 181,877
------------ ------------
CASH - NOVEMBER 30, $ 134,863 $ 192,333
============ ===========
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash Paid For:
Interest $ - $ -
============ ===========
Taxes $ - $ -
============ ===========
The accompanying notes are an integral part of these consolidated financial
statements.
5
<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, 2000:
Common stock totaling 175,000 shares was issued for services. These shares
have been valued at $32,900.
Options to purchase 175,000 shares of common stock were issued for services.
These options have been valued at $32,879.
Period ended November 30, 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 FINANCIAL STATEMENTS
(UNAUDITED)
NOVEMBER 30, 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 November 30, 2000
and the consolidated statements of operations and cash flows for
the nine and three month periods ended November 30, 2000 and 1999
are those of Sector Communications, Inc. ("Sector") and its
subsidiaries (collectively the "Company"). All significant
inter-company 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 FINANCIAL STATEMENTS
(UNAUDITED)
NOVEMBER 30, 2000 AND 1999
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
November 30, February 29,
2000 2000
------------ ------------
Fiber Network $ 157,837 $ 157,837
Equipment 1,541,099 1,724,832
Furniture and Fixtures 53,639 47,223
Vehicles and Other 90,068 90,068
------------ ------------
1,842,643 2,019,960
Less: Accumulated Depreciation 1,622,582 1,803,610
------------ ------------
$ 220,061 $ 216,350
============ ============
Depreciation expense for the nine month periods ended November 30,
2000 and 1999 was $72,796 and $246,126, respectively and for the three
month periods ended November 30, 2000 and 1999 was $25,092 and
$77,678, respectively.
NOTE 3 - WARRANTS
At November 30, 2000, all of the Company's outstanding common stock
purchase warrants expired 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 November
30, 2000 are as follows:
Outstanding, Beginning 5,312,458
Granted 175,000
---------
Outstanding, Ending 5,487,458
=========
Exercisable, Ending 5,487,458
=========
8
<PAGE>
SECTOR COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOVEMBER 30, 2000 AND 1999
NOTE 5 - STOCKHOLDERS' EQUITY
The company has received $400,000 in common stock subscriptions.
Because the price of the company's stock remained below $0.15 per
share for 10 consecutive trading days, the subscription price was
reset to $0.10 per share, which was below the trading price. A
financing cost attributable to the discount, aggregating $668,729, has
been recorded in the financial statements. 4,000,000 shares of common
stock were issued in December, 2000.
During the quarter ended November 30, 2000, the company has received
an additional $420,500 in common stock subscriptions. These shares
have not yet been issued.
On August 8, 2000, the authorized number of common shares was
increased to 500,000,000 shares.
On June 22, 2000, the Company issued 175,000 shares of common stock
for directors' compensation. These shares have been valued at $32,900.
On June 22, 2000, the Company issued options to purchase 175,000
shares of common stock as compensation for service. These options have
been valued at $32,879 using the Black- Sholes options pricing model.
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. Judgment was entered against Ideous in the
amount of $110,850. An appeal is pending. The full amount has
been accrued in the financial statements.
9
<PAGE>
SECTOR COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOVEMBER 30, 2000 AND 1999
NOTE 6 - COMMITMENTS AND CONTINGENCIES (continued)
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
President 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.
4) The Company is named a defendant in an action alleging
non-payment of legal services and expenses in the amount of
$12,500. The Company believes some loss may be probable and has
accrued this amount in the financial statements.
NOTE 7 - GOING CONCERN
The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As of November
30, 2000, the Company has a working capital deficit of $2,960,070 and
an accumulated deficit of $17,716,912. 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.
10
<PAGE>
SECTOR COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOVEMBER 30, 2000 AND 1999
NOTE 8 - SEGMENT INFORMATION
The Company's foreign operations are conducted by Global, Sector Bulgaria
and Ideous.
