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

                                   FORM 10-KSB

(Mark one)

         [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended January 31, 2000
                                            ----------------

                                       OR

         [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from _________ to __________

Commission file number 33-5820-LA
                       ----------

                               SETO HOLDINGS, INC.
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

Nevada                                                    77-00882545
-------------------------------                        -----------------
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                         Identification No.)

554 North State Road
Briarcliff Manor, New York                             10510
----------------------------------------               -----
(Address of principal executive offices)               Zip Code

Issuer's telephone number (914) 923-5000
                          --------------

Securities registered under Section 12(b) of the Exchange Act:

                                                        Name of each exchange on
Title of each class                                     which registered
-------------------                                     ----------------

       N/A                                                    N/A
-------------------                                     ----------------

         Securities registered under Section 12(g) of the Exchange Act:

                                       N/A
--------------------------------------------------------------------------------
                                (Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required


<PAGE>   2



to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

Yes  X     No
    ---      ---

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year. $6,643,088
                                                          ---------

State the aggregate market value of the voting stock held by non affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. $26,339,671 as of April 17, 2000.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 19,464,101 shares of Common Stock,
$.001 par value, outstanding as of April 13, 2000.


                   DOCUMENTS INCORPORATED BY REFERENCE - None



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                                     PART I

Item 1.  Description of Business.

General

         With the recent acquisition of Hong Kong Batteries Industries, Ltd. and
Fimas Sdn Bhd., SETO Holdings, Inc. (formerly Semicon Tools, Inc.) (the
"Company"), a Nevada corporation, completely re-directed its business objectives
and mission. It now principally manufactures and/or distributes (1) power tool
batteries, (2) cellular telephone and other rechargeable batteries, (3) consumer
electronics and (4) industrial ceramic products. As a result, other products
which previously were major contributors to the Company's total revenue stream,
now play a reduced role in that regard, namely, the manufacture and distribution
of small disposable diamond cutting tools (dicing blades and scribes, which are
the cutting components of precision electronic saws, scribers used by the
electronics and semiconductor industries, and dressers for the shaping and
forming of grinding wheels in the machine tool industry). Approximately 92.5% of
the Company's revenues are generated in Malaysia and other parts of Asia.

Business Development over the Past Three Years

         Until mid-1998, the Company principally has (a) distributed and
fabricated on a "value-added" basis industrial ceramic products, and (b) sold
small, disposable precision diamond cutting tools, which include diamond-coated
nickel dicing blades (which are components of precision electronic saws) and
diamond scribes, both of which are used to cut integrated circuits, and diamond
dressers which are used to shape grinding wheels in machine shops. These
products are marketed to the microelectronics and semiconductor industries
primarily for use in the manufacture of electronic components and devices. The
Company's customers for these products consist of hundreds of Fortune 1000
companies such as IBM, National Semiconductor, Motorola and General Motors.
Since June 1996, when it purchased all of the assets of KBR (Malaysia) Sdn. Bhd.
("KBR"), a Malaysian corporation, the Company's dicing blades have been
manufactured in Malaysia. Its other cutting tools and ceramics have been made
and fabricated, respectively, at its facility in New York.

         On November 26, 1997, the Company acquired all of the issued and
outstanding capital stock of Teik Tatt Holding Co. (1979) Sdn. Bhd. ("TTH"), a
Malaysian corporation which principally manufactured rubber bands and plastic
rope and recycled scrap non-




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ferrous metals, in exchange for 10,000,000 shares of Common Stock, which
resulted in a change-in-control of the Company. On September 15, 1998 the
Company reversed its acquisition of TTH by selling all of the issued and
outstanding capital stock of TTH to Tan Khay Swee, the former owner of TTH, in
exchange for 10,000,000 shares of the Company's Common Stock, the amount of the
original purchase price. The following discussion of the Company's business and
operating results does not take into account the operations of TTH.

         On June 30, 1998, the Company issued 100,000 shares of Common Stock to
Tan Hun Hooi as consideration for its acquisition of all of the issued and
outstanding shares of Fuji Fabrication Sdn. Bhd. ("Fuji"), a Malaysian company
which principally designs, manufactures and distributes cellular telephone and
other rechargeable batteries.

         On November 19, 1999, the Company acquired all of the issued and
outstanding capital stock of Hong Kong Batteries Industries Ltd. ("HKbiL"), a
Hong Kong manufacturer and distributor of electronic components and batteries,
in exchange for 1,500,000 shares of the Company's common stock. In the event
that the Company makes available to HKbiL an aggregate of $700,000 and HKBI's
operations for the fiscal year ending January 31, 2001 generate net income of at
least $300,000, then the Company shall issue to the former stockholders of HKbiL
an additional 500,000 shares of the Company's common stock.

         On November 27, 1999, the Company acquired all of the issued and
outstanding capital stock of Fimas Sdn Bhd. ("Fimas"), a Malaysian holding
corporation with a manufacturing facility in Malaysia and Suzhou, China, in
exchange for 5,000,000 shares of the Company's Common Stock. In the event that
the Company makes available to Fimas an aggregate of $1,500,000 for additional
working capital and Fimas' operations for the fiscal year ending March 31, 2001
generate net income of at least $1,000,000, then the Company will issue to the
former stockholders of Fimas an additional 1,000,000 shares of the Company's
Common Stock. Fimas manufactures electronic consumer products such as DVD
players, CD-Rom drives, home theater systems, CD players and a wireless
computer mouse.

         On December 6, 1999, the Company entered into a joint venture with
International Bearing Networks, LLC ("IBN") a privately owned company in
California, to manufacture and supply a new diamond dicing blade developed by
IBN which is manufactured using a proprietary process called Diamond Life(TM).





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         The acquisition of HKBI and Fimas marks the beginning of the Company's
emphasis on the design, manufacturing, marketing and distribution of products
for the electronics and telecommunications industries. In line with its new
direction, the Company has recently entered into a number of joint ventures
aimed at either providing support for its products' technological designs and
requirements or providing additional marketing and distribution capabilities. On
March 20, 2000, the Company entered into a joint venture agreement with
Circlecom Sdn Bhd. ("Circlecom"), a telecommunications company that uses Voice
Over Internet Protocol to provide telecommunications services through a network
with MCI-Worldcom. Circlecom has created and maintains virtual private networks
for the transmission of international calling traffic and provides video
communications through the distribution of a prepaid calling card. By entering
this joint venture with Circlecom, the Company hopes to penetrate the Malaysian
markets for government projects and to become a significant player in the
Malaysian Multinational Super Corridor, a business, public, banking and
government internet system in Kuala Lumpur.

         On March 23, 2000 the Company acquired all of the assets of SETO (M)
Sdn Bhd. ("SETO (M)"), a joint venture formed between the Company and certain
individuals for the design and development of various telecommunications
products such as a Net PC, a Web handset, an Internet phone, an ADSL modem and a
PABX for Voice Over Internet Protocol. If SETO(M) attains a profit of $1,000,000
for the year ending January 31, 2001, the individuals would receive options to
purchase 300,000 shares of the Company's Common Stock at a price of $2.50 per
share. If SETO (M) attains a profit of $2.5 million for the year ending January
31, 2002, the individuals would receive options to purchase 600,000 shares of
the Company's Common Stock at a price of $3.50 per share.

Forward-Looking Statements

         THIS ANNUAL REPORT ON FORM 10-KSB, INCLUDING WITHOUT LIMITATION ITEM 6,
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION, CONTAINS STATEMENTS
WHICH ARE NOT HISTORICAL FACTS AND ARE FORWARD-LOOKING STATEMENTS WHICH REFLECT
MANAGEMENT'S EXPECTATIONS, ESTIMATES AND ASSUMPTIONS. SUCH STATEMENTS ARE BASED
ON INFORMATION AVAILABLE AT THE TIME THIS FORM 10K-SB WAS PREPARED AND INVOLVE
RISKS AND UNCERTAINTIES THAT COULD CAUSE FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS OF THE COMPANY TO DIFFER SIGNIFICANTLY FROM PROJECTED RESULTS.
FACTORS THAT COULD CAUSE ACTUAL FUTURE RESULTS TO DIFFER MATERIALLY INCLUDE,
AMONG OTHERS, THE RISKS OF DOING BUSINESS IN MALAYSIA AND ASIA, INCLUDING,
WITHOUT LIMITATION, ECONOMIC AND POLITICAL CONDITIONS,






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FOREIGN CURRENCY TRANSLATION RISKS, TARIFFS AND OTHER FOREIGN TRADE POLICIES AND
DEPENDENCE ON INEXPENSIVE LABOR IN SUCH COUNTRIES, PARTIAL DEPENDENCE ON THE
SEMICONDUCTOR MANUFACTURING INDUSTRY, AVAILABILITY OF RAW MATERIALS, COMPETITION
AND TECHNOLOGICAL OBSOLESCENCE. THE COMPANY ASSUMES NO OBLIGATION TO UPDATE SUCH
FORWARD-LOOKING STATEMENTS, IF ANY, AT ANY TIME.

Principal Products

Overview

         The Company operates as a broad-based technical manufacturer and
distributor in two major areas: (1) consumer products, which includes cellular
phone batteries, power tool batteries and other rechargeable batteries for all
uses, and consumer electronics, and (2) technical products to industry, which
includes diamond tools, wafer fab supplies and technical ceramics.

         The percentage contributions to the Company's sales by product line for
the fiscal years ended January 31, 1998, 1999 and 2000 are as follows:

                                  Contribution to Total Sales
                                  ---------------------------
                                          January 31,
        Product line               1998       1999      2000
        ------------              ------     ------    ------

Cellular Telephone Batteries        --         16%       17%
Other Rechargeable Batteries        --         --         6
Consumer Electronics                --         --        46
Industrial Ceramic Products         64         55        20
Diamond Cutting Tools               29         23         9
Miscellaneous Products               8          5         2


Cellular Telephone, Power Tool and Other Rechargeable Batteries

         The Company manufactures rechargeable battery packs principally for
cellular telephones, power tools, notebook computers, and camcorders. These
products are manufactured by the Company in Malaysia and mainland China, based
on battery designs and modifications engineered by the Company's research and
development team. The Company's products rely on the availability of an adequate
supply of battery cells and components, which the Company purchases from
multiple international electronics manufacturers. The Company recently entered
into joint venture agreements with two third-party suppliers in China to supply
batteries to the Company when the Company receives an order that is





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beyond its manufacturing capacity or is for a product which the Company does not
now manufacture. The Company's products include replacement batteries for such
major cellular phone companies as Ericsson, Nokia, Panasonic, NEC and OKI and
many custom batteries for OEM and private label customers. The Company currently
has an insignificant share of the battery market, which is dominated by the
cellular phone manufacturers, such as Motorola, Nokia and Ericsson, and mass
retailers such as Radio Shack and Staples. The Company competes principally on
the basis of quality, price and availability.

