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

FORM 10-KSB

(Mark one)

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|[X] |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
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|    |  | For the fiscal year ended January 31, 2001                                          

OR

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

Commission file number 33-5820-LA

SETO HOLDINGS, INC.




|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                         |  | 77-00882545                         
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
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:

|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on
which registered
|                    |  |                                          
|N/A                 |  | N/A                                      

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

N/A








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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

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. $ 5,653,289
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. $3,369,203 as of April 24, 2001.

State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date. 15,281,601 shares of Common
Stock, $.001 par value, outstanding as of April 24, 2001.

DOCUMENTS INCORPORATED BY REFERENCE  None





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PART I

Item 1. Description of Business.

General

With the January 31, 2001, sale of Fimas Sdn Bhd. (Fimas), SETO
Holdings, Inc. (formerly Semicon Tools, Inc.) (the Company), a Nevada
corporation, re-adjusted its business by disposing of its consumer electronics
manufacturing operations because of its low gross profit margins, increasing
losses and high working capital requirements. The Company now principally (1)
manufactures and sells cellular telephone batteries and other rechargeable
batteries for power tools, toys and other uses (2) fabricates and distributes
industrial ceramic products and (3) manufactures and sells small industrial
diamond cutting tools. Approximately 66% of the Companys revenues are
generated in Malaysia and other parts of Asia.

Business Development over the Past Three Years

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

On November 26, 1997, the Company acquired all of the issued and
outstanding capital stock of Teik Tatt Holding Co. (1979) Sdn. Bhd. (TTH), a
Malaysian corporation which principally manufactured rubber bands and plastic
rope and recycled scrap non-ferrous metals, in exchange for 10,000,000 shares
of Common Stock, which resulted in a change-in-control of the Company. On
September 15, 1998 the Company reversed its acquisition of TTH by selling all
of the issued and outstanding capital stock of TTH to Tan Khay Swee, the former
owner of TTH, in exchange for 10,000,000 shares of the Companys Common Stock,
the amount of the original purchase price. The following discussion of the
Companys business and operating results does not take into account the
operations of TTH.

On June 30, 1998, the Company issued 100,000 shares of Common Stock to
acquire all of the issued and outstanding shares of Fuji Fabrication Sdn. Bhd.
(Fuji), a Malaysian company which principally designs, manufactures and
distributes cellular telephone and other rechargeable batteries.

On November 19, 1999, the Company acquired all of the issued and
outstanding capital stock of Hong Kong Batteries Industries Ltd. (HKbiL), a
Hong Kong manufacturer and distributor of electronic components and batteries,
in exchange for 1,500,000 shares of the Companys Common Stock. In January
2001, the parties mutually agreed to reduce the purchase price by





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100,000
shares, which shares were returned to the Company and cancelled. In March
2001, the Company issued to the former shareholders of HKbiL an additional
500,000 shares because it generated a certain amount of post acquisition net
income.

On November 27, 1999, the Company issued 5,000,000 shares of its Companys
Common Stock to acquire all of the issued and outstanding capital stock of
Fimas Sdn Bhd. (Fimas), a Malaysian holding corporation with facilities in
Malaysia and Suzhou, China, to manufacture electronic consumer products such as
DVD players, CD-Rom drives, home theater systems, CD players and a wireless
computer mouse. On January 31, 2001, the Company sold Fimas back to its former
owners in exchange for the 5,000,000 shares of Common Stock the Company
originally issued to acquire Fimas. The Company decided to dispose of Fimas
because of its low gross profit margins, increasing losses and high working
capital requirements.

On December 6, 1999, the Company entered into a joint venture with
International Bearing Networks, LLC (IBN) a privately owned company in
California, to manufacture and supply a new diamond dicing blade developed by
IBN which is manufactured using a proprietary process called Diamond
Life. This venture ended in June 2000.

The acquisition of HKBI marked the beginning of the Companys emphasis on
the design, manufacturing, marketing and distribution of products for the
telecommunications industry.

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. THE COMPANY ASSUMES NO OBLIGATION
TO UPDATE SUCH FORWARD-LOOKING STATEMENTS, IF ANY, AT ANY TIME.

Principal Products

Overview

The Company principally (1) manufactures and sells cellular telephone and
other rechargeable batteries, (2) fabricates and distributes industrial
ceramics products and (3) manufactures and sells small industrial diamond
cutting tools for industry.

Excluding discontinued operations, the percentage contributions to the
Companys sales by product line for the fiscal years ended January 31, 2001,
2000 and 1999 are as follows:





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|                                 |  |                             |    |      |  |      |    |   |  |  |    |  
|-------------------------------- |  | --------------------------- | -- | ---- |  | ---- | -- | - |  |  | -- | -
|                                 |  | Contribution to Total Sales
|                                 |  |                            
|                                 |  | January 31,                
|                                 |  |                            
|Product line                     |  | 1999                        |    | 2000 |  | 2001
|                                 |  |                             |    |      |  |     
|Cellular Telephone Batteries     |  |                             | 16 | %    |  |      | 31 | % |  |  | 13 | %
|                                
|                                
|                                
|                                
|Other Rechargeable Batteries     |  |                             |   |      |  |      | 11 |   |  |  | 46 |  
|                                
|                                
|                                
|                                
|Industrial Ceramic Products      |  |                             | 55 |      |  |      | 37 |   |  |  | 25 |  
|                                
|                                
|                                
|                                
|Industrial Diamond Cutting
Tools |  |                             | 23 |      |  |      | 17 |   |  |  | 14 |  
|                                
|                                
|                                
|                                
|Miscellaneous Products           |  |                             | 5  |      |  |      | 4  |   |  |  | 2  |  

Cellular Telephone and Other Rechargeable Batteries

The Company manufactures rechargeable battery packs principally for
cellular telephones, power tools, notebook computers, and camcorders. These
products are manufactured by the Company in Malaysia and main land China, based
on battery designs and modifications engineered by the Companys research and
development team. The Companys products rely on the availability of an
adequate supply of battery cells and components, which the Company purchases
from multiple international electronics manufacturers. The Company has joint
venture agreements with two third-party suppliers in China to supply batteries
to the Company when the Company receives an order that is beyond its
manufacturing capacity or is for a product which the Company does not now
manufacture. The Companys products include replacement batteries for such
major cellular phone companies as Ericsson, Nokia, Panasonic, NEC and OKI and
many custom batteries for OEM and private label customers. The Company
currently has an insignificant share of the battery market, which is dominated
by the cellular phone manufacturers, such as Motorola, Nokia and Ericsson, and
mass retailers such as Radio Shack and Staples. The Company competes
principally on the basis of quality, price and availability.

