FORM 10 K
                                 
                SECURITIES AND EXCHANGE COMMISSION
                                 
                      WASHINGTON, D.C. 20549
                                 
        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
                                 
               THE SECURITIES EXCHANGE ACT OF 1934

For this fiscal year ended September 30, 1998, Commission file
number 03385

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

Delaware                                     22-1840647          
(State or other jurisdiction of                  (I.R.S. Employer
     incorporation or organization)            Identification No.)

217 First Street, P.O. Box 287, Ho-Ho-Kus, NJ    07423-0287       
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code 201-445-2420

Securities registered pursuant to Section 12(b) of the Act:

                                        Name of exchange on which
          Title of each class                  registered
Common Stock, Par Value $0.10 per share           Over the Counter

Securities registered pursuant to Section 12(g) of the Act:

                                                                  
                         (Title of Class)

                                                                  
                         (Title of Class)

          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 preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes  x     No     
          State the aggregate market value of the voting stock held
by non-affiliates of the Registrant.  The aggregated market value
shall be computed by references to the price at which the stock
sold, or the average bid and asked prices of such stock, as of a
specified date within 60 days prior to date of filing.
$4,155,429.00 at December 4, 1998.

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<PAGE>

          Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest practicable
date.  302,213 Common Shares at December 4,1998.

               DOCUMENTS INCORPORATED BY REFERENCE.
     1.   Annual Report Form 10K for the year ended September 30, 1994.
     2.   Financial Statements for the year ended September 30, 1995.
     3.   Financial Statements for the years ended September 30, 1990 and 1989.
     4.   Annual Report Form 10K for the years ended September 30,
          1996 and 1997.
     5.   Holobeam, Inc. Defined Benefit Plan.



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<PAGE>

                              PART I
Item 1.  Business
     (a)  In General.  The Registrant was organized in October,
1967, and commenced doing business on January 1, 1968.  The
Registrant is engaged in the rental and development of real estate
and in developing surgical staples and the technology used to apply
the staples and was formerly engaged in developing technology for
semiconductor devices until 1994 when such activities were
terminated.  
     b)   Industry Segments.  For financial information in regard
to Industry Segments, reference is made to Note 13 to the Financial
Statements for the years ended September 30, 1998, 1997 and 1996.
     (c)  Description of Business.
          (i)  Principal Activities and
          (ii) Status of products and Real Estate Properties.
                         Medical Staples
     The Registrant is continuing its efforts in the area of
Medical Staples for use in internal surgery.  Four United States
Patents have been received and foreign applications have been filed
on a novel staple.  The staple has been produced and animal testing
has yielded favorable results during 1998.  Additional testing has
been started at a medical center and preliminary results have been
successful enough to continue the project.
     A significant investment would be required if the Registrant
were to pursue this area of business.  The Registrant may seek a
relationship of some sort with a firm active in the medical
equipment area.  However, no decision as to such a relationship has
been made at this time.
                     Semiconductor Technology
     The Registrant had obtained a United States patent covering
technology for the deposition of thin films of semiconductor
materials, e.g., III-V materials such as binary or ternary
semiconductor materials, on suitable substrates.  Contracts to
investigate the technology involved were given by the Solar Energy
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<PAGE>

 Research Institute (S.E.R.I.) of the United States Department of
Energy (USDOE) to Brown University.  This work, in order to support
the length of research required to test the theories, was to test
the quality of the materials and potential applications and the
funds were supplied by the USDOE on the Solaris Solar Research
program, Grant #DE-FG02-84C410203.  Subsequently, Brown University
performed additional investigations of the applications of the
technology supported by the USDOE under the University
Participation Program, Contract #XB5-05009-5.  These investigations
showed that the film deposition rates with the technology were
faster than with conventional liquid phase epitaxy and were of high
quality.  However, variations in film thickness along the direction
of flow were observed.  If such variation cannot be solved, it
would limit the possible commercial use of the technology.  Further
investigation of the technology by Brown University has ceased as
governmental support for their research has terminated.  The
Registrant has no direct knowledge at this time of other research
taking place using its technology.  There is no assurance that the
technology in question will find commercial application. During
1993 the Registrant expended $37,615.00 toward development of
semiconductor technology and substantially reduced expenditures
during 1994. 
     During fiscal year 1994, the Registrant discontinued efforts
relating to photovoltaic cells.  Work in the field has moved in
directions away from that of the Registrant's technology.  There
has been a substantial reduction of government support in this
technical area and funding that had been received by laboratories
exploring the Registrant's technology has terminated.
          Real Estate Development and Rental Activities
     The Registrant has rented two buildings it owns located at A&S
Drive, Paramus, New Jersey: one to The Sports Authority, Inc. and
the other to Tandy Corporation for retail purposes.
          (iii)      Raw Materials
     The Registrant believes that the components and materials
necessary or useful to its operations will be available from
diverse sources of supply.  The 

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<PAGE>

materials used for the Registrant's research activities have been
acquired through commercial businesses engaged in the distribution
of such supplies.  The materials that the Registrant would require
for development of commercial production of medical staples are
widely available.
          (iv) Patents.
     The Registrant has filed several patent applications and has
several patents issued in connection with medical staples for use
in internal surgery.  These applications and patents are as
follows:

                          
No. Serial No.     Title of Invention            Issue Date

 1. PCT/US94/02227        Staples                   03/01/94

 2. 08/512,766            Staples                   08/09/95

 3. 08/228,058            Staples                   08/29/95

 4. Canadian Pat. No.     Improved Staples (PCT NAT)08/18/98
    2,155,750

 5. European Pat. 94910801.3 Staples                03/01/94 

 6. Australian Pat. 63568/94 Improved Staples       09/15/94

 7. Japanese Pat. 6-520120   Staples                03/01/94

 8. Brazilian Pat.        Staples                   03/01/94
    PCT/US94/02227

 9. 08/502,988            Staple Overlap            07/18/95

10. 07/753,116            Surgical Stapling Method  01/19/93

11. 07/934,858            Surgical Stapling Method  11/23/93
                          
12. 08/024,501            Staples                   08/30/94

13. US Pat. #5,445,648    Staples                   08/29/95

14. US Pat. #5,342,396    Staples                   08/30/94

15. US Pat. #5,263,973    Surgical Stapling Method  11/23/93

16. US Pat. #5,667,527    Staples                   09/16/97

17. US Pat. #5,749,896    Staple Overlap            05/12/98

18. Japanese Pat. #2672713   Improved Staples       07/11/97

19. Brazilian Pat. #9405840-7     Improved Staples  09/01/95


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<PAGE>

     The Registrant has obtained patent protection on technology
developed in the areas of epitaxial growth, peeled films and
photovoltaic cells.  However, there is no assurance that any
revenue will be received as a result of obtaining the patents.  The
Patents issued to the Registrant dealing with the Semiconductor
research are as follows:
     1.   U.S. Patent No. 4,396,456 "Method of Peeling Epilayers",
          Melvin S. Cook.
     2.   U.S. Patent No. 4,519,871 "Bubble-Mode Liquid Phase
          Epitaxy," Melvin S. Cook.
     3.   U.S. Patent No. 4,548,658 "Growth of Lattice-Graded
          Epilayers," Melvin S. Cook.
     4.   U.S. Patent No. 4,594,126 "Growth of This Epitaxial Films
          on Moving Substrates from Flowing Solutions," Melvin S.
          Cook.
     5.   U.S. Patent No. 4,594,128 "Liquid Phase Epitaxy," Melvin
          S. Cook.
     6.   U.S. Patent No. 4,597,823 "Rapid LPE Crystal Growth,"
          Melvin S. Cook.
     7.   U.S. Patent No. 4,633,030 "Photovoltaic Cells on
          Larrice-Mismatched Crystal Substrates," Melvin S. Cook.
             (v) Non-seasonal Business.
     The Registrant does not believe that its products are subject
to material seasonal changes.
            (vi) Working Capital.
     Not relevant.
           (vii) Customers.
     Not relevant.
          (viii) Backlog.
     Not relevant.
            (ix) Governmental Contracts.  Not relevant.
             (x) Competition.

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<PAGE>

     It is presently contemplated that Registrant's activities with
respect to medical staples, if actual commercial activities are
commenced, may be limited to licensing the technology to other
firms or to forming some type of business relationship with other
firms.  The technology is in competition with alternative staples,
some of the suppliers of which are well-established.
     Competition in the real estate office rental segment of the
Registrant's business activities was significant in the Bergen
County, New Jersey market in which the Registrant competes. 
     The obsolete style of the office building owned by the
Registrant prior to and during 1991 made the attraction of suitable
office tenants most difficult. 
     In an effort to increase the marketability of the Registrant's
properties, the Registrant applied to the Borough of Paramus for a
zoning change to allow retail use for the office building and for
development of the adjacent site.
     In December 1991, the change in zoning was approved.  The then
existing building was rented to The Sports Authority, Inc.  The
market for retail space in Paramus, New Jersey area, although in
recession, was not as adversely affected as was the market for
office space.
     During 1994, a 30,000 sq. ft. building was constructed on the
Registrant's site located adjacent to the building leased by The
Sports Authority, for use as a Computer City retail store.  Tandy
Corp. commenced paying rent in October 1994.  Holobeam reimbursed
Tandy Corporation $1,189,675 for the costs of constructing the
building and paving of the site, after a permanent Certificate of
Occupancy was obtained.
            (xi) Research and Development.
     The Registrant discontinued engineering and development in
connection with the development of technology associated with
semiconductor devices during 1994 and no funds were expended in
connection with these activities.  During 1993 the Registrant
recorded research and development costs of $37,615.00 on such
technology.  There have been no such costs expended during 1994,
1995, 1996, 1997 and 1998 in connection with this technology.  The
Registrant anticipates that no 

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<PAGE>

Research and Development expenditures will be made with respect to
semiconductor technology during the year ended September 30, 1999.
     The Registrant has investigated methods for applying surgical
staples and the technology presently used to fabricate and apply
such staples.  During 1998, 1997 and 1996, the Registrant expended
$224,693.00, $147,562.00 and $219,001.00, respectively, in
connection with furtherance of this activity.  Such costs have been
currently expensed and consist principally of materials, supplies
and costs associated with design and development.
           (xii) Environmental Compliances.
     The Registrant does not believe that compliance with Federal,
State or Local provisions of a governmental nature which have been
enacted or adopted regulating the discharge of material into the
environment will have a materially adverse effect upon the capital
expenditure requirements, earnings or competitive position of the
Registrant.
     If the semiconductor technology developed had ever reached
production, the Registrant would have engaged an accredited,
outside manufacturing firm to perform the production process.  One
feature of the Registrant's technology was the absence of
significant waste materials.  Since the Registrant's semiconductor
technology was developed, other technologies have advanced the
state-of-the-art and new directions in this field have rendered the
Registrant's technology less attractive.
     The Registrant's activities with regard to medical staple
technology, at present, are limited to engineering, development and
testing of medical staple design with fabrication and manufacturing
of prototypes and models sub-contracted to other firms.
     The Registrant is not aware of any potential liabilities or
costs associated with the disposal or handling of waste materials
and is not aware of any potential violations of local, state or
federal laws which regulate the technology.