November 30,
2000 1999
---------------- ---------------
Revenues from external customers:
Telecommunications $ 337,345 $ 512,205
Software 287,501 399,789
---------------- ---------------
$ 624,846 $ 911,994
============== ===============
Interest expense:
Corporate $ 15,837 $ 70,004
=============== ==============
Depreciation and amortization:
Telecommunications $ 64,004 $ 218,598
Software 8,792 19,812
Corporate - 7,716
---------------- ---------------
$ 72,796 $ 246,126
=============== ===============
Segment profit (loss) before taxes:
Telecommunications $ ( 39,735) $ 59,379
Software ( 33,282) ( 30,539)
Corporate (1,895,880) ( 202,542)
---------------- ---------------
$ (1,968,897) $ ( 173,702)
================= ==============
Segment assets:
Telecommunications $ 347,926 $ 491,544
Software 186,064 246,007
Corporate 95,234 53,232
---------------- ---------------
$ 629,224 $ 790,783
================ ===============
Expenditure for segment assets:
Telecommunications $ 66,408 $ 75,642
Software 1,610 22,777
Corporate 9,099 -
---------------- ---------------
$ 77,117 $ 98,419
================ ===============
11
<PAGE>
SECTOR COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOVEMBER 30, 2000 AND 1999
NOTE 8 - SEGMENT INFORMATION (CONT'D)
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.
November 30,
2000 1999
---------------- ---------------
Revenues from external customers:
United States $ - $ -
Switzerland 287,501 399,789
Bulgaria 337,345 512,205
---------------- ---------------
$ 624,846 $ 911,994
================ ===============
Segment assets:
Switzerland $ 186,064 $ 246,007
Bulgaria 347,926 491,544
United States 95,234 53,232
---------------- ---------------
$ 629,224 $ 790,783
================ ===============
NOTE 9- SUBSEQUENT EVENTS
The company issued 3,991,709 shares of common stock as payment for
services by directors. These shares have been valued at $339,295.
This amount has been included in the statement of operations for
the three and nine month periods ended November 30, 2000.
The company has entered into three consulting agreements. Payments
of these agreements will be made through the issuance of 2,000,000
shares of common stock.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS:
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.
OVERVIEW
On August 29, 2000, Sector signed a preliminary letter of intent (LOI) to
acquire several corporations which were to develop business markets for the
Company in sales and retail job exposition and recruitment conferences; the
agreement called for Sector to fund a portion of the target companies'
operations while continuing to conduct due diligence inquiries. As Sector's due
diligence inquiries progressed during the September and October, the Board of
Directors had increased concern regarding the transaction and the operational
structure within the target companies; Sector's Board determined it was not in
the Company's best interests to proceed with the transactions contemplated by
the LOI. Instead, the Company wrote off the monies transferred to the target
companies and formed several subsidiary corporations with the intent of making
its own forays into the exposition business. The first of these "Global Tech
Expos" is presently scheduled in March, 2001 in Silicon Valley, California, and
is unique in its focus on the high-tech information technology (IT) sector and
use of videoconferencing equipment (supplied by joint venturer Talk Visual
Corporation) to allow real-time participation by applicants domestically and in
foreign countries. Additional events are scheduled throughout 2001, with the
current base of operations for one of the new subsidiaries, known as Sector
Development, Inc. and doing business as "Global Tech Expos", sited in Irvine,
California. The Company believes its development of new markets domestically and
in foreign countries will provide a new business focus as former market
concentrations diminish or expire.
13
<PAGE>
During the quarter, the Company's Board of Directors conducted further on-site
reviews of its subsidiary business operations in Bulgaria; assigned directors
analyzed business activity of the subsidiary corporation and its staff, its
current operating structure, and recent threats by the BTC to disconnect certain
circuits serving the subsidiary corporation's clients. The Directors
collectively determined that Sector's telecommunications business in Bulgaria is
in a precarious state given recent activity by the BTC (and the necessity to
maintain arbitration proceedings against the government-owned telecommunications
entity) and upcoming deregulation of telecommunications within the country. As a
result, the Directors ordered certain research activity intended to source new
markets for replacement of its subsidiary business, with the belief that the
Company can continue to advance in Bulgaria as an underdeveloped market. The
Company continued activity with respect to the cable television and other
license rights obtained previously, including directives for security system
signal transmission, although it has not yet approved a formal plan for
exploitation of the licenses and cannot estimate the financial impact of the
same. The directors also ordered a downsizing of staff of its subsidiary
business and instituted a system of financial controls which presently requires
review of all contemplated expenditures by at least one director of the parent
company.