Industrial Ceramic Products

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





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Industrial Diamond Cutting Tools

Dicing Blades.Dicing blades are made of diamonds bonded to a circular
nickel alloy blade. They are used with the precision electronic dicing saws
which the microelectronics and semiconductor industries use to cut and separate
integrated circuits and discrete devices made from silicon and other wafers.
The blade market consists principally of hubbed blades, made of diamond nickel
alloy (the most common), diamond/thermoset plastic (called resin blades, which
are the blades most widely used in precision electronic saws for cutting
ceramic substrates, even though they have a shorter useful life) and diamond
nickel alloy hubless blades. Hubbed blades are competitively manufactured
principally by Disco, Inc., Semitec Corporation and Kulicke & Soffa
Corporation. The Company, which manufactures hubbed and hubless blades in its
Malaysian facility, has an insignificant share of the world-wide dicing blade
market. There can be no assurance that the Company will be able to increase
its market share.

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

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

Miscellaneous Products

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

Raw Materials

The Company purchases its raw materials and supplies from multiple
sources. None of the raw materials and supplies it requires currently are in
short supply although factors outside of the Companys control could adversely
impact their future availability.

Backlog

As of January 31, 2001, the Company had a backlog of orders of
approximately $3 million, all of which it expects to ship by June 30, 2001.
While such orders may be cancelled or postponed, the Company believes that





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they
are firm and the resulting revenues will be realized.

Competition

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

Marketing

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

Manufacturing Facilities

In Briarcliff, New York, the Company operates a machine shop and a
manufacturing facility for resin/diamond dicing blades. The Company leases a
facility in Kepala Batas, Penang, Malaysia, equipped to manufacture dicing
blades and diamond dressing tools and another facility located in Batu Maung,
Penang, Malaysia, where it manufactures rechargeable batteries. The Company
also manufactures rechargeable batteries at a facility in Shenzhen, China. 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 China. The Company has not incurred any special or unusual costs to comply
with environmental laws or other applicable governmental regulations.

Research and Development

In the fiscal years ended January 31, 2001 and 2000, the Company spent
approximately $75,000 and $350,000, respectively, on its research and
development activities.

Employees

The Company employs approximately 50 full-time employees, of which 20 work
in its diamond tools and ceramics facilities and 30 work in its rechargeable
battery facilities. It also utilizes outside consultants and part-time workers
when required.

Item 2. Description of Property.

In Malaysia, the Company leases approximately 4,000 square feet





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of manufacturing space and 500 square feet of office space in Kepala Batas,
Penang, pursuant to a lease expiring July 2001 with minimum annual lease
payments of $7,200. It also occupies approximately 3,500 square feet of
manufacturing facilities and 600 square feet of office space in Batu Maung,
pursuant to a lease expiring July 2001, with a minimum annual lease payment of
$11,400.

In the United States, the Company leases approximately 2,400 square feet
of manufacturing and warehouse space and 1,200 square feet of office space in
Briarcliff Manor, New York, from Rachrob Realty, LLC, a company owned by Eugene
Pian, the President and a principal shareholder of the Company, pursuant to a
fifteen (15) year lease which expires on April 30, 2013, with annual base
rents, excluding utilities, maintenance and repairs, as follows: Years One to
Five   $60,000; Years Six to Ten  $66,000; Years Eleven to Fifteen  $72,000.

Item 3. Legal Proceedings.

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

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

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

PART II

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

Market Information

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

The following table sets forth the range of high and low bid information
for the Companys Common Stock for each calendar quarter within the last two
fiscal years, and for the first calendar quarter of 2001, as provided by the
Pink Sheets LLC and the National Quotation Bureau, Inc. Such quotations
reflect inter-dealer prices without retail mark-up, mark-down or commission and
may not represent actual transactions.

|               |  |     |      |      |  |   |       | 
|-------------- |  | --- | ---- | ---- |  | - | ----- | 
|2001           |  | Low |      | High
|               |  |     |      |     
|First quarter  |  | $   | .74  |      |  | $ | .21   | 
|              
|2000          
|               | 
|              
|              
|              
|              
|First quarter  |  |     | .38  |      |  |   | 2.75  | 
|              
|              
|              
|              
|Second quarter |  |     | 1.21 |      |  |   | 2.00  | 
|              
|              
|              
|              
|Third quarter  |  |     | 1.03 |      |  |   | 1.81  | 
|              
|              
|              
|              
|Fourth quarter |  |     | .31  |      |  |   | 1.10  | 
|              
|1999          
|               | 
|              
|              
|              
|              
|First quarter  |  |     | .14  |      |  |   | 1.625 | 
|              
|              
|              
|              
|Second quarter |  |     | .30  |      |  |   | .67   | 
|              
|              
|              
|              
|Third quarter  |  |     | .30  |      |  |   | .55   | 
|              
|              
|              
|              
|Fourth quarter |  |     | .40  |      |  |   | .76   | 





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Holders

As of April 24, 2001, there were 328 record holders of the Companys
Common Stock.

Recent Sales of Unregistered Securities

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

On December 10, 1999, the Company issued 1,500,000 shares of its Common
Stock pursuant to Section 4(2) of the Securities Act in exchange for all of the
issued and outstanding stock of Hong Kong Batteries Industries, Ltd. The
shares were issued as follows: 900,000 shares to To Wai Kwong Tommy and
600,000 shares to Siu Suet Ping. (In January 2001, Mr. Tommy returned 100,000
of his shares to the Company for cancellation.)

On December 12, 1999, the Company issued 5,000,000 shares of its Common
stock pursuant to Section 4(2) of the Securities Act in exchange for all of the
issued and outstanding stock of Fimas Sdn Bhd. The shares were issued as
follows: 2,475,000 shares to Yap Hun Kok; 825,000 shares to Lim Ah Huat;
825,000 shares to Voon Soo Tuck; 150,000 shares to Voon Su Piang; 150,000
shares to Wang Yunn Ing; 100,000 shares to Tiew Cheow Nan; and 475,000 shares
to Fimas Global Sdn Bhd. (On January 31, 2001, the Company sold Fimas back to
its former owners in return for such 5,000,000 shares.)

On January 28, 2000, the Company issued 250,000 shares of its Common Stock
to an individual who rendered consulting services to the Company valued at
$68,000 in connection with the Companys acquisition of Fimas The shares were
issued pursuant to Section 4(2) of the Securities Act. (In March 2001, the
consultant returned 200,000 of these shares to the Company for cancellation.)

