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 31,1998

                                                        OR

         [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
                  For the transition period from _________ to __________

Commission file number 33-5820-LA

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

Yes  X     No ____


<PAGE>



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. $7.8
million

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. $4,224,840 as of March 25, 1998.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable  date.  20,167,501 shares of Common Stock,
$.001 par value, outstanding as
of March 31, 1998.


                                    DOCUMENTS INCORPORATED BY REFERENCE - None



                                                         2

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                                                      PART I

Item 1.  Description of Business.

General

                  The  Company  recycles in Malaysia  plastics  and  non-ferrous
metals  it  recovers  from  electrical/telephone  cable and  precious  metals it
recovers from  electronic  components,  including  circuit boards  obtained from
obsolete  computers.  It also  manufactures  plastic  rope and  rubber  bands in
Malaysia  and  Vietnam.  The  Company  also  sells to more  than  400  customers
disposable tools,  including (1) diamond dicing blades and scribes which are the
tooling components of precision  electronic saws and scribers,  (2) dressers for
the shaping and forming of grinding  wheels in the machine tool industry and (3)
industrial  ceramic products and clean room supplies.  Approximately  71% of the
Company's revenues are generated in Malaysia.

Business Development over the Past Three Years

                  For more than the past three years,  Semicon Tools,  Inc. (the
"Company"),  a Nevada  corporation,  has (a)  sold  small  precision  disposable
diamond  cutting  tools,  which include  dicing blades (which are  components of
precision  electronic  saws)  and  scribes  which  are  used  to cut  integrated
circuits, and dressers which are used to shape grinding wheels in machine shops,
in each case to the microelectronics  and semiconductor  industries primarily to
manufacture electronic components and devices, (b) distributed and fabricated on
a "value-added"  basis industrial  ceramic products,  and (c) distributed "clean
room" materials and supplies (e.g., items used to preserve a  contamination-free
environment)  primarily used by the  electronics and defense  industries.  Since
June 1996,  when it  purchased  all of the assets of KBR  (Malaysia)  Sdn.  Bhd.
("KBR"),  a corporation  organized under the laws of, and located in,  Malaysia,
the hubbed and hubless  diamond-coated  nickel-dicing blades sold by the Company
have been manufactured in Malaysia; the other products described above have been
made or fabricated by the Company at its facility in New York. The Company sells
these products to hundreds of Fortune 1000  companies,  including IBM,  National
Semiconductor, Motorola and General Motors.

                  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  formed in 1979, in exchange for  10,000,000  shares of
Common Stock,  which resulted in a  change-in-control  of the Company.  (As used
herein "TTH" refers to TTH and its direct and indirect  subsidiaries.)  See Item
11, Security Ownership of Certain  Beneficial Owners and Management.  TTH is (a)
the largest  Malaysian  manufacturer  of plastic rope,  yarn and twine  products
which  are  commonly  used  in  fishery,  construction,  agriculture,  forestry,
shipping and transportation

                                                         3

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and  for  sporting  and  household   uses,  (b)  the  third  largest   Malaysian
manufacturer of rubber bands, which it sells in Malaysia, Singapore,  Indonesia,
Taiwan and Hong Kong,  and (c) a growing  recycler of plastics  and  non-ferrous
metals it recovers from  electrical/telephone  cables and of precious  metals it
recovers from  electronic  components,  including  circuit boards  obtained from
obsolete computers (TTH consumes approximately 30% of the recycled materials and
resells the balance to other Malaysian companies).  Unless the context otherwise
requires,   the  "Company"  includes  all  the  Company's  direct  and  indirect
subsidiaries, including TTH.

                  The Company's  current overall  strategy is to position itself
to take advantage of opportunities in Malaysia and Asia as a whole.  Although no
assurance can be given,  the Company also expects that its principal growth will
be in its metal recycling business.

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
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  COUNTRIES,  PARTIAL
DEPENDENCE ON THE  SEMICONDUCTOR  MANUFACTURING  INDUSTRY,  AVAILABILITY  OF RAW
MATERIALS, COMPETITION AND TECHNOLOGICAL OBSOLESCENCE.

Principal Products

Overview

                  The percentage contributions to the Company's sales by product
line for the fiscal year ended January 31, 1998,  which  includes the results of
TTH and its subsidiaries only from November 26, 1997, are as follows:


                                                         4

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                                                   Contribution to Total Sales
                  Product line                     Fiscal 1996     Fiscal 1997
                  ------------                     -----------     -----------

                  Industrial Ceramic Products          58%               16
                  Diamond Cutting Tools                33                 7
                  Miscellaneous Products                9                 1
                  Clean Room Materials and Supplies     *                 *
                  Scrap Metal Recycling                 -                41%
                  Plastic Rope                          -                26
                  Rubber Bands                          -                 6
                  Plastic Recycling                     -                 2


                  *Less than 1%

Scrap Metal Recycling

                  In December 1996, the Company began  recycling metal cable and
wire by stripping and separating the wire from its plastic  insulator (which now
is  used  in the  plastic  recycling  business  described  below).  Scrap  metal
recycling is done in the  Company's  own  facilities,  which  currently  recycle
approximately  800 tons per month and have the capacity to recycle an additional
700 tons per  month.  The scrap is  sourced  locally in  Malaysia  and  overseas
through  international  networking,  and the end  products  of the  scrap  metal
recycling  are  processed  scrap  copper,  cast-iron  and  aluminum,  and  fully
processed plastic resins.  The Company is currently  studying the feasibility of
engaging in the value-added process of converting the  crushed/granulated  scrap
metals  into  ingot/block  form,  the  prices  for  which  are set  daily in the
commodities  markets and therefore  fluctuate  considerably  depending on market
conditions.

                  Recycling of metals is very competitive.  The Company competes
domestically  for the  scrap  used  in  recycling  with  three  other  Malaysian
companies,  Cop Chuan Bee, Lam Eng Trading (M) Sdn.  Bhd. and Beloga Sdn.  Bhd.,
and with other companies in Japan,  Korea, China, Taiwan and Europe. The Company
has been  able to  maintain  reliable  and  sufficient  supplies  of  scrap  raw
materials,  principally  because  it is able to outbid its  competitors  for the
scrap because it recycles all of the materials,  metal and plastic, whereas most
of its competitors recycle only certain types of metal.

Plastic Rope

                  The  Company  is the  largest  plastic  rope  manufacturer  in
Malaysia,  with a 40% market share. It manufactures the rope from plastic resins
(approximately 30% of which it obtains from its recycling operations),  chemical
composition and color pigments.  It currently  manufactures 350 tons of rope per
month and has the

                                                         5

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capacity  to produce an  additional  150 tons per month.  Rope sizes  range from
2.5mm  to  42mm  for  three  or  four-strand  rope  and  from  3mm to  80mm  for
eight-strand  braided rope (cross rope), rope length varies from 200m to 220m in
coils and colors include white, black, green, yellow, blue and red.

                  New  machinery  along with an  aggressive  marketing  strategy
enabled  the Company to expand into  Australia,  New Zealand and Europe.  Import
quotas have been a substantial obstacle preventing the Company from entering the
United  States  market.  However,  in September  1997 the Company  relocated one
production  line to  Vietnam,  whose goods may enter the United  States  without
quota.  The  Company  intends  to  enter  the  United  States  market  with  its
Vietnamese-produced goods.

                  The Company has three major  competitors in the manufacture of
plastic rope in Malaysia, one of which also manufactures fishing nets using such
rope.  These  competitors  manufacture  ropes in only a limited  ropes in a full
range of sizes, whereas the Company produces ropes in a full range of sizes. The
Company  believes it enjoys an additional  competitive  advantage as it produces
finished end products requiring no additional  processing,  whereas the products
of its domestic competitors require further processing prior to use. The Company
also has a competitive  edge over foreign rope  manufacturers  because  Malaysia
imposes a 25% duty on imported plastic rope to Malaysia.

Rubber Bands

                  The Company is the largest Malaysian rubber band manufacturer,
with a 90% share of the Malaysian  market, in which rubber bands are widely used
in the stationery and packaging industries as well as in households. The Company
also exports rubber bands to the Far East, Europe and North America.

                  The  Company's  rubber  bands are  produced in the rubber band
district  of Bedong,  Kedah,  allowing  it to  receive a constant  supply of raw
materials including plastic resins,  chemical composition and color pigments. It
produces an average of 250 tons of rubber  bands per month and has the  capacity
to  manufacture a maximum of 300 tons per month.  The rubber bands are available
in a wide variety of sizes, with diameters  ranging from 11mm to 159mm,  lengths
from 20mm to 250mm,  widths from 1mm to 21mm and thicknesses  from .9mm. to 3mm.
They are available in red, green,  blue,  yellow,  white and black, and standard
packaging is 30kg per bag.

                  The Company's  major  Malaysian  competitor is Central Elastic
Corporation  Sdn.  Bhd.,  which  produces  its rubber  bands  mainly for export.
However,  Thailand  currently  is the largest  exporter  of rubber  bands in the
world,  in part  because  of the large  number of rubber  trees  located in that
country.  The Company  plans to conduct a feasibility  study on  relocating  its
rubber band

                                                         6

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manufacturing  operations  to Vietnam to lower  production  costs and expand its
markets by taking  advantage of the relaxed trade  agreements  which Vietnam has
with many countries.