Consumer Electronics

         The Company manufactures a variety of consumer electronic products
including DVD players, CD-Rom drives, home theatre systems, CD players and a
wireless mouse. These products, which bear the SETO brand name, are manufactured
by the Company at manufacturing facilities in Suzhou, China, a suburb of
Shanghai, and Kulim, Malaysia. The products are sold directly to the consumer
via the Company's SETO E MALL website, and to companies such as ACER
Technologies, Lite-On Technology, Philips Sound Systems and SONY Electronics.
The Company has an insignificant share of the consumer electronics market and
competes on the basis of quality, price and availability.

Industrial Ceramic Products

         The Company distributes two principal categories of industrial ceramic
products: (1) insulators, tubes, rods and crucibles and other labware, all of
which are standard catalogue items, and (2) machinable ceramics. The products
are manufactured by third parties and fabricated, warehoused and distributed by
the Company from its facilities in Briarcliff Manor, New York, often after a
value-added machining process performed either by the Company or subcontractors.
The products are used principally by the aerospace, electronic detection
equipment and industrial heating industries.

Diamond Cutting Tools

         Dicing Blades. Dicing blades are made of diamonds bonded to a circular
nickel alloy blade. They are used with the precision electronic dicing saws
which the microelectronics and semiconductor industries use to cut and separate
integrated circuits and discrete devices made from silicon and other wafers. The
blade market consists principally of hubbed blades, made of diamond nickel alloy
(the most common), diamond/thermoset plastic (called resin blades,






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which are the blades most widely used in precision electronic saws for cutting
ceramic substrates, even though they have a shorter useful life) and diamond
nickel alloy hubless blades. Hubbed blades are competitively manufactured
principally by Disco, Inc., Semitec Corporation and Kulicke & Soffa Corporation.
The Company, which manufactures hubbed and hubless blades in its Malaysian
facility, has an insignificant share of the world-wide dicing blade market.
There can be no assurance that the Company will be able to increase its market
share.

         Scribes. Scribes, which have tips made out of gem quality diamonds, are
used to cut silicon wafers and perform die and integrated circuit separation.
These products, which are assembled in the Company's facility in Briarcliff
Manor, New York, have limited growth potential in this application since the
electronics and semiconductor industries have in large part switched from
scribing machines to dicing saws for the wafer cutting process. However, diamond
scribes are preferred over sawing for cutting certain wafer materials because
they provide cleaner separation. They also are preferred for certain low volume
applications which do not justify the capital expense of using a dicing saw. The
Company occasionally uses subcontractors to set or "lap" the diamonds into the
tools.

         Dressers. Dressers are diamond-tipped tools generally used to "dress"
or shape abrasive grinding wheels in machine shops. These products, which are
assembled in the Company's facility in Malaysia, are sold by the Company
principally to companies such as Black & Decker and Snap On Tools which resell
them to third parties. The Company believes that there are multiple foreign
suppliers of these dressers.

Miscellaneous Products

         The Company distributes small precision tools such as tweezers, pliers,
vacuum pickups and scribes, core drills and sinter blades for ceramic
applications. It also distributes cleaning chemicals, inspection gloves and
other items used to preserve a contamination-free environment, and they are
primarily marketed to IBM and Lucent Technologies.

Raw Materials

         The Company purchases its raw materials and supplies from multiple
sources. None of the raw materials and supplies it requires currently are in
short supply although factors outside of




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the Company's control could adversely impact their future availability.

Backlog

         As of January 31, 2000, the Company had a backlog of orders of
approximately $11 million, all of which it expects to ship by June 30, 2000.
While such orders may be cancelled or postponed, the Company believes that they
are firm and the resulting revenues will be realized.

Competition

         The Company's operating segments each are intensely competitive.
Virtually all competitors have greater financial and personnel resources and
greater market recognition than the Company. As a result, these competitors can
obtain better payment terms and service from suppliers. Furthermore, the Company
faces the possibility of adverse market conditions arising from tariff revisions
resulting from changes in foreign trade policies, raw material shortages,
technological change, shifting product emphasis among competitors and the entry
of new competitors into its markets. The Company believes the principal
competitive factors affecting its products are quality, price and availability.

Marketing

         The Company markets its products through joint ventures, account
representatives, distributors, telephone solicitations, participation in trade
shows, the Internet and advertisements in trade journals.

Manufacturing Facilities

         In Briarcliff, New York, the Company operates a machine shop and a
manufacturing facility for resin/diamond dicing blades. The Company leases a
facility in Kepala Batas, Penang, Malaysia, equipped to manufacture dicing
blades and diamond dressing tools and another facility located in Batu Maung,
Penang, Malaysia, where it manufactures rechargeable batteries. The Company also
manufactures rechargeable batteries at a facility in Shenzhen, China and it
manufactures consumer electronics in its facilities in Kulim, Malaysia and
Suzhou, China. See Item 2 below, "Description of Property."



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Government Regulation

         The Company believes its operations and facilities are in compliance
with all federal, state and local environmental laws in the United States,
Malaysia and China. The Company has not incurred any special or unusual costs to
comply with environmental laws or other applicable governmental regulations.

Research and Development

         In the fiscal years ended January 31, 2000 and 1999, the Company spent
approximately $350,000 and $50,000, respectively, on its research and
development activities.

Employees

         The Company employs approximately 500 full-time employees, of which 20
work in its diamond tools and ceramics facilities, 30 work in its battery pack
facilities and 450 work in its consumer electronics facilities. It also utilizes
outside consultants and part-time workers when required.


Item 2.  Description of Property.

         In Malaysia, the Company leases approximately 4,000 square feet of
manufacturing space and 500 square feet of office space in Kepala Batas, Penang,
pursuant to a lease expiring July 2001 with minimum annual lease payments of
$7,200. It also occupies approximately 3,500 square feet of manufacturing
facilities and 600 square feet of office space in Batu Maung, pursuant to a
lease expiring July 2001, with a minimum annual lease payment of $11,400. In
addition, the Company owns three facilities in Kulim, which includes facilities
to manufacture consumer electronics as well as office space and 15,248 square
feet of manufacturing space. There are mortgages on the facilities in Kulim
totaling $213,000 for which Fimas' land and buildings are pledged as collateral.

         In mainland China, the Company owns one office and one factory in
Suzhou where it manufactures consumer electronics. The combined square footage
of the consumer electronics manufacturing space in Suzhou and Kulim is 17,809
square feet. The combined square footage of the office space in its consumer
electronics facilities in Suzhou and Kulim is 7,324 square feet. The Company
also owns 1700 square feet of manufacturing and warehouse space in Shenzhen
where it manufactures rechargeable batteries, as well as 500 square feet of
office space.

         In the United States, the Company leases approximately 2,400 square
feet of manufacturing and warehouse space and 1,200 square feet of office space
in Briarcliff Manor, New York, from






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Rachrob Realty, LLC, a company owned by Eugene Pian, the President and a
principal shareholder of the Company, pursuant to a fifteen (15) year lease
which expires on April 30, 2013, with annual base rents, excluding utilities,
maintenance and repairs, as follows: Years One to Five - $60,000; Years Six to
Ten - $66,000; Years Eleven to Fifteen - $72,000.


Item 3.  Legal Proceedings.

         There are no pending legal proceedings to which the Company is a party
or to which any of its property is subject and no such proceedings are known to
the Company to be threatened or contemplated by or against it.


Item 4.  Submission of Matters to a Vote of Security Holders.

         No matters were submitted to a vote of security holders during the last
fiscal quarter covered by this Report.






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                                     PART II


Item 5.  Market for Common Equity and Related Stockholder Matters.

Market Information

         The Company's Common Stock, $.001 par value, is traded in the
over-the-counter market on the OTC Bulletin Board under the symbol "SETO". Such
Stock is not traded or quoted on any automated quotation system.

         The following table sets forth the range of high and low bid
information for the Company's Common Stock for each calendar quarter within the
last two fiscal years, and for the first calendar quarter of 2000, as provided
by the National Quotation Bureau, Inc. Such quotations reflect inter-dealer
prices without retail mark-up, mark-down or commission and may not represent
actual transactions.

                  2000                     Low        High
                  ----                     ---        ----

                  First quarter           $.38       $2.75

                  1999
                  ----

                  First quarter            .14        1.625
                  Second quarter           .30         .67
                  Third quarter            .30         .55
                  Fourth quarter           .40         .76

                  1998
                  ----

                  First quarter            .29         .70
                  Second quarter           .61         .9
                  Third quarter            .19         .80
                  Fourth quarter           .20         .335

Holders

         As of April 13, 2000, there were 325 record holders of the Company's
Common Stock.

Recent Sales of Unregistered Securities

         On November 26, 1997, the Company issued 10,000,000 shares of its
Common Stock pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act"), in




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exchange for all of the issued and outstanding capital stock of TTH. The shares
were issued to Tan Khay Swee. (The Company sold TTH back to Mr. Tan Khay Swee on
September 15, 1998 in return for such 10,000,000 shares.)

         On July 1, 1998, the Company issued 100,000 shares of its Common Stock
pursuant to Section 4(2) of the Securities Act in exchange for all of the issued
and outstanding stock of Fuji Fabrication Sdn. Bhd. The shares were issued to
Tan Hun Hooi.

         On December 10, 1999, the Company issued 1,500,000 shares of its Common
Stock pursuant to Section 4(2) of the Securities Act in exchange for all of the
issued and outstanding stock of Hong Kong Batteries Industries, Ltd. The shares
were issued as follows: 900,000 shares to To Wai Kwong Tommy and 600,000 shares
to Siu Suet Ping.