In February 2000, the Company issued 100,000 shares of Common Stock to
SCAL Distributors in connection with a distribution agreement, pursuant to
Section 4(2) of the Securities Act.

In March 2000, the Company issued an aggregate of 875,000 shares of Common
Stock sold at a price of $.40 per share to three investors, pursuant to Section
4(2) of the Securities Act.

In March 2000, the Company issued 180,000 shares to GoPublicNow.com, an
investor relations company, for services to be rendered, pursuant to Section
4(2) of the Securities Act.





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In April 2000, the Company issued an aggregate of 317,500 shares of Common
Stock sold at a price of $1.25 per share to 15 investors, pursuant to Section 4(2) of the Securities Act.

In March 2001, the Company issued 500,000 shares to the former owners the
Companys Hong Kong Batteries Industries Ltd. subsidiary acquired in November
1999, as additional purchase price based on it having generated a certain
amount of post acquisition net income, pursuant to Section 4(2) of the
Securities Act.

In April 2001, the Company issued an aggregate of 500,000 shares to Eugene
Pian (250,000 shares), Craig Pian (150,000 shares) and Francine Pian (100,000
shares) for agreeing to extend the term of their employment agreements for an
additional five years, pursuant to Section 4(6) of the Securities Act.

Voting and Other Rights

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

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

Forward-Looking Statements

THIS MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION, CONTAINS
STATEMENTS WHICH ARE NOT HISTORICAL FACTS AND ARE FORWARD-LOOKING STATEMENTS
WHICH REFLECT MANAGEMENTS EXPECTATIONS, ESTIMATES AND ASSUMPTIONS. SUCH
STATEMENTS ARE BASED ON INFORMATION AVAILABLE AT THE TIME THIS FORM 10K-SB WAS
PREPARED AND INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO DIFFER SIGNIFICANTLY FROM
PROJECTED RESULTS. FACTORS THAT COULD CAUSE ACTUAL FUTURE





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RESULTS TO DIFFER MATERIALLY INCLUDE, AMONG OTHERS, THE RISKS OF DOING BUSINESS
IN MALAYSIA AND 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, INTENSE
COMPETITION AND TECHNOLOGICAL OBSOLESCENCE. THE COMPANY ASSUMES NO OBLIGATION
TO UPDATE SUCH FORWARD-LOOKING STATEMENTS, IF ANY, AT ANY TIME.

MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

General

The Company effected a major reorganization as of the end of fiscal year
2001 and started fiscal year 2002 restructured with core profitable product
lines in place.

Fimas Sdn. Bhd (Fimas), a Malaysian subsidiary with plants in China, had
been acquired by the Company in November 1999. Its consumer electronic product
line became the largest revenue producing arm of the Company having, for the
nine months ended October 31, 2000, contributed approximately 80% of total
sales ($18,414,032 out of a total of $22,796,000) and for fiscal year 2001 its
sales amounted to $24,091,242. However, with a very low gross profit margin of
less than 5%, Fimas had begun to incur losses. Management also became
concerned that the subsidiary would not overcome its inefficient contract
manufacturing and mode of operation as concerned to its fabrication of electronic
and telecommunications product lines.

On January 31, 2001, coincident with the end of Fiscal Year 2001, the
Company disassociated itself from Fimas by selling the subsidiary to the former
owners for the original price; namely: 5 million shares of the common stock of
SETO Holdings, Inc. (SETO). The reverse sale and its terms were mutually
agreeable. In so doing, the cessation of its OEM manufacturing, that step now
allows SETO to outsource the products it wishes to market to the
telecommunications, electronic and computer industries rather than to be
manufactured in-house at Fimas. The Company continues to anticipate a flow of
new design initiatives from a number of sources so that this part of its
business will continue on both outsourcing and joint venture bases.

Going forward, the Companys product lines will fall into three major
areas:



|1. |  | High tech manufacturing, fabrication and value added services
for the semiconductor and electronic detection industries inclusive
of ceramic products and diamond coated tools.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Energy products consisting of rechargeable batteries and
accessories for the wireless, toys, safety and emergency industries                                                   
|  
|3. |  | Telecommunications products in the telephony industries                                                                                                                        

SETO still maintains a substantial presence in the Far East with its
facilities in Malaysia and Hong Kong. For Fiscal Year 2001, 66.6% or
$3,762,354 of its sales were derived in that part of the world. Management
believes there are no signs of political uncertainty that could negatively
affect its operation in those locations. However, no assurance can be given
that adverse changes will not occur.

Management believes its financial condition remains healthy. As of
January 31, 2001, its cash position of $743,116 is 17.2% greater than it was at
the end of the previous quarter. Further, the Company feels financially
comfortable with its lenders and suppliers.

Management projects that the Company as restructured will see revenues and
net income improve significantly during fiscal year 2002. As of April, it had
a firm backlog of $2 million to be shipped over the subsequent four months.

The analysis of the results of operation that follows excludes the results
of Fimas, and other discontinued operations. As is denoted in the consolidated
Statement of Income, the discontinuation of Fimas negatively impacted fiscal
2001 net income: a loss from its operations of $154,518 and a loss on disposal
of the subsidiary of $581,121 for a total loss of $735,639. Of the latter
amount, $287,473 involved cash transactions (see Liquidity and Capital
Resources).

1



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Fiscal 2001 Compared to Fiscal 2000

In the fiscal year ended January 31, 2001, net sales increased 58.9%, from
$3,558,569 to $5,653,289, and income from operations increased 117% from
$118,630 to $257,432 compared to the previous fiscal year ended January 31,
2000. Income after taxes in fiscal year 2001 was $75,648 compared to a loss of
$4,055 in the fiscal year ended January 31, 2000.

Whereas gross profit increased 30.1% from $1,671,549 to $2,174,837 in
fiscal year 2001 compared to fiscal year 2000, the gross profit margin
decreased 18.1% from 47.0% to 38.5%. Management attributes this to the product
mix which caused the margin to be impacted by the battery lines 78.5% cost of
sales as compared to 61.5% for all lines combined during fiscal year 2001.

Management points out that during fiscal year 2001, the disassociation of
Fimas caused one time high selling, general and administrative costs and that
during the year interest expense was impacted by the operation and support of
that subsidiary.

As a result of the restructuring, the Company will be able to concentrate
in fiscal 2002 on its core profitable business lines: diamond coated tools,
high tech ceramics and batteries and accessories which respectively contributed
13.4%, 24.4% and 58.5% to total revenue. Also, although the first quarter of
the next fiscal year ending April 30, 2001 will pick up residual disassociation
expenses, Management believes their core businesses should yield total sales of
$8 to $10 million and net income in excess of $500,000 for the year.