Plastic Recycling

                  In 1994, the Company began recycling used plastics.  The
Company maintains its own Malaysian plastic recycling facilities in
which it recycles 200 tons of plastic each month and  has the
capacity to recycle up to 400 tons per month.  Currently, it has
two lines of recycling plastic machines producing off-grade resins
(which are approximately 90% virgin grade quality).  The off-grade
resins are mixed with the virgin grade resins to improve margins.
Approximately 30% of these recycled resins are used by the Company
in the production of plastic rope.  The balance is sold locally in
Malaysia or exported to Thailand.

                  The  plastic  recycling  industry  in  Malaysia  is  intensely
competitive.  Only those companies which have a constant supply of raw materials
and demand for their off-grade resins will be able to compete  effectively.  The
Company has not experienced  difficulties in obtaining sufficient  quantities of
raw materials,  although there can be no assurance that shortages will not occur
in the future.


Industrial Ceramic Products

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

Diamond Cutting Tools

                  Dicing Blades.  Dicing blades are made of diamonds bonded with
nickel alloy. 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 three types of materials,
diamond/metal (the most common), diamond/thermoset plastic (called resin blades,
which are the blades most widely used in precision  electronic  saws for cutting
ceramic  substrates,  even though they have a shorter  useful life) and sintered
metal. Hubbed blades are competitively  manufactured principally by Disco, Inc.,
Semitec  Corporation and Dynatex  Corporation.  The Company,  which manufactures
hubbed and hubless blades in its Malaysian facility,

                                                         7

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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 third party contractors 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 Briarcliff Manor, New York, are
sold by the Company principally to companies which resell them to third parties.
The  Company  believes  that there are  multiple  foreign  suppliers  of natural
diamond-tipped dressers.

Clean Room Materials and Supplies

                  These products  include cleaning  chemicals,  latex gloves and
other  items used to preserve a  contamination  free  environment,  and they are
primarily marketed to IBM and Lucent Technologies.

Miscellaneous Products

                  The  Company   distributes   small  precision  tools  such  as
tweezers,  pliers, vacuum pickups and scribes, core drills and sinter blades for
ceramic applications.

Customers

                  During the fiscal  year ended  January 31,  1998,  none of the
Company's customers accounted for more than 10% of its consolidated net sales.

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 the Company's  control could
adversely  impact  their future  availability.  The  principal  suppliers of the
Company's  plastic resin raw materials  used in the  manufacture  of its plastic
rope and

                                                         8

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twine are Titan Polyethylene (M) Sdn. Bhd. and Titan PP Polymers
(M) Sdn. Bhd.

Backlog

                  As of January 31, 1998, the Company had a backlog of orders of
approximately  $4,450,000,  all of which are expected to be shipped by May 1998.
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.  Many competitors have greater financial is personnel resources and
greater market recognition than the Company.  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 effecting its products are quality and price.

Marketing

                  The Company has a world-wide  network of  independent  trading
companies  which  provide  scrap  material  supplies,  and  purchasers  for  the
reclaimed  materials.  Its rubber  bands and  plastic  ropes are sold  through a
world-wide    network    of    distributors.    The    Company    markets    its
semiconductor/cutting   tools/ceramics   products   directly  through  telephone
solicitation, participation in trade shows and advertisements in trade journals.


Manufacturing Facilities

                  The  Company  has two plastic  rope  manufacturing  facilities
located in  Butterworth,  Penang,  Malaysia,  and one rubber band  manufacturing
factory and one plastic and metal recycling facility in Bedong, Kedah, Malaysia.
In  addition,  the Company  has a rope  manufacturing  facility  in Vietnam.  In
Briarcliff,  New York, the Company  operates a machine shop and a  manufacturing
facility for resin/diamond  dicing blades.  The Company has a Malaysian facility
equipped to manufacture dicing blades and diamond dressing tools.
See Item 2 below, "Description of Property."

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 Vietnam. The Company has not

                                                         9

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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,  1998 and 1997,  the
Company spent approximately $40,000 and $50,000,  respectively,  on its research
and development activities.

Employees

                  The Company employs approximately 625 full-time employees,  of
which 400 work in its  rubber  band and  recycling  facilities,  200 work in its
plastic  rope  manufacturing  factories  and 25 work in its  diamond  tools  and
ceramics facilities.  It also utilizes outside consultants and part-time workers
when required.


Item 2.           Description of Property.

                  In  Malaysia,   the  Company  owns  104,450   square  feet  of
manufacturing  space  and 3,360  square  feet of  office  space in  Butterworth,
Penang,  and it  also  occupies  1,230,434  square  feet  of  manufacturing  and
recycling  facilities  and 5,096 square feet of office  space in Bedong,  Kedah,
pursuant  to a lease  with a term of 25 years,  commencing  in June  1996,  with
minimum  annual lease payments as follows:  year 1 - $24,030;  year 2 - $96,199;
and each of years 3, 4 and 5 - $147,382. The rent will be revised every five (5)
years,  but in no event  will by more than 15% more  than that of the  preceding
year. In Vietnam,  the Company occupies 436,500 square feet of land, including a
25,000 square foot building  which consists of 1,500 square feet of office space
and 23,500 square feet of manufacturing space, pursuant to a 20-year lease at an
annual  rental of $9,600.  It also  leases  approximately  2,400  square feet of
manufacturing  and  warehouse  space and 1,200  square  feet of office  space in
Briarcliff  Manor,  New York,  pursuant  to a five (5) lease  which  expires  on
February 28, 2003, with base annual rents, excluding utilities,  maintenance and
repairs,  as follows:  Years One and Two - $36,000;  Year Three - $42,000;  Year
Four - $43,200; Year Five - $44,400. In addition,  the rent in Years Three, Four
and Five will be increased by 1/12 of any increase in real estate taxes over the
base period of 1998. The Company and its President,  Eugene Pian, have an option
to purchase the leased property for $380,000 which expires on February 28, 2000.

                  The Company  also leases  approximately  4,000  square feet of
manufacturing  and  warehouse  space and 2,000  square  feet of office  space in
Armonk, New York, at an annual rental of $38,564, including utilities, taxes and
other costs.  The Company  occupied  this space before it leased the  Briarcliff
Manor facility. This lease expires on May 31, 1998.

                                                        10

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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 fiscal year covered by this Report.


                                                      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
quotes of the  Company's  Common Stock per  calendar  quarter as provided by the
National  Quotation  Bureau,  Inc.  (which reflect  inter-dealer  prices without
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions).

                                                                Low     High

                  1998

                  First quarter                                $.290   $.700

                  1997

                  First quarter                                 .070    .200
                  Second quarter                                .050    .140
                  Third quarter                                 .050    .155
                  Fourth quarter                                .075    .450


                  1996

                  First quarter                                 .125    .625
                  Second quarter                                .406    .969
                  Third quarter                                 .313    .688
                  Fourth quarter                                .125    .406

                                                        11

<PAGE>

Holders

                  As of March 31,  1998,  there were 310  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, in exchange for all of the issued and outstanding capital stock of TTH.
The shares were issued to Tan Khay Swee,  Chief  Executive  Officer of TTH.  See
Item 1, Description of Business.

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,  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.

                                     12
<PAGE>

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



General

                  On November 26, 1997, the Company  acquired all of the capital
stock of TTH. The  transaction was accounted for as a purchase and therefore the
Company's  financial  statements  include  the  operations  of TTH only from the
acquisition  date. At January 31, 1998, TTH generated  approximately  75% of the
Company's net sales,  principally from Malaysia,  and in fiscal 1998 the Company
expects to transact  substantially  all its  business in Malaysia  and  Vietnam.
Accordingly,  economic and political  conditions  in Malaysia,  and in Southeast
Asia as a whole,  including without  limitation,  import and export limitations,
exchange  controls and currency  fluctuations,  have become  significant  to the
Company.

                  In late 1997,  currency  devaluations,  stock market downturns
and general  financial  uncertainties  in Southeast Asia caused  economic growth
forecasts for that region to be reduced  significantly,  and in the future there
could be a material decrease in the demand for the Company's products.  Although
no assurance can be given,  the Company  believes such  conditions will not have
any material  adverse  effect on its  operations or financial  condition.  While
changes in the dollar value of foreign currencies will effect earnings from time
to time and in fiscal 1997 the Company  experienced a loss of $37,719 on foreign
currency exchange,
 Management  believes  that the longer  term  economic  effect of these  changes
should not be significant  because over 60% of the Company's sales are in United
States  Dollars and raw materials  are purchased  either in the United States in
United States Dollars or locally in Malaysian currency.

Fiscal 1997 Results of Operations

                  For the year ended  January 31, 1998,  the Company's net sales
increased to $7,808,380, a 487% increase over the $1,602,830 in fiscal 1996, and
net income was $629,586 or $.05 per share,  a 250% increase over the $213,652 or
$.02 per share in fiscal 1996. The acquisition of TTH contributed  $5,876,774 to
net sales and $378,580 to net income  during the fourth  quarter of fiscal 1997.
In fiscal  1997  gross  profit  was  $2,586,816,  or 33% of gross  revenues,  as
compared to $1,105,570, or 69% of gross revenues in fiscal 1996. In fiscal 1997,
gross profit  increased due to higher sales, and gross profit as a percentage of
gross  revenues  decreased  principally  due  to low  profit  margins  on  TTH's
operations, especially its recycling business.

                  In fiscal 1997,  net sales of the  Company's  diamond  cutting
tools increased  approximately  4% to $554,695 but generated a loss of $279,395,
approximately  43% higher than the loss in fiscal 1996.  Net sales of industrial
ceramics and clean room supplies  increased by 26.5% to $1,226,136,  and related
net income

                                       13

<PAGE>



increased  by  $31.6%  to  $409,901.  Net  sales  of TTH for  the  approximately
two-month  period  after its  acquisition  by the Company  were  $5,876,774  and
related net income was $378,580.