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<PAGE>

          (xiii) Employees.
     At September 30, 1998, the Registrant employed three persons
as compared to the three persons at September 30, 1997 and three
persons at September 30, 1996. 
          (d)  Financial Information About Foreign and Domestic
               Operations and Export Sales.
     The Registrant is not engaged in foreign operations and does
not export to foreign countries.
Item 2.  Properties
     The Registrant's headquarters and principal facilities are
located at 217  First Street, Ho-Ho-Kus, New Jersey 07423-0287. The
Registrant leases approximately 1,000 square feet of office and
laboratory space on a 12 month lease that is annually renewable. 
The Registrant owns two office buildings of 62,000 square feet and
30,000 square feet located at 50 A&S Drive, Paramus, New Jersey. 
One building was placed in service in October 1994, the other in
1982.  (Reference is made to Notes 4, 8, 9 and 10 to the Financial
Statements for the fiscal year ended September 30, 1991, 1990 and
1989.)
     Pertinent information concerning the Registrant's properties
is as follows.  (Reference is made to Schedule XI of the
accompanying Financial statements for the years ended September 30,
1997 and 1996.)
                                  Building          Building
                                Paramus, NJ             Paramus, NJ


Year Acquired                      1971                1994

Gross Square Footage              62,000              30,000

Percent Leased at 9/30/95          100%                100%

Acquisition Cost               $  718,881               $2,592,513
(2)

Capital Improvements Since
   Acquisition                 $3,649,850  (1)              -0-

Total Investment               $4,587,133  (3)          $2,826,843
(4)

Mortgage Balance               $6,264,064               $   -0-





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<PAGE>


     (1)  Includes $3,567,267.00 of improvements to the building
          paid by The Sports Authority, Inc. (the Tenant) upon
          closing of the Mortgage, but does not include additional
          amounts expended by The Sports Authority, Inc. since
          closing.

     (2)  Includes construction allowance of $1,189,675.00 for
          Tandy Corporation pursuant to the Operating Lease
          Agreement.

     (3)  Includes land cost of $218,402 for the 62,000 sq. ft. building.

     (4)  Includes land cost of $234,370 for the 30,000 sq. ft. building.

     In 1983, the Registrant purchased 2.799 acres of land located
in Paramus, New Jersey and adjacent to the building owned by the
Registrant at 50 A&S Drive.  The purchase price was $173,565 which
was paid in cash.  Since 1983, the Registrant has incurred costs in
the amount of $60,805 for various improvements and architectural
work relating to development of this property.  During 1992, 1991
and 1990, the Registrant spent $293,784, $78,051 and $50,667
respectively in connection with an application for a use variance
for the site and various site improvements that would enable the
construction of a commercial or retail building on the site.  The
change in zoning to retail use was approved by the Borough of
Paramus in December 1991.  The change in zoning to allow retail use
also required new site plan approval because the change in use
requires new traffic pattern studies, parking lot re-design and
significant additional changes in order to comply with governmental
requirements.
     In addition, the Registrant expended $964,505 through
September 30, 1994 for site plan approval and changes, and toward
construction of a building on the site.  No depreciation or
amortization was recorded until the building and site were put into
service. During October 1994, construction was completed by Tandy
Corporation of a retail building on the Registrant's site.  The
building is now being used for a Computer City retail store. 
(Reference is made to Note 13 to the Registrant's 1994 Financial
Statements and to Item 1, Part X of the 1994 Form 10K.)  The source
of funds for any additional improvements will be the cash and cash
equivalents reflected on the Balance Sheet, and if necessary, the
Cash Flows associated with the Rental Income generated by the
Operating Leases.  (Reference is made to Note 3 of the accompanying
Financial Statements for the years 

                                10

<PAGE>


ended September 30, 1997 and 1996.)
     The zoning change approval allowed for retail use of the
property and significantly enhanced the opportunities for
attracting a suitable tenant for the site.
     When purchased, the site adjacent to the building owned by the
Registrant, was 12 (twelve) feet below the acceptable construction
level and required significant amounts of fill together with site
engineering costs to acquire site plan approval for a building from
the appropriate governmental regulatory authorities.
     In addition, the Registrant expended funds to change the
zoning of the property from office use to retail use.  This change
in zoning allowed the Registrant to seek tenants who were engaged
in retail operations for the site and resulted in the October 1994
tenancy of Computer City.  (Reference is made to Note 12 of the
Financial Statement for the year ended September 30, 1997.)
     The Registrant was not able to lease the property since the
original site plan allowing office use was approved until the
Computer City occupancy of October 1994 for retail use.  The market
for office space has seen significant decline during the years
ended September 30, 1990, 1991, 1992, 1993 and 1994.  The vacancy
rate for such space had reached 28% during the year ended September
30, 1994 and 1993, respectively for the area in which the
Registrant competes, Bergen County, New Jersey.
     The occupancy rate for the building owned by the Registrant
and under lease to The Sports Authority Inc. for the past five (5)
years is as follows:
                         1998        100%
                         1997        100%
                         1996        100%
                         1995        100%
                         1994        100%
                         
     The building owned by the Registrant and under lease to Tandy
Corp. has been 100% occupied since October 1994.  A summary of the
amounts expended for such approvals for the three most recent
fiscal years during which such expenditures were made appears
below.  No such expenditures were made in 1995, 1996, 1997 or 1998.

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<PAGE>

                                    1994            1993      1992

Zoning Changes and Site Plan Approvals:
   Legal Fees                      $ 2,859   $ 10,093  $ 15,840
   Governmental Fees                11,827     55,811    19,990
   Engineering                      11,049     39,171    57,954
   Paramus Park                      -0-       -0-      200,000

      Total Related Costs          $25,735   $105,075  $293,784

     The payment of $200,000 during 1992 to Paramus Park, a retail
shopping mall adjacent to the site currently being developed by the
Registrant, was a one-time fee in connection with removal of an
existing deed restriction which prohibited adjacent retail
activity.  The balance of the payments for site plan approvals were
paid to various engineering, legal and surveying firms in con-
nection with professional services rendered to obtain governmental
approvals.
     No payments to affiliated parties were made in connection with
the zoning changes nor were any payments made to affiliated or
related parties for the acquisition of site plan approval.  Any
payments to affiliated parties are unrelated to the cost of such
activities and are detailed and disclosed in Item 11 (d) of this
report.
     During 1998, Computer City, Inc. retail stores were acquired
by CompUSA, Inc., another retailer of computers, computer
accessories and software.  The Registrant accepted assignment of
the Computer City lease by CompUSA and Tandy Corporation remains in
the lease as the guarantor.
Item 3.  Legal Proceedings.
     There are no legal proceedings of a material nature to which
the Registrant is a party other than ordinary, routine litigation
incidental to the business of the Registrant.
Item 4.  Submission to Matters to a Vote of Security Holders.
     None.
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                                 PART II
Item 5.  Market for the Registrant's Common Stock and Related
Stockholder
         Matters.
     (a)  The Registrant's common stock is traded on the
over-the-counter market.  The bid price offered by Walsh Manning
Securities Inc., New York, New York on December 4, 1998 was $11.00
per share.  On July 18, 1983, the Registrant's shares were deleted
from the NASDAQ system when no market maker for the Registrant's
common stock any longer maintained registration as such with the
NASDAQ System.
     (b)  The approximate number of holders of Common Stock
securities of the Registrant as of December 4, 1998 was 630.
     (c)  No dividends have been paid or declared on the Common
Stock of the Registrant during the 1998, 1997 or 1996 fiscal years. 
In making decisions regarding the possible payment of dividends,
the Board of Directors considers the Requirements of the Registrant
in such ongoing activities as real estate development and the
research, development and engineering efforts of the Registrant as
well as such obligations as mortgages and debentures.
     (d)  Changes in Securities.
     (Reference is made for Form 10Q for the six-month period ended
March 31, 1984,  wherein the Registrant completed an exchange of
common stock for 5% Debentures payable March 1, 1989.  Reference is
made to Notes 9 and 10 to the Financial Statements for the years
ended September 30, 1989 and 1990.)
     The high and low bid information of the Registrant's common
stock for the last two years was estimated to be as follows: 
(Source:  National Quotation Bureau).  (On July 18, 1993, the
Company shares were deleted from NASDAQ.)

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                                 1998                1997
                              high  low           high  low 

Quarter Ended Dec. 31    11.00     11.00          11.00     11.00     

Quarter Ended Mar. 31    11.25     11.00          11.00     11.00     

Quarter Ended June 30    11.50     11.25          11.00     11.00     

Quarter Ended Sept. 30   14.75     12.75          11.00     11.00     

     Such quotation represents prices offered by purchases without
retail mark-up, mark-down or commission and may not represent
actual sales transactions.
Item 6.  Selected Financial Data.
     Financial information for the five-year period commencing
October 1, 1993 and ending September 30, 1998 is presented below.
                         HOLOBEAM, INC.
               SUMMARY OF SELECTED FINANCIAL DATA
               FOR THE YEARS ENDED SEPTEMBER 30,
<TABLE>
 
<CAPTION>
    
                     1998        1997        1996     1995           1994
                                                     Restated  
<S>               <C>         <C>         <C>         <C>         <C> 
Gross Income      $1,964,562  $1,873,382  $1,856,218  $1,895,392  $1,239,344
Net Income (Loss) $  166,891  $  303,882  $  306,434  $  334,594  $  556,787
Weighted Average
   Number of
   Common Shares
   Outstanding       304,237     310,426     316,992     323,596     335,211
Earnings Per 
   Share (Loss)       $ 0.55     $  0.98    $   0.97     $  1.03   $    1.66
Total Assets      $7,255,082  $7,552,667  $7,743,614  $8,931,962  $7,456,189
Long-Term Debt    $5,984,002  $6,310,060  $6,667,298  $6,946,564  $7,002,162
Shareholders'
    Equity        $  856,536  $  748,020  $  558,463  $  371,422  $   68,070
Gross Rental
    Income        $1,925,534  $1,845,509  $1,838,216  $1,834,829  $1,208,217
Net Rental Income $1,667,028  $1,578,010  $1,577,254  $1,554,791  $1,039,686
</TABLE>

Item 7.  Management's Discussion and Analysis of Financial
Condition and
         Results of Operations.
     (1)  Liquidity.
          The Registrant funded construction site preparation,
     engineering and site plan approvals for a 30,000 sq. ft.
     building presently occupied by Tandy Corporation as a Computer
     City retail store.  Total costs related to 
                                14



<PAGE>
the building construction amounted to $2,592,513 and the building
was placed in service during the fiscal year ended September 30,
1995.  (Reference is made to the Registrant's Annual Report, Form
10K for the year ended September 30, 1994, Item 1(c), Item 2 and to
Note 3 to the Registrant's financial statements for the year ended
September 30, 1995.)
          These construction costs were funded in part by the
     proceeds of the First Mortgage on the 62,000 sq. ft. building
     owned by the Registrant (and occupied by The Sports
     Authority), in part by the Tenant allowance for construction
     pursuant to the lease agreement and by cash flows associated
     with the operating leases for both buildings.
          Gross Rents and net rental income associated with the
     operating leases on the properties of the Registrant are
     sufficient to provide the cash flows necessary to fund the
     Registrant's operations.  The lease terms expire in 2009
     (Tandy Corporation) and 2012 (The Sports Authority) and
     include options for renewal.  In the event that the lease
     options are exercised, revenue will continue beyond 2009 and
     2012.
          Total minimum future rental income associated with these
     leases approximates $28,111,000.00 and should be adequate to
     fund the Registrant's real estate rental activities and to
     provide the cash flows necessary to fund the surgical staple
     development and engineering project.