Fiscal 2000 Compared to Fiscal 1999

In the fiscal year ended January 31, 2000, net sales increased 34.5% from
$2,646,650 to $3,558,569; and net income from operations decreased 33.1% to
$118,620 from $177,328 compared to the prior fiscal year ended January 31,
1999. Income after taxes was at a loss of $4055 for fiscal year 2000 compared
to a profit of $232,541 in fiscal year 1999.

Reviewing various cost factors affecting the above results, cost of sales
increased 35.2%, interest expense doubled to $114,933 and selling, general and
administrative expense increased 8.4% in fiscal year 2000 compared to fiscal
year 1999. Part of the reason for these negative influences, was the fact that
the Company incurred start-up costs associated with the acquisitions of Hong
Kong Batteries Industries Limited and Fimas during fiscal year 2000. On the
other hand, sales for the battery business was just being initiated.

Liquidity and Capital Resources

At January 31, 2001, the Company had current assets of $2,820,454,
inclusive of $743,116 of unrestricted cash, and current liabilities of
$2,231,580 yielding a current ratio of 1.26:1, or an improvement of almost 10%
compared to October 31, 2000. This current ratio is in the upper range of its
historical experience so that Management believes that this measure of a
companys ability to meet current obligations reflects positively on the
Companys financial health. This is especially true with the net cash increase
of $386,959 during fiscal year 2001 and the Companys ability to accommodate
the $287,473 cash requirement associated with the Fimas disassociation.

2



---



Liquidity and Capital Resources (Continued)

During the quarter ended January 31, 2001, the Company received a
Malaysian banking facility of $280,000 for short-term working capital needs,
particularly those of letters of credit. During the year just ended, SETO
issued private placement stock for $643,833 in cash. These factors coupled
with the interest and support continued to be shown by Merrill Lynch Business
Financial Services and the working capital expected to be generated by the
Companys continuing operations are believed to be sufficient to cover the
Companys growth of its existing product lines for fiscal year 2002.

On the other hand, funds for any strategic acquisitions, which the Company
plans to restrict to the U.S., will have to emanate from new financing sources.
Although discussions are in process for such transactions and additional
sources will be explored, there is no assurance that such funds will become
available and if so, that it will be sufficient and on acceptable terms to
satisfy requirements.

There are no major equipment purchases that the Company anticipates during
fiscal year 2002.

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

Effects of Foreign Currency Fluctuations

The Companys foreign operations are subject to risks related to
fluctuations in foreign currency exchange rates. During fiscal year 2001, the
foreign currency exchange gain was $881; and during fiscal 2000 the foreign
currency exchange loss was $529, and thus neither materially impacted
operational results.

Management believes that for fiscal year 2002, two factors will continue
to keep its foreign currency exchange losses or gains, if any, extremely low:
Malaysian and Chinese exchange rates are fixed relative to the U.S. Dollar and,
outside of these prime Company operating areas, the Company deals in U.S.
Dollars almost exclusively. As a by-product, a number of economists believe
that such predictable policies such as pegging exchange rates yields a key
element of financial stability.

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

Disclosures About Market Risk

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

3



---



Disclosures About Market Risk (Continued)

The Companys exposure to foreign exchange rates fluctuations results from
wholly-owned subsidiary operations in Malaysia and Hong Kong and from the
Companys share of the earnings of these operations, which are denominated in
other currencies.

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 cost of operation
or the profitability of its products during fiscal year 2002.

Forward Looking Statements

This Managements Discussion and Analysis or Plan of Operation contains
statements which are not historical facts and are forward-looking statements
which reflect managements expectations, estimates and assumptions. Such
statements are based on information available at the time this Form 10-KSB was
prepared and involve risks and uncertainties that could cause future results,
performance and 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, Hong
Kong, Southeast Asia in general, and other parts of the globe 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,
electronic and telecommunication manufacturing industries, availability of raw
materials, intense competition and technological obsolescence. The Company
assumes no obligation to update such forward-looking statements, if any, at any
time.

4



---



Item 7. Financial Statements.



| |  | The following are filed as part of this Report:                                                        
| |  | -------------------------------------------------------------------------------------------------------
|
| |  | Consolidated Financial Statements:                                                                     
|
| |  | Independent Accountants Report                                                                        
|
| |  | Consolidated Balance Sheet as at January 31, 2001                                                      
|
| |  | Consolidated Statement of Income (Loss) for the Years ended January 31,
2001 and 2000                  
|
| |  | Consolidated Statement of Comprehensive Income for the Years ended
January 31, 2001 and 2000           
|
| |  | Consolidated Statement of Cash Flows for the Years ended January 31, 2001
and 2000                     
|
| |  | Consolidated Statement of Changes in Stockholders Equity for the Years
ended January 31, 2001 and 2000
|
| |  | Notes to Consolidated Financial Statements                                                             

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 |  |     | 61 |          |  | President, Chief
Executive Officer
& Director 
|              
|              
|              
|              
|Craig Pian     |  |     | 39 |          |  | Executive Vice
President, Treasurer
& Director
|              
|              
|              
|              
|Francine Pian  |  |     | 41 |          |  | Secretary                                     
|              
|              
|              
|              
|Tan Hun Chin   |  |     | 39 |          |  | Director                                      





---



Craig and Francine Pian are the children of Eugene Pian.

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

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

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

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

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

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

Item 10. Executive Compensation.

Employment Agreements.

The Company and Eugene Pian entered into an employment agreement





---



dated May
1, 1996, providing for him to be the Companys President through April 30,
2001, and receive (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 an option to purchase 1,000,000 shares of
the Companys common stock at $.25 per share through May 5, 2001 (extended in
April 2001 to April 30, 2006). In February 1997, the agreement was amended to
grant him an option to purchase an additional 1,000,000 shares at a price of
$.10 per share. In July 1998 the agreement was amended to grant him an option
to purchase an additional 500,000 shares at $.50 per share for agreeing to
extend the contract term to June 30, 2003. In March 2000 the agreement was
amended to increase his annual base salary to $125,000 and to grant him 250,000
shares of common stock for agreeing to extend the contract term to April 30,
2006. 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.