         On December 12, 1999, the Company issued 5,000,000 shares of its Common
Stock pursuant to Section 4(2) of the Securities Act in exchange for all of the
issued and outstanding stock of Fimas Sdn Bhd. The shares were issued as
follows: 2,475,000 shares to Yap Hun Kok; 825,000 shares to Lim Ah Huat; 825,000
shares to Voon Soo Tuck; 150,000 shares to Voon Su Piang; 150,000 shares to Wang
Yunn Ing; 100,000 shares to Tiew Cheow Nan; and 475,000 shares to Fimas Global
Sdn Bhd.

         On January 28, 2000, the Company issued 250,000 shares of its Common
Stock to an individual who rendered consulting services to the Company valued at
$68,000 in connection with the Company's acquisition of Fimas. The shares were
issued pursuant to Section 4(2) of the Securities Act.

Voting and Other Rights

         Holders of Common Stock are entitled to one vote for each share held.
There are no preemptive, subscription, conversion or redemption rights
pertaining to the Common Stock. Holders of Common Stock are entitled to receive
such dividends as may be declared by the Board of Directors out of assets
legally available therefor and to share ratably in the assets of the Company
available upon liquidation.

         The holders of Common Stock do not have the right to cumulate their
votes in the election of directors and, accordingly, the holders of more than
50% of all such shares outstanding can elect all of the directors of the
Company.

Dividends

         The Company has not paid cash dividends to date and intends to apply
its earnings, if any, for use in its activities. Payment of cash dividends in
the future will be wholly dependent upon the Board of Directors and upon the
Company's earnings,




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financial condition, capital requirements and other factors deemed relevant by
them. it is not likely that cash dividends will be paid in the foreseeable
future.

        In the event of the acquisition of or merger with a business by the
Company, control of the Company and its Board of Directors may pass to others.
In that event, the payment of dividends would be wholly dependent upon such
persons.


Item 6. Management's Discussion and Analysis or Plan of Operation.

GENERAL

During fiscal year 1999 ending January 31, 2000, the Company continued to
significantly expand its Consumer Products Sector of business while its
Industrial Products to Industry Sector plateaued and is anticipated, in the
future, to play a reduced role in the Company's growth. The prime reasons for
the degree of growth were two acquisitions made in November 1999.

During the fiscal year, disregarding the impact of the results of operations
which were discontinued with the dissociation in September 1998 of an earlier
acquisition due to unsuspected and serious credit deviations from that which
were obligated, the Company experienced its highest annual sales and income
from operations in its history and achieved its greatest net worth.

More specifically, these results are attributable to sales of the cellular
battery product line initiated with the acquisition in mid-1998 of Fuji
Fabrications SDN BHD ("Fuji") (an increase of 157% to $1,102,258); the
rechargeable battery product line initiated with acquisition at 1999 year-end
of Hong Kong Batteries Industries, Ltd. ("HKBI") ($376,486 in sales over only a
10 week period, whereas there was none the fiscal year previous); and the
consumer electronics product line initiated with the acquisition at 1999 year-
end of Fimas SDN BHD ("Fimas") ($3,084,159 in sales over only a 9 week period,
whereas there was none the fiscal year previous).

The Company's financial condition remains healthy. As of January 31, 2000, both
total assets at $13,484,786 and total current assets at $6,821,915 increased
over the previous quarter's report by approximately 4 and 3 times respectively.
Similarly, cash and total shareholders' equity increased over that at October
31, 1999 several times along with an associated requirement of an in-line
increase in long-term debt of approximately 3 times. These results are mostly
also attributable to the above mentioned acquisitions and the consolidation
process.

The Company has operations in several countries in the Far East: Malaysia, China
and Hong Kong and Thailand. Altogether, it derives approximately 68.5% of its
revenues from that part of the world; whereas most of its foreign subsidiaries
are Malaysian with some fabrication plants located in China. Thus, economic and
political conditions in Malaysia and China are of major interest to the Company.

As for Malaysia, it appears to be economically strong with a projected 5.3%
growth for the current year. In addition, its banking system, although still
carrying a large amount of non-performing assets on their books, is
restructuring to become a sturdy, competitive one.

In China, with an emphasis on acceptance into the World Trade Organization and
Permanent Normal Trade Relations with the U.S., the Government appears to be
planning and taking steps to level the economic playing field not only between
private and state enterprises, but between foreign and domestic firms. The
market reforms are occurring and increased economic opportunity will increase as
foreign and private firms invest. The Company believes, however, that regardless
of the final WTO outcome, its Chinese operations will continue to profit and
expand with an excellent chance for normalization in U.S. trade relations.

In any event, although no assurance can be given, the Company believes that
regional conditions and circumstances will have no material adverse effect on
the operations or financial condition during the fiscal year beginning February
1, 2000.



<PAGE>   15



In fiscal 2000, Management believes that the cellular phone and power tool
battery lines and the consumer electronic lines will grow substantially,
especially with a full year of sales from Fimas and HKBI. It is anticipated that
revenues and net income both will increase almost an order of magnitude. This
latter statement is reinforced by unaudited proforma financial statements which
incorporate Fimas and HKBI as if they were part of the Company for the entire
fiscal year of 1999: sales of $21,661,373, net income of $571,146 from
continuing operations and earnings per share from continuing operations of
$0.048. Further reinforcement emanates from the marketplace itself; namely: a
significant portion of the Company's product lines is being driven by the two
biggest technological trends, namely: mobile phones and the Internet. As global
businesses, they are still in its infancy. The prospects for the future globally
appears to be without bounds and thus, the affected Company product lines are
expected to realize increasing revenues. As an example, last year, Europe's
cellfone population exploded from 93 million to 170 million whereas the
worldwide increase was 283 million.

To sell its product lines, SETO Holdings, Inc. aggressively markets its products
through advertisements in trade journals, account representatives, distributors,
trade shows, telephone solicitations, and now, the Internet.

The manufacture and distribution of such a wide range of products by all the
company subsidiaries has allowed management to maximize the effectiveness of its
marketing operations enabling them to offer customers the most expansive
selection of needed disposable products. As of this report, the Company's
backlog is approximately $11 million all of which is expected to be shipped by
June 30th.

FISCAL 1999 COMPARED TO FISCAL 1998
-----------------------------------

In the fiscal year ended January 31, 2000, net sales increased 151%, from
$2,646,650 to $6,643,088; and income from operations increased 60.7% from
$177,328 to $264,970 compared to the prior year. Net income after taxes in the
current fiscal year was $86,241 compared to a loss of $232,541 in the fiscal
year ended January 31, 1999. Several factors affecting these and other results
are:

1.   The Company's product mix is now skewed towards batteries and consumer
     electronics representing 68.7% of revenues. As a consequence, gross profit
     margins decreased 51.8% from the previous year, going from 60.8% to 29.3%.
     This trend will continue because the newer lines will become a greater
     portion of sales and are more competitively priced.

2.   Selling, general and administrative expenses in the current fiscal year of
     $1,659,998 represented only 25.0% of sales compared to the 54.1% for the
     year ended January 31, 1999. This is a result of selling, general and
     administrative expenses stabilizing whereas net sales increased
     significantly. With the continuing growth in sales which Management
     forecasts, selling general and administrative will represent a smaller and
     smaller portion of sales, improving the potential for profitability.

3.   Whereas interest expense in the current fiscal year slightly more than
     doubled, it remained approximately at the same pro-rated portion of sales.
     Management believes, therefore, that its funding actions are cautious and
     appropriate. As pointed out in the previous Section, on a consolidated
     yearly basis with acquisitions incorporated for the entire year,
     substantially higher sales and net profit are realized. Management
     believes, therefore, that the growth trend predicted will bring with it:

       1.   An improvement in all or most operating ratios.
       2.   Increasing profitability and higher earnings per share.




<PAGE>   16


FISCAL 1998 COMPARED TO FISCAL 1997
-----------------------------------

Including discontinued operations, in the fiscal year ended January 31, 1999 the
Company has a net loss of $226,962, compared to net income of $629,586 in the
prior year. However, excluding discontinued operations, the Company's net sales
increased 37%, from $1,931,606 to $2,646,650 and income from continuing
operations declined $18,465 or 7.4% from $251,006 to $232,541. The decrease in
income from continuing operations principally resulted from (1) a $260,498
increase in general and administrative expense from non-recurring costs related
to increases in public relations expenses and the Company's relocation from
Armonk, New York to its new headquarters and manufacturing/warehouse facilities
in Briarcliff Manor, New York, and (2) a near-doubling in cost of sales (an
increase of $481,145, or 87%) attributable mainly to the high material cost of
manufacturing cellular telephone batteries. The significant increase in cost of
sales was attributable principally to the Company's launch of its cellular
telephone batteries in July 1998, and these products will continue to cause a
decrease in the Company's gross margins. However, with anticipated volume
growth, the Company's unit cost of these products should decline.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

At January 31, 2000, the Company has current assets of $6,821,915, including
$363,372 of unrestricted cash, and current liabilities of $5,431,490 yielding a
positive working capital position of $1,390,425 and a current ratio of 1.26:1.
Dun and Bradstreet, in a report dated March 3, 2000, stated that SETO Holdings,
Inc.'s financials as of October 31, 1999, the latest report it had, reflected a
satisfactory liquidity position and a fair debt to equity ratio compared to
other companies in the same line of business. These standard measures of a
company's ability to meet its current obligations reflect positively on the
Company's financial standing. In addition, it demonstrates an ability to
internally generate or, as a result, obtain funds necessary to support its
current level of business and enables the Company to obtain favorable payment
terms from its suppliers because of its credit-worthiness.

Not reflected in the financials is the post closing sale of $1,150,000 of
restricted stock, a direct cash infusion. In addition, the Company benefited
from the exercise of stock options ($90,000) and improved on its line of credit
to $750,000, an increase of approximately $150,000, by replacing a bank source
with an institutional source, Merrill Lynch Business Financial Services, Inc.
("Merrill"). Merrill has also indicated that the size of the line could grow
with the Company's progress. These transactions, coupled with the profit
throw-offs allow for the near term cash flow required for the Company's sales
growth in the next several months, the expansion of the Company's office staff
and a marketing effort inclusive of the SETO web site.

Management believes other extraordinary growth potential exists via
acquisitions. If in the Far East, it anticipates utilizing a non-cash investment
via the use of common stock; and if in the United States, cash or partial cash
will be required. In either case, Management anticipates that it will also have
to supply working capital following a completed transaction. Although in the
process of discussions for loan and investment support for these purposes and
for anticipated growth in its current businesses, no assurance can be given that
such financing will be successfully obtained when required.