     (2)  Capital Resources
          Since building construction has been completed, the
     Registrant does not anticipate future additional capital
     requirements for the rental properties other than those that
     are routine and incidental to its rental operations.  Expenses
     are expected in connection with maintenance, insurance and
     taxes, but no major capital projects are planned at this time.
          The Registrant expects to continue to fund the
     development and engineering associated with its activities
     with the medical staples 

                                15

<PAGE>


technology.  Testing has commenced at a medical center and is
expected to continue during 1999.  Results during 1998 have been
encouraging and the Registrant expects to continue with the
project.  The Registrant expects that the maximum funding
requirement during 1999 in connection with the development,
engineering and testing will approximate $300,000.00 and will be
funded from cash flows provided by the real estate rental
activities.  No revenues are projected in connection with the
medical staples technology during 1999.
          During 1998 the Registrant established a defined benefit
     plan covering all eligible employees who have completed one
     year of service.  Benefits are based upon years of service and
     average compensation during the three years in which the
     participant earned the highest compensation.
          The Registrant's funding policy is to make annual
     contributions to the plan in amounts sufficient to fully
     provide for all employees' benefits by the time they retire.
          During 1998 the Registrant's pension contribution was
     $307,773.00 and was included in General and Administrative
     expenses in the Statement of Operations in the accompanying
     Financial Statements for the year ended September 30, 1998. 
     (Reference is made to Note 15 to the Financial Statements for
     the year ended September 30, 1998 and to the Exhibit filed
     August 8, 1998 with the Registrant's Quarterly Report on Form
     10Q for the Quarter ended June 30, 1998.)

     (3)  Results of Operations.
          (a)  The Registrant recorded net income for the year
     ended September 30, 1998 in the amount of $166,891.00 as
     compared to $303,882.00 for the year ended September 30, 1997. 
     The results of operations reflect improved revenues and income
     associated with the Registrant's real estate rental activities
     as net rental income was $1,667,028.00 as compared to
     $1,578,010.00 in 1997.

                                16


<PAGE>

          The Registrant continues to experience consistent
     earnings performance due to 100% occupancy of the Registrant's
     rental properties and the favorable long-term operating
     leases.  Costs associated with the Registrant's real estate
     rental activities are expected to remain at present levels
     during the short-term as are the revenues associated with such
     operating leases.
          Long term, costs are expected to rise with inflation and
     some capital maintenance and repairs are expected as the
     buildings mature and require more intensive upkeep.  Since
     there are rental income escalation provisions contained in the
     operating leases, revenues are expected to be sufficient to
     provide for such costs, which are not expected to have any
     materially adverse effects upon the results of operations
     during the term of the leases.
          The Registrant continued to fund the engineering and
     development activities related to the surgical staple
     technology it has developed.  Expenditures in connection with
     this project for 1998 were $225,041.00, which represented an
     increase of $77,479.00 when compared to the 1997 expenditures
     for the staples project.  The Registrant expects to continue
     funding this project during 1999 and will utilize the cash
     flows and revenues from its real estate rental activities to
     fund the ongoing testing and development for the staples
     project.  Testing has commenced at a medical center and
     initial results, although favorable, cannot assure the
     commercial viability of the Registrant's technology.  When
     more definitive results can be obtained, the Registrant will
     analyze its position and determine if funding should continue
     beyond fiscal year 1999.  The Registrant anticipates funding
     testing, development and patent activities in connection with
     the staples project during 1999 to approximate $300,000.00.
          During 1998, the Registrant contributed $307,773.00 to
     its defined benefit plan (pension plan) which covers all
     eligible employees who have 

                                17

<PAGE>

completed one year of service.  (Reference is made to Exhibit
entitled"Defined Benefit Plan" filed with Quarterly Report 10Q for
the Quarter ended June 30, 1998 and filed on August 8, 1998.)  The
Registrant expects to continue to fund the pension plan on an
annual basis and does not expect the expense of such plan to have
a materially adverse effect upon its financial condition.
          (b)  The results of operations for the year ended
     September 30, 1997 indicate after tax income of $303,882.00 as
     compared to $306,434.00 for the fiscal year ended September
     30, 1996.  The Registrant has experienced consistent results
     of operations since the real estate rental properties have
     been 100% occupied and under favorable operating lease
     agreements.  Because the buildings are under lease to The
     Sports Authority and to Tandy Corporation, such revenues are
     expected to continue to be uniform through 2009 when the Tandy
     lease expires.  Costs are also expected to remain at present
     levels during the short term.
          Long term, the Registrant expects costs to increase,
     particularly with liability insurance, during the life of the
     leases.  It is also expected that maintenance costs may
     increase as the buildings mature and may require more
     substantial and costly repairs.  Funding of these costs is not
     expected to have a materially adverse effect upon the results
     of operations during the term of the leases.
          As previously discussed, the Registrant also expects to
     fund engineering and development activities associated with
     its medical staple technology in the maximum amount of
     $250,000.00 during 1998 which will be supported by the cash
     flows associated with the real estate rental activities.  The
     Registrant funded the medical staples technology development
     in the amount of $147,562.00 during the year ended September
     30, 1997.
          (c)  The results of operations for the year ended
     September 30, 1996 indicate after-tax income of $334,594.00
     for 1995.  Performance for 
                                18

<PAGE>


the two years remained relatively stable resulting from revenues
received under the operating leases of The Sports Authority, Inc.
and Tandy Corp.  Since the buildings are 100% occupied and will
remain so until 2009, revenues are expected to continue to be
uniform through 2009.  Costs associated with the operating leases
are expected to remain at present levels throughout the terms of
the leases with the exception of costs associated with business
liability insurance in connection with the leasing activities,
which are expected to rise with inflation and risk factors.
          The Registrant expects to continue to fund research and
     development costs associated with the surgical staple project
     and such costs increased from $120,833.00 in 1995 to
     $219,001.00 in 1996.  This increase resulted from additional
     expenditures for purchases of materials, supplies and design
     and drafting services during 1996.  The Registrant expects to
     continue to fund the development during 1997 and anticipates
     that such expenditures will approximate $250,000.00 during
     1997.
          At present, the fabrication and experiments being
     performed by the Registrant in connection with the surgical
     staples project are limited to engineering, design and
     development of staple design and to design of equipment to
     apply the staples.  Such work may progress to animal testing
     during 1997 and if started, may take substantial time before
     conclusive results can be evaluated.

     (4)  Other Matters
          The Company is currently working to resolve the potential
     impact of the Year 2000 on the processing of date-sensitive
     information by the Company's computerized information system.
     The Year 2000 problem is the result of computer programs being
     written using two digits (rather than four) to define the
     applicable year. Any of the Company's programs that have time-sensitive
     software may recognize a date using "00" as the year

                                19

<PAGE>


 1900 rather than the year 2000, which could cause miscalculations
or systems failures. The costs of addressing potential problems are
not expected to have a material adverse impact on the Company's
financial position, results of operations or cash flows in future
periods. However, if the Company or its vendors are unable to
resolve such issues in a timely manner, it could result in a
material financial risk. The Company does plan to devote the
necessary resources to resolve all significant Year 2000 issues in
a timely manner.

Item 8.  Financial Statements and Supplemental Data.
     Financial statements, supplementary financial information and
Accountant's Report are filed with this report.  (See Financial
Statements and reports thereon of Fredericks and Company for 1997
and 1998.)
Item 9.  Disagreements on Accounting and Financial Disclosure.
     None.


                                20

<PAGE>


                             PART III
Item 10.  Directors and Executive Officers of the Registrant.
     (a)  The following Table identifies each Director of the
Registrant and indicates his position with the Registrant, the
duration of his term as Director and the date when he was first
elected.
                                                       Date First
Name and Age             Title                 Term     Elected   

Melvin S. Cook      Chairman of the Board    1999 Annual       1968
Age 67              President of Registrant    Meeting

William M. Hackett  Treasurer of Registrant  2000 Annual       1984
Age 55                                         Meeting

Beverly Cook        Office Manager and       2001 Annual       1995
Age 62              Secretary of Registrant    Meeting
                   
(1)  Martin R. Infante, Secretary of the Registrant and member of
     the Board of Directors served the Registrant in such
     capacities until his death while in office during the year
     ended September 30, 1997.

     (b)  The following Table represents the name and age of each
officer of the Registrant, the positions and offices held by each,
the term of each office and the period which each has served in the
indicated office.

                                                       Date First
Name and Age             Title           Term           Elected  

Melvin S. Cook      Chairman of the Board    Annual       1968
Age 67

William M. Hackett  Secretary and Treasurer of    Annual       1975
Age 55              the Registrant

Beverly Cook (1)    Secretary of the Registrant   Annual       1997
Age 62

(1)  Martin R. Infante, Secretary of the Registrant and member of
     the Board of Directors of the Registrant served in such
     capacities until his death during the year ended September 30,
     1997.     

     (1)  Each officer has been selected to serve until the next
Annual Meeting of the Board of Directors or until his respective
successor shall be elected and shall quality.
          (c)  There are no significant employees other than those
identified in (a) and (b) above.
          (d)  The following Table summarizes the business
experience and 

                                21

<PAGE>


principal occupation during the last five years of each person who
serves as a director of executive officer of the Registrant, as
well as any other directorship held by persons serving as directors
of the Registrant.
                                                          Other
Name           Business Experience/Occupation          Directorship

Melvin S. Cook Chairman of the Board of Directors and      None
               President of the Registrant since its
               formation.

William M. Hackett  Vice President of Registrant from          None
                    August 23, 1975 until June 1, 1981 and
                    Controller of Registrant and member of
                    accounting staff from October 1973 to
                    August 1975.  Treasurer of Registrant
                    from June 1981 to present.  Vice President 
                    of CMA Co., Inc. from November 1986 to
                    present. Elected President of CMA Co., Inc.
                    in 1998.

Beverly Cook   Office Manager of Registrant from June 1,       None
               1981 until present.  Married to Melvin S.
               Cook, President and Chairman of the 
               Board of Directors.

(1)  Martin R. Infante, Secretary of the Registrant and member of
     the Board of Directors of the Registrant served in such
     capacities until his death during the year ended September 30,
     1997.          
          (f)  Not applicable.
Item 11.  Management Compensation.
     (a)  The following Table shows all direct remunerations paid
by the Registrant during the fiscal year ended September 30, 1998
to each Director or Officer of the Registrant whose aggregate
direct remuneration exceeds $100,000.00, and the direct
remuneration paid all Directors and Officers of the Registrant as
a group for such fiscal year.