The Company and Craig Pian entered into an employment agreement dated May
1, 1996, providing for him to be the Companys Executive Vice President and
Treasurer through April 30, 2001 and receive (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. In May 1996 he received a signing bonus of
$25,000. Under the Agreement, Mr. Pian was granted an option to purchase
1,000,000 shares of the Companys common stock at $.25 per share through May 1,
2001 (extended in April 2001 to April 30, 2006). In February 1997, the
agreement was amended to grant him an option to purchase an additional
1,000,000 shares at a price of $.10 per share. In July 1998 the agreement was
amended to grant him an option to purchase an additional 500,000 shares at $.50
per share for agreeing to extend the contract term to June 30, 2003. In March
2000 the agreement was amended to increase his annual base salary to $110,000
and to grant him 150,000 shares of common stock for agreeing to extend the
contract term to April 30, 2006. He may demand registration by the Company
under the Securities Act of all or any part of the option shares as to which
stock options have been exercised and may piggyback any other shares which he
owns.

Director Compensation

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

Summary Compensation

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





---



Summary Compensation Table

|                           |  |                     |      |     |  |        |         |              |  |           |   |          |  |        |        |            |  |           |         | 
|-------------------------- |  | ------------------- | ---- | --- |  | ------ | ------- | ------------ |  | --------- | - | -------- |  | ------ | ------ | ---------- |  | --------- | ------- | 
|                           |  |                     |      |     |  |        |         |              |  |           |   |          |  |        |        |            |  | Long Term
|                           |  | Annual Compensation |      |     |  |        |         | Compensation
|                           |  |                     |      |     |  |        |         |             
|                           |  |                     |      |     |  |        |         |              |  |           |   |          |  | Other  |        | Securities
|Name and                   |  |                     |      |     |  |        |         |              |  |           |   |          |  | Annual |        | Underlying
|Principal                  |  |                     |      |     |  | Salary |         | Bonus        |  | Comp.
(1) |   | Options/
|Position                   |  | Year                |      | ($) |  | ($)    |         | ($)          |  | SARs (#) 
|                           |  |                     |      |     |  |        |         |              |  |          
|Eugene Pian, Chief         |  |                     | 2000 |     |  |        | 110,000 |              |  |           |  |          |  |        |       |            |  |           |        | 
|                          
|                          
|                          
|                          
|Executive                  |  |                     | 1999 |     |  |        | 110,000 |              |  |           |  |          |  |        |       |            |  |           |        | 
|                          
|                          
|                          
|                          
|Officer                    |  |                     | 1998 |     |  |        | 107,499 |              |  |           |  |          |  |        |       |            |  |           | 500,000 | 
|                          
|                          
|                          
|                          
|Craig Pian,
Executive Vice |  |                     | 2000 |     |  |        | 113,423 |              |  |           |  |          |  |        | 58,813 |            |  |           | 50,000  | 
|                          
|                          
|                          
|                          
|President and              |  |                     | 1999 |     |  |        | 91,384  |              |  |           |  |          |  |        | 28,997 |            |  |           |        | 
|                          
|                          
|                          
|                          
|Treasurer                  |  |                     | 1998 |     |  |        | 83,769  |              |  |           |  |          |  |        | 53,665 |            |  |           | 500,000 | 



---

|(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.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Option/SAR Grants in Last Fiscal Year

|            |  |                   |        |                |  |             |    |            |  |              |      |              |  |  |          |  |  |   |      | 
|----------- |  | ----------------- | ------ | -------------- |  | ----------- | -- | ---------- |  | ------------ | ---- | ------------ |  |  | -------- |  |  | - | ---- | 
|            |  | Individual Grants
|            |  |                  
|            |  | Number of         |        | % of Total    
|            |  | Securities        |        | Options/SARS  
|            |  | Underlying        |        | Granted to     |  | Exercise or |    |            |  |              |      | Market Price
|            |  | Options/SARS      |        | Employees      |  | Base Price  |    | Expiration |  | on Date of  
|Name        |  | Granted (#)       |        | in Fiscal Year |  | ($/share)   |    | Date       |  | of Grant ($)
|            |  |                   |        |                |  |             |    |            |  |             
|Eugene Pian |  |                   | 0      |                |  |             |   |            |  |              |     |              |  |  |         |  |  |   |     | 
|           
|           
|           
|           
|Craig Pian  |  |                   | 50,000 |                |  |             | 16 | %          |  | $            | 0.50 |              |  |  | 02/04/02 |  |  | $ | 0.48 | 

Aggregated Option/SAR Exercises in Fiscal Year 2001
and Option/SAR Values at January 31, 2001

|            |  |              |   |          |  |                     |   |                     |  |                        |           |                      |  |  |   |  |  |   |         |  |  |  |   | 
|----------- |  | ------------ | - | -------- |  | ------------------- | - | ------------------- |  | ---------------------- | --------- | -------------------- |  |  | - |  |  | - | ------- |  |  |  | - | 
|            |  |              |   |          |  |                     |   |                     |  | Number of Securities   |           | Value of Unexercised
|            |  |              |   |          |  |                     |   |                     |  | Underlying Unexercised |           | in-the-Money        
|            |  |              |   |          |  |                     |   |                     |  | Options/SARs           |           | Options/SARs at     
|            |  | Shares       |   | Value    |  | Fiscal Year-End (#) |   | Fiscal Year-End ($)
|            |  | Acquired on  |   | Realized |  |                     |   |                    
|Name        |  | Exercise (#) |   | ($)      |  | Exercisable         |   | Unexercisable       |  | Exercisable            |           | Unexercisable       
|            |  |              |   |          |  |                     |   |                     |  |                        |           |                     
|Eugene Pian |  |              |  |          |  |                     |  |                     |  |                        | 1,000,000 |                      |  |  | 0 |  |  | $ | 390,000 |  |  |  |  | 
|           
|           
|           
|           
|            |  |              |  |          |  |                     |  |                     |  |                        | 1,000,000 |                      |  |  | 0 |  |  | $ | 540,000 |  |  |  |  | 
|           
|           
|           
|           
|            |  |              |  |          |  |                     |  |                     |  |                        | 500,000   |                      |  |  | 0 |  |  | $ | 45,000  |  |  |  |  | 
|           
|           
|           
|           
|Craig Pian  |  |              |  |          |  |                     |  |                     |  |                        | 1,000,000 |                      |  |  | 0 |  |  | $ | 390,000 |  |  |  |  | 
|           
|           
|           
|           
|            |  |              |  |          |  |                     |  |                     |  |                        | 1,000,000 |                      |  |  | 0 |  |  | $ | 540,000 |  |  |  |  | 
|           
|           
|           
|           
|            |  |              |  |          |  |                     |  |                     |  |                        | 500,000   |                      |  |  | 0 |  |  | $ | 45,000  |  |  |  |  | 
|           
|           
|           
|           
|            |  |              |  |          |  |                     |  |                     |  |                        | 50,000    |                      |  |  | 0 |  |  | $ | 4,500   |  |  |  |  | 





---



Item 11. Security Ownership of Certain Beneficial Owners and Management.