Liquidity and Capital Resources

                  As more fully  described in Note 11 to the  Company's  January
31, 1998 financial  statements  set forth in Item 7 hereof,  at January 31, 1998
substantially  all of the Company's  assets,  liabilities and retained  earnings
were attributable to TTH.  Accordingly,  at January 31, 1998 the Company's total
assets increased to $30,574,383 (from $1,228,937), its total current liabilities
and long term debt,  net of current  portion,  increased  to  $19,318,885  (from
$373,020) and $3,840,851  (from  $170,000),  respectively,  and it had a working
capital  deficit of  $1,349,938  (compared  to working  capital of  $358,198  at
January 31, 1997).

                  At  January  31,  1998  the  Company  had  current  assets  of
$17,968,947, including $371,413 of unrestricted cash, and current liabilities of
$19,318,885.   Accordingly,  the  Company  had  a  working  capital  deficit  of
$1,349,938.  Although  no  assurances  can be given,  the Company  expects  that
internally  generated  funds together with its existing  credit  facilities will
enable it to meet it obligations as they come due and finance its operations. To
strengthen its liquidity the Company intends to seek additional capital,  either
debt or equity.  However, no potential funding source has been identified and no
assurance can be given that any such financing will be obtained on  commercially
reasonable terms, or at all.

                  A  small   percentage  of  the  profits  of  TTH  may  not  be
distributable to the Company's other subsidiaries or as dividends.
 Under  Malaysian  law TTH 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.


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, due
to a  strengthening  U.S.  dollar and a weaker  Malaysian  ringgit,  the Company
recognized  $37,719 in foreign currency  exchange  losses,  which did not have a
material  adverse effect on net income.  While future  fluctuations  in currency
exchange rates could impact results of operations or financial position, foreign
operations  are  expected to continue to provide  strong  financial  results and
earnings growth.




                                     14

<PAGE>


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 investment in foreign ventures in Malaysia,  and from the Company's
share  of the  earnings  of  these  operations,  which  are  denominated  in the
Malaysian ringgit.

New Accounting Pronouncements

                  In June 1997, the Financial  Accounting Standards Board (FASB)
issued  Statement  of  Financial  Accounting  Standard  (FAS  130),   "Reporting
Comprehensive  Income." This statement  establishes  standards for reporting and
display  of   comprehensive   income  and  requires   that  all   components  of
comprehensive  income  be  reported  in  financial  statement  having  the  same
prominence as other financial statements.  For the Company, FAS 130 is effective
in 1998, and it requires  reclassification of prior period financial  statements
for comparative purposes. Adoption of this standard should have little effect on
the Company's  financial  statements as the new requirements  primarily  involve
modifications to the way that existing information is displayed.

                  Also in June 1997, the FASB issued FAS 131, "Disclosures about
Segments of an Enterprises and Related  Information." This statement  supersedes
FAS  14,  "Financial  Reporting  of  Segments  of  a  Business  Enterprise,"  by
establishing new standards for the way that a public business enterprise reports
operating segment information in its annual and interim financial statements. In
general, FAS 131 requires reporting of financial information as it
is used by senior company management for evaluating performance and deciding how
to allocate  resources.  The  statement is effective  for 1998,  but need not be
applied to interim financial  statements in that year.  Comparative  information
for earlier years must be restated.

Year 2000 Costs

                  The  Company  currently   operates   numerous   date-sensitive
computer applications and network systems throughout its business.
 As the century change approaches, it is essential for the Company



                                       15

<PAGE>


to ensure that these  systems  properly  recognize the year 2000 and continue to
process operational and financial information. The Company recently upgraded its
computer systems and does not expect  complications  related to year 2000 issues
to arise.

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.









I.  Financial Condition

Assets:

Total  assets  at the end of fiscal  1996  were  $1,288,937,  as  compared  with
$1,005,609 at the end of fiscal 1995.  Generally,  the increase results from the
higher, more profitable sales volume.

The notable  differences  in these years is reflected in the components of total
assets as follows:

         (i) At January  31, 1997 cash  increased  to  $116,334,  as compared to
         $42,642 at January  31,  1996.  This  increase  was  largely due to the
         higher  overall  revenues  experienced  during fiscal 1996 coupled with
         sales of stock and exercise of options;

         (ii) For the same  reason,  accounts  receivables  at January  31, 1997
         reached   $162,439,   up  from  $158,631  at  January  31,  1996.  This
         represented an increase of 2.4% from the end of fiscal 1995;

         (iii) Inventory increased during fiscal 1996 to approximately $339,552,
         or 30.3%,  to meet the  demands  of  increases  in sales for 1996.  See
         "Results of  Operations"  below for a more  complete  discussion of the
         factors which resulted in higher net sales for fiscal 1995;

         (iv)   Property   and   equipment   for  fiscal  1996  did  not  change
         substantially  when  compared  to  fiscal  1995  and  did  not  have  a
         significant effect on the Company's  financial condition in 1995. There
         were no substantial additions to property and equipment during the year
         other than via investment in the new subsidiary.






                                      16               


<PAGE>









Liabilities:

Total  liabilities  at the end of fiscal 1996 were  $543,020,  as compared  with
$855,594 at the end of fiscal 1995. The changes in this comparison are reflected
in the components of total liabilities as follows:

         (i)  Significant  reductions in liabilities for notes payable and notes
         payable  shareholders  are  evident  this  year  as  the  Company  made
         substantial  repayment of these items through the issuance of shares of
         its common stock. This also contributed to a significant improvement in
         the Company's retained earnings deficit at January 31, 1997 as compared
         to January 31, 1996. See discussion in "Results of Operations" below;

         (ii) Accounts payable at January 31, 1997 were also substantially lower
         than at January  31,  1996,  also due to the Company  settling  certain
         accounts  payable  through  the  issuance  of shares  of common  stock.
         Additionally,  during  fiscal 1995,  accounts  payable were higher than
         usual because purchase of inventory  increased in 1995 in line with the
         increased dependency upon third party manufacturers by the Company;

         (iii) Long term liabilities  decreased in 1996 to $170,000, as compared
         to $185,421 in 1995 due to the  reclassification of the old shareholder
         loans from current to long-term loans. This  reclassification  resulted
         from the subordination of the shareholder debt to certain bank loans in
         1994. None of the long-term loans are considered by management to be on
         demand;

         (iv) Accrued interest increased  substantially in 1996 to $188,309,  as
         compared to $155,177 in 1995 due principally to the reclassification of
         certain  payments due with respect to  shareholder  loans from accounts
         payable,  as carried on the  Company's  books during  1995,  to accrued
         interest.  This reclassification was made in order to correctly reflect
         the nature of these obligations.


Financial  condition  in fiscal 1996 when  compared to 1995 is stronger and more
stable.

See "Results of Operations" for additional information.

II.  Results of Operations

Net sales for the year ended  January 31,  1997  (fiscal  1996) were  $1,602,830
compared to  $1,248,668  for the year ended January 31, 1996 (fiscal  1995), an
increase of over 28.3%.  This increase in sales  revenues  has, in  management's
opinion,  continues the reversal of the decline  experienced  during fiscal 1994
and was the result of  management's  efforts to expand the Company's  ability to
fabricate value-added ceramic and resin blade manufacture and an increase in the
sale of scribes mostly due to a new application from one customer. During fiscal
1996,  this  effort  resulted  in a 69.4%  increase  in ceramic  sales,  an 8.9%
increase in all blade sales including the resin based blades and a 142% increase
in the sale of  scribes.  Management  believes,  although no  assurances  can be
given,  that these increased product lines,  coupled with  management's  ongoing
efforts to further expand its supplier network, will continue to be reflected in
higher revenues during fiscal 1997 and beyond.





                                    17                     


<PAGE>





Gross profit from operations during fiscal 1996 reached $1,105,570,  or 70.0% of
gross  revenues,  as  compared to  $727,304  in fiscal  1995,  or 58.2% of gross
revenues.  This increase of more than 52.0% over fiscal 1995 is attributable to
two primary factors.  First, the Company's continued change in product sales mix
to greater  profit  margin items such as resin  blades and ceramic  products has
enhanced  overall gross profit  margins.  Second,  the full  realization  of the
benefits derived from management's competitive pricing steps taken during fiscal
1995 and continued  during  fiscal 1996 for certain  products.  In  combination,
these measures have resulted in a dramatic increase in gross profit margins well
beyond  that  projected  by  management  in its annual  report for fiscal  1995.
Management  anticipates  that this trend will  continue,  that the cost of sales
will  remain at the new  favorable  levels  experienced  in fiscal 1996 and that
gross margins will continue at fiscal 1996 levels.

Operating  expenses  decreased  dramatically  from  $1,109,735 in fiscal 1995 to
$950,013  in  1996,  a  decrease  of  over  $159,722  or  14.3%.  The  increased
profitability of the Company had the effect of decreasing the Company's retained
earnings  deficit from $2,009,971 at the end of fiscal 1995 to $1,781,396 at the
end of fiscal 1996.