                                     22

<PAGE>

                                          HOLOBEAM, INC.
                                             Form 10K
                                    Summary Compensation Table
                                        September 30, 1998
<TABLE>

<CAPTION>
                             
                                                  Long Term Compensation   

Name and                Annual Compensation                 Awards         Payouts     All Other
Principal           Year  Salary  Bonus Other Restricted Stock  SUO/SARS LTIP Payouts Compensation
Position
<S>                 <C>  <C>       <C>  <C>            <C>       <C>       <C>           <C>
Melvin S. Cook      1998 $250,000  -0-  -0-            -0-       -0-       -0-              -0-
 President and CEO  1997  250,000  -0-  -0-            -0-       -0-       -0-              -0-
   and Director     1996  200,000  -0-  -0-            -0-       -0-       -0-              -0-
          
William M. Hackett  1998   17,550  -0-  -0-            -0-       -0-       -0-              -0-
 Treasurer and      1997   17,550  -0-  -0-            -0-       -0-       -0-              -0-
   Director         1996   17,550  -0-  -0-            -0-       -0-       -0-              -0-

Martin R.Infante(1) 1998      -0-  -0-  -0-            -0-       -0-       -0-              -0-
 Secretary and      1997      -0-  -0-  -0-            -0-       -0-       -0-            9,999  
   Director         1996      -0-  -0-  -0-            -0-       -0-       -0-           29,984

Beverly Cook        1998   75,000  -0-  -0-            -0-       -0-       -0-              -0-
                    1997   75,000  -0-  -0-            -0-       -0-       -0-              -0-
                    1996   54,167  -0-  -0-            -0-       -0-       -0-              -0-

All Officers and    1998  342,550  -0-  -0-            -0-       -0-       -0-              -0-
 Directors as a     1997  342,550  -0-  -0-            -0-       -0-       -0-            9,999
   Group            1996  271,717  -0-  -0-            -0-       -0-       -0-           29,984


</TABLE>

 
(1)  Martin Infante performed services for the registrant as landlord and
     insurance broker.  See Item 11(D) of this report.  Mr. Infante died
     during the year ended September 30, 1997


                                                 23

<PAGE>


Item 11 (cont'd.)
     The Summary Compensation Table represents all aggregate forms
of remuneration to the executive officers of the Registrant.  There
were no other payments or compensation awarded to the officers of
the Registrant.
     Mr. Infante received no compensation as an employee of the
Registrant.  The amounts paid to Mr. Infante were in connection
with his services performed as insurance agent and landlord. 
During 1997, Mr. Infante's payments were limited to rental payments
amounting to $9,999.00.  (Reference is made to Notes 4 and 6 to the
Financial Statements for the year ended September 30, 1997 and to
Item 11 (d) of Report, Form 10K for the year ended September 30,
1997.)
     (a)  The Directors who are not employees of the Registrant
receive standard attendance fees of $200 plus applicable expenses
for travel.  No Directors' fees were paid during 1998, 1997 and
1996.
     (b)  The following Table sets forth all the options to
purchase securities from the Registrant which were granted to or
exercised by any of its directors and each officer whose direct
remuneration exceeds $100,000.00 as well as all officers and
directors as a group since October 1, 1997.
                              All Directors and Officers as a Group
Options Granted                                      0
Options Exercised                                    0
Unexercised Options Held at 9/30/98                  0
     (d)  During the fiscal year of the Registrant ended on
September 30, 1997, the Registrant utilized the services of Mr.
Infante as a landlord.  In the opinion of the Registrant, the
amounts paid to Mr. Infante in respect to the foregoing were in all
cases fair to the Registrant and were consistent with the amount
which would have been paid had the transaction occurred with
unaffiliated parties.  (Reference is made to Notes 4 and 5 to the
Financial Statements of the Registrant for the years ended
September 30, 1997 and 1996.)
     The amounts paid to Mr. Infante during the years ended
September 30 1997 and 1996 are presented below:


                                24

<PAGE>


                              1997           1996  
Rent Expense                  $ 9,999        $10,908
Insurance                       -0-           19,076
Total Payments                $ 9,999        $29,984

The following Table sets forth information about the Company's
defined benefit pension plan benefits:
                              Pension Plan Table
                              Years of Service
Remuneration                       37
60,000                             60,000
160,000                            107,112
200,000                            107,112
Pensions are based upon average annual earnings (salary and bonus)
for the highest three consecutive years of employment with the
Company. For Melvin Cook and Beverly Cook the amounts equaled
$107,112 and $60,000, respectively, as of September 30, 1998.
Melvin Cook and Beverly Cook were credited with 36 years of service
each under the Pension Plan as of September 30, 1998. Pensions may
be adjusted for a surviving spouse's pension or other options under
the Pension Plan. Pensions are not subject to any other deduction
for social security or any other amounts.

                             PART IV
Item 12.  Security Ownership of Certain Beneficial Owners and
Management.

                                       25

<PAGE>


     (a)  The stockholding of each person who is known by the
Registrant to own beneficially more than 5% of any classes of
securities as of December 4, 1998 is as follows:
Title of Class           Name & Address      Amount Owned   % of Class

Common Stock, Par        Melvin S. Cook           123,497    40.9%
Value $0.10 Per Share    540 Ravine Court
                         Wyckoff, NJ  07481

Common Stock, Par        Beverly Cook              95,000    31.4%
Value $0.10 Per Share    540 Ravine Court
                         Wyckoff, NJ  07481

     (b)  The stockholding of Officers and Directors as a group as
of December 10, 1998 are as follows:
Title of Class      Amount Beneficially Owned          % of Class

Common Stock, Par Value           218,497                     72.3%
$0.10 Per Share

     (c)  There are no contractual arrangements that might result
in a change of control of Registrant.
Item 13.  Certain Relationships and Related Transactions.
     Martin R. Infante, Former Secretary and Director provided
services to the Registrant in his capacity as a principal in the
Martin Infante Insurance Agency and as a landlord.
     During the fiscal years ended September 30, 1997 and 1996, the
amounts paid to Mr. Infante in connection with such services were
as follows:





                                26

<PAGE>


                              1997           1996  
Rent Expense                  $9,999         $10,908   
Insurance                       -0-           19,076
Total Payments                $9,999         $29,984
     Reference is made to Item 11 (d) of Form 10K and to Notes 4
and 6 to the Financial Statements for the year ended September 30,
1997.
Item 14.  Exhibits, Financial Statement Schedules and Reports on
Form 8K
     (a)  Index to Financial Statement filed as part of the Annual
Report and attached.
     (b)  Reports on Form 8K.
     (c)  Lease with The Sports Authority, Inc. filed as part of
the 1993 Annual Report Form 10K-A.
     (d)  Financial Statement Schedules.
     (e)  Lease with Tandy Corp. filed as part of the 1995 Annual
Report Form 10K.
     The following is a list of Financial Statement Schedules filed
as part of this Annual Report on Form 10K.  All other schedules
omitted herein are so omitted because either (1) they are not
applicable, or (2) they required information is shown in the
Financial Statements.
          Schedules

              V     Property and Equipment

              VI    Accumulated Depreciation and Amortization of
                    Property and Equipment

              X     Supplementary Income Statement Information

             XI     Real Estate and Accumulated Depreciation

            XII     Mortgage Loans on Real Estate

     (e)  Exhibits, including those incorporated by references.



                                27



<PAGE>
     The following is a list of Exhibits filed as part of this
Annual Report on Form 10K.  Where so indicated by footnotes,
Exhibits that were previously filed are incorporated by references.
                                        Legend for Documents
                                            Incorporated
                                             by Reference 
          

Articles of Incorporation and By Laws

   Articles of Incorporation                        (1)

   By-Laws                                          (1)

   By Laws as Amended                               (2)

Instruments Defining Rights of Share-
   holders Including Indentures

   Specimen Certificate for Shares of
      Common Stock                             (1)

   Security Combination Agreement                   (1)

Additional Exhibits - Exchange Offer                (3)

                    - Lease with Sports 
                      Authority, Inc.                (4)

                    - Lease with Tandy
                      Corporation                   (5)

Form 8K - Change in Certifying Accountants          (6)

Form 8K-A - Change in Certifying Accountants        (7)

Defined Benefit Plan                                (8)
     
Legend
     (1)  Filed September 21, 1968 as an Exhibit to Form 10K and
incorporated herein by reference.
     (2)  Filed December 15, 1986 as part of proxy statement and
incorporated herein by reference.
     (3)  Filed December 23, 1983 - Exchange Offer.
     (4)  Filed October 12, 1994 as an exhibit to Form 10K-A and
incorporated herein by reference.
     (5)  Filed December 21, 1995 as an exhibit to Form 10K.
     (6)  Filed November 15, 1996 and incorporated herein by
reference.


                                28



<PAGE>
     (7)  Filed November 20, 1996 and incorporated herein by
reference.
     (8)  Filed August 8, 1998 with Quarterly Report 10Q and
          incorporated herein by reference.

Supplemental Information
     No annual report or proxy material has been sent to security
holders.  Such annual report and proxy material are to be furnished
to security holders subsequent to the filing of the annual report
on this form.  Copies of such material will be furnished to the
Commission when it is sent to security holders.




                                29

<PAGE>


                          HOLOBEAM, INC.
                             Form 10K
                        September 30, 1998

                            Signatures



Pursuant to the requirements of Section 13 or 15(d) 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.


Registrant     Holobeam, Inc.    

By   William M. Hackett       

Date December 28, 1998        


Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.


HOLOBEAM, INC.


By:  Melvin S. Cook                     
     Melvin S. Cook
     President and Chairman of the Board

Date:     December 28, 1998                  



By:  William M. Hackett                 
     William M. Hackett
     Director and Treasurer

Date:     December 28, 1998                  



By:  Beverly Cook                  
     Beverly Cook
     Director

Date:     December 28, 1998                  





<PAGE>




                          HOLOBEAM, INC.

                       FINANCIAL STATEMENTS
               WITH INDEPENDENT ACCOUNTANTS' REPORT

                           YEARS ENDED 
              SEPTEMBER 30, 1998, AND 1997 AND 1996
































                 R.A. FREDERICKS & COMPANY, LLP
                  CERTIFIED PUBLIC ACCOUNTANTS
                                
<PAGE>

                              
HOLOBEAM, INC.

INDEX TO FINANCIAL STATEMENTS





                                                                  PAGE
INDEPENDENT ACCOUNTANTS' REPORT                                    F-1

FINANCIAL STATEMENTS:

  BALANCE SHEETS                                                 F-2,3

  STATEMENTS OF OPERATIONS                                         F-4

  STATEMENTS OF SHAREHOLDERS' EQUITY                               F-5

  STATEMENTS OF CASH FLOWS                                         F-6

  NOTES TO FINANCIAL STATEMENTS                                  F7-18

SCHEDULES FOR THE YEARS ENDED SEPTEMBER 30, 1998,
 1997 AND 1996                                                        

  V  PROPERTY AND EQUIPMENT                                       F-19

  VI ACCUMULATED DEPRECIATION AND AMORTIZATION
      PROPERTY AND EQUIPMENT                                      F-20

  X  SUPPLEMENTARY INCOME STATEMENT INFORMATION                   F-21

  XI REAL ESTATE AND ACCUMULATED DEPRECIATION                     F-22

  XII     MORTGAGE LOANS REAL ESTATE                              F-23

ALL OTHER SCHEDULES HAVE BEEN OMITTED BECAUSE THEY ARE NOT
APPLICABLE, OR THE INFORMATION IS SHOWN IN THE FINANCIAL STATEMENTS
OR NOTES THERETO.  