Within the next few months, a new saw used in cutting ceramics and other hard
materials is the only equipment which the Company anticipates purchasing at a
cost of $52,000. Management has decided to lease the saw and already has
identified and negotiated for it.

A small percentage of the Company's profits may not be distributable to the
Company's other subsidiaries or as dividends. Under Malaysian law, a Malaysian
corporation is required to maintain a statutory reserve of five percent (5%) of
profit after taxation in accordance with the Foreign Investment Law until such
reserve equals ten percent (10%) of legal capital. Such reserve is
non-distributable.


<PAGE>   17







EFFECTS OF FOREIGN CURRENCY FLUCTUATIONS
----------------------------------------

The Company's foreign operations are subject to certain risks related to
fluctuation in foreign currency exchange rates. In fiscal 1998, loss on foreign
currency exchange was only $900, although the Company suffered a foreign
currency translation adjustment of ($119,374). In fiscal 1999 the loss on
foreign currency exchange was $529, although the Company suffered a foreign
currency translation adjustment of ($79,601).

Management believes that for fiscal year 2000, two factors will continue to keep
its foreign currency exchange losses extremely low: Malaysian and Chinese
exchange rates are fixed relative to the U.S. Dollar; and, outside of these
prime Company operating areas, the Company deals in U.S. Dollars almost
exclusively. As a by-product, a number of economists believe that such
predictable policies such as pegging exchange rates yields a key element of
financial stability.

While future fluctuations in currency rates could impact results of operations
or financial conditions, foreign operations are expected to continue to provide
strong financial results and earnings growth.

DISCLOSURES ABOUT MARKET RISK
-----------------------------

The Company is exposed to market risks primarily from changes in interest rates
and foreign currency exchange rates. To manage exposure to these fluctuations,
the Company occasionally enters into various hedging transactions. The Company
does not use derivatives for trading purposes, or to generate income or to
engage in speculative activity, and the Company never uses leveraged
derivatives. The Company does not use derivatives to hedge the value of its net
investments in these foreign operations.

The Company's exposure to foreign exchange rate fluctuations results from
wholly-owned subsidiary operations in Malaysia, and from the Company's share of
the earnings of these operations, which are denominated in the Malaysian ringit.

IMPACT OF INFLATION
-------------------

Although it is difficult to predict the impact of inflation on costs and
revenues of the Company in connection with the Company's products, the Company
does not anticipate that inflation will materially impact its costs of operation
or the profitability of its products during fiscal year 2000.

FORWARD LOOKING STATEMENTS
--------------------------

This "Management's Discussion and Analysis or Plan of Operation" contains
statements which are not historical facts and are forward-looking statements
which reflect management's expectations, estimates and assumptions. Such
statements are based on information available at the time this Form 10K-SB was
prepared and involve risks and uncertainties that could cause future results,
performance or achievements of the Company to differ significantly from
projected results. Factors that could cause actual future results to differ
materially include among others, the risks of doing business in Malaysia and
Southeast Asia, including, without limitation, economic and political
conditions, foreign currency translation risks, tariffs and other foreign trade
policies and dependence on inexpensive labor in such counties, partial
dependence on the semiconductor manufacturing industry, availability of raw
materials, intense competition and technological obsolescence. The Company
assumes no obligation to update such forward- looking statements, if any, at
any time.












<PAGE>   18
                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



Board of Directors
Seto Holdings, Inc. and Subsidiaries
Briarcliff Manor, New York


     We have audited the consolidated balance sheet of Seto Holdings, Inc. and
Subsidiaries as of January 31, 2000 and the related consolidated statements of
income (loss), comprehensive income, cash flows and changes in shareholders
equity for the years ended January 31, 2000 and 1999. 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 did not
audit the financial statements of DTI Technology, SDN BHD, Fuji Fabrication SDN
BHD, Hong Kong Batteries Industries, Ltd. and Fimas, SDN BHD, wholly owned
subsidiaries, which statements reflect total assets of $9,835,874 at January 31,
2000 and total sales for the years ended January 31, 2000 and 1999 of $4,558,076
and $675,022, respectively. Those statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates to
the amounts included for DTI Technology, SDN BHD and Fuji Fabrication, SDN BHD,
Hong Kong Batteries Industries, Ltd. and Fimas, SDN BHD, is based solely on the
report of the other auditors.

     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
misstatement. 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 and the reports of other auditors provide a
reasonable basis for our opinion.

     In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Seto Holdings, Inc. and
Subsidiaries as of January 31, 2000 and the results of their operations and
their cash flows for the years ended January 31, 2000 and 1999, in conformity
with generally accepted accounting principles.






Zeller Weiss & Kahn, LLP



April 28, 2000
Mountainside, New Jersey                                                   F-1


<PAGE>   19

<TABLE>
<CAPTION>


                                                 SETO HOLDINGS, INC. AND SUBSIDIARIES

                                             CONSOLIDATED BALANCE SHEET - JANUARY 31, 2000






                                                                ASSETS


<S>                                                                                                                    <C>
Current assets:
  Cash                                                                                                                 $    363,372
  Accounts receivable, less allowance
   for doubtful accounts of $10,350                                                                                       3,514,959
  Inventory                                                                                                               2,402,793
  Prepaid expenses and other current assets                                                                                 430,199
  Deferred tax asset, current portion                                                                                       110,592
                                                                                                                       ------------
    Total current assets                                                                                                  6,821,915
                                                                                                                       ------------

Property and Equipment                                                                                                    4,193,846
                                                                                                                       ------------

Other assets:
  Goodwill, net of amortization                                                                                           2,205,146
  Security deposits                                                                                                          39,345
  Deferred tax asset, net of current portion                                                                                224,534
                                                                                                                       ------------
                                                                                                                          2,469,025
                                                                                                                       ------------
                                                                                                                       $ 13,484,786
                                                                                                                       ============


                                                 LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
  Current portion of long-term debt                                                                                    $    512,853
  Notes payable, bank                                                                                                     1,943,653
  Accounts payable                                                                                                        1,762,779
  Accrued expenses                                                                                                        1,060,377
  Income taxes payable                                                                                                      151,828
                                                                                                                       ------------
    Total current liabilities                                                                                             5,431,490
                                                                                                                       ------------

Long-term debt, net of current portion                                                                                    1,242,311
                                                                                                                       ------------

Deferred lease liability                                                                                                     10,500
                                                                                                                       ------------

Deferred income taxes payable                                                                                               130,823
                                                                                                                       ------------

Commitments and contingencies

Shareholders' equity:
  Common stock par value $.001; 100,000,000
   shares authorized 18,118,500 shares issued                                                                                18,119
  Additional paid in capital                                                                                              8,152,075
  Currency translation adjustment                                                                                      (    198,975)
  Retained earnings (deficit)                                                                                          (  1,292,531)
                                                                                                                       ------------
                                                                                                                          6,678,688
  Less common shares held in treasury, 29,400
   shares at cost                                                                                                             9,026
                                                                                                                       ------------

  Total shareholders' equity                                                                                              6,669,662
                                                                                                                       ------------

                                                                                                                       $ 13,484,786
                                                                                                                       ============

</TABLE>


                 See notes to consolidated financial statements.            F-2
<PAGE>   20

<TABLE>
<CAPTION>


                                                 SETO HOLDINGS, INC. AND SUBSIDIARIES

                                                CONSOLIDATED STATEMENT OF INCOME (LOSS)

                                                 YEARS ENDED JANUARY 31, 2000 AND 1999










                                                                        2000                        1999
                                                                        ----                        ----

<S>                                                                 <C>                         <C>
Net sales                                                           $ 6,643,088                 $ 2,646,650

Cost of sales                                                         4,698,120                   1,036,651
                                                                    -----------                 -----------

Gross profit                                                          1,944,968                   1,609,999

Selling, general and administrative
 expenses                                                             1,659,998                   1,432,671
                                                                    -----------                 -----------

Income from operations                                                  284,970                     177,328
                                                                    -----------                 -----------

Other income (expenses):
  Interest expense                                                  (   177,972)                (    53,637)
  Loss on foreign currency exchange                                 (       529)                (       900)
  Interest income                                                         6,238
                                                                    -----------                 -----------
                                                                    (   172,263)                (    54,537)
                                                                    -----------                 -----------

Income before income taxes                                              112,707                     122,791

Income tax expense (benefit)                                             26,466                 (   109,750)
                                                                    -----------                 -----------

Income from continuing operations                                        86,241                     232,541
                                                                    -----------                 -----------

Discontinued operations:
  Income from operations of subsidiary                                                            1,017,537
  Loss on disposal of subsidiary                                                                ( 1,477,040)
                                                                                                ------------

                                                                                                (   459,503)
                                                                                                -----------
Net income (loss)                                                   $    86,241                 ($  226,962)
                                                                    ===========                 ===========

Earnings per share information:
  Basic income from continuing operations                           $       .01                 $       .02
  Loss from discontinued operations                                         .00                 (       .03)
                                                                    -----------                 -----------
                                                                    $       .01                 ($      .01)
                                                                    ===========                 ===========

Fully diluted:
  Income from continuing operations                                 $       .01                 $       .02
  Loss from discontinued operations                                         .00                 (       .03)
                                                                    -----------                 -----------
                                                                    $       .01                 ($      .01)
                                                                    ===========                 ===========




</TABLE>






                 See notes to consolidated financial statements.           F-3


<PAGE>   21



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                      YEARS ENDED JANUARY 31, 2000 AND 1999






<TABLE>
<CAPTION>











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


<S>                                                       <C>                        <C>
Net income (loss)                                         $  86,241                  ($226,962)

Other comprehensive income, net of tax:
  Foreign currency translation adjustment                 (  79,601)                   466,126
                                                          ---------                  ---------

Comprehensive income                                      $   6,640                  $ 239,164
                                                          =========                  =========