However,  to properly evaluate the Company's operating results, it must be noted
that during fiscal 1995, the Company effected a series of transactions utilizing
its authorized but unissued shares of common stock (the "Shares"), and issued an
aggregate of 1,270,000 Shares to officers,  directors and various  creditors for
settlement  of accounts  payable and various  loans owing by the  Company,  in a
total aggregate value of $113,650. In addition,  during fiscal 1995, the Company
also issued an additional 910,000 Shares to several consultants as part of their
compensation for consulting  services (see "Financial  Statements - Note 8"). In
keeping with the prescribed accounting procedures of the Securities and Exchange
Commission, these Shares were valued at an aggregate of $346,442.  Consequently,
Selling,  General and Administrative  Expenses for fiscal 1995 were increased by
this amount.  These are, however,  non-recurring  events. Had these transactions
not been  present  during  fiscal  1996,  Selling,  General  and  Administrative
Expenses  would have been  $719,555 and income from  operations  would have been
$53,802,  as compared  to a loss of  $292,640,  as  reflected  on the  Company's
financial statements.
See "Financial Statements - Note 7".

The Company's net income for the year ended January 31, 1997 was $213,652  ($.02
per share)  compared  to a loss of  $419,630  for the prior  year.  It should be
noted,  however,  that  if the  effects  of the  Company's  stock  activity,  as
discussed above, were eliminated from  consideration,  the Company's  operations
would have  resulted in a net pre-tax  profit of $16,603  rather than the stated
loss in 1966. Management believes that this is significant since it demonstrates
that the Company's operations have finally turned the corner and are profitable,
a situation which management  believes will continue  throughout fiscal 1996, as
confirmed by the increase in order  back-logs at fiscal year-end (up to 10.5% to
$442,000 at January 31, 1997).  This also confirms  management's  prior estimate
that operating revenues had to reach the $1.25 million level to achieve a "break
even" from  operations.  Management  continues to take steps to reduce expenses,
identify new, more economical product sources and to generally expand sales.








                                       18                


<PAGE>



Item 7.  Financial Statements.

                  The following are filed as part of this Report:

         Consolidated Financial Statements:                  

         Independent Accountants' Report                                F-1

         Consolidated Balance Sheet as at January 31, 1998              F-2

         Consolidated Statement of Income for the Years ended
         January 31, 1998 and 1997                                      F-3

         Consolidated Statement of Cash Flows for the Years ended       
         January 31, 1998 and 1997                                      F-4

         Consolidated Statement of Changes in Stockholders' Equity for
         the Years ended January 31, 1998 and 1997                      F-5

         Notes to Consolidated Financial Statements                   F-6-F-20  




                                                

<PAGE>





                       INDEPENDENT AUDITORS' REPORT



Board of Directors
Semicon Tools, Inc. and Subsidiaries
New Rochelle, New York


     We have audited the consolidated  balance sheets of Semicon Tools, Inc. and
Subsidiaries as of January 31, 1998 and the related  consolidated  statements of
income,  retained earnings,  and cash flows for the years ended January 31, 1998
and 1997.  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 and Teik Tatt SDN BHD,  wholly  owned  subsidiaries,  which
statements reflect total assets of $30,598,896 and $24,859,788 as of January 31,
1998 and 1997,  respectively,  and total revenues of $7,808,380 and  $14,135,386
for the years then ended.  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, 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 report 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  Semicon  Tools,  Inc.  and
Subsidiaries as of January 31, 1998 and 1997 and the results of their operations
and  their  cash  flows for the  years  ended  January  31,  1998 and  1997,  in
conformity with generally accepted accounting principles.




                                                    ZELLER WEISS & KAHN







April 27, 1998
                                                                           F-1


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                   CONSOLIDATED BALANCE SHEET - JANUARY 31, 1998






                                    ASSETS


Current assets:
  Cash                                                 $   371,413
  Cash, fixed deposits with bank                           921,053
  Accounts receivable, less allowance
   for doubtful accounts of $259,361                     9,238,476
  Inventory                                              6,742,706
  Prepaid expenses and other current assets                623,883
  Deferred tax asset, current portion                       71,416
                                                        -----------
    Total current assets                                17,968,947
                                                        ----------

Property and Equipment                                  12,344,764
                                                        ----------

Other assets:
  Goodwill, net of amortization                             98,881
  Security deposits                                         18,957
  Deferred tax asset, net of current portion               142,834
                                                       -----------
                                                           260,672
                                                       ------------

                                                       $30,574,383
                                                       ===========




                          LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
  Current portion of long-term debt                    $ 1,616,151
  Notes payable, bank                                    4,978,287
  Notes payable, other                                   9,240,907
  Accounts payable                                       1,948,872
  Accrued expenses                                       1,308,865
  Income taxes payable                                     225,803
                                                       -----------
    Total current liabilities                           19,318,885
                                                        ----------

Long-term debt, net of current portion                   3,840,851
                                                       -----------

Commitments and contingencies

Shareholders' equity (deficiency):
  Common stock par value $.001; 100,000,000
   shares authorized 19,867,500 shares issued and
     outstanding                                            19,868
  Additional paid in capital                             9,132,089
  Currency translation adjustment                     (    585,500)
  Retained earnings (deficit)                         (  1,151,810)
                                                        -----------
                                                         7,414,647
                                                         ---------

                                                       $30,574,383
                                                       ===========








     See notes to consolidated financial statements.
                                                                           F-2


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                         CONSOLIDATED STATEMENT OF INCOME

                                       YEARS ENDED JANUARY 31, 1998 AND 1997











<TABLE>
<CAPTION>
<S>                                                                               <C>                <C>    


                                                                                       1998                1997
                                                                                       ----                ----

Net sales                                                                           $7,808,380         $1,602,830

Cost of sales                                                                        5,221,564            497,260
                                                                                    ----------         ----------

Gross profit                                                                         2,586,816          1,105,570

Selling, general and administrative
 expenses                                                                            1,551,376            950,013
                                                                                    ----------         ----------

Income from operations                                                               1,035,440            155,557
                                                                                    ----------         ----------

Other income (expenses):
  Interest expense                                                                (   488,635)       (    35,655)
  Loss on foreign currency exchange                                               (    37,719)
                                                                                   ----------
                                                                                  (   526,354)       (    35,655)
                                                                                   ----------         ----------

Income before income taxes                                                             509,086            119,902

Provision for income taxes (benefit)                                              (   120,500)       (    93,750)
                                                                                   ----------         ----------

Net income                                                                          $  629,586         $  213,652
                                                                                    ==========         ==========

Earnings per common share:
  Primary                                                                          $      .05          $      .02
                                                                                    ==========          ==========
  Fully diluted                                                                    $      .05          $      .02
                                                                                    ==========          ==========

Weighted average common shares outstanding
  Primary                                                                           12,858,936          8,970,445
                                                                                    ==========         ==========
  Fully diluted                                                                     12,858,936          8,970,445
                                                                                    ==========         ==========



</TABLE>















     See notes to consolidated financial statements.
                                                                           F-3

<PAGE>



                                     SEMICON TOOLS, INC. AND SUBSIDIARIES

                                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                       YEARS ENDED JANUARY 31, 1998 AND 1997


<TABLE>
<CAPTION>
<S>                                                                                             <C>                <C>    


                                                                                                     1998              1997
                                                                                                     ----              ----
Operating activities:
  Net income                                                                                     $  629,586          $213,652
  Adjustments to reconcile net income to
   cash provided from operating activities:
     Depreciation and amortization                                                                  207,474            23,317
     Compensatory stock issued                                                                                         54,125
     Currency translation adjustment                                                           (   585,501)
     Changes in other operating assets and liabilities:
       Accounts receivable                                                                     ( 1,154,537)        (   3,808)
       Inventories                                                                                  858,692        (  79,059)
       Prepaid expenses and other current assets                                                     82,781        (  21,697)
       Deferred tax assets                                                                     (   120,500)        (  93,750)
       Other assets                                                                            (     4,526)        (   5,244)
       Accounts payable                                                                        (   140,501)        ( 234,761)
       Accrued expenses                                                                        (    49,989)            33,132
       Income taxes payable                                                                         102,895        (  41,415)
                                                                                                 ----------         --------

       Net cash used in operating expenses                                                     (   174,126)        ( 155,508)
                                                                                                ----------          --------

Investing activities:
  Purchase of property and equipment                                                           (   283,996)        (  25,549)
  Decrease in investment in foreign subsidiary                                                                     (   3,776)
                                                                                                 ----------         --------

       Net cash used in investing activities                                                   (   283,996)        (  29,325)
                                                                                                ----------          --------

Financing activities:
  Proceeds from sale of stock                                                                           500           328,125
  Increase in long-term debt                                                                         27,985
  Increase in notes payable, bank                                                                   266,824
  Increase in notes payable, other                                                                  309,664
  Increase (decrease) in notes payable, shareholder                                                  61,996        (  23,338)
  Payment of long term debt                                                                    (   268,612)        (  46,262)
                                                                                                ----------          --------

       Net cash provided from financing activities                                                  398,357           258,525
                                                                                                 ----------          --------

Net increase (decrease) in cash                                                                (    59,765)            73,692

Cash beginning of year                                                                            1,352,231            42,642
                                                                                                 ----------          --------

Cash end of year                                                                                 $1,292,466          $116,334
                                                                                                 ==========          ========

Supplemental disclosures:
  Interest paid during the year                                                                  $  470,422          $  2,533
                                                                                                 ==========          ========
  Income taxes paid during the year                                                                  -0-                -0-
                                                                                                 ==========          ======

Supplemental schedule of non-cash investing and financing activities:
  Issuance of common stock for purchase of subsidiary                                            $6,624,143          $125,048
                                                                                                 ==========          ========