RESULTS OF OPERATIONS (For the 3 months ended November 30, 2000 v. 1999)
Telecommunication Revenue - Sector continues to earn all of its
telecommunications revenue from Sector PLC (i) providing direct-dial services
for international long distance calls to a select group of hotels 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 PLC-owned digital phone systems through shared revenue
agreements with some of its customers.
Sector's telecommunications revenue for the three months ended on November 30,
2000 was $108,133, which represents a decrease of $98,372 or 48% from the
$206,505 of revenue earned for the same quarter of 1999. Management believes the
decrease in revenue was the result of a decrease in the number of hotels who
have contracted for services from Sector and a decrease in overall occupancy of
its hotel customers. Management estimates that revenue levels for the upcoming
quarter will remain stable but suspects that steps presently being taken toward
deregulation of the BTC and the BTC's present competitive strategies could cause
some of Sector's existing clients to terminate their contracts. Management is
unable to estimate if or when such terminations may occur and therefore provides
no estimate of its financial impact.
14
<PAGE>
Software Sales and Maintenance Revenue - Sector's software sales and maintenance
revenue for the three months ended on November 30, 2000 was $78,999, which
represents a decrease of 160,406 or 67% from the $239,405 of revenue earned for
the same quarter of 1999 (all figures are net of payments to third party
distributors). Management believes the decrease in sales for the three months
ending November 30, 2000, was attributable to a winding down of operations by
HIS, which is experiencing a shortfall of capital funding and has threatened to
cease operations altogether. 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 (COS) of Sector for the three months ended
November 30, 2000 was $54,650, which represents a decrease of $70,609 or 56%
from $125,259 COS experienced for the same quarter of 1999. The majority of the
decrease was attributable to (1) the decrease in costs associated with payments
due to the BTC resulting from the lower revenues (2) a decrease in other
variable expenses associated with the lower revenue levels and (3) to reduced
depreciation charges of fixed assets. Management anticipates some reductions in
the coming quarter which will be attributable to active management of Sector
PLC's expenditures by the parent company's directors, but expects such
reductions to be offset by new costs of sale attributable to its job exposition
business.
Gross Profit - Gross profit is calculated as revenues less the cost of revenues.
Sector's gross profit for the three months ended November 30, 2000 was $132,482,
which represents a decrease of $188,169 or 59% from the $320,651 of gross profit
experienced for the same quarter of 1999. Management considers the decrease in
accord with the reduction of telecommunications and software sales revenues.
Operating Expenses - Operating expenses represent the sum of software
development costs and sales, general and administrative expenses. Total
operating expenses of Sector for the three month period ending November 30, 2000
were $1,253,773, which represents an increase of $980,783 or 359% from the
$272,990 of operating expenses incurred for the same quarter of 1999. More than
half of this increase or $640,500 is attributable to write-off of the monies
funded to one of the target companies Sector intended to acquire. The remainder
of the increase is attributable to costs associated with startup of Sector's job
exposition business and maintenance of offices and staff in Los Angeles,
California, along with issuance of shares as director's compensation and
compensation to the individuals who framed Sector's plans for entry into
exposition markets. Management expects operating expenses to decrease during the
upcoming quarter as it does not expect to experience again the type of write-off
expensed to the quarter ended November 30, 2000; management cannot presently
estimate the percentage or dollar decrease expected, as expansion of its
subsidiary businesses can be expected to offset a significant portion of the
anticipated decreases.
15
<PAGE>
Software Development Costs - Software development costs consisted primarily of
salaries, related benefits, consultants fees and other costs. Sector's software
development costs for the three month period ending November 30, 2000 were
$6,004, which represents a decrease of $126,119 or 95% from $132,123 of software
development costs incurred for the same quarter of 1999. The decrease was
attributable the lack of capital available to HIS/Ideous to fund a higher level
of software development costs. Management believes software development costs
will remain stable or decrease during the upcoming quarter.