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

|                                                                                       |  |                                                  |  |           |              |            |      |   |  | 
|-------------------------------------------------------------------------------------- |  | ------------------------------------------------ |  | --------- | ------------ | ---------- | ---- | - |  | 
|Name and Address of                                                                    |  | Position                                         |  | Number    |              | Percentage
|Beneficial Owner                                                                       |  | with Company                                     |  | of Shares |              | of Class  
|                                                                                       |  |                                                  |  |           |              |           
|Eugene J. Pian
c/o Semicon Tools, Inc.
554 North State Road
Briarcliff Manor, NY 10510 |  | President and
Director                           |  |           | 4,364,567(1) |            | 24.5 | %
|                                                                                      
|Craig Pian
c/o Semicon Tools, Inc.
554 North State Road
Briarcliff Manor, NY 10510     |  | Executive Vice
President,
Treasurer and
Director |  |           | 2,700,333(2) |            | 15.4 |  
|                                                                                      
|Francine Pian
c/o Semicon Tools, Inc.
554 North State Road
Briarcliff Manor, NY 10510  |  | Secretary
and Director                           |  |           | 1,003,560(3) |            | 6.7  |  
|                                                                                      
|Tan Hun Chin
#35,Lintang Delima 3,
Greenlane
11700 Penang, Malaysia                    |  | Director                                         |  |           | 580,000(4)   |            | 3.7  |  
|                                                                                      
|All Directors and Executive
Officers as a Group
(4 Persons)                            |  |                                                  |  |           | 8,748,460(5) |            | 40.8 |  





---





---

|(1) |  | Includes currently exercisable options to purchase 2,500,000 shares of
Common Stock, 225,000 shares of Common Stock held under voting trusts
which terminate when the shareholder sells his stock, and 25,000 shares
and 25,000 currently exercisable options owned by his spouse as to which
he disclaims beneficial ownership.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Includes currently exercisable options to purchase 2,550,000 shares of
Common Stock.                                                                                                                                                                                                                                            
|   
|   
|   
|   
|(3) |  | Includes currently exercisable options to purchase 550,000 shares of
Common Stock.                                                                                                                                                                                                                                              
|   
|   
|   
|   
|(4) |  | Includes currently exercisable options to purchase 550,000 shares of
Common Stock.                                                                                                                                                                                                                                              
|   
|   
|   
|   
|(5) |  | Includes currently exercisable options to purchase 6,150,000 shares of
Common Stock.                                                                                                                                                                                                                                            

|         |  |                                                
|-------- |  | -----------------------------------------------
|Item 12. |  | Certain Relationships and Related Transactions.

|    
|----
|None

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

|    |  |                   
|--- |  | ------------------
|(a) |  | Index of Exhibits.

|      |  |                                                                      
|----- |  | ---------------------------------------------------------------------
|      |  | Exhibit                                                              
|      |  |                                                                      
|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        
|     
|     
|     
|     
|10(n) |  | Teik Tatt Holding Co.
Disposition Agreement6                         
|     
|     
|     
|     
|10(o) |  | Hong Kong Batteries
Industries, Ltd.                                 





---



|      |  |                                                 
|----- |  | ------------------------------------------------
|      |  | Exhibit                                         
|      |  |                                                 
|     
|     
|     
|     
|      |  | Acquisition Agreement7                          
|     
|     
|     
|     
|10(p) |  | Fimas Sdn Bhd.
Acquisition Agreement8           
|     
|     
|     
|     
|10(q) |  | Fimas Sdn Bhd.
Disposition Agreement10          
|     
|     
|     
|     
|16    |  | The required letter from the
former accountants9
|     
|     
|     
|     
|21    |  | List of Subsidiaries                            



---

|(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
September 19, 1998.                              
|    
|    
|    
|    
|(7)  |  | Incorporated by Reference from
Registrants Form 8-K Report dated December 9, 1999.                                
|    
|    
|    
|    
|(8)  |  | Incorporated by Reference from
Registrants Form 8-K Report dated December 10, 1999.                               
|    
|    
|    
|    
|(9)  |  | Incorporated by Reference from
Registrants Form 8-K Report dated January 29, 1993.                                
|    
|    
|    
|    
|(10) |  | Incorporated by Reference from Registrants Form
8-K Report dated January 31, 2001.                                





---



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.

SIGNATURES

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

| |                    |                          
| | ------------------ | -------------------------
| | SETO HOLDINGS, INC
| |                   
| | (Registrant)      
|
| | By                 | /s/ Eugene J. Pian       
| |                    |                          
| |                    | Eugene J. Pian, President
|
| |                    | Date:  April 26, 2001    

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 26, 2001
|
| |  | /s/ Craig A. Pian    
| |  |                      
| |  | Director             
|
| |  | Date:  April 26, 2001
|
| |  | /s/ Francine Pian    
| |  |                      
| |  | Director             
|
| |  | Date:  April 26, 2001
|
| |  |                      
|
| |  |                      
| |  | Director             





---



INDEPENDENT AUDITORS REPORT

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

We have audited the consolidated balance sheet of SETO Holdings, Inc. and
Subsidiaries as of January 31, 2001 and the related consolidated statements of
income (loss), comprehensive income, cash flows and changes in shareholders
equity for the years ended January 31, 2001 and 2000. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of DTI Technology, SDN
BHD, Fuji Fabrication SDN BHD, Hong Kong Batteries Industries, Ltd. and SETO
Technology Dot Com, SDN BHD, wholly owned subsidiaries, which statements
reflect total assets of $2,167,141 at January 31, 2001 and total sales for the
years ended January 31, 2001 and 2000 of $3,762,354 and $1,919,491
respectively. Those statements were audited by other auditors whose report has
been furnished to us, and our opinion, insofar as it relates to the amounts
included for DTI Technology, SDN BHD and Fuji Fabrication, SDN BHD, Hong Kong
Batteries Industries, Ltd. and SETO Technology Dot Com SDN BHD, is based solely
on the report of the other auditors. We did not audit the financial statements
of Fimas SDN BHD, a subsidiary which was disposed of in January 2001. Those
statements as of January 31, 2000 and for the year then ended, which reflected
a net income of $90,926, were audited by other auditors whose report had been
furnished to us, and our opinion, insofar as it relates to the amounts included
for Fimas, SDN BHD, was based solely on the report of other auditors. The
financial statements of Fimas, SDN BHD as of January 31, 2001, and for the year
then ended, which reflect a net loss of $154,518 were not audited and that
companys accountants did not express an opinion on them.