Reconciliation of increase in cash and short-term investments:
   Cash at February 1, 1997 as originally reported                                               $  116,334
   Increase in cash resulting in acquisition of
    foreign subsidiary at November 27, 1997                                                       1,235,897
                                                                                                 ----------
   Cash at beginning of year                                                                     $1,352,231
                                                                                                 ==========

</TABLE>

     See notes to consolidated financial statements. 
                                                                            F-4

<PAGE>



                               SEMICON TOOLS, INC. AND SUBSIDIARIES

                             CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                                 YEARS ENDED JANUARY 31, 1998 AND 1997

<TABLE>
<CAPTION>
<S>                                <C>              <C>           <C>          <C>             <C>                 <C>
                                                                                  Equity
                                                                                adjustment
                                                                  Additional    from foreign      Retained              Total
                                                     Common         paid in      currency         earnings          Shareholders'
                                      Shares          stock         capital     translation       (deficit)            equity

Balance at January 31, 1996         5,167,500        $ 5,168      $2,014,847                    ($1,995,048)        $   24,967

Issuance of stock on exercise
 of stock options                   2,550,000          2,550         237,450                                           240,000

Sale of stock                          75,000             75         28,050                                             28,125

Issuance of stock for
 consulting services                  150,000            150          7,350                                              7,500

Issuance of stock regarding
 acquisition of subsidiary,
 DTI Technologies, SDN BHD            300,000            300        124,748                                            125,048

Issuance of stock for
 services                              75,000             75         28,675                                             28,750

Sale of stock                         400,000            400         59,600                                             60,000

Issuance of stock in lieu of
 payment of officers salaries         650,000            650         17,225                                             17,875

Net income for the year
 January 31, 1997                                                                                      213,652         213,652
                                    ----------        -------      ----------          --------      ----------       ----------

Balance, January 31, 1997            9,367,500          9,368      2,517,945                         1,781,396)        745,917

Shares issued for services             500,000            500                                                              500

Issuance of stock regarding
 acquisition of subsidiary,
 Teik Tatt, SDN BHD                 10,000,000         10,000     6,614,144                                          6,624,143

Foreign currency translation
 adjustment for the year
 ended January 31, 1998                                                             ($585,500)                     (  585,500)


Net income for the year ended
 January 31, 1998                                                                                     629,586         629,586
                                   ----------        -------     ----------          --------       ----------      ----------

                                   19,867,500        $19,868     $9,132,089         ($585,500)    ($1,151,810)     $7,414,646
                                   ==========        =======     ==========          ========      ==========      ==========

     See notes to consolidated financial statements.
                                                                            F-5
</TABLE>


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS









1.  Organization of the Company:

    Semicon Tools, 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 two  subsidiaries  with their own product
    lines.

    One of the Company's  wholly-owned  subsidiaries,  East Coast Sales Company,
    Inc.  ("ECS")  is  a  Connecticut   corporation  which  distributes  and
    fabricates   technical  ceramic  products  and  distributes  clean  room
    supplies  and tools.  This  Company,  which was  acquired on January 26,
    1990,  was accounted for in a manner similar to the pooling of interests
    method of accounting.  The total cost of the acquisition,  $309,000, was
    paid for by the issuance of a $300,000 note, bearing interest at 10% per
    annum, and the issuance of 9,000,000 shares (60,000 shares,  as restated
    - see Note 7) of the  Company's  $.001 par value  common stock (see also
    Note 5).

    The Company's  wholly-owned  subsidiary,   DTI  Technology,  SDN  BHD  is  a
    Malaysian  company which  manufactures a product line similar to that of
    Semicon  Tools,  Inc.  Semicon  Tools,  Inc.  acquired the assets of DTI
    Technology, SDN BHD on June 22, 1996. The total cost of the acquisition,
    $125,048,  was  paid  for by  the  issuance  of  300,000  shares  of the
    Company's  $.001 par value common stock with a negotiated  fair value of
    $.42 per share.

    The Company's other wholly-owned subsidiary,  Teik Tatt Holding Company, SDN
    BHD is located in Penang,  Malaysia.  The  Company  manufactures  rubber
    bands,  plastic  ropes and  recycles  plastic and metal from wire cable,
    electronic devices and circuit broads.

    In  November  1997,   Semicon  Tools,   Inc.  issued  10,000,000  shares of
    unregistered  common  shares  in  exchange  for 100% of the  outstanding
    shares of Teik Tatt Holding  Company,  SDN BHD and Teik Siang Industries
    SDN BHD, a  subsidiary  of Teik Tatt,  the value of the shares being the
    net book value of the acquired  Company of $6,560,040  or  approximately
    $.66 per share. The acquisition is being accounted for as a purchase.


2. Summary of significant accounting policies:

    Principles of consolidation:
     The  consolidated  financial  statements  of  Semicon  Tools,  Inc.  and
     subsidiaries  include all the  accounts of Semicon  Tools,  Inc.,  East
     Coast Sales Company,  DTI  Technology,  SDN BHD and Teik Tatt, SDN, BHD
     after  elimination of all  significant  intercompany  transactions  and
     accounts.  The  financial  statements  give  retroactive  effect to the
     acquisition of DTI Technology,  SDN BHD which has been accounted for as
     an acquisition as if in a pooling of interest method at historical cost
     of the assets acquired.








                                                                          F-6


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








2. Summary of significant accounting policies (continued):

    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.

    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 stockholders' equity.

    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
           Leasehold land                                          37-99


    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 subsidiaries.  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.





                                                                           F-7


<PAGE>



                               SEMICON TOOLS, INC. AND SUBSIDIARIES

                            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS









2. Summary of significant accounting policies (continued):

    Post retirement benefits:
       On December 31, 1990, the Financial  Accounting  Standards  Board (FASB)
       issued  Statement of  Financial  Accounting  Standards  (SFAS) No. 106,
       "Employers'   Accounting  for  Post  Retirement   Benefits  Other  Than
       Pensions."  SFAS No. 106 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.

      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.

      Accounting convention:
       For the purpose of  preparation  of  consolidated  accounts of Teik Tatt
       Holding Co., SDN BHD, into United States  accounting,  the accounts are
       stated in U.S. dollars instead of Ringgit, Malaysian. The accounts have
       been translated using the following rates:


                      Common stock                                3.0
                      Retained earnings                           3.0
                      Assets and liabilities                      3.8
                      Income and expenses                         3.5


      Foreign currency translation:
        Assets and  liabilities in foreign  currencies at balance sheet date are
        translated  into U.S.  dollars at  approximately  the rates of exchange
        prevailing on that date.

       Transactions  in foreign  currencies  during the year are converted into
       U.S. dollars at approximately  the rates of exchange  prevailing on the
       dates of the transactions.

       Exchange  differences  arising from  foreign  currency  translation  are
       included in the profit and loss account.








                                                                          F-8


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS









2. Summary of significant accounting policies (continued):

      The  accounts  of the  foreign  subsidiaries  are  translated  into U.S.
      dollars at rates  approximating those prevailing at balance sheet date.
      Exchange  differences  on  translation  of the net  assets  of  foreign
      subsidiaries are accounted for through the exchange.

      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 competitions into its market.


4. Property and equipment:

    Major classifications of property and equipment are as follows:



      Land                                                     $   348,606
      Buildings and improvements                                 2,015,431
      Manufacturing equipment                                   12,220,043
      Office equipment                                             557,469
      Automotive equipment                                         177,662
                                                                -----------
                                                                15,319,211
      Less accumulated depreciation                              2,974,447
                                                                 ---------

                                                               $12,344,764
                                                               ===========


5.  Goodwill:

    On January 26, 1990,  the Company  acquired  East Coast Sales  Company (its
    wholly-owned  subsidiary)  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
    $35,400 as of January 31, 1998.








                                                                         F-9


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS









6. Commitments and contingencies:

    In November  1995  the  Company  moved  to new  premises  and is  currently
    obligated  under  a  lease   agreement  for  office  and   manufacturing
    facilities.  This lease,  which  expires on May 31,  1998,  requires the
    following future minimum rental payments:


                           January 31, 1999                       $14,172
                                                                  -------
                                                                  $14,172
                                                                  =======



     Rental expense for the year ended January 31, 1997 amounted to $39,047 and
     $38,564 for the year ended January 31, 1998.

    The Company also leases three  vehicles  under  operating  leases with terms
    expiring  through 1998.  Total lease expense was $33,597 and $25,307 for
    the years ended January 31, 1998 and 1997, respectively.

      Future minimum rentals are as follows:

                           January 31, 1999                      $25,088
                           January 31, 2000                       20,298
                           January 31, 2001                        5,474
                                                                 -------
                                                                 $50,860
                                                                 =======

      The Company has entered into written sales  agreements with two employees.
      The  agreements  are on a year to year basis and call for the payment of
      commissions,  varying  from 1 to 4  percent,  on the  sale  of  selected
      products.

     On April 8,  1996,  the  Company  reached a  settlement  with  their  prior
     accountants  of fees due from  the  Company.  The  agreement  calls  for
     monthly  installments of $4,000  commencing  April 1, 1996 and ending on
     September  1, 1996 for a total of  $24,000.  The  balance  reflected  at
     January 31, 1996 on the  Company's  accounts  payable was  $28,068.  The
     books at October 31, 1996 have been adjusted to reflect this settlement.
     As of January 31, 1997 the balance had been paid in full.