<PAGE>

                 R.A. Fredericks & Company, LLP
                  Certified Public Accountants
         240 Main Road   US Hwy. Route 202             
                  Montville, New Jersey 07045
            Tel: (973) 263-2900 Fax: (973) 316-6940
                                
         P.O. Box 206  Wood - Ridge, New Jersey 07075
                      Tel: (201) 507-0041




                 INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors and Stockholders
Holobeam Inc.
Ho-Ho-Kus , New Jersey

We have audited the accompanying balance sheets of Holobeam, Inc.
as of September 30, 1998 and 1997 and the related statements of
operations, shareholders' equity and statements of cash flows for
the years ended September 30, 1998, 1997, 1996.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements.  An audit
includes, examining on a test basis, evidence supporting the
amounts and disclosures in the financial statements.  An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects the financial position of
Holobeam, Inc. as of September 30, 1998 and 1997, and the results
of its operations, shareholders' equity and its cash flows for  the
years ended September 30, 1998, 1997, 1996, in conformity with
generally accepted accounting principles.  Further, it is our
opinion that the schedules referred to in the accompanying index
present fairly the information set forth therein.  





                                                                  
  R.A. FREDERICKS & COMPANY, LLP                                           


Montville, New Jersey
December 16, 1998






                               F-1

<PAGE>

HOLOBEAM, INC.

BALANCE SHEETS
SEPTEMBER 30, 1998 AND 1997




                              ASSETS 

                                                        1998         1997 
                                                              
CURRENT ASSETS
     Cash (including cash equivalents of $268,932             
      in 1998 and $227,732 in 1997)                $   301,623 $   365,308
     Short-term Investments                            421,282     400,000
     Accrued Interest                                    5,823       4,051
     Prepaid Income Taxes                                    -       3,196
     Prepaid Expenses                                    8,092       6,452
                                                    ----------  ----------
TOTAL CURRENT ASSETS                                   736,820     779,007
                                                    ----------  ----------
PROPERTY AND EQUIPMENT-COST
     Real Estate:
       Land                                            452,772     452,772
       Buildings and Building Improvements           6,961,244   6,961,244
                                                    ----------  ----------
     TOTAL                                           7,414,016   7,414,016
                      
     Machinery and Equipment                            66,939      66,939
     Furniture and Fixtures                             20,633      12,657
                                                    ----------  ----------
     TOTAL                                           7,501,588   7,493,612

Less: Accumulated Depreciation and Amortization      1,569,407   1,354,980
                                                    ----------  ----------
PROPERTY AND EQUIPMENT-NET                           5,932,181   6,138,632
                                                    ----------  ----------
OTHER ASSETS                                                  
     Patents and Patent application cost, net of
     accumulated amortization of $204,001 in 1998
      and $190,668 in 1997                              76,024      83,862
     Deferred Charges                                  510,057     551,166
                                                    ----------  ----------
TOTAL OTHER ASSETS                                     586,081     635,028
                                                    ----------  ----------
TOTAL ASSETS                                       $ 7,255,082 $ 7,552,667
                                                   =========== ===========



   The accompanying notes are an integral part of the financial
statements. 
                               F-2

<PAGE>

HOLOBEAM, INC.

BALANCE SHEETS
SEPTEMBER 30, 1998 AND 1997




               LIABILITIES AND SHAREHOLDERS' EQUITY

                                                       1998         1997  
CURRENT LIABILITIES
     Mortgage Payable-Current Portion                $ 292,195 $   267,783
     Accounts Payable                                    6,832     116,172
     Franchise Taxes Payable                             8,976       8,593
     Income Taxes Payable                                5,580           -
     Other Accrued Expenses                             21,392      20,515
     Accrued Interest Payable                           45,707      47,661
     Accrued Commissions Payable                        33,862      33,863
                                                     ---------   ---------
TOTAL CURRENT LIABILITIES                              414,544     494,587
                                                     ---------   ---------
LONG-TERM DEBT
     Mortgage Payable (Net of Current Portion)       5,971,869   6,264,065
     Real Estate Commissions Payable                    12,133      45,995
                                                    ----------  ----------
TOTAL LONG-TERM LIABILITIES                          5,984,002   6,310,060
                                                    ----------  ----------
TOTAL LIABILITIES                                    6,398,546   6,804,647
                                                    ----------  ----------
SHAREHOLDERS' EQUITY
     Common Stock, Par Value $.10 Per Share
      Authorized 2,000,000 Shares, Issued 
       305,598 in 1998 and 1,052,598 1997               30,559     105,260
     Additional Paid in Capital                      9,825,498  12,399,699
     Accumulated Deficit                            (8,947,666) (9,114,557)
                                                    ----------- -----------
TOTAL                                                  908,391   3,390,402
                              
     Less: Cost of Shares in Treasury (3,395 
      in 1998 and 746,573 in 1997)                     (51,855) (2,642,382)
                                                    ----------  ----------
TOTAL SHAREHOLDERS' EQUITY                             856,536     748,020
                                                   -----------  ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        $  7,255,082  $7,552,667
                                                   ===========  ==========




   The accompanying notes are an integral part of the financial
statements
                               F-3

<PAGE>

HOLOBEAM, INC.

STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996

                                                      
                                 1998           1997          1996           
REVENUES
     Rental Income            $ 1,925,534   $1,845,509   $1,838,216
     Interest Income               38,977       27,873       18,002
     Other                             51            -            -
                               ----------   ----------   ----------
TOTAL                           1,964,562    1,873,382    1,856,218
                               ----------   ----------   ----------

COSTS AND EXPENSES
     Rental Expense               258,506      267,499      260,962
     General Expense              633,625      347,556      253,146
     Interest Expense             564,525      587,061      607,719
     Research and Development     225,041      147,562      219,001
     Other                              -       10,022            -
                               ----------   ----------   ----------
TOTAL                           1,681,697    1,359,700    1,340,828
                               ----------   ----------   ----------
INCOME BEFORE INCOME TAXES        282,865      513,682      515,390

INCOME TAX EXPENSE                115,974      209,800      208,956
                               ----------   ----------   ----------
NET INCOME                      $ 166,891    $ 303,882    $ 306,434
                               ==========   ==========   ==========
WEIGHTED AVERAGE NUMBER OF SHARES 
 OUTSTANDING                      304,237      310,426      316,992
                               ----------   ----------   ----------
EARNINGS PER SHARE              $     .55    $     .98    $     .97
                               ==========   ==========   ==========











   The accompanying notes are an integral part of the financial
statements. 
                               F-4

<PAGE>

HOLOBEAM, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996  

<TABLE>

<CAPTION>

                                                          Additional                                                 
                                       Common Stock         Paid-In     Accumulated        Treasury Stock 
                                    Shares      Amount      Capital      Deficit          Shares   Amount 

<S>                               <C>           <C>        <C>           <C>            <C>       <C>
BALANCE, SEPTEMBER 30, 1995        1,052,598    $105,260   $12,399,699   $(9,724,873)   730,455   $2,408,664

  Net Income                                                                 306,434

  Purchase of Treasury Stock                                                              8,624      119,393
                                  ----------     -------   -----------    ----------    -------    ---------
BALANCE, SEPTEMBER 30, 1996        1,052,598    $105,260   $12,399,699   $(9,418,439)   739,079   $2,528,057

  Net Income                                                                 303,882

  Purchase of Treasury Stock                                                              7,494      114,325
                                  ---------     --------   -----------   -----------    -------    ---------
BALANCE, SEPTEMBER 30, 1997       1,052,598     $105,260   $12,399,699   $(9,114,557)   746,573    2,642,382

  Net Income                                                                 166,891               

  Purchase of Treasury Stock                                                              3,822       58,375

  Retirement of Treasury Stock     (747,000)     (74,701)   (2,574,201)                (747,000)  (2,648,902)
                                  ---------     --------   -----------   -----------   --------    ---------
BALANCE, SEPTEMBER 30, 1998         305,598     $ 30,059   $ 9,825,498   $(8,947,666)     3,395     $ 51,855
                                  =========     ========   ===========   ===========   ========    =========
</TABLE>


 The accompanying notes are an integral part of the financial statements.
                                            F-5

<PAGE>

HOLOBEAM, INC.

STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996 

          
                                                  1998      1997       1996  
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income                                      $166,891  $303,882  $ 306,434
                                                --------  --------  ---------
Adjustments to Reconcile Net Income to Net Cash
 Provided by Operating Activities:
    Loss on disposition of assets                      -    10,022          -
    Depreciation                                 214,427   212,487    206,651
    Amortization                                  54,442    54,895     56,037
    Patent and Patent Application Costs           (5,495)   (9,477)   (30,048)

Increase (Decrease) in:                                 
    Accounts Payable and Accrued Expenses       (104,454)  (45,637)    20,551
    Real Estate Brokers Commissions              (33,863)  (89,455)   (33,863)

Decrease (Increase) in:                                           
    Other Receivables                                  -    49,230          -
    Deferred Tax Asset                                 -    91,800    203,790
    Interest Receivable                           (1,772)   (4,051)     3,758
    Prepaid Expenses                               1,556    (3,336)     ( 608)
                                                --------  --------   --------
Total Adjustments                                124,841   266,478    426,268
                                                --------  --------   --------
Net Cash Provided by Operating Activities        291,732   570,360    732,702
                                                --------  --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of Short-term Investments               (21,282) (400,000)         -
Capital Expenditures                              (7,976)  (51,587)         -
Proceeds from Sale of Assets                           -     7,500          -
                                                 -------- ---------  --------
Net Cash Used in Investing Activities            (29,258) (444,087)         -
                                                 -------- ---------  --------
CASH FLOWS FROM FINANCING ACTIVITIES

Principal Payments on First Mortgage            (267,784) (245,412)  (224,902)
Purchase of Treasury Stock                       (58,375) (114,325)  (119,393)
Principal Payments on Loan Payable-Tandy               -         -  1,137,175
                                                ---------  -------- ---------
Net Cash Provided (Used) by 
Financing Activities                            (326,159) (359,737)(1,481,470)
                                                --------  --------  ---------
NET INCREASE (DECREASE) IN CASH 
AND CASH EQUIVALENTS                             (63,685) (233,464)  (748,768)

CASH AND CASH EQUIVALENTS AT 
BEGINNING OF YEAR                                365,308   598,772  1,347,540
                                               ---------  --------  ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR      $  301,623 $ 365,308  $ 598,772 
                                               =========  ========   ========
SUPPLEMENTAL CASH FLOWS DISCLOSURES
Interest Paid                                $   566,479 $ 588,852   $609,359 
Income Taxes Paid                            $   107,198 $ 124,925   $  3,041


The accompanying notes are an integral part of the financial statements.    
                                    F-6


<PAGE>

 HOLOBEAM, INC.