</TABLE>




























                 See notes to consolidated financial statements.            F-4


<PAGE>   22

<TABLE>
<CAPTION>


                                                 SETO HOLDINGS, INC. AND SUBSIDIARIES

                                                 CONSOLIDATED STATEMENT OF CASH FLOWS

                                                 YEARS ENDED JANUARY 31, 2000 AND 1999






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

<S>                                                                             <C>                  <C>
Operating activities:
  Income from continuing operations                                             $  86,241            $ 232,541
  Adjustments to reconcile net income to cash
   provided by continuing operations:
     Depreciation and amortization                                                168,741               50,667
     Compensatory stock issued                                                     50,800                5,000
     Loss on foreign currency exchange                                                                     900
     Loss on sale of assets                                                         2,064
     Changes in other operating assets and
      liabilities:
        Accounts receivable                                                     ( 533,851)           (  85,190)
        Inventories                                                               262,731            ( 382,242)
        Prepaid expenses and other current assets                                  36,635               20,803
        Deferred tax assets                                                     (  11,126)           ( 109,750)
        Other assets                                                                                     3,861
        Accounts payable and accrued expenses                                   ( 377,094)             189,655
        Income taxes payable                                                      151,828
        Deferred lease liability                                                    6,000                4,500
        Deferred income taxes                                                      35,560
                                                                                ---------            ---------

        Net cash used in operating activities                                   ( 121,471)           (  69,255)
                                                                                ---------            ---------

Investing activities:
  Cash acquired on acquisition of subsidiaries                                    313,565
  Purchase of property and equipment                                            ( 109,647)           ( 341,440)
  Increase in loan receivable, officer                                                               (  10,815)
  Proceeds from sale of assets                                                      2,659
                                                                                ---------            ---------

        Net cash provided by (used in) investing
         activities                                                               206,577            ( 352,255)
                                                                                ---------            ---------

Financing activities:
  Proceeds from issuance of common stock                                           90,000              120,000
  Proceeds from financing                                                         290,524              387,352
  Payment of debt                                                               ( 450,238)           ( 140,387)
  Purchase of treasury stock                                                                         (  15,166)
  Increase in loans from directors                                                206,038
                                                                                ---------            ---------

        Net cash provided by financing activities                                 136,324              351,799
                                                                                ---------            ---------

Effect of exchange rate changes on cash                                            75,890               29,668
                                                                                ---------            ---------

Net increase (decrease) in cash                                                   297,320            (  40,043)

Cash, beginning of year                                                            66,052              106,095
                                                                                ---------            ---------

Cash, end of year                                                               $ 363,372            $  66,052
                                                                                =========            =========


</TABLE>





                 See notes to consolidated financial statements.            F-5


<PAGE>   23

<TABLE>
<CAPTION>


                                                 SETO HOLDINGS, INC. AND SUBSIDIARIES

                                            CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                                                 YEARS ENDED JANUARY 31, 2000 AND 1999

                                                                                           Equity
                                                                                         adjustment
                                                                           Additional    from foreign      Retained
                                                               Common        paid in       currency         earnings
                                               Shares          stock         capital      translation      (deficit)
                                               ------          -----         -------      -----------      --------

<S>                                          <C>           <C>            <C>            <C>             <C>
Balance, January 31, 1998                    19,867,500    $    19,868    $ 9,132,089    ($  585,500)    ($1,151,810)

Cancellation of shares issued regarding
 acquisition of subsidiary, Teik Tatt,
 SDN BHD                                    (10,000,000)       (10,000)    (6,614,143)

Issuance of shares regarding acquisition
 of subsidiary, Fuji Fabrication, SDN BHD       100,000            100         99,900

Shares issued for cash                          450,000            450        119,550

Shares issued for services                      131,000            131         42,229

Purchase of treasury stock

Foreign currency translation adjustment
 for the year ended January 31, 1999                                                         466,126

Net loss for the year ended January 31,
1999                                                                                                        (226,962)
                                            -----------    -----------    -----------      ---------     -----------

Balance, January 31, 1999                    10,548,500         10,549      2,779,625       (119,374)     (1,378,772)

Issuance of shares regarding acquisition
 of subsidiary, Hong Kong Batteries
 Industries, Ltd.                             1,500,000          1,500        725,500

Issuance of shares regarding acquisition
 of subsidiary, Fimas, SDN BHD                5,250,000          5,250      4,513,112

Shares issued for cash                          330,000            330         87,170

Shares issued for services                      510,000            510        129,290

Shares cancelled                                (20,000)           (20)       (82,622)

Foreign currency translation adjustment
 for the year ended January 31, 2000                                                       (79,601)

Net income for the year ended January
 31, 2000                                                                                                  86,241
                                            -----------    -----------    -----------    ---------    -----------

Balance, January 31, 2000                    18,118,500    $    18,119    $ 8,152,075    ($198,975)   ($1,292,531)
                                            ===========    ===========    ===========    =========    ===========


<CAPTION>


                                                                 Total
                                                  Treasury    Shareholders'
                                                   stock         equity
                                                   -----      ------------

<S>                                               <C>              <C>
Balance, January 31, 1998                                      $ 7,414,647

Cancellation of shares issued regarding
 acquisition of subsidiary, Teik Tatt,
 SDN BHD                                                        (6,624,143)

Issuance of shares regarding acquisition
 of subsidiary, Fuji Fabrication, SDN BHD                          100,000

Shares issued for cash                                             120,000

Shares issued for services                                          42,360

Purchase of treasury stock                        ($15,166)        (15,166)

Foreign currency translation adjustment
 for the year ended January 31, 1999                               466,126

Net loss for the year ended January 31,
1999                                                              (226,962)
                                                 -----------   -----------

Balance, January 31, 1999                          (15,166)      1,276,862

Issuance of shares regarding acquisition
 of subsidiary, Hong Kong Batteries
 Industries, Ltd.                                                  727,000

Issuance of shares regarding acquisition
 of subsidiary, Fimas, SDN BHD                                   4,518,362

Shares issued for cash                                              87,500

Shares issued for services                                         129,800

Shares cancelled                                    6,140          (76,502)

Foreign currency translation adjustment
 for the year ended January 31, 2000                               (79,601)

Net income for the year ended January
 31, 2000                                                           86,241
                                              -----------      -----------

Balance, January 31, 2000                     ($    9,026)     $ 6,669,662
                                              ===========      ===========
</TABLE>






                 See notes to consolidated financial statements.           F-6


<PAGE>   24



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS






1.   Organization of the Company:

        Seto Holdings, Inc. (the "Company"), a Nevada corporation, is primarily
     in the business of selling small precision disposable diamond and other
     base material tools used to cut and separate electronic components and
     devices. In addition, it has five subsidiaries with their own product
     lines.

     East Coast Sales Company, Inc. ("ECS") is a Connecticut corporation which
          distributes and fabricates industrial ceramic products and distributes
          clean room supplies and tools.

     DTI Technology, SDN BHD ("DTI") is a Malaysian company which manufactures
          a product line similar to that of Seto Holdings, Inc.

     Fuji Fabrication, SDN BHD ("FUJI") is a Malaysian corporation which
          manufactures cellular phone replacement batteries.

     Hong Kong Batteries Industries Ltd. ("HKBI"), based in Hong Kong with
          manufacturing facilities in Main Land China, manufactures batteries
          for consumer products.

     Fimas, SDN BHD, based in Malaysia, with manufacturing facilities in Main
          Land China, manufactures consumer electronic products.



2.   Summary of significant accounting policies:

     Principles of consolidation:
        The consolidated financial statements of Seto Holdings, Inc. and
     subsidiaries include all the accounts of Seto Holdings, Inc., East Coast
     Sales Company, DTI Technology, SDN BHD, Fuji Fabrication SDN BHD, Hong
     Kong Batteries Industries Ltd. and Fimas, SDN BHD after elimination of all
     significant intercompany transactions and accounts. The financial
     statements give retroactive effect to the disposition of Teik Tatt Holding
     Co., SDN BHD.

     Cash and cash equivalents:
          Cash and cash equivalents include all highly liquid investments with
     an original maturity of three months or less.

     Inventories:
          Inventories, which consist solely of finished goods, are stated at the
     lower of cost or market. Market is considered at net realizable value.

     Per  share amounts:
          Net earnings per share are calculated by dividing net earnings by the
     weighted average shares of common stock of the Company and weighted average
     of common stock equivalents outstanding for the period. Common stock
     equivalents represent the dilutive effect of the assumed exercise of
     certain outstanding stock options. The Company uses the treasury stock
     method in its treatment of stock options.






                                                                             F-7


<PAGE>   25



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







2.   Summary of significant accounting policies (continued):

     Foreign currency translation policy:
          For foreign subsidiaries whose functional currency is the local
     foreign currency, balance sheet accounts are translated at exchange rates
     in effect at the end of the year and income statement accounts are
     translated at average exchange rates for the year . Translation gains or
     losses are included as a separate component of shareholders' equity.
     Exchange differences arising from foreign currency translation are
     included in the profit and loss account.

     Property and equipment:
          Property and equipment are stated at cost. Depreciation of property
     and equipment is provided using the straight-line method over the following
     useful lives:



                                                                      Years
                                                                      -----
            Manufacturing                                              5-20
            Furniture and fixtures                                     7-20
            Other equipment                                            5-14
            Buildings and improvements                                10-50
            Automotive equipment                                         5




     Expenditures for major renewals and betterment that extend the useful
     lives of property and equipment are capitalized. Expenditures for
     maintenance and repairs are charged to expense as incurred.

     Income taxes:
          The Company has elected to file a consolidated corporate income tax
     return with its domestic subsidiary. For tax reporting purposes, the
     Company uses certain accelerated depreciation methods which may create
     timing differences between book and tax income. Deferred income taxes will
     be reflected for these timing differences.

     Deferred taxation:
          Provision is made by the liability method for taxation deferred in
     respect of all timing differences. Deferred tax benefit is recognized only
     when there is reasonable assurance of realization.

     Post retirement benefits:
          Statement of Financial Accounting Standards (SFAS) No. 106,
     "Employers' Accounting for Post Retirement Benefits Other Than Pensions"
     requires that companies recognize the cost of providing post retirement
     health care and other non-pension benefits over the employees' service
     periods, rather than as the benefits are paid. The Company does not provide
     any non-pension post retirement benefits at the present time.







                                                                             F-8


<PAGE>   26



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








     2.   Summary of significant accounting policies (continued):

     Allowance for doubtful accounts:
          An allowance for doubtful accounts has been established based on
     management's review of the outstanding accounts receivable balance and
     their determination of possible uncollectible accounts.