     The  foreign  subsidiaries  have been  granted  rights to use its land and
     plant for a period of 25 years  commencing  June 1996.  The land  rental
     rate will be revised  every 5 years but the increment to the rate should
     not exceed 15% of the preceding  rate. The minimum lease payments are as
     follows:

                       Within 1 year                             $ 24,030
                       From 1-2 years                              96,119
                       From 2-5 years                             442,146
                                                                 --------

                                                                  $562,295
                                                                  ========








                                                                          F-10


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







7. Common stock and stock split:

    On March 6, 1996 the Company  entered into an  investment  agreement  for a
    three  year  term.  The  consultant   agreed  to  assist  management  in
    broadening  the  Company's  exposure  to  the  financial  community  and
    securing  necessary  funding to meet its needs according to the terms of
    the agreement. The consultant was to be compensated by having the option
    to purchase up to 6,000,000  of the  Company's  common  shares at prices
    varying from $.10 to $1.75 during the period commencing on March 6, 1996
    and ending  September  30,  1996.  As of September  30, 1996,  2,550,000
    shares had been issued for $240,000.  This  agreement was  terminated on
    September 30, 1996 and all unexercised options had been cancelled.

    The Company  entered into a  consulting  agreement on August 29, 1996 with
    the  consultant to provide  professional  corporate  finance,  financial
    public  relations,  management  consulting  and advisory  services.  The
    consultant  was issued  options to purchase the  Company's  common stock
    from August 29, 1996  through  October 31,  1996.  A total of  7,900,000
    shares were  optioned  at prices of $.15 to $1.00 per share.  At October
    31, 1996, the Company  received $60,000 and issued 400,000 shares of its
    common stock.  At October 31, 1996,  the  consulting  agreement had been
    terminated  at the  option  of the  Company  and all  unexercised  stock
    options cancelled.

    During the year ended  January 31, 1998,  the Company  issued  shares of its
      common shares in non-cash transactions as follows:
<TABLE>
<CAPTION>
<S>            <C>                  <C>                 <C>               <C>   

                                      Number
                                        of                 Total
                Date                  shares               Value            Reason for issuance

                03/05/96              100,000            $  5,000           Consulting services

                03/05/96               50,000               2,500           Consulting services

                06/22/96              100,000              33,921           Acquisition of DTI Technology

                06/22/96               50,000              16,961           Acquisition of DTI Technology

                06/22/96              150,000              74,166           Acquisition of DTI Technology

                08/31/96               50,000              25,250           Legal services

                08/31/96               25,000               3,500           Consulting services

                01/31/97               500,000             13,750           Bonus

                01/31/97               150,000              4,125           Bonus
                                     ---------           --------

                                     1,175,000           $179,173
                                     =========           ========
</TABLE>


    Of the above  1,175,000  shares issued,  800,000 were issued to officers of
    the Company.

    The Company sold  3,025,000  common  shares  during the year ended January
    1997 for $328,125.







                                                                         F-11


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








7. Common stock and stock split (continued):

      During the year ended January 31, 1998,  the Company  issued the following
        shares:

<TABLE>
<CAPTION>
<S>           <C>                    <C>                   <C>                  <C>   
                                        Number
                                          of                    Total
               Date                     shares                  Value            Reason for issuance

               05/07/97                  500,000            $      500           Consulting services

               11/27/97               10,000,000             5,416,151           Acquisition of subsidiary
                                                                                   Teik Tatt
</TABLE>

<TABLE>
<CAPTION>
<S>                                      <C>            <C>              <C>           <C>             <C>    

8. Long-term debt:                                                         
                                                                            Long-term       Current
                                                            Rate           Portion        Portion      Maturity

        Note payable,Marine Midland      (a)                Prime       $   59,839    $   32,638        2001

        Note payable, shareholders       (b)                  15%             100,000                      2000

        Note payable, shareholder        (c)                  10%             184,434        36,849        2002

        Notes payable, bank (foreign)    (d)             1.75% to 2%
                                                       above bankers
                                                       base lender's
                                                            rates           1,720,895       126,806  undetermined
        Notes  payable, capital leases,
         bank, (foreign)                 (e)               Approx 8%        1,770,868     1,419,858        1999
                                                                           ----------    ----------

                                                                           $3,840,851    $1,616,151
                                                                           ==========    ==========
</TABLE>


  (a)   Note  payable,  Marine Midland,  represents  the drawdown of a $200,000
        revolving  line of credit as of January 31, 1998.  The  principal
        payment  per  month  is  1/36  of the  outstanding  balance  plus
         interest  at  prime.  The  note is  secured  by  accounts
         receivable,  inventory  and  equipment  currently  owned  by  the
         Company  as  well  as  a  guarentee  of  one  of  its   principal
         shareholders.

   (b)   Note payable, shareholder, became due when the note to Citibank was
         paid in full.  The sharehoder has wavied his demand right and the
         Company is currently negotiating terms for payment of the note.

    (c)  On April 23, 1997, the Company renegotiated an existing loan with
         a certain  shareholder  resulting in a new obligation  payable in
         monthly installments of $4,053 including interest at 10%.

    (d)   The term loans are  secured by a mortgage on the  leasehold  land
          and factory building of Teik Tatt Holding Co., SDN BHD, machinery
          of one of its  subsidiaries  and its  property  owned  by a third
           party.

    (e)    Certain  fixed assets are pledged as  collateral  for the capital
           leases to the banks by both foreign subsidiaries.




                                                                        F-12

<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







8.  Long-term debt (continued):

      The maturities of these loans are as follows:

                     January 31, 1999                            $1,616,151
                     January 31, 2000                               651,162
                     January 31, 2001                               208,978
                     January 31, 2002                               145,942
                     January 31, 2003                             2,834,769
                                                                 ----------

                                                                 $5,457,002
                                                                 ==========


9. Notes payable, banks:

      Bank  overdrafts  and  borrowings  for the foreign  subsidiary, Teik Tatt
       Holding  Co., in the amount of  $4,219,194  are secured in the amount of
      $4,978,287  by  leasehold  land and  factory  building  of the  Company,
       freehold  land and buildings of one of its  subsidiaries  and a property
       owned by a third party and the guarantee of all the directors.  Interest
       is payable at 1% to 2% above banks base lending rates.


10. Acquisition of subsidiary, DTI Technology, SND BHD:

     On June  22,  1996,  the  Company  acquired  100%  of  the  assets  of  DTI
     Technology,  SDN BHD, a Malaysian  company formed on May 17, 1995, for a
     total cost of $125,048.  The major shareholder of Semicon Tool Co., Inc.
     and  Subsidiaries  was also a major  stockholder in DTI Technology,  SDN
     BHD. Accordingly the accounts are recorded at their historical basis and
     their operations and cash flows have been included as if the acquisition
     had occurred on May 17, 1995.  The Company  issued 300,000 of its common
     shares to the  shareholders  of DTI  Technology.  The fair  value  being
     determined  at $.42 per share  was  equal to the net asset  value of the
     assets acquired. The condensed balance sheet of DTI Technology,  SDN BHD
     at June 22, 1996 was as follows:

                                                   BALANCE SHEET

                                                      ASSETS

           Current assets                                             $112,003
           Property and equipment                                      312,997
                                                                       -------

              Total assets                                            $425,000
                                                                      ========


                                       LIABILITIES AND SHAREHOLDERS' EQUITY

           Current liabilities                                        $299,952
           Shareholders' equity                                        125,048
                                                                       =======
              Total liabilities and shareholders'
               equity                                                 $425,000
                                                                      ========






                                                                          F-13


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







10. Acquisition of subsidiary, DTI Technology, SDN BHD (continued):

     The results of operations  for DTI for the period June 22, 1996 to January
     31, 1997 resulted in a net profit of $2,314.  For the year ended January
     31, 1998, DTI had a net loss of $41,486.


11. Acquisition of subsidiary, Teik Tatt Holding Company, SDN BHD:

       On November  27, 1997,  the Company  purchased  100% of the  outstanding
       common shares of Teik Tatt Holding Co., SDN BHD as a transaction  to be
       accounted for as a purchase.  The Company issued  10,000,000  shares of
       its common shares pursuant to the acquisition. The stock will be valued
       at the net book value of assets acquired at historical cost.

       Teik Tatt Holding Co., SDN BHD,  founded in 1979, is a  manufacturer  of
       rope, yarn, twine and high quality rubber bands. Teik Tatt Holding Co.,
       SDN BHD  recycles  plastics  and non  ferrous  metals  from  cable  and
       precious metals from electronic  components and circuit boards obtained
       from obsolete computers.

       As a result of this  acquisition,  the  shareholder of Teik Tatt Holding
       Co., SDN BHD owns  approximately  50% of the outstanding  shares of the
       Company.

       The  assets  acquired  and the  liabilities  assumed  (unaudited)  as of
       November  27,  1997,  the  date  of the  financial  statements,  are as
       follows:


                    Current assets                                 $16,998,597
                    Noncurrent assets                               11,954,944
                                                                    ----------
                                                                   $28,953,541
                                                                   ===========

                    Current liabilities                            $17,086,081
                    Long-term debt                                   5,243,317
                                                                     ---------
                                                                    22,329,398
                                                                    ----------

                    Common stock                                     2,597,456
                    Retained earnings                                4,026,687
                                                                     ---------
                                                                     6,624,143
                                                                     ---------

                                                                   $28,953,541
                                                                   ===========


12. Income taxes:

      Asof January 31, 1997 the Company had net  operating  loss  carryovers  of
        approximately $1,780,000 expiring in various years through 2008.