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

In our opinion, based on our audits and the reports of other auditors,
except for the effects of such adjustments, if any, that might have been
necessary had the financial statements of Fimas, SDN BHD, a significant former
subsidiary of the Company, as of January 31, 2001 and for the year then ended,
had been audited, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of SETO
Holdings, Inc. and Subsidiaries as of January 31, 2001 and the results of their
operations, cash flows and changes in shareholders equity for the years ended
January 31, 2001 and 2000, in accordance with accounting principles generally
accepted in the United States of America.

|                                        |  |                        
|--------------------------------------- |  | -----------------------
|April 25, 2001
Mountainside, New Jersey |  | ZELLER WEISS & KAHN LLP

F-1



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET  JANUARY 31, 2001

ASSETS

|                       |                                                                      |                      |           |         |           | 
|---------------------- | -------------------------------------------------------------------- | -------------------- | --------- | ------- | --------- | 
|Current assets:       
|                      
|                      
|                      
|                      
|                       | Cash                                                                 |                      | $         | 743,116 |          
|                      
|                      
|                      
|                      
|                       | Accounts receivable, less allowance
for doubtful accounts of $10,350 |                      |           | 857,737 |          
|                      
|                      
|                      
|                      
|                       | Inventory                                                            |                      |           | 949,360 |          
|                      
|                      
|                      
|                      
|                       | Prepaid expenses and other assets                                    |                      |           | 156,032 |          
|                      
|                      
|                      
|                      
|                       | Deferred tax asset, current portion                                  |                      |           | 114,209 |          
|                       |                                                                      |                      |           |        
|                       |                                                                      | Total current assets |           |         | 2,820,454 | 
|                       |                                                                      |                      |           |        
|Property and Equipment |                                                                      |                      | 751,864   |        
|                       |                                                                      |                      |           |        
|Other assets:         
|                      
|                      
|                      
|                      
|                       | Goodwill, net of amortization                                        |                      |           | 834,001 |          
|                      
|                      
|                      
|                      
|                       | Security deposits                                                    |                      |           | 6,947   |          
|                      
|                      
|                      
|                      
|                       | Deferred tax asset, net of current portion                           |                      |           | 220,917 |          
|                       |                                                                      |                      |           |        
|                       |                                                                      |                      | 1,061,865 |        
|                       |                                                                      |                      |           |        
|                       |                                                                      | $                    | 4,634,183 |        
|                       |                                                                      |                      |           |        

LIABILITIES AND SHAREHOLDERS EQUITY

|                                       |                                                                                      |                            |           |            |           | 
|-------------------------------------- | ------------------------------------------------------------------------------------ | -------------------------- | --------- | ---------- | --------- | 
|Current liabilities:                  
|                                      
|                                      
|                                      
|                                      
|                                       | Current portion of long-term debt                                                    |                            | $         | 127,395    |          
|                                      
|                                      
|                                      
|                                      
|                                       | Notes payable                                                                        |                            |           | 981,153    |          
|                                      
|                                      
|                                      
|                                      
|                                       | Accounts payable                                                                     |                            |           | 792,452    |          
|                                      
|                                      
|                                      
|                                      
|                                       | Accrued expenses                                                                     |                            |           | 330,580    |          
|                                       |                                                                                      |                            |           |           
|                                       |                                                                                      | Total current liabilities  |           |            | 2,231,580 | 
|                                       |                                                                                      |                            |           |           
|Long-term debt, net of current portion |                                                                                      |                            | 122,074   |           
|                                       |                                                                                      |                            |           |           
|Deferred lease liability               |                                                                                      |                            | 16,500    |           
|                                       |                                                                                      |                            |           |           
|Deferred income taxes payable          |                                                                                      |                            | 41,189    |           
|                                       |                                                                                      |                            |           |           
|Commitments and contingencies         
|                                      
|                                      
|                                      
|                                      
|Shareholders equity:                 
|                                      
|                                      
|                                      
|                                      
|                                       | Common stock par value $.001; 100,000,000
shares authorized 14,361,000 shares issued |                            |           | 14,361     |          
|                                      
|                                      
|                                      
|                                      
|                                       | Additional paid in capital                                                           |                            |           | 4,389,146  |          
|                                      
|                                      
|                                      
|                                      
|                                       | Currency translation adjustment                                                      |                            |           | (219,119   | )        
|                                      
|                                      
|                                      
|                                      
|                                       | Retained earnings (deficit)                                                          |                            |           | (1,952,522 | )        
|                                       |                                                                                      |                            |           |           
|                                       |                                                                                      |                            | 2,231,866 |           
|                                      
|                                      
|                                      
|                                      
|                                       | Less common shares held in treasury, 29,400
shares at cost                           |                            |           | (9,026     | )        
|                                       |                                                                                      |                            |           |           
|                                       |                                                                                      | Total shareholders equity |           |            | 2,222,840 | 
|                                       |                                                                                      |                            |           |           
|                                       |                                                                                      | $                          | 4,634,183 |           
|                                       |                                                                                      |                            |           |           

See notes to consolidated financial statements.

F-2



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (LOSS)