     Use  of estimates:
          The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make assumptions that
     affect the reported amounts of assets and liabilities and disclosure of
     contingent assets and liabilities at the date of the financial statements
     and the reported amounts of revenues and expenses during the reporting
     period. Actual results could differ from those estimates.

     Hire purchase obligations:
          Assets acquired under an installment plan are capitalized as fixed
     assets and the corresponding obligations are treated as a long-term
     liability. Financing charges are allocated to the profit and loss account
     over the purchase periods using the "sum of the years digits" method to
     give a constant periodical rate of interest on the remaining liabilities.



3.   Nature of operation, risks and uncertainties:

          The Company currently has a minuscule share of the dicing blade and
     ceramics market. There can be no assurance that the Company will be able to
     increase its market share or that the market will increase. Furthermore,
     the Company faces the possibility of adverse market conditions from
     technological changes, shifting product emphasis among competitors and the
     entry of new competitors into the market.



4.  Property and equipment:

    Major classifications of property and equipment are as follows:

               Buildings                               $  351,863
               Leasehold improvements                     602,890
               Manufacturing equipment                  5,313,072
               Office equipment                           501,196
                                                       ----------
                                                        6,769,021
               Less accumulated depreciation            2,575,175
                                                       ----------

                                                       $4,193,846
                                                       ==========








                                                                             F-9


<PAGE>   27



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








5.   Goodwill:

          In January, 1990, the Company acquired East Coast Sales Company for a
     cost of $309,000. The purchase price exceeded the fair value of the assets
     by $134,281 which amount was assigned to goodwill, and is being amortized
     on a straight-line basis over forty years. Accumulated amortization of
     goodwill aggregated $42,114 as of January 31, 2000.

          In June, 1998, the Company acquired Fuji Fabrication, SDN BHD for a
     cost of $100,000. The purchase price exceeded fair value of the assets by
     $20,999, which amount was assigned to goodwill and is being amortized over
     a forty year period. Accumulated amortization of goodwill aggregated $831
     as of January 31, 2000.

          In November, 1999, the Company acquired Hong Kong Batteries
     Industries, Ltd. for a cost of $727,000. The purchase price exceeded the
     net book value of the acquired company by $747,300 which amount was
     assigned to goodwill and is being amortized on a straight-line basis over
     forty years. Also in November, 1999, the Company acquired Fimas, SDN BHD
     for a cost of $4,518,363. The purchase price exceeded the net book value
     of the acquired company by $1,333,217. Accumulated amortization of
     goodwill aggregated $8,811 at January 31, 2000.


6.   Commitments and contingencies:

          In April 1998, the Company moved its New York operations and is
     currently obligated under a lease agreement with an entity owned by an
     officer of the Company which expires on April 30, 2013. Annual rent expense
     is as follows: $60,000 for each of the first five years, $66,000 for each
     of the second five years and $72,000 for each of the final five years. The
     Company is also obligated for insurance and the increase in real estate
     taxes over the base year as stipulated in the lease. This lease requires
     the following future minimum rental payments:


               January 31, 2001                          $ 60,000
               January 31, 2002                            60,000
               January 31, 2003                            60,000
               January 31, 2004                            64,500
               January 31, 2005                            66,000
               Thereafter                                 574,500
                                                         --------
                                                         $885,000
                                                         ========

          Rent expense amounted to $66,000 for the year ended January 31, 2000
     and $69,483 for 1999.

          The Company also leases three vehicles under operating leases with
     terms expiring through 2003. Total lease expense was $34,452 and $33,317
     for the year ended January 31, 2000 and 1999, respectively.







                                                                            F-10


<PAGE>   28



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS









7.   Common stock:

          During the year ended January 31, 2000, the Company issued 330,000
     shares of its common shares with net proceeds of $90,000 upon the exercise
     of certain common stock purchase options.

          The Company issued 6,750,000 shares in connection with its acquisition
     of Hong Kong Batteries Industries, Ltd. and Fimas, SDN BHD.



8.   Notes payable and long-term debt:

          The Company has an outstanding line of credit with the a bank for
     $500,000. Interest is payable monthly at a rate of 1% per year over prime.
     The loan is secured by the personal guarantee of the Company's president
     and the assets of Seto Holdings, Inc. At January 31, 2000, the Company had
     utilized $279,135 of this line.

          Long-term debt of the domestic companies consists of the following:

                                                         Balance
                                                        January 31,
                                             Rate           2000        Maturity
                                             ----           ----        --------

               Notes payable:
                  Bank            (a)       8.45%      $120,833           2002
                  Shareholder     (b)         10%        64,108           2001
                  Shareholder     (c)         15%       139,471           2003
                  Shareholder     (d)         10%        78,730           2002
                  Shareholder     (e)                    57,100           none
                                                       --------
                                                        460,242
                  Less current portion                  170,802
                                                       --------
                                                       $289,440
                                                       ========


     (a) The note is payable in monthly installments of $4,167 plus interest.
     (b) The note is payable in monthly installments of $4,053 including
         interest.
     (c) The note is payable in monthly installments of $4,731 including
         interest.
     (d) The note is payable in monthly installments of $3,633 including
         interest.
     (e) The Company's principal shareholder has advanced non-interest bearing
         funds to the Company. Approximately, $36,000 of this amount is
         subordinated to the loans from the bank.









                                                                            F-11


<PAGE>   29



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS









8.   Notes payable and long-term debt (continued):

     The maturities of these loans are as follows:


               January 31, 2001                          $170,802
               January 31, 2002                           155,062
               January 31, 2003                            72,605
               January 31, 2004                             4,673
               Indefinite                                  57,100
                                                         --------
                                                         $460,242
                                                         ========


     Notes payable and long-term debt of the foreign subsidiaries consist of the
     following:


               Fimas:
                   Notes payable:
                      Bankers acceptances              $1,024,210
                      Bank overdrafts                     538,678
                      ECR                                 101,630
                                                       ----------
                                                       $1,664,518
                                                       ==========

                   Long-term debt:
                      Principal loan                   $  352,191
                      Capitalized lease                   488,375
                                                       ----------
                                                          840,566
                      Less current portion                333,630
                                                       ----------
                                                          506,936
                      Amount due directors                218,998
                                                       ----------
                                                       $  725,934
                                                       ==========


          The Company's land and buildings are pledged as collateral. The loans,
     which are guaranteed jointly and severally by the Company's directors,
     carry interest rates between 2% and 2.25% above the lender's base lending
     rates. The directors of Fimas have made interest-free advances to the
     Company which are unsecured and have no fixed repayment terms.


               DTI:
                   Capitalized lease                      $45,681
                   Current portion                          8,421
                                                          -------
                                                          $37,260
                                                          =======


          Hong Kong Batteries Industries, Ltd.:
          The directors of Hong Kong Batteries have made interest-free advances
     to the Company in the amount of $189,678 which are unsecured and have no
     fixed repayment terms.





                                                                            F-12


<PAGE>   30



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS









9.   Income taxes:

          Provision for income taxes (benefit):

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

               Domestic:
                 Current                         0             0
                 Deferred                ($ 11,126)    ($109,750)
                                         ---------     ---------
                  Total benefit            (11,126)     (109,750)
                                         ---------     ---------

               Foreign:
                 Current                         0             0
                 Deferred                   37,592             0
                                         ---------     ---------
                                            37,592             0
                                         ---------     ---------

               Total                     $  26,466     ($109,750)
                                         =========     =========



          A reconciliation of the income tax provision at the federal statutory
          rate to the income tax provision at the effective tax rate is as
          follows


                                                          2000         1999
                                                     ---------    ---------
               Income tax computed at the domestic
                   federal statutory rates                   0            0
               State tax (net of federal benefit)            0            0
               Reduction on valuation allowance      ($ 11,126)   ($109,750)
               Foreign deferred taxes                   37,592            0
                                                     ---------    ---------

               Provision (credit) for income taxes   $  26,466    ($109,750)
                                                     =========    =========



          The components of deferred tax assets and liabilities consist of the
          following:


               Deferred tax asset:

                  Net operating loss carryforward   $475,000   $475,000
                                                    --------   --------

                     Total deferred tax asset        475,000    475,000

                     Valuation allowance             139,874    151,000
                                                    --------   --------

                                                    $335,121   $324,000
                                                    ========   ========








                                                                            F-13


<PAGE>   31



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







9.   Income taxes (continued):

          The Company has a net operating loss carry forward of approximately
     $1,600,000 for federal and state purposes which will expire in 2008.



10.  Employment and consulting agreements:

     Employment agreements:

          On May 1, 1996, the Company entered into employment agreements with
     its President and Vice President. The term of the agreements covers a five
     year period expiring April 30, 2003. Compensation is set at a base of
     $100,000 and $75,000 for the President and Vice President, respectively,
     with each getting a bonus of 5% of the increase in Seto Holdings,
     Inc./East Coast Sales consolidated net income over the net income from the
     previous years. Each employee also received 1,000,000 stock options at
     $.25, 1,000,000 stock options at $.10 and 500,000 stock options at $.50.
     The options were not part of the 1997 Non-statutory Stock Option Plan
     effectuated March 25, 1997. As of January 31, 2000, none of these options
     had been exercised.

          On July 15, 1998, the Company entered into an employment agreement
     with the acting secretary of the Company. The term of the agreement covers
     a five year period expiring July 15, 2003. Compensation is set at a base
     of $55,000 with a bonus of 2% of any increase in Seto Holdings, Inc./East
     Coast Sales consolidated net income over the net income from the previous
     years. The employee also received 500,000 stock options exercisable at
     $.50 per share, none of which have been exercised as of January 31, 2000.
     These options were not part of the 1997 non-statutory stock option Plan
     effectuated March 25, 1997.

     Consulting agreements:

          On January 1, 1998, the Company granted a consultant an option to
     purchase 100,000 shares of common stock of Seto Holdings,Inc. at a price of
     $.05 per share for a period of three years from the date of signing. This
     option was issued for services the consultant provided which were related
     to the Teik Tatt acquisition. The shares underlying these options were
     issued pursuant to the Company's 1997 Non-Statutory Stock Option Plan. The
     option was exercised February 6, 1998.