Sales, General and Administrative Costs (SG&A)- SG&A consists primarily of
personnel costs, including salaries, benefits and bonuses and related costs for
management, finance and accounting, legal and other professional services. SG&A
Expenses for Sector for the period ending November 30, 2000 were $1,247,769,
which represents an increase of $1,106,902 or 785% from the $140,687 SG&A
experienced for the same quarter of 1999. More than half of this increase or
$640,500 is attributable to write-off of the monies funded to one of the target
companies Sector intended to acquire. The remainder of the increase is
attributable to costs associated with startup of Sector's job exposition
business and maintenance of offices and staff in Los Angeles, California, along
with issuance of shares as director's compensation and compensation to the
individuals who framed Sector's plans for entry into exposition markets.
Management is currently working with Sector PLC's executive to reduce staff and
cut costs wherever possible. Management expects Sector's general and
administrative costs, exclusive of any addition of new employees, to be reduced,
as it does not expect to experience again the type of write-off expensed to the
quarter ended November 30, 2000. If the Company proceeds with acquisition or
other development plans, however, domestic operating general and administrative
expenses would be expected to rise in accordance with the costs incurred to
administer the business elements of such plans, the dollar figures for which
cannot presently be estimated.
Interest Expense - Interest expense of $5,264 incurred for the three month
period ending November 30,2000 decreased by $15 or less than 0.01% as compared
to the interest expense of $5,264 incurred for the same three month period of
1999. Management considers the change negligible. 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.
RESULTS OF OPERATIONS (For the 9 months ended November 30, 2000 v. 1999)
Telecommunications Revenue - Sector continues to earn all of its
telecommunications revenue from Sector PLC (i) providing direct-dial services
for international long distance calls to a select group of hotels 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.
16
<PAGE>
Sector's telecommunications revenue for the nine months ended on November 30,
2000 was $337,345, which represents a decrease of $174,860 or 34% decrease from
the $512,205 of revenue earned for the same period of 1999. Management believes
the decrease in revenue was the result of a decrease in the number of hotels who
have contracted for services from Sector and a decrease in overall occupancy of
its hotel customers. Management estimates that revenue levels for the upcoming
nine month period will remain stable but suspects that steps presently being
taken toward deregulation of the BTC and the BTC's present competitive
strategies could cause some of Sector's existing clients to terminate their
contracts. Management is unable to estimate if or when such terminations may
occur and therefore provides no estimate of its financial impact.
Software Sales and Maintenance Revenue - Sector's software sales and maintenance
revenue for the nine months ended November 30, 2000 was $287,501, which
represents a decrease of $112,288 or 28% from the $399,789 of revenue earned for
the same period of 1999. Management believes the decrease in sales for the three
months ending November 30, 2000, was attributable to a winding down of
operations by HIS, which is experiencing a shortfall of capital funding and has
threatened to cease operations altogether. 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.
Cost of Sales - The Cost of Sales (COS) of Sector for the nine months ended
November 30, 2000 was $170,151, which represents a decrease of $188,629 or 52%
from the $358,780 COS experienced for the same period of 1999. The majority of
the decrease was attributable to (1) the decrease in costs associated with
payments due to the BTC resulting from the lower revenues (2) a decrease in
other variable expenses associated with the lower revenue levels and (3) to
reduced depreciation charges of fixed assets. Management anticipates some
reductions in the coming nine months which will be attributable to active
management of Sector PLC's expenditures by the parent company's directors, but
expects such reductions to be offset by new costs of sale attributable to its
job exposition business.
Gross Profit - Gross profit is calculated as revenues less the cost of revenues.
Sector's gross profit for the nine months ended November 30, 2000 was $454,695,
which represents a decrease of $98,519 or 18% from the $553,214 of gross profit
experienced for the same period of 1999. The decrease is considered natural as a
result of the decreases experienced in Revenues and Costs of Sales as described
herein.
Operating Expenses - Operating expenses represent the sum of software
development costs and sales, general and administrative expenses. Total
operating expenses of Sector for the nine month period ending November 30, 2000
were $1,752,706, which represents an increase of $990,692 or 130% from the
$762,014 of operating expenses incurred for the same period of 1999. More than
half of this increase or $640,500 is attributable to write-off of the monies
funded to one of the target companies Sector intended to acquire. The remainder
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of the increase is attributable to costs associated with startup of Sector's job
exposition business and maintenance of offices and staff in Los Angeles,
California, along with issuance of shares as director's compensation and
compensation to the individuals who framed Sector's plans for entry into
exposition markets. While management does not expect to experience again the
type of write-off expensed to the quarter ended November 30, 2000, it expects
operating expenses to remain stable or increase during the upcoming nine month
period, principally because it expects expansion efforts to be active during
that time. Management cannot presently estimate the percentage or dollar shifts
expected, as expansion of its subsidiary businesses can be expected to offset a
significant portion of the anticipated decreases.