      Effective February 1, 1993, the Company adopted Statement of Financial
        Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
        109"), the cumulative effect of which was not material to the
        consolidated financial statements and is therefore not presented
        separately.  Under the asset and liability method of SFAS No. 109,
        deferred tax assets and liabilities are recognized for the future tax





                                                                        F-14


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS






12.  Income taxes (continued):

        consequences  attributable  to the  differences  between the  financial
        statement carrying amounts of existing assets and liabilities and their
        respective tax bases and operating  loss and tax credit  carryforwards.
        Deferred  tax assets and  liabilities  are measured  using  enacted tax
        rates  expected  to apply to taxable  income in the year in which those
        temporary  differences  are expected to be recovered or settled.  Under
        SFAS No. 109,  the effect on deferred tax assets and  liabilities  of a
        change in tax rates is recognized in income in the period that includes
        the enactment  date;  this effect was immaterial  during the year ended
        January 31, 1997 and 1996. The deferred tax asset less the deferred tax
        liabilities has been reduced by a valuation  allowance equal to the net
        tax benefit in excess of the  estimated  taxable  profits over the next
        three years.

      Provision for income taxes (benefit):
                                                        1998              1997
                                                        ----              ----

            Current                                 $ 58,718           $ 31,250
            Deferred                               ( 179,218)         ( 125,000)
                                                    --------           --------
                 Total benefit                     ($120,500)         ($ 93,750)
                                                    ========           ========


      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

                                                             1998        1997
                                                             ----        ----
            Income tax computed at the
              federal statutory rates                     $ 44,968     $ 24,128
            State tax (net of federal benefit)              13,750        7,122
            Net operating loss carryforward              ( 179,218)   ( 125,000)
                                                          --------     --------

            Provision (credit) for income taxes          ($120,500)   ($ 93,750)
                                                          ========     ========


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

            Deferred tax asset:

              Net operating loss carryforward             $480,000     $538,750
                                                          --------     --------

                 Total deferred tax asset                  480,000      538,750

                 Valuation allowance                       265,750    ( 445,000)
                                                          --------     --------

                                                          $214,250     $ 93,750
                                                          ========     ========


      The foreign  subsidiary,  Teik Tatt  Holding  Co., SDN BHD, is required to
       maintain  a  statutory  reserve of 5% of the profit  after  taxation  in
       accordance with the Foreign Investment Law until such reserve equals 10%
       of the legal capital. The reserve is  non-distributable  under Malaysian
       law.






                                                                          F-15


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







12.  Income taxes (continued):

       The Company has made  adjustments  to eliminate the tax  provisions  for
       foreign  earnings  since said  earnings are  undistributed  and will be
       permanently  invested.  The cumulative amounts of foreign undistributed
       earnings are $378,580 at January 31, 1998


13. Principal products and segmentation of sales:

      The  disposable  tools sold by the  Company  include  dicing  blades and
      scribes,  which are components of precision electronic saws and scribes
      used to cut silicon  wafers,  porcelain  and ceramic molds and dressers
      used for the shaping and forming of grinding wheels in the machine tool
      industry. Industrial ceramic products and clean room supplies are among
      the Company's products.

        Financial  information  relating  to  industry  segments  and classes of
         products:

<TABLE>
<CAPTION>
<S>                                                                              <C>                 <C>
                                                                                  January 31,         January 31,
                                                                                      1998                1997
           Sales to customers:
            Industry A: Semicon Tools, Inc. and
          DTI Technologies, SDN BHD
               Diamond tools                                                      $   554,695          $  531,039
               Miscellaneous hardware and
                other products                                                         82,737              56,200
            Industry B: East Coast Sales, Inc.
               Ceramics                                                             1,225,248             924,733
               Clean room supplies                                                     40,888               5,582
               Other products                                                          28,038              85,276
            Industry C:  Teik Tatt, SDN BHD
               Metal                                                                3,231,766
               Rubber bands                                                           505,205
               Resins                                                                 137,574
               Ropes                                                                2,002,229
                                                                                  -----------

                                                                                  $ 7,808,380          $1,602,830
                                                                                  ===========          ==========

         Operating profit or loss:
            Industry A:  Semicon Tools, Inc. and
              DTI Technologies, SDN BHD                                         ($   279,395)        ($  160,458)
            Industry B:  East Coast Sales, Inc.                                       409,901             280,360
            Industry C:  Teik Tatt, SDN BHD                                           378,580
                                                                                  -----------
                                                                                  $   509,086          $  119,902
                                                                                  ===========          ==========
         Identifiable assets:
            Industry A:  Semicon Tools, Inc. and
              DTI Technologies, SDN BHD                                           $   719,554          $  683,878
            Industry B:  East Coast Sales, Inc.                                       397,069             511,309
            Industry C:  Teik Tatt, SDN BHD                                        29,243,510
                                                                                  -----------

                                                                                  $30,360,133          $1,195,187
                                                                                  ===========          ==========


</TABLE>





                                                                          F-16


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








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

        Six customers  accounted for  approximately 49% or $772,995 and of which
        two customers accounted for 34% or $542,722 of consolidated revenues in
        1997.

        For the year ended January 31, 1998, there were no customers whose sales
        amounted to 10% of the gross consolidated sales.

        Foreign and domestic operations and export sales:
<TABLE>
<CAPTION>
<S>                                                                              <C>                 <C>    

                                                                                  January 31,         January 31,
                                                                                     1998                1997
           Sales to customers:
              United States                                                       $ 1,178,588          $1,100,133
              Far East                                                              5,105,570             162,045
              Europe                                                                  271,928              63,607
              Canada                                                                  541,079             277,045
              Other                                                                   711,215
                                                                                  -----------

                                                                                  $ 7,808,380          $1,602,830
                                                                                  ===========          ==========

           Operating profit:
              United States                                                       $    95,623          $   77,625
              Far East                                                                224,632        (    17,867)
              Europe                                                                   14,248        (    16,729)
              Canada                                                                  129,465              76,873
              Other                                                                    45,118
                                                                                  -----------

                                                                                  $   509,086          $  119,902
                                                                                  ===========          ==========


           Identifiable assets:
              United States                                                       $   671,459          $  590,057
              Far East                                                             24,647,849             432,763
              Europe                                                                1,320,995              36,786
              Canada                                                                  186,268             135,581
              Other                                                                 3,533,562
                                                                                  -----------

                                                                                  $30,360,133          $1,195,187
                                                                                  ===========          ==========
</TABLE>



14. Prior period adjustment:

    Until July 31, 1996,  the Company had recorded an  investment  in a foreign
    affiliate at cost with the intention of accounting for this  investment
    using the equity method.  The Company had a 9 1/4% interest and because
    the books and records of the affiliate were not readily available,  the
    losses of the  affiliate  were  never  recorded  by the  Company.  This
    investment has been written down to zero,  the correct value  according
    to the information that has now become available.







                                                                        F-17


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








15. 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 January 31, 2001. 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  consolidated  net
       income over the consolidated  net income from the previous years.  Each
       employee  also received  1,000,000  stock options at $.25 and 1,000,000
       stock  options  at  $.10.  The  options  were  not  part  of  the  1997
       Non-statutory  Stock  Option Plan  effectuated  March 25,  1997.  As of
       January 31, 1998, none of these options had been exercised.


16. Subsequent events:

       On February 9, 1998, the Company entered into a consulting agreement for
       the period  February 9, 1998 to December 31, 1999. The consultant  will
       assist Semicon Tools, Inc. in strategic  planning,  corporate planning,
       merger and acquisition and divestitive advice. In consideration for the
       consulting  services Semicon will grant an option to purchase 1,200,000
       shares of the common  stock of Semicon  Tools,  Inc. at a price of $.50
       per share for a period of two years  commencing  four  months  from the
       date of the  signing.  The  shares  underlying  these  options  will be
       registered  under the  Securities  Act of 1933.  The consultant is also
       entitled to a finders fee in the event the consultant  first introduces
       a  potential  acquisition  to  the  Company  and  such  acquisition  is
       ultimately  consummated.  The agreement calls for a payout based on the
       amounts expended for such acquisition.

       Also on  February  9,  1998,  the  Company  entered  into  a  consulting
       agreement  for the period  February 9, 1998 to December 31,  1998.  The
       consultant  will assist  Semicon  Tools,  Inc. in  strategic  planning,
       corporate  planning,  merger and acquisition and divestiture advice. In
       consideration for the consulting agreement Semicon will grant an option
       to purchase 100,000 shares of common stock of Semicon Tools,  Inc. 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.  The  shares
       underlying these options will be registered under the Securities Act of
       1933. The consultant is also entitled to a finders fee in the event the
       consultant first introduces a potential  acquisition to the Company and
       such acquisition is ultimately  consummated.  The agreement calls for a
       payout based on the amounts expended for such acquisition.

       On February  18,  1998,  the Company  entered  into a  agreement  with a
       consultant to provide the Company with a public relations program.  The
       term of the  agreement is from  February 19, 1998 to August 18, 1998, a
       six month  period.  The  agreement  can be cancelled  anytime after the
       first 90 days and calls for a monthly  fee of $2,500 plus out of pocket
        costs not to exceed $2,000.









                                                                         F-18


<PAGE>



                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







16.  Subsequent events (continued):

        On February 2, 1998,  the Company  issued 150,000 shares of common stock
         to three different  parties pursuant to the Company's 1997 Non-statuary
         Stock  Option  Plan.  The Company  received a total of $7,500 from this
         transaction.  On April 7, 1998, the Company issued an additional 25,000
         shares under the same plan for proceeds of $1,250.