          On February 9, 1998, the Company entered into a consulting agreement
     for the period February 9, 1998 to December 31, 1998, subsequently extended
     to December 2000 for strategic planning, corporate planning, merger and
     acquisition and divestiture advice. In consideration for the consulting
     services, the Company granted an option to the consultant to purchase
     600,000 shares of common stock at a price of $.50 per share for a period of
     two years commencing four months from the date of signing. This








                                                                            F-14


<PAGE>   32



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








10.  Employment and consulting agreements (continued):

     Consulting agreements (continued):

     option was reduced to 300,000 shares at $.25 per share. The shares
     underlying these options were issued pursuant to the Company's 1997 non-
     statutory Stock Option Plan, 100,000 shares were issued subsequent to
     January 31, 2000.

          Also on February 9, 1998, the Company entered into a consulting
     agreement for the period February 9, 1998 to December 31, 1998 and
     subsequently extended to December 2000 for strategic planning, corporate
     planning, merger and acquisition and divestiture advice. In consideration
     for the consulting agreement the Company granted an option to purchase
     100,000 shares of common stock at a price of $.50 per share for a period of
     two years commencing four months from the date of the signing of this
     agreement. 50,000 options have been exercised. The shares underlying these
     options will be registered under the Securities Act of 1933.

          On July 1, 1998, the Company entered into a consulting agreement for
     the period July 1, 1998 to June 30, 1999 for strategic planning, corporate
     planning, mergers and acquisitions and divestiture advice. In consideration
     for the consulting agreement the Company granted an option to purchase
     1,000,000 shares of its common stock at a price of $.50 per share for one
     year from the date of signing this agreement. This option was reduced to
     100,000 shares at $.30 per share.




11.  Computation of earnings per share:



                                                 2000         1999
                                             ----------   ----------
               Weighted average number of
                 common shares outstanding   12,029,547   10,300,219

               Assumed conversion of
                 stock options                6,070,000
                                             ----------   ----------

               Weighted average number of
                 common shares outstanding   18,099,547   10,300,219
                                             ==========   ==========



     The conversion of stock options was not assumed for the year ended January
31, 1999 as the effect would be antidilutive.









                                                                            F-15


<PAGE>   33



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







12.  Acquisition of subsidiary, Fimas, SDN BHD:

          In November, 1999, the Company purchased 100% of the outstanding
     common shares of Fimas, SDN BHD in a transaction accounted for as a
     purchase. The Company issued 5,000,000 shares of its common stock valued
     at $.89 per share.

          The assets acquired and liabilities assumed as of the date of the
     acquisition, are as follows:

               Current assets                          $4,489,000

               Non-current assets                       3,514,000
                                                       ----------
                                                        8,003,000

               Liabilities                              4,817,854
                                                       ----------

               Net assets acquired                      3,185,146

               Purchase price                           4,518,363
                                                       ----------

               Excess of purchase price over
                net assets acquired                    $1,333,217
                                                       ==========



13.  Acquisition of subsidiary, Hong Kong Batteries Industries, Ltd.:

          In November 1999, the Company purchased 100% of the outstanding
     common shares of Hong Kong Batteries Industries, Ltd. in a transaction
     accounted for as a purchase. The Company issued 1,500,000 of its common
     stock valued at $.484 per share.

          The assets acquired and liabilities assumed as of the date of the
     acquisition are as follows:


               Current assets                  $494,276

               Non-current assets                85,238
                                               --------
                                                579,415

               Liabilities                      599,814
                                               --------

               Net assets acquired             ( 20,300)

               Purchase price                   727,000
                                               --------

               Excess of purchase price over
                net assets acquired            $747,300
                                               ========








                                                                            F-16


<PAGE>   34



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








14.  Common stock options outstanding:

          On March 25, 1997, the Company effectuated a Non-statutory Stock
     Option Plan for the purpose of advancing the interests of the Company and
     its stockholders by helping the Company obtain and retain the services of
     key management employees, officers, directors and consultants. The Plan is
     administered by the Non-statutory Stock Option Committee of the Board of
     Directors of the Company. The committee has full authority and discretion
     to determine the eligible participants to be granted the options, the date
     of issuance, exercise price and expiration date. The total number of
     shares set aside for the Plan is 6,500,000. As of January 31, 1999,
     950,000 options had been issued under the Plan, of which 220,000 had been
     exercised by April 1999.

          The Company has elected to continue use of the methods of accounting
     described by APB-25 "Accounting for Stock Issued to Employees" which is
     based on the intrinsic value of equity instruments and has not adopted the
     principles of SFAS-123 "Accounting for Stock Based Compensation" effective
     for fiscal year beginning after December 15, 1995, which is based on fair
     value. There is no significant difference between compensation cost
     recognized by APB-25 and the fair value method of SFAS-123. The Company has
     not recognized compensation on the granting of options or warrants to
     employees and consultants since the fair value of warrants or options is
     the same as or less than the exercise price.

               Summary of options are as follows:
<TABLE>
<CAPTION>

                                                                           Exercise   Expiration
                                                   Date         Amount       Price       Date
                                                ----------    ----------   --------   --------

<S>                                              <C>           <C>         <C>        <C>
               Eugene Pian, Officer              05/01/96      1,000,000   $   .25    05/01/01
               Eugene Pian, Officer              02/13/97      1,000,000       .10    05/01/01
               Eugene Pian, Officer              07/15/98        500,000       .50    06/30/03
               Craig Pian, Officer               05/01/96      1,000,000       .10    05/01/01
               Craig Pian, Officer               02/13/97      1,000,000       .10    05/01/01
               Craig Pian, Officer               07/15/98        500,000       .50    06/30/03
               Francine Pian, Officer            07/15/98        500,000       .50    06/30/03

               Tan Hun Chin, Director            11/27/97        500,000       .10    11/27/00
               Consultant                        06/19/98         70,000       .25    06/09/00

</TABLE>



15.  Principal products and segmentation of sales:

          The Company's principal products are industrial ceramics, diamond
     cutting tools and cellular batteries. The tools include dicing blades which
     are components of precision electronic saws, scribes which are used to cut
     silicon wafers, porcelain and ceramic molds and dressers which are used for
     the shading and forming of grinding wheels in the machine tool industry.





                                                                            F-17


<PAGE>   35



                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS






15.  Principal products and segmentation of sales (continued):

          Financial information relating to the principal industry segments and
     classes of products:

                                                 January 31,        January 31,
                                                     2000              1999
                                                 -----------       -----------
           Sales to customers:
             Industry A:
                Ceramics                         $ 1,324,519       $ 1,461,621
             Industry B:
                Diamond tools                        612,793           617,140
             Industry C:
                Cellular batteries                 1,102,258           428,850
             Industry D:
                Rechargeable batteries               376,486
             Industry E:
                Consumer electronics               3,084,519
             Miscellaneous                           142,513           139,039
                                                 -----------       -----------
                                                 $ 6,643,088       $ 2,646,650
                                                 ===========       ===========

         Operating profit or loss:
             Industry A                          $   333,978       $   438,477
             Industry B                            ( 245,384)        ( 353,558)
             Industry C                               20,046            37,872
             Industry D                               18,801
             Industry E                              157,529
                                                 -----------       -----------

                                                 $   284,970       $   122,791
                                                 ===========       ===========

         Identifiable assets:
             Industry A                          $   434,250       $   441,285
             Industry B                            1,660,441         1,303,039
             Industry C                              626,089           116,819
             Industry D                              543,287
             Industry E                            7,973,651
                                                 -----------       -----------

                                                 $11,237,718       $ 1,861,143
                                                 ===========       ===========


          Two customers each accounted for more than 10% of total sales and
     together accounted for approximately 44% of total sales for the year ended
     January 31, 1999.

          Foreign and domestic operations and export sales:

                                                 January 31,         January 31,
                                                     2000                1999
                                                 ----------          ----------
               Sales to customers:
                  United States                  $1,579,586        $1,604,300
                  Far East                        4,551,582           476,970
                  Canada                            511,920           565,380
                                                 ----------        ----------
                                                 $6,643,088        $2,646,650
                                                 ==========        ==========






                                                                            F-18


<PAGE>   36


                      SETO HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








15.  Principal products and segmentation of sales (continued):
<TABLE>
<CAPTION>


                                                            January 31,  January 31,
                                                               2000          1999
                                                           -----------   -----------
<S>                                                        <C>           <C>
               Operating profit:
                  United States                            $    67,760   $    74,431
                  Far East                                     195,250        22,129
                  Canada                                        21,960        26,231
                                                           -----------   -----------
                                                           $   284,970   $   122,791
                                                           ===========   ===========

               Identifiable assets:
                  United States                            $ 1,419,984   $ 1,128,156
                  Far East                                   9,624,348       335,410
                  Canada                                       193,386       397,577
                                                           -----------   -----------
                                                           $11,237,718   $ 1,861,143
                                                           ===========   ===========



</TABLE>

17.  Supplemental cash flow information:
<TABLE>
<CAPTION>

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

<S>                                                        <C>           <C>
                Interest paid during the year              $  177,972    $   53,656
                                                           ==========    ==========
                Income taxes paid during the year          $        0    $        0
                                                           ==========    ==========

                Supplemental schedule of non-cash
                    investing and financing activities:
                     Issuance of common shares for
                      purchase of subsidiaries             $5,245,363    $  100,000
                                                           ==========    ==========

</TABLE>

























                                                                            F-19





<PAGE>   37


Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

         None.





                                       19
<PAGE>   38


                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.

         The following table sets forth certain information concerning the
current directors and executive officers of the Company, who will serve for one
year or until their respective successors are elected and have qualified:

NAME                   AGE            POSITION
----                   ---            --------

Eugene J. Pian          60            President, Chief
                                      Executive Officer
                                      & Director

Craig Pian              38            Executive Vice
                                      President, Treasurer
                                      & Director

Francine Pian           40            Secretary

Tan Hun Chin            38            Director

         Craig and Francine Pian are the children of Eugene Pian.

         Eugene J. Pian. Mr. Pian has been President of the Company since April
1987. He was President of East Coast Sales from its inception in 1975 until its
acquisition by the Company in January 1990. From 1969 to 1975, he was Division
Manager of Consolidated Refining Company, where he was responsible for
organizing a division manufacturing the materials necessary to plate and stamp
semiconductor materials and supervising all sales and manufacturing. From 1960
to 1969, he was Vice President of Semi Alloys, Inc., where he was responsible
for the manufacture and sale of fabricated metal products to the semiconductor
industry.