NOTES TO FINANCIAL STATEMENTS 
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996


NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          a.  Nature of Operations

              The Company is engaged in the rental of real
              property for retail use and in development of
              surgical staples and the technology used to apply
              the staples for use in internal surgery.  

          b.  Depreciation and Amortization

              It is the policy of the Company to provide for
              depreciation and amortization of the building and
              equipment on a straight-line and accelerated basis
              in amounts sufficient to write-off the cost of the
              assets over their estimated useful lives, which are
              as follows:

                Building and Building Improvements       31. 5 to 40 years
                Machinery and Equipment                       5 to 7 years
                Furniture and Fixtures                       7 to 10 years

              Maintenance and repairs are charged to operations in
              the year in which incurred, while replacements and
              betterments are capitalized by charges to the
              appropriate asset accounts.  The cost and
              accumulated depreciation and amortization with
              respect to assets retired or otherwise disposed, are
              eliminated from the assets and related accumulated
              depreciation and amortization accounts and any
              profit or loss resulting therefrom is reflected in
              operations.

              Patent and patent application costs are amortized on
              a straight-line basis over a ten year period.

          c.  Earnings Per Share

              Earnings per share of common stock has been computed
              by dividing net income by the weighted average
              number of common shares outstanding during the year. 
              Diluted earnings per share of common stock is the
              same as earnings per share prior to dilution.  

          d.  Common Stock

              Each share of common stock is entitled to one vote. 
              No such shares of common were reserved at September
              30, 1998, 1997, 1996.  On February 19, 1998, the
              Company retired 747,000 shares of Treasury Stock
              purchased between 1970 and January of 1998 at a cost
              of $2,648,902.  

          e.  Statement of Cash Flows

              For purposes of reporting cash flows, all liquid
              investments with original maturities of three months
              or less are considered cash equivalents.




          
                               F-7

<PAGE>

HOLOBEAM, INC.

NOTES TO FINANCIAL STATEMENTS 
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996


NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          f.  Income Taxes

              Deferred income taxes are provided on temporary
              differences between financial statement and income
              tax bases of assets and liabilities.  Generally, 
              deferred tax assets are recognized in the current
              period for the future benefit of net operating loss
              carry forwards and items for which expenses have
              been recognized for financial statement purposes,
              but will be deductible in future periods.  Valuation
              allowances are established when necessary to reduce
              deferred tax assets to the amount expected to be
              realized. 

          g.  Deferred Charges

              It is the policy of the Company to charge costs
              associated with the acquisition of long term debt
              (mortgages) to expense over the term of the
              mortgage.

              In addition, the Company charges costs associated
              with the procurement of operating leases,
              specifically real estate brokers commissions, to
              expense during the term of the operating lease.  

          h.  Use of Estimates

              The preparation of financial statements requires
              management to make estimates and assumptions that
              affect certain reported amounts and disclosures. 
              Accordingly, actual results could differ from these
              estimates.
          
          I.  Short-Term Investments

              Short-term investments have an original maturity of
              more than three months and a remaining maturity of
              less than 1 year.  These investments are stated at
              cost as it is the intent of the company to hold
              these securities until maturity.        
NOTE 2.   INCOME TAXES

          The deferred tax assets recorded on the balance sheet as
          of September 30, are as follows:

                                          1998        1997             1996  

          Deferred tax asset       $         -    $      -        $ 91,800
          Valuation allowance                -           -               -
                                   -----------    --------        ---------
          Net deferred tax asset   $         -    $      -         $ 91,800
                                   ===========    ========        =========
          Net operating loss carryovers of the Company, aggregated
          approximately $0 at September 30, 1998 and 1997, and
          $270,000 at September 30, 1996.               



                               F-8


<PAGE>


HOLOBEAM, INC.

NOTES TO FINANCIAL STATEMENTS 
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996


NOTE 2.   INCOME TAXES (Continued)
          
          The sources of deferred income taxes for the years ended
          September 30, are as follows:

                                            1998            1997          1996 

          Depreciation              $          -     $         -    $        -
          Net operating loss 
              carryover                        -               -       270,000
                                    ------------     -----------     ---------
                                    $          -     $         -     $ 270,000
                                    ============     ===========     =========
          The difference between the statutory federal income tax
          rate on income before income taxes and the Company's
          effective income tax rate is as follows:
                                                 1998       1997        1996  

          Federal statutory income tax rate       34%        34%         34%
          State tax provisions, net of 
           federal benefits                        6          6           6
          Other                                    1          1           1
                                                  --         --          -- 
          Effective income tax expense rate       41%        41%         41%
                                                  ==         ==          ==
          Income tax expense (benefit) consisted of the following:

                                     1998               1997           1996  
          Current
            Federal           $     89,716          $  69,000       $  2,916
            State                   26,258             49,000          2,125

          Deferred
            Federal                      -             91,800        184,508
            State                        -                  -         19,407
                                 ---------          ---------      ---------
                                 $ 115,974          $ 209,800      $ 208,956
                                 =========          =========      =========
          In 1998, 1997 and 1996, the net operating loss carryovers
          do not agree with the accumulated deficit on the balance
          sheets for the same periods because some net operating
          losses have expired and because capital losses are not
          included in the net operating loss carryovers.

          




                               F-9

<PAGE>

HOLOBEAM, INC.

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
          

NOTE 3.   RENTAL INCOME UNDER OPERATING LEASES

          The Company has leased two buildings at its A & S Drive,
          Paramus, N.J. site for retail use.  The Sports Authority,
          Inc. has leased the 62,000 sq. ft. building for a lease
          term of twenty (20) years and the Tandy Corporation has
          leased the 30,000 sq. ft. building for use as a Computer
          City retail store for a lease term of fifteen (15) years. 
          The tenants are also responsible for real estate taxes
          and other assessments as defined in the operating lease
          agreements.

                                        1998            1997           1996  
 Buildings and building improvements:                   
           Cost                      $ 6,961,244     $6,961,244    $6,961,244
           Accumulated depreciation    1,526,605      1,326,646     1,126,687
                                     -----------     ----------     ---------
           Net buildings and building 
              improvements           $ 5,434,639     $5,634,598    $5,834,557
                                     ===========     ==========    ==========
          The minimum future rentals on noncancellable operating
          leases for the years ending September 30, are as follows:

         1999     1,925,717         2004 $2,116,467   2009         $2,331,017
         2000     2,020,217         2005  2,225,142   2010          1,497,842
         2001     2,020,217         2006  2,225,142   2011          1,497,842
         2002     2,108,447         2007  2,322,194   2012          1,373,022
         2003     2,116,467         2008  2,331,017              ------------
                                                      Total       $28,110,750
                                                                 ============
          Net rental income consists of the following:
                                     1998         1997              1996   
          Rental income           $1,925,534    $1,845,509       $1,838,216     
          Depreciation expense      (199,959)     (199,959)        (199,987)
          Other expenses             (58,547)      (67,540)         (60,975)
                                  ----------    ----------       ----------
          Rental income, net     $ 1,667,028    $1,578,010       $1,577,254
                                  ==========    ==========       ==========
          In 1998, 1997, and 1996, depreciation expense included
          all depreciation of the rental buildings and building
          improvements.

          a)  The Company entered into a triple net lease
              agreement with The Sports Authority, Inc., Fort
              Lauderdale, Florida.  The term of the lease is
              twenty (20) years with four (4) options to extend
              the term for an additional period of five (5) years
              in each option.  

              The Company was responsible for funding certain
              improvements to the building pursuant to the lease
              agreement and incurred costs amounting to $3,567,276
              at September 30, 1993.  The Company reimbursed The
              Sports Authority, Inc. for such improvements and on
              February 5, 1993 the original lease was amended and
              the base rent was increased to reflect the improved
              condition of the building.

                               F-10

<PAGE>

HOLOBEAM, INC.

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996


NOTE 3.   RENTAL INCOME UNDER OPERATING LEASES (Continued)

          a)  The Company obtained additional mortgage financing
              totaling $7,500,000 in order to fund reimbursement
              to The Sports Authority, Inc.,  whose former parent
              company, K-Mart Corporation (K-mart Corporation is
              a public company and financial information regarding
              K-mart is publicly available) has guaranteed the
              incremental monthly rental payments over the
              remaining life of the lease.  (See Note 8).

              The base rents under the amended lease were
              increased as follows:

                   2nd through 5th years                        $1,208,217
                   6th through 10th years                        1,295,716
                   11th through 15th years                       1,391,967
                   16th through 20th years                       1,497,842

              In addition to the rent, the tenant is responsible
              for real estate taxes and other assessments as
              defined in the operating lease.

          b)  Tandy Corporation has constructed a 30,000 sq.ft.
              building on the Company's site located in Paramus,
              N.J. for use as a Computer City retail store.  Tandy
              Corporation commenced paying rent to the Company
              pursuant to the terms of the operating lease on
              October 1, 1994.  The lease term is for fifteen (15)
              years at an annual rental of $630,000 for the first
              five years, $724,500 for the second five years and
              $833,175 for the last five years.  Tandy Corporation
              has three (3) options to extend the term of the
              lease for an additional period of five (5) years for
              each such option.

              Pursuant to the terms and conditions of the lease,
              the Company agreed to reimburse Tandy Corporation up
              to $1,200,000 plus the costs of paving the driveway
              and parking area and one-half (1/2) the cost of
              exterior lighting not attached to the building. 
              This construction allowance was amended to
              $1,189,675 and paid in cash to Tandy Corporation on
              November 9, 1995.

              Costs associated with the 30,000 sq. ft. building
              are as follows:*

              Construction allowance paid to Tandy Corporation     $1,189,675
              Costs incurred by the Company for use variance 
               and site improvement (deferred until put in
               service at October 1, 1994)                            434,821
              Construction costs incurred through September 30,
               1994 (deferred until put in service at October
               1, 1994)                                               964,505
              Construction costs incurred during 1995                   3,512
                                                                   ----------
              Total Costs of 30,000 sq. ft. building occupied
               by Tandy Corporation.                               $2,592,513
                                                                   ==========
              (*)  Does not include costs of improvements incurred
              by the tenant.


                               F-11

<PAGE>


HOLOBEAM, INC.

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996


NOTE 3.   RENTAL INCOME UNDER OPERATING LEASES (Continued)

          b)  The construction allowance was payable to Tandy
              Corporation two (2) months after a permanent
              certificate of occupancy was issued by local
              governmental authorities.  According to the terms
              and conditions of the lease agreement, Tandy
              Corporation could accrue interest at the annual rate
              of 7% on the unpaid balance and could also cease
              paying rent until such amounts payable by the
              Company were paid.  Accordingly, the Company elected
              to pay the amounts in full on November 9, 1995.

              On September 1, 1998, Tandy Corporation sold
              Computer City, Inc. to CompUSA, Inc.  The lease was
              therefore assigned to CompUSA, Inc. and is still
              guaranteed by Tandy Corporation.  