Software Development Costs - Software development costs consisted primarily of
salaries, related benefits, consultants fees and other costs. Sector's software
development costs for the nine months ending November 30, 2000 were $17,166,
which represents a decrease of 92% or $203,637 from the $220,803 of costs
experienced during the same period of 1999. The decrease was attributable the
lack of capital available to HIS/Ideous to fund a higher level of software
development costs. Management believes software development costs will remain
stable or decrease during the upcoming quarter.
Sales, General and Administrative Costs (SG&A)- SG&A consists primarily of
personnel costs, including salaries, benefits and bonuses and related costs for
management, finance and accounting, legal and other professional services. SG&A
expenses for Sector for the nine month period ending November 30, 2000 were
$1,735,540, which represents an increase of $1,194,329 or 220% from the $541,211
SG&A experienced for the same quarter of 1999. More than half of this increase
or $640,500 is attributable to write-off of the monies funded to one of the
target companies Sector intended to acquire. The remainder of the increase is
principally attributable to costs associated with startup of Sector's job
exposition business and maintenance of offices and staff in Los Angeles,
California, along with issuance of shares as director's compensation and
compensation to the individuals who framed Sector's plans for entry into
exposition markets. Management is currently working with Sector PLC's executive
to reduce staff and cut costs wherever possible. Management expects Sector's
general and administrative costs, exclusive of any addition of new employees, to
be reduced, as it does not expect to experience again the type of write-off
expensed to the quarter ended November 30, 2000. If the Company proceeds with
acquisition or other development plans, however, domestic operating general and
administrative expenses would be expected to rise in accordance with the costs
incurred to administer the business elements of such plans, the dollar figures
for which cannot presently be estimated.
Interest Expense - Interest expense of $15,837 incurred for the nine month
period ending November 30,2000 decreased by $54,167 or 77% as compared to
interest expense of $70,004 incurred for the same period in 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.
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LIQUIDITY AND CAPITAL RESOURCES
During the quarter ending November 30, 2000, the Company financed Sector's
operations primarily through sales revenue generated from the Company's
subsidiaries. The Company also received $400,000 in funding through a stock
subscription pursuant to a Regulation S offering. A director of the Company is a
30% owner of the company providing 50% of this funding. The Company also
received $420,500 in funding through debt instruments convertible to sale of
shares of its common stock under Regulation S. Although the Company has in the
past and is currently experiencing negative cash flow from operations, the
Company believes it will be able to meet its basic capital demands during the
next quarter through cash receipts from its subsidiary exposition business. The
funding of any expanded and/or 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 or 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 Company's common stock on the NASDAQ Small
Cap Market occurred previously; the Company's common stock presently trades
through the 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.
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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.
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.
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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
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 30,2000, 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.
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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 job exposition business as well as its ability to expand the scope
of its business activities globally. 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 and services are 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 or services obsolete and
unmarketable. As a result, Sector's future success will depend upon its ability
to continue to enhance existing products and services, respond to changing
customer requirements and develop and introduce, in a timely manner, new
products and services 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 or new products or services on a timely
basis. Sector has in the past experienced delays in the development of its
services and there can be no assurance that Sector will not experience further
delays in connection with its current service offerings or future service
development activities. If Sector is unable to develop and introduce new
products or services, or enhancements to existing products or services, 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
services will achieve market acceptance.
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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 in part 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.
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PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
There were no material developments in the Company's prior reported legal
proceedings during the quarter.
ITEM 2 - Changes In Securities
The Company did not issue any stock certificates during the quarter.