         Craig Pian. Mr. Pian has been Executive Vice President and Treasurer of
the Company since February 1, 1995. He has been employed by the Company since
April 1987. Mr. Pian has been involved with all aspects of the Company's diamond
cutting tool and ceramic operations as well as the Company's United States
manufacturing, sales and administrative operations. Mr. Pian graduated Manhattan
College with a Bachelor of Science Degree in Business.




                                       20
<PAGE>   39


         Francine Pian. Ms. Pian has been a director of the Company since March
1996. She has been employed by the Company since 1987, serving as its Secretary
since March 1996.

         Tan Hun Chin. Mr. Tan, domiciled in Malaysia, has been a director of
the Company since November 1998. Since 1991 he has been a Managing Director of
Gentlecare Learning Center (M) Sdn. Bhd., a childcare center in Malaysia. Since
1996 he has been an Executive Director of Intellect Technology Aura (M) Sdn.
Bhd., an electronic sub-contract manufacturing company. He has been Managing
Director of Fuji Fabrication Sdn. Bhd. since it became a wholly-owned subsidiary
of the Company in June 1998. Mr. Tan has Management and Business degrees from
the United Kingdom and Canadian Universities.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         The Company does not have any securities registered under Section 12 of
the Securities Exchange Act of 1934 and, accordingly, compliance with Section
16(a) thereof is not required or applicable.


Item 10. Executive Compensation.

Employment Agreements.

         Mr. Eugene Pian, the Company's President, serves under a five (5) year
employment agreement dated May 1, 1996 providing for (a) a base annual salary of
$100,000 plus annual increases as determined by the Board of Directors, but in
no event less than the increase in the Consumer Price Index over the preceding
calendar year, (b) a bonus equal to five percent (5%) of any increase in the
Company's consolidated net income and (c) an automobile allowance of $500 per
month or use of a Company car. Under the Agreement, Mr. Pian was granted five
(5) year options to purchase 1,000,000 shares of the Company's Common stock at
$.25 per share and 1,000,000 shares at $.10 per share. He may demand
registration by the Company under the Securities Act of all or any part of the
option shares as to which stock options have been exercised and may piggyback
any other shares which he owns.

         Mr. Craig Pian, the Company's Executive Vice President and Treasurer,
serves under a five (5) year employment agreement dated May 1, 1996 providing
for (a) a base annual salary of $75,000 plus annual increases as determined by
the Board of Directors, but



                                       21
<PAGE>   40
in no event less than the increase in the Consumer Price Index over the
preceding calendar year, (b) a bonus equal to five percent (5%) of any increase
in the Company's consolidated net income, (c) an automobile allowance of $500
per month or use of a Company car and (d) a one-time signing bonus of $25,000.
Under the Agreement, Mr. Pian was granted five (5) year options to purchase
1,000,000 shares of the Company's Common stock at $.25 per share and 1,000,000
shares at $.10 per share. He may demand registration by the Company under the
Securities Act of all or any part of the option shares as to which stock options
have been exercised and may piggyback any other shares which he owns.

Director Compensation

         Directors do not receive compensation for their services as directors,
but may be reimbursed for expenses incurred for attendance at meetings of the
Board of Directors.

Summary Compensation

         The following Summary Compensation Table reflects certain information
for the Company's Chief Executive Officer and the Company's executive officers
who had total annual salary and bonus for any of the last three fiscal years
exceeding $100,000.

                           Summary Compensation Table


                                                                  Long Term
                           Annual Compensation                  Compensation
                           -------------------                  ------------

                                                       Other      Securities
    Name and                                          Annual      Underlying
    Principal                   Salary      Bonus    Comp. (1)     Options/
    Position            Year      ($)        ($)        ($)        SARs (#)
    ---------           ----    -------    ------    ---------     --------

Eugene Pian, Chief      1999    110,000        --         --             --
Executive               1998    107,499        --         --        500,000
Officer                 1997    101,662     1,868         --      1,000,000

Craig Pian,             1999     91,384        --     28,997             --
Executive Vice          1998     83,769        --     53,665        500,000
President and           1997     73,648    26,868     28,317      1,000,000
Treasurer


--------------------

(1) Excludes perquisites and other benefits, unless the aggregate amount of such
    compensation is at least the lesser of either $50,000 or 10% of the total
    annual salary and bonus reported for the named executive officer.



                                       22
<PAGE>   41
Item 11. Security Ownership of Certain Beneficial Owners and Management.

         The following table sets forth certain information as to the number of
shares of the Company's Common Stock deemed to be owned beneficially by each
person known by the Registrant to be the beneficial owner of more than 5% of the
outstanding Common Stock, each of its executive officers and directors, and all
of its executive officers and directors as a group, at April 13, 2000. Except as
indicated in the footnotes to this table, the Company believes that the named
persons have sole voting power with respect to the shares indicated:

Name and Address of                  Position           Number    Percentage
Beneficial Owner                   with Company       of Shares    of Class
-------------------                ------------       ---------    --------

Eugene J. Pian                    President and      5,267,180(1)     24%
c/o Semicon Tools, Inc.           Director
554 North State Road
Briarcliff Manor, NY 10510

Craig Pian                        Executive Vice     2,754,333(2)     13
c/o Semicon Tools, Inc.           President,
554 North State Road              Treasurer and
Briarcliff Manor, NY 10510        Director

Francine Pian                     Secretary            703,560(3)      4
c/o Semicon Tools, Inc.           and Director
554 North State Road
Briarcliff Manor, NY 10510

Tan Hun Chin                      Director             530,000(4)      3
#35,Lintang Delima 3,
Greenlane
11700 Penang, Malaysia

Yap Hun Kok                                          2,475,000        13
Lot 8 & 9
Lorong Perusahaan 6C
Kawasan MIEL Kulim
09000 Kulim, Kedah
Malaysia

All Directors and Executive                          9,255,073(5)     36
Officers as a Group
(4 Persons)

--------------------
(1) Includes currently exercisable options to purchase 2,500,000 shares of
    Common Stock, and 1,552,613 shares of Common Stock held under voting trusts.
    Each Voting Trust terminates when the shareholder sells his stock.

(2) Includes currently exercisable options to purchase 2,500,000 shares of
    Common Stock.



                                       23
<PAGE>   42


(3) Includes currently exercisable options to purchase 500,000 shares of Common
    Stock.

(4) Includes currently exercisable options to purchase 500,000 shares of Common
    Stock.

(5) Includes currently exercisable options to purchase 6,000,000 shares of
    Common Stock.


Item 12. Certain Relationships and Related Transactions.

         None.





                                       24
<PAGE>   43

Item 13. Exhibits and Reports on Form 8-K.

         (a) Index of Exhibits.

                          Exhibit                                          Page
                          -------                                          ----

               3(a)       Articles of Incorporation(1)
               3(b)       By-Laws(1)
               3(c)       Amendment to Articles of
                          Incorporation(2)
               10(a)      Agreement of Merger with
                          Semicon Tools, Inc., a
                          New York Corporation(2)
               10(b)      Articles of Merger(2)
               10(c)      Certificate of Merger(2)
               10(d)      Patent License(1)
               10(e)      Patent No. 4,219.004(1)
               10(f)      License Agreement with Bookuk
                          Industry Company, Ltd.(1)
               10(i)      Thermode/Synthrode Supplier
                          Agreement(1)
               10(j)      East Coast Sales Acquisition
                          Agreement(3)
               10(k)      $300,000 Promissory Note(3)
               10(l)      Amendment to East Coast Sales
                          Acquisition Agreement(4)
               10(m)      Teik Tatt Holding Co. (1979)
                          Sdn. Bhd. Acquisition Agreement(5)
               10(n)      Teik Tatt Holding Co.
                          Disposition Agreement(6)
               10(o)      Hong Kong Batteries
                          Industries, Ltd.
                          Acquisition Agreement(7)
               10(p)      Fimas Sdn Bhd.
                          Acquisition Agreement(8)
               16         The required letter from the
                          former accountants(9)
               21         List of Subsidiaries
               27         Financial Data Schedule

-------------------

1.  Incorporated by Reference from Registrant's Registration Statement on Form
    S-18 declared effective on June 8, 1988.

2.  Incorporated by Reference from Registrant's Form 8-K Report dated May 19,
    1987.

3.  Incorporated by Reference from Registrant's Form 8-K Report dated
    February 19, 1990.





                                       25
<PAGE>   44

4.  Incorporated by Reference from Registrant's Form 10-K Report for the year
    ended January 31, 1991.

5.  Incorporated by Reference from Registrant's Form 8-K Report dated
    December 9, 1997.

6.  Incorporated by Reference from Registrant's Form 8-K Report dated
    September 19, 1998.

7.  Incorporated by Reference from Registrant's Form 8-K Report dated
    December 9, 1999.

8.  Incorporated by Reference from Registrant's Form 8-K Report dated
    December 10, 1999.

9.  Incorporated by Reference from Registrant's Form 8-K Report dated
    January 29, 1993.





                                       26
<PAGE>   45

                  Supplemental Information to be Furnished With
                     Reports Filed Pursuant to Section 15(d)
                  of the Exchange Act By Non-reporting Issuers

         (1) No annual report to security holders covering the registrant's last
fiscal year was sent to security holders; and

         (2) No proxy statement, form of proxy or other proxy soliciting
material has been sent to more than ten of the registrant's security holders
with respect to any annual or other meeting of security holders.





                                       27
<PAGE>   46

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                         SETO HOLDINGS, INC.
                                                    ----------------------------
                                                             (Registrant)

                                                 By /s/ Eugene J. Pian
                                                    ----------------------------
                                                 Eugene J. Pian, President

                                                 Date:  April 28, 2000


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.


                                                 /s/ Eugene J. Pian
                                                 -------------------------------
                                                 Eugene J. Pian
                                                 Director

                                                 Date:  April 28, 2000

                                                 /s/ Craig A. Pian
                                                 -------------------------------
                                                 Craig A. Pian
                                                 Director

                                                 Date:  April 28, 2000

                                                 /s/ Francine Pian
                                                 -------------------------------
                                                 Francine Pian
                                                 Director

                                                 Date:  April 28, 2000

                                                 /s/ Tan Hun Chin
                                                 -------------------------------
                                                 Tan Hun Chin
                                                 Director

                                                 Date:  April 28, 2000




                                       28