          The following is a condensed summary of financial
          information on the above publicly  held companies:
                         Tandy  The Sports                                   
                   Corporation   Authority              K-Mart        CompUSA
                      12/31/97     1/28/98             1/28/98        6/27/98
                  (In Millions)(In Thousands)    (In Millions)  (In Thousands)
Current assets          $ 1,715  $  392,426            $  7,476      $ 922,867
Total assets              2,318     812,288              13,558      1,160,510
Current liabilities         976     292,716               3,274        634,000
Total liabilities         1,259     480,826               7,143        745,872
Minority interest             -      (2,089)                  -              -
Total stockholders' 
 equity                   1,059     333,551               6,415        414,638
Net sales                 5,372   1,467,910              32,183      5,286,041
Cost of sales             3,358   1,045,028              25,152      4,540,717
Gross profit              2,014     422,882               7,031        745,324
Income before 
 income taxes               304      34,732                 369         51,288
Income taxes                117      14,730                 120         19,745
Minority Interest             -      (2,191)                  -              -
Net income              $   187$     22,193            $    249      $  31,543

NOTE 4.   RELATED PARTY TRANSACTIONS

          An officer and member of the Board of Directors, acted in
          the capacity as insurance broker and was the Company's
          landlord until his death during the year ended September
          30, 1997.  
                                                    1997           1996  
              Landlord-Office rental                                     
               and related services                 $9,999        $10,908
              Insurance                                  -         19,076
                                                    ------        -------
                                                    $9,999        $29,984
                                                    ======         =======
NOTE 5.   RESEARCH AND DEVELOPMENT

          Research and development expenses in the amount of
          $225,041 in 1998, $147,562 in 1997, and $219,001 in 1996,
          were charged to operations and included in costs and
          expenses.

                               F-12

<PAGE>

HOLOBEAM, INC.

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996


NOTE 6.   RENT EXPENSE
          
          The Company had leased approximately 1,000 square feet of
          office space on a month to month basis at a monthly
          rental of $909  from a member of the Board of Directors
          (See Note 4) until August 31, 1997. The Company moved its
          headquarters to Ho-Ho-Kus, New Jersey and occupies
          approximately 1,000 square feet of office and laboratory
          space on an annual lease.  Lease payments are $950 per
          month and are paid to an unaffiliated landlord.   Rent
          expense was $11,400 in 1998, $11,449 in 1997 and $10,908
          in 1996.

NOTE 7.   PATENTS

          The Company has discontinued efforts relating to solar
          cells and semi-conductor technology.  Work in the field
          has moved in other directions than that of the Company's
          technology and there has been a substantial reduction of
          government support in this technical area.  The funding
          that had been received by laboratories exploring the
          Company's technology has also terminated.

          The Company is continuing its efforts in the area of
          surgical staple design for use in internal surgery. 
          Several United States Patents have been issued and
          foreign applications have been filed on a novel staple. 
          The staple has been produced and it is anticipated that
          tests will continue during 1998 at a medical center. 
          Research and development costs in the amounts of
          $225,041, $147,562 and $219,000 have been expended in
          connection with the surgical staple during 1998, 1997 and
          1996, respectively.

NOTE 8.   LONG-TERM DEBT

          The mortgage consists of two loans, one in the amount of
          $6,000,000 payable in monthly installments of $55,328
          including interest at 8.77% until 2011.  The second is in
          the amount of $1,500,000 payable in monthly installments
          of $13,767 including interest at 8.7% until 2011.       

          Costs incurred in connection with this mortgage amounted
          to $102,520 and are charged to expense over the life of
          the mortgage.  This amount is included in the balance of
          deferred charges as detailed in Note 9.  The expense for
          the next five (5) years is presented below:

              1999                                  $5,126
              2000                                   5,126
              2001                                   5,126
              2002                                   5,126
              2003                                   5,126

          



          

                               F-13

<PAGE>

HOLOBEAM, INC.

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996


NOTE 8.   LONG-TERM DEBT (Continued)

          The balance outstanding for each debt issued at the end
          of 1998, 1997, and 1996 is as follows:
                                     1998            1997             1996  
First Mortgage on
62,000 sq. ft. Building            $6,264,064     $6,531,848      $6,777,260
          
Real Estate Brokers Commissions 
   Payable                             12,133         45,995         135,450
                                   ----------      ---------      ----------
          Total                     6,276,197      6,577,843       6,912,710

Less Current Portion                  292,195        267,783         245,412
                                  -----------     ----------      ----------
Long-Term Portion                 $ 5,984,002     $6,310,060      $6,667,298
                                  ===========     ==========      ==========
          There was no outstanding long-term debt at September 30,
          1996 other than the first mortgage and real estate
          brokers commissions payable after September 30, 1996. 
          The mortgage is secured by the land and building and
          operating lease agreement with The Sports Authority, Inc. 
          (See Note 3).

          The principle payments of long-term debt for the term of
          the mortgage is as follows:

           1999         $292,195       2004      $451,978     2009    $699,136
           2000          318,832       2005       493,181     2010     762,870
           2001          347,897       2006       538,140     2011     338,083
           2002          379,611       2007       587,197     
           2003          414,217       2008       640,727                    
NOTE 9.   DEFERRED CHARGES

          The composition of deferred charges and related
          amortization is as follows:
                                                                 
                                                 Real Estate              
                                 Mortgage    Brokers Commissions      
                       Total      Costs  Sports Authority Tandy Corp.
Original Cost        $712,160    $102,520     $279,584     $330,056
Accumulated 
 Amortization         202,103      29,047       85,040       88,016
                     --------    --------     --------     --------
Balance 9/30/98      $510,057    $ 73,473     $194,544     $242,040
                     ========    ========     ========     ========
Original Cost        $712,160    $102,520     $279,584     $330,056
Accumulated 
 Amortization         160,994      23,921       71,061       66,012
                     --------    --------     --------     --------
Balance 9/30/97      $551,166     $78,599     $208,523     $264,044
                     ========    ========     ========     ========

                              F-14


<PAGE>


HOLOBEAM, INC.

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996


NOTE 10.  DEFERRED SITE COST

          The Company incurred costs in connection with an
          application for a use variance and site improvements for
          the property owned by the Company at 50 A&S Drive,
          Paramus, New Jersey, adjacent to the building owned by
          the Company and leased to the Sports Authority, Inc. 
          Such costs amounting to $806,656 have been considered to
          be part of the site cost and are included in fixed
          assets. 
 
NOTE 11.  OTHER EMPLOYEE BENEFITS

          The Financial Accounting Standards Board issued SFAS No.
          106 " Employers Accounting for Post Retirement Benefits"
          and SFAS No. 112 "Employers Accounting for Post
          Employment Benefits", which changed employers' accounting
          for these benefits.  Since the Company has no post-retirement
          benefits plan, and does not offer post
          employment benefits, SFAS No. 106 and SFAS No. 112 are
          not applicable.

NOTE 12.  CONCENTRATION OF CREDIT RISK

          The Company maintains its cash balances and short term
          investments in several financial institutions in excess
          of the $100,000 guarantee by the Federal Deposit
          Insurance Corporation (FDIC).  At September 30, 1998,
          this excess amounted to  $357,954. 
  
          Substantially all of the Company's income is rental
          income received from two tenants.  These tenants are
          subject to long-term lease agreements. (See Note 3)

NOTE 13.  FINANCIAL REPORTING BY BUSINESS SEGMENTS

          A summary description of the Company's business segments
          is as follows:

          Surgical Staples-Engaged in engineering and design of
          surgical staples for use in internal surgery,  and in the
          technology used to fabricate the equipment issued to
          apply the staples.

          Electro-Optical-Engaged in engineering and development of
          equipment for the semi-conductor industry.  The company
          has discontinued efforts relating to the electro-optical
          segment of its business.

          Rental-Engaged in leasing to tenants, the two retail
          buildings owned by the Company at 50 A&S Drive, Paramus,
          New Jersey.

          The Company has deferred its adoption of Financial
          Accounting Standards Board Statement (SFAS) No. 131
          "Disclosures About Segments of an Enterprise and Related
          Information" until year ending September 30,1999. 
          However, the Company believes the Segments reported above
          will remain the same under SFAS 131.  



                              F-15
                                
                                
<PAGE>                                
                                
                                
HOLOBEAM, INC.

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996


NOTE 13.  FINANCIAL REPORTING BY BUSINESS SEGMENTS (Continued)


                                            Revenues                        
                                1998                1997               1996   
Business Segments:

 Surgical Staples      $                -      $         -     $          -
 Electro-Optical                        -                -                -
 Real Estate Rental             1,925,534        1,845,509        1,838,216
 Corporate                         39,028           27,873           18,002
                             ------------       ----------       ----------
     Total                   $  1,964,562       $1,873,382       $1,856,218
                             ============       ==========       ==========
Business Segments:                          Income (Loss)           
                              1998                1997                1996  
 Surgical Staples            $   (225,041)    $   (147,562)    $   (219,001)
 Electro-Optical                        -                -                -
 Real Estate Rental             1,667,028        1,578,010        1,577,254
                                ---------        ---------        ---------
     Total                      1,441,987        1,430,448        1,358,253
                                ---------        ---------        ---------
 General and Administrative
 Expenses                        (633,625)        (347,556)        (253,146)
 Interest Expense                (564,525)        (587,061)        (607,719)
 Other Income                      39,028           17,851           18,002
 Income Tax Expense              (115,974)        (209,800)        (208,956)
                               -----------     -----------       -----------
     Total                     (1,275,096)      (1,126,566)      (1,051,819)
                               ----------      -----------        ---------
 Net Income                    $  166,891      $   303,882        $ 306,434
                               ==========      ===========        =========
Business Segments:                      Identifiable Assets            
                              1998                1997               1996   
 Surgical Staples               $  60,738    $      63,599     $     61,729
 Electro-Optical                   15,286           20,263           26,442
 Real Estate Rental             6,397,468        6,638,536        6,885,752
 Corporate and Other
 Non-segment Items                781,590          830,269          769,691
                             ------------       ----------      -----------
     TOTAL ASSETS            $  7,255,082       $7,552,667       $7,743,614
                             ============       ==========       ==========









                               F-16

<PAGE>


HOLOBEAM, INC.

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996

NOTE 14.      FAIR VALUES OF FINANCIAL INSTRUMENTS

          The Company has a number of financial instruments, none
          of which are held for trading purposes.  The Company
          estimates that the fair value of all financial
          instruments at September 30, 1998, does not differ
          materially from the aggregate carrying values of its
          financial instruments recorded in the accompanying
          balance sheet.  The estimated fair value amounts have
          been determined by the Company using available market
          information and appropriate valuation methodologies. 
          Considerable judgement is necessarily required in
          interpreting market data to develop the estimates of fair
          value, and accordingly, the estimates are not necessarily
          indicative of the amounts that the Company could realize
          in a current market exchange.            

NOTE 15.  PENSION PLAN

          The Company established a defined benefit plan in 1998
          covering all eligible employees, who have completed one
          year of service.  Benefits are based on years of service
          and the average compensation during the best three years
          of participation.  