The Company received a demand for adjustment of amount of shares due under its
Regulation S subscription; the agreement provided for a reset of the
subscription share price in the event the trading price of the Company's stock
fell below $0.15 for ten consecutive trading days; in such event, the
subscription share price was to be reset to $0.10 per share, with additional
shares issued to reflect such adjustment. Although the Company did not issue the
required certificates during the quarter, it included the necessary adjustments
in its financial statements. At the end of the quarter, the Company recognized
an obligation to issue 4,000,000 shares of its common stock for $400,000
received under the Regulation S subscription.
ITEM 5 - Other Information
On September 1, 2000, the Board of Directors approved compensation in the amount
of $60,000 for each of three directors who actively participated in development
of the Company's plan for development of the job recruitment and exposition
business. The compensation may be taken as cash or common stock restricted under
Rule 144, as the Company's financial condition may permit. The conversion, if
any, shall be calculated using a thirty percent discount from the three-day
average closing price for the Company's common stock, as calculated for day of
demand of conversion and the two days prior; the Company will consider September
1, 2000, the tacking date for any conversion.
On October 30, 2000, the Company formed three subsidiary corporations in
California: Sector Development, Inc., Sector Ventures, Inc. and Tech Recruitment
Conferences. Sector Development, Inc. filed a fictitious business name statement
and currently operates as "Global Tech Expos."
On November 2, 2000, the Company announced the resignation of Theodore Georgelas
in a Form 8-K filing. Mr. Georgelas' resignation includes resignation from all
officer and director positions within the Company and its subsidiaries.
On November 14, 2000, two Form 8-K filings were erroneously made under the
Company's name; said filings have been removed from the Securities and Exchange
Commission's EDGAR system but may remain on certain Internet bulletin boards and
other Edgar filing dissemination services.
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In January, 2001, the Company's Chairman accepted the resignation of James
Zelloe from all officer and director positions, which allowed the Company to
centralize management within its Los Angeles offices. In accordance with Company
policy, any resignation from the Company includes resignation from all of the
Company's subsidiaries and vice-versa, as applicable. Duties formerly assigned
to or undertaken by Mr. Zelloe will be assumed by others as provided for in the
Company's bylaws or at the discretion of the Company's Chairman.
ITEM 6 - Exhibits and reports on Form 8-K
(a) Exhibit Index
No. Description
-- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
November 2, 2000 (Item 5)
-------------------------
On October 30, 2000 the Board of Directors of Registrant accepted the
resignation of Theodore Georgelas as president and director of the Company. On
the same date, the Board of Directors appointed the Company's Chairman, Mohamed
Hadid, to act as interim President and Chief Executive Officer. Marilyn Foster
was appointed Secretary of Registrant, following the resignation by James Zelloe
of that office. Mr. Zelloe continues to serve as treasurer and director.
Registrant has moved its principal executive offices to Los Angeles, to 1801
Century Park East, 23rd Floor, Los Angeles, California 90067, phone
310-772-0715.
November 6, 2000 (Item 5)
-------------------------
The Company earlier determined that entry into job exposition and
recruitment conference businesses would complement its telecommunications base
and yield new revenue streams. The Company framed a plan for entry into these
markets and sought acquisition of companies which commanded a significant market
presence; as a result, the Company entered into a letter of intent/preliminary
acquisition agreement (the "Agreement"), announced on August 29, 2000, which
allowed the Company to conduct due diligence regarding its potential
acquisitions of Workseek.com and American Recruitment Conferences Inc., private
California corporations, and Sunburst Acquisitions III Inc., a Colorado public
corporation. While the Company continues its interest in the job exposition and
recruitment conference businesses, it was not satisfied with the results of its
due diligence inquiries and determined it is not in the Company's best interests
to proceed with the transactions contemplated by the Agreement.
November 11, 2000 (Item 9 - FD Disclosure)
------------------------------------------
On November 8, 2000, Sector Development, Inc., a wholly-owned subsidiary of
Registrant, entered into a joint marketing agreement with Talk Visual
Corporation, a public corporation based in Miami, Florida (OTCBB: TVCP), for
purchase and sale of its TV225 videocall telephones.
November 14, 2000 - erroneous filings
-------------------------------------
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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)
Dated: January 15, 2001 By /s/ Mohamed Hadid
--------------------------
Chairman, Acting President & Director
26