17. Computation of earnings per share:

                                                   1998              1997
                                                   ----              ----

              Weighted average number of
               common shares outstanding        $11,523,321       $7,458,116
              Assumed conversion of
               stock options                      1,335,615        1,512,329
                                                -----------       ----------

              Weighted average number of
               common shares outstanding        $12,858,936       $8,970,445
                                                ===========       ==========




18. Common stock options outstanding:

        Summary of options outstanding are as follows:

<TABLE>
<CAPTION>
<S>                                               <C>              <C>               <C>              <C>    
                                                                                      Exercise         Expiration
                                                     Date               Amount          Price              Date

        Eugene Pian, Officer                       05/01/96         $1,000,000            $.25           05/01/01
        Craig 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
        Craig Pian, Officer                        02/13/97          1,000,000             .10           05/01/01

        Consultant                                 11/10/97             50,000             .05           11/10/99
        Consultant                                 11/27/97            500,000             .10           11/27/98
        Consultant                                 01/01/98            100,000             .50           01/01/00
        Employee                                   11/05/97             25,000             .05           11/05/99
        Employee                                   11/05/97             25,000             .05           11/05/99
        Professional services                      11/06/97             35,000             .05           11/06/99
        Professional services                      11/06/97             15,000             .05           11/06/99

</TABLE>


       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
       will be administered by the Non-statutory Stock Option Committee of the








                                                                           F-19


<PAGE>


                                       SEMICON TOOLS, INC. AND SUBSIDIARIES

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS









18. Common stock options outstanding (continued):

       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, 1998,  750,000  options had been issued under the Plan,  of
       which 75,000 had been exercised by April 1998.

       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.















                                                                        F-20


<PAGE>





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

                  None.


                                                     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                 58                        President, Chief
                                                         Executive Officer
                                                         & Director

Craig Pian                     36                        Executive Vice
                                                         President, Treasurer
                                                         & Director

Francine Pian                  38                        Secretary & 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  Cost  Sales  since 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 general the Company's United States
manufacturing, sales and administrative operations.  Mr. Pian
graduated Manhattan College with a Bachelor of Science Degree in
Business.


                                                        19

<PAGE>



                  Francine Pian.  Ms. Pian has been Secretary of the
Company since 1996.  She has been employed by the Company since
1987.

Significant Employees

                  Tan Khay Swee.  Mr. Swee, age 36, has been Chief
Executive Officer of TTH since 1992 and is responsible for
overseeing all operations of TTH.  He received a Business
Management certificate from Stamford College, Malaysia in 1986.

                  Tan Khay Hock.  Mr. Hock, age 31, is the Sales Director
of TTH and is responsible for the marketing and sales activities of
all products manufactured by TTH.  He received a Diploma in
Business Administration from Stanford College in 1990, and has more
than ten years' experience in the manufacturing of plastic ropes.

                  Tan Loo Hung.  Ms. Hung, age 33, is the Finance Director
of TTH responsible for its Administration and Finance Departments.
She has more than eight years' experience in the manufacturing of
plastic rope.

                  Ooi Choon Huat.  Mr. Huat, age 58, is the Sales Manager
of TTH and is responsible for the overall sales and marketing
activities of all products manufactured by TTH.  He has worked for
TTH for more than 20 years and has vast experience and contacts in
the Malaysian market.

                  Chin Choon Fah.  Mr. Fah, age 27, is TTH's Technical
Manager, in charge of the trade operations of its plastic and metal
recycling business.  From 1994 to 1996, he worked as a technical
service engineer for the Titan Group.  He received a Diploma in
Science from Linton Institute of Technology in 1990.

                  Dr. Loo Seow Pin.  Dr. Pin, age 51, has been General
Manager (Manufacturing) of Teik Siang since 1997.  He obtained his
Bachelors and Masters Degrees in engineering from Canterbury
University, New Zealand and his Doctor of Science from Pacific
Western University, United States.  Over the last 20 years, he
worked for Rheem Hyme (M) Bhd. as a production manager, for Leader
Cable Sdn. Bhd. as a project manager, for Malaysia Aica (M) Bhd. as
a group production manager and for Wellington Polytechnic, New
Zealand as a senior lecturer.

                  Loh Mooi Kooi.  Ms.  Kooi,  age 29,  Group  Accounts  Manager,
joined the Company in 1994 and is responsible  for overseeing the accounting and
costing  departments  of TTH and its  subsidiaries.  She  passed  the  Chartered
Institute of Management  Accountants  Examination (CIMA) in 1994 and in 1997 she
attained  CIMA  Associate  Accountant  Membership.  She is currently  pursuing a
Masters in  Business  Administration  from  Strathlyde  University,  Scotland by
distance learning.

                                                        20

<PAGE>




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 Commission 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 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.



                                                        21

<PAGE>



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.
<TABLE>
<CAPTION>
<S>        <C>               <C>                                <C>                  <C>                  <C>    

                              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                    1997        101,662          51,868                  -                    1,000,000
Executive                             1996         92,784            -                     -                    1,000,000
Officer                               1995         82,659            -                     -                        -

Craig Pian,                           1997         73,648          26,868               28,317                  1,000,000
Executive Vice                                                                                                      -
President and
Treasurer

</TABLE>


(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.

                  Options/SAR Grant Table:  The following information is
provided for the Company's executive officers:

                             OPTION/SAR GRANTS IN LAST FISCAL YEAR

                                    Individual Grants

                          Number of        % of Total
                          Securities       Options/SARs    Exercise
                          Underlying       Granted to      or Base
                          Options/SARs     Employees in     Price    Expiration
         Name             Granted (#)      Fiscal Year     ($/Sh)       Date


Eugene Pian,               1,000,000         48.5%          $.10      1/31/01
Chief
Executive
Officer

Craig Pian                 1,000,000         48.5%          $.10      1/31/01



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

                                                        22

<PAGE>



owned beneficially by each person known by the Registrant to be deemed 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 March 31, 1998. 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     5,126,113(1)         22%
c/o Semicon Tools, Inc.          Director
554 North State Road
Briarcliff Manor, NY 10510

Craig Pian                       Executive Vice   2,550,333(2)         12
c/o Semicon Tools, Inc.          President,
554 North State Road             Treasurer and
Briarcliff Manor, NY 10510       Director

Francine Pian                    Secretary          323,500             2
c/o Semicon Tools, Inc.          and Director
554 North State Road
Briarcliff Manor, NY 10510

All Directors and Executive                       7,999,946(3)         31
Officers as a Group
(3 Persons)

Tan Khay Swee                                    10,000,000            50
c/o Teik Tatt Holding Co.
  (1979) Sdn. Bhd.
Lot 1774, Lorong Mak Mandin 6
Mak Mandin Industrial Estate
13400 Butterworth, Penang
Malaysia


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

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

Item 12.  Certain Relationships and Related Transactions.

                                                        N/A



                                                        23

<PAGE>



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

                  (a)      Index of Exhibits.

                                      Exhibit                             Page

                           3(a)       Articles of Incorporation1
                           3(b)       By-Laws1
                           3(c)       Amendment to Articles of
                                      Incorporation2
                           10(a)      Agreement of Merger with
                                      Semicon Tools, Inc., a
                                      New York Corporation2
                           10(b)      Articles of Merger2
                           10(c)      Certificate of Merger2
                           10(d)      Patent License1
                           10(e)      Patent No. 4,219.0041
                           10(f)      License Agreement with Bookuk
                                      Industry Company, Ltd.1
                           10(i)      Thermode/Synthrode Supplier
                                      Agreement1
                           10(j)      East Coast Sales Acquisition
                                      Agreement3
                           10(k)      $300,000 Promissory Note3
                           10(l)      Amendment to East Coast Sales
                                      Acquisition Agreement4
                           10(m)      Teik Tatt Holding Co. (1979)
                                      Sdn. Bhd. Acquisition Agreement5
                           16         The required letter from the
                                      former accountants6
                           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.

                           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 January 29, 1993.


                                                        24

<PAGE>



                  (b)      Reports on Form 8-K.

                           A Report on Form 8-K was filed on  December  9, 1997,
                           reporting  the  acquisition  of all of the issued and
                           outstanding  capital  stock of Teik Tatt  Holding Co.
                           (1979) Sdn. Bhd. and the related change in control of
                           the Company.


                                                        25

<PAGE>



                                   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.


                                                        26

<PAGE>



                                                    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.


                                                          SEMICON TOOLS, INC.
                                                             (Registrant)


                                                   By  /s/ Eugene J. Pian
                                                       Eugene J. Pian, President
                                                       Date:  April 30, 1998



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 30, 1998


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

                                                  Date:  April 30, 1998


                                             /s/ Francine Pian
                                                 Francine Pian
                                                 Director

                                                 Date:  April 30, 1998


                                                        27

<PAGE>


                                                    EXHIBIT 21


                                                  Subsidiaries of
                                                Semicon Tools, Inc.



  Name of                                           State/Jurisdiction
Subsidiary                                          of Incorporation

East Coast Sales Company, Inc.                        Connecticut


DTI Technology, Sdn. Bhd.                             Malaysia


Teik Tatt Holding Company, Sdn. Bhd.                  Malaysia

Teik Siang Industries Sdn. Bhd.*                      Malaysia


Teik Tatt Industries (Vietnam) Co., Ltd.*             Vietnam








*Subsidiaries of Teik Tatt Holding Company, Sdn. Bhd.
A:\MTP3322




                                                        28