          The Company's funding policy is to make annual
          contributions to the plan in amounts such that all
          employees' benefits will be fully provided for by the
          time they retire.  Contributions are intended to provide
          not only for benefits attributed to service to date but
          also for those expected to be earned in the future.  

          Although it has not expressed any intention to do so, the
          Company has the right under the plan to discontinue its
          contributions at any time and to terminate the Plan
          subject to the provisions set forth in ERISA.  

          Net pension cost for the Company's defined benefit plan,
          determined under the provisions of the Statement of
          Financial Accounting Statements No. 87, includes the
          following components:
                                                                 1998    
              a. Accumulated benefit obligation                      
                -vested                                         $ 307,773
                -non-vested                                             -
                                                                ---------
                -Total                                            307,773
              b. Additional benefits based on 
                   Estimated future salary levels                       -
                                                               ----------

              Projected benefit obligation September 30           307,773
                                                                ---------
              Plan assets at fair value                           307,773
              Plan assets in excess of projected benefit
               obligation                                               -
              Unrecognized net obligation at transition                 -
              Unrecognized net (gain) loss                              -
                                                                ---------
              Prepaid pension cost                                $     -
                                                                =========

                              F-17


<PAGE>


HOLOBEAM, INC.

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996



NOTE 15.  PENSION PLAN (CONTINUED)

              Assumed discount rate: 7%
              Expected long-term rate of return 
               on plan assets: 7%
              
              The net periodic pension cost for the year ended
              September 30, includes the following components:

              1.  Service cost - benefits earned
                    during the period                           $ 287,638
              2.  Interest cost on projected benefit
                    obligation                                     20,135
                                                                  -------
              3.  Actual return on plan assets                          -
                                                                 --------
              4.  Net amortization and deferral                         -
                                                                  -------

                 a. Amortization of unrecognized net
                     obligation (asset) at transition                   -
                 b. Amortization of unrecognized 
                     prior service cost                                 -
                 c. Amortization of unrecognized net
                     (gain) or loss                                     -
                 d. Asset gain or (loss) deferred                       -
                                                                  -------
                 e. Total                                               -
                                                                  -------
              5.  Net periodic pension cost (credit) =
                    (Item 1 + item 2 + item 3 + item 4 (e)      $ 307,773
                                                                =========
              The net periodic pension cost for 1998 was
              determined based on a 7% discount rate, a long -
              term rate of return of 7% on plan assets.

              The Company's pension plan was valued on October 1,
              1997.  

NOTE 16.  CONTINGENCIES

              The Company is engaged in a comprehensive project to
              assure all its systems are year 2000 compliant. 
              Based on current estimates, the Company does not
              anticipate related material adverse effects on its
              financial condition, liquidity or results of
              operations.  








                               F-18

<PAGE>
                                                     Schedule V
HOLOBEAM, INC.

PROPERTY AND EQUIPMENT
SEPTEMBER 30, 1998, 1997 AND 1996

                            Balance at                             Balance at
                            Beginning                                 End of
    CLASSIFICATIONS          of Year      Additions  Retirements       Year  



YEAR ENDED SEPTEMBER 30, 1996:

Machinery and Equipment       $ 67,227        $     -    $      -    $ 67,227
Furniture and Fixtures           2,258              -           -       2,258
                              --------        --------   --------    --------
TOTAL                         $ 69,485        $     -    $      -    $ 69,485
                              ========        ========   ========    ========
YEAR ENDED SEPTEMBER 30, 1997:

Machinery and Equipment        $67,227         $38,930    $39,218     $66,939
Furniture and Fixtures           2,258          12,657      2,258      12,657
                               -------         -------    -------     -------
TOTAL                          $69,485         $51,587    $41,476     $79,596
                               =======         =======    =======     =======
YEAR ENDED SEPTEMBER 30, 1998:

Machinery and Equipment        $66,939       $      -     $     -     $66,939
Furniture and Fixtures          12,657           7,976          -      20,633
                               -------       ---------    -------     -------
                               $79,596          $7,976    $     -     $87,572
                               =======       =========    =======     =======




















   The accompanying notes are an integral part of the financial
statements.
                               F-19

<PAGE>

                                            Schedule VI
HOLOBEAM, INC.

ACCUMULATED DEPRECIATION AND AMORTIZATION 
PROPERTY AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996

                          Balance at                              Balance at
                          Beginning                                  End of
CLASSIFICATIONS            of Year     Additions  Retirements         Year  



YEAR ENDED SEPTEMBER 30, 1996:

Machinery and Equipment      $ 30,892      $ 8,300    $       -      $ 39,192
Furniture and Fixtures          2,204           52            -         2,256
                             --------      -------    ---------      --------
TOTAL                        $ 33,096      $ 8,352    $       -      $ 41,448
                             ========      =======    =========      ========
YEAR ENDED SEPTEMBER 30, 1997:

Machinery and Equipment       $39,192      $10,581     $ 21,696       $28,077
Furniture and Fixtures          2,256          256        2,256           256
                              -------      -------     --------       -------
TOTAL                         $41,448      $10,837     $ 23,952       $28,333
                              =======      =======     ========       =======
YEAR ENDED SEPTEMBER 30, 1998:

Machinery and Equipment       $28,077      $12,604   $        -       $40,681
Furniture and Fixtures            256        1,864            -         2,120
                              -------      -------    ---------       -------
                              $28,333      $14,468   $        -       $42,801
                              =======       ======    =========       =======



















   The accompanying notes are an integral part of the financial
statements.
                              F-20

<PAGE>
                                                       Schedule X
HOLOBEAM, INC.

SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996


                                        1998       1997                1996   
Maintenance and Repairs         $         -     $10,610          $      945
                                 ==========     =======           =========
Depreciation and Amortization of
 Intangible Assets                  $54,442     $54,895            $ 56,037
                                    =======      ======            ========
Taxes, Other than Payroll and Income Tax
 Franchise                          $ 3,600     $ 3,060             $ 4,740
 Real Estate                             -           -                   -
 Other                                   -        6,004                 300
                                    ------       ------              -------
                                    $ 3,600   $   9,064             $ 5,040
                                    =======    ========              ======
Royalties                         $        -   $       -         $         -
                                     =======     =======            ========
Advertising                       $        -   $       -         $         -
                                    ========    ========          ==========






























     The accompanying notes are an integral part of the financial
statements.
                              F-21


<PAGE>


                                                                    Schedule XI
HOLOBEAM, INC.

REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 1998
<TABLE>

<CAPTION>
                                                                                                                      Life in
                                                                                                                      Which
                                           Cost Capitalized    Gross Amount at                                        Deprec.
                            Initial            Subsequent     Which Carried at                                        in Latest
                         Cost to Company     To Acquisition Close of Period (1)     (2)                Date            Income
                Incumb               Bldg &         Carrying             Bldg &              Accum.      of   Date     Stmt is 
               Brances    Land       Improv  Improv   Costs    Land     Improv       Total   Deprec.   Cons. Acquired  Computed

<S>            <C>        <C>      <C>        <C>        <C>  <C>      <C>          <C>      <C>        <C>  <C>  <C>
Improved Land                                                                                                              
 Paramus, NJ   $        0 $218,402 $        0 $        0 $  0 $218,402 $        0   $218,402         $0      1971           -
Improved Land
 Paramus, NJ            0  173,565          0     60,805    0  234,370          0    234,370          0      1983           -

Building I
 Paramus, NJ
 Improvements   6,777,260        0    718,881  3,649,850    0        0  4,368,731  4,368,731  1,266,246 1958 1971 3 to 40 years

Building II 
 Paramus, NJ            0        0  2,592,513          0    0        0  2,592,513  2,592,513    260,359 1995 1995   30 Years
               ---------- -------- ---------- ---------- ---- -------- ---------- ---------- ----------
               $6,777,260 $391,967 $3,311,394 $3,710,655 $  0 $452,772 $6,961,244 $7,414,016 $1,526,605
               ========== ======== ========== ========== ==== ======== ========== ========== ==========
</TABLE>

<TABLE>

<CAPTION>
(1)Activity for the three years                        (2)Activity for the three years    
   ended September 30, 1998 is                          ended September 30, 1998 is 
   as follows:           1998       1997        1996    as follows:             1998           1997           1996  

Balance at Beginning                                    Balance at Beginning
<S>                   <C>         <C>        <C>        <C>                      <C>         <C>          <C>       
 of Year              $7,414,016  $7,414,016 $8,424,724              of Year     $1,326,646  $1,126,687   $1,937,408
Additions:                                                         Additions:
  Improvements                 0           0          0         Depreciation        199,959     199,959      199,987
  Acquisitions                 0           0          0     Less Retirements              0           0    1,010,708
                       ---------   ---------  ---------                           ---------   ---------    ---------
                       7,414,016   7,414,016  8,424,724       Balance at End   
Deductions During                                                    of Year     $1,526,605  $1,326,646   $1,126,687
                                                                                  =========   =========    =========
 Year:
  Retirements                  0           0  1,010,708
  Cost of Real
   Estate Sales                0           0          0
                       ---------   ---------  ---------
Balance at End 
  of Year             $7,414,016  $7,414,016 $7,414,016
                       =========   =========  =========
</TABLE>

The aggregate cost for Federal income tax purposes
 at September 30, 1998 is $7,414,016.
The accompanying notes are an integral part of these financial statements.
                                                   F-22


<PAGE>

                                                      Schedule XII
HOLOBEAM, INC.

MORTGAGE LOANS ON REAL ESTATE
SEPTEMBER 30, 1998
   
<TABLE>

<CAPTION>
                                                                                                   Principal Amount
                                                   Periodic          Face Amount   Carrying Amount of Loans Subject to
                        Interest  Final Maturity    Payment Prior       of              of         Delinquent Principal
                           Rate       Date           Terms  Items     Mortgage      Mortgage(1)           or Interest   
<S>                         <C>    <C>               <C>      <C>    <C>           <C>         <C>      
Mortgage Payable                                                                                        
Building and Improvements    8.7%  February 5, 2011  $13,367  None   $1,500,000    $1,251,672        None

Mortgage Payable
Building and Improvements   8.77%  February 5, 2011  $56,328  None   $6,000,000    $5,012,392        None
                                                                                   ----------
                                                                                   $6,264,064
                                                                                   ==========
</TABLE>


Activity for the three 
   years ended September 30, 
   1997 is as follows:
                                     1998        1997        1996  
Balance at Beginning of Year:    $6,531,848  $6,777,260  $8,139,337
Addition During Year                       
  Commercial Loans                        0           0           0 (2)
  New Mortgages                           0           0           0
                                 ----------  ----------  ----------
                                  6,531,848   6,777,260   8,139,337
Deductions During Year:
  Principal Payments                267,784     245,412     224,902
  Mortgage Payments                       0           0   1,137,175   (2)
                                 ----------  ----------  ----------
Balance at End of Year           $6,264,064  $6,531,848  $6,777,260
                                 ==========  ==========  ==========
(1) The cost for Federal income taxes
   Purpose at 9/30/97 $6,264,064

(2) The Loan was paid in full
   on November 9, 1995


The accompanying notes are an integral part of these financial statements.
F-23 
 

<PAGE>