YEARS ENDED JANUARY 31, 2001 AND 2000

|                                             |                          |                                             |           |   |          |        |           |   |          |      | 
|-------------------------------------------- | ------------------------ | ------------------------------------------- | --------- | - | -------- | ------ | --------- | - | -------- | ---- | 
|                                             |                          |                                             |           |   | 2001     |        | 2000     
|                                             |                          |                                             |           |   |          |        |          
|Net sales                                    |                          | $                                           | 5,653,289 |   |          | $      | 3,558,569 |  
|                                            
|                                            
|                                            
|                                            
|Cost of sales                                |                          |                                             | 3,478,452 |   |          |        | 1,887,020 |  
|                                             |                          |                                             |           |   |          |        |           |  
|Gross profit                                 |                          |                                             | 2,174,837 |   |          |        | 1,671,549 |  
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative
expenses |                          |                                             | 1,917,405 |   |          |        | 1,552,919 |  
|                                             |                          |                                             |           |   |          |        |           |  
|Income from operations                       |                          |                                             | 257,432   |   |          |        | 118,630   |  
|                                             |                          |                                             |           |   |          |        |           |  
|Other income (expenses):                    
|                                            
|                                            
|                                            
|                                            
|                                             |                          | Interest income                             |           |   | 13,630   |        |           |   | 3,264    |     
|                                            
|                                            
|                                            
|                                            
|                                             |                          | Loss on disposal of assets                  |           |   | (12,250  | )     
|                                            
|                                            
|                                            
|                                            
|                                             |                          | Interest expense                            |           |   | (152,953 | )      |           |   | (114,933 | )   
|                                            
|                                            
|                                            
|                                            
|                                             |                          | Foreign currency exchange                   |           |   | 881      |        |           |   | (529     | )   
|                                             |                          |                                             |           |   |          |        |           |  
|                                             |                          |                                             | (150,692  | ) |          |        | (112,198  | )
|                                             |                          |                                             |           |   |          |        |           |  
|Income before income taxes                   |                          |                                             | 106,740   |   |          |        | 6,432     |  
|                                            
|                                            
|                                            
|                                            
|Income taxes                                 |                          |                                             | 31,092    |   |          |        | 10,487    |  
|                                             |                          |                                             |           |   |          |        |           |  
|Income (loss) from continuing operations     |                          |                                             | 75,648    |   |          |        | (4,055    | )
|                                             |                          |                                             |           |   |          |        |           |  
|Discontinued operations:                    
|                                            
|                                            
|                                            
|                                            
|                                             |                          | Income (loss) from operations of subsidiary |           |   | (154,518 | )      |           |   | 90,296   |     
|                                            
|                                            
|                                            
|                                            
|                                             |                          | Loss on disposal of subsidiary              |           |   | (581,121 | )     
|                                             |                          |                                             |           |   |          |        |           |  
|                                             |                          |                                             | (735,639  | ) |          |        | 90,296    |  
|                                             |                          |                                             |           |   |          |        |           |  
|Net income (loss)                            |                          |                                             | ($659,991 | ) |          | $      | 86,241    |  
|                                             |                          |                                             |           |   |          |        |           |  
|Earnings per share information:             
|                                            
|                                            
|                                            
|                                            
|                                             |                          | Income from continuing operations           |          
|                                             |                          |                                             | Basic     |   | $        | 0.00   |           |   | $        | 0.00 | 
|                                             |                          |                                             |           |   |          |        |           |  
|                                             |                          |                                             | Diluted   |   | $        | 0.00   |           |   | $        | 0.00 | 
|                                             |                          |                                             |           |   |          |        |           |  
|                                             | Discontinued operations:
|                                            
|                                            
|                                            
|                                            
|                                             |                          |                                             | Basic     |   |          | ($0.04 | )         |   | $        | 0.01 | 
|                                             |                          |                                             |           |   |          |        |           |  
|                                             |                          |                                             | Diluted   |   |          | ($0.04 | )         |   | $        | 0.00 | 
|                                             |                          |                                             |           |   |          |        |           |  

See notes to consolidated financial statements.

F-3



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEARS ENDED JANUARY 31, 2001 AND 2000

|                                        |                                         |  |           |         |      |   |        |         |  
|--------------------------------------- | --------------------------------------- |  | --------- | ------- | ---- | - | ------ | ------- | -
|                                        |                                         |  | 2001      |         | 2000
|                                        |                                         |  |           |         |     
|Net income (loss)                       |                                         |  | ($659,991 | )       |      | $ | 86,241 |        
|                                       
|                                       
|                                       
|                                       
|Other comprehensive income, net of tax:
|                                       
|                                       
|                                       
|                                       
|                                        | Foreign currency translation adjustment |  |           | (20,144 | )    |   |        | (79,601 | )
|                                        |                                         |  |           |         |      |   |        |        
|Comprehensive income (loss)             |                                         |  | ($680,135 | )       |      | $ | 6,640  |        
|                                        |                                         |  |           |         |      |   |        |        

See notes to consolidated financial statements.

F-4



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

YEARS ENDED JANUARY 31, 2001 AND 2000

|                                        |                                                                                |                                                    |                                                        |          |         |           |         |          |        |          |  
|--------------------------------------- | ------------------------------------------------------------------------------ | -------------------------------------------------- | ------------------------------------------------------ | -------- | ------- | --------- | ------- | -------- | ------ | -------- | -
|                                        |                                                                                |                                                    |                                                        |          | 2001    |           | 2000   
|                                        |                                                                                |                                                    |                                                        |          |         |           |        
|Operating activities:                  
|                                       
|                                       
|                                       
|                                       
|                                        | Income (loss) from continuing operations                                       |                                                    | $                                                      | 75,648   |         |           |         | ($4,055  | )     
|                                       
|                                       
|                                       
|                                       
|                                        | Adjustments to reconcile net income to cash
provided by continuing operations:
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                | Depreciation and amortization                      |                                                        |          | 138,534 |           |         |          | 76,371 |         
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                | Loss on sale of assets                             |                                                        |          | 12,250  |           |         |          | 2,064  |         
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                | Compensatory stock issued                          |                                                        |          | 33,556  |          
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                | Changes in other operating assets and
liabilities:
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                |                                                    | Accounts receivable                                    |          |         | (59,507   | )       |          |        | (409,766 | )
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                |                                                    | Inventories                                            |          |         | (9,898    | )       |          |        | (178,764 | )
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                |                                                    | Prepaid expenses and other current assets              |          |         | (35,688   | )       |          |        | (86,034  | )
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                |                                                    | Deferred tax assets                                    |          |         |           |         |          |        | (11,126  | )
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                |                                                    | Other assets                                           |          |         | 7,210     |         |          |        | 1,393    |  
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                |                                                    | Accounts payable and accrued expenses                  |          |         | (318,188  | )      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                |                                                    | Deferred lease liability                               |          |         | 6,000     |         |          |        | 815,756  |  
|                                        |                                                                                |                                                    |                                                        |          |         |           |         |         
|                                        |                                                                                |                                                    | Net cash used in continuing operations                 |          |         | (150,083  | )       |          |        | (205,839 | )
|                                        |                                                                                |                                                    |                                                        |          |         |           |         |         
|                                        |                                                                                |                                                    | Net cash provided by (used in)
discontinued operations |          |         | (287,473  | )       |          |        | 90,296   |  
|                                        |                                                                                |                                                    |                                                        |          |         |           |         |         
|                                        |                                                                                |                                                    | Net cash provided by (used in)
operating activities    |          |         | (437,556  | )       |          |        | 296,135  |  
|                                        |                                                                                |                                                    |                                                        |          |         |           |         |         
|Investing activities:                  
|                                       
|                                       
|                                       
|                                       
|                                        | Cash acquired on acquisition of subsidiaries                                   |                                                    |                                                        |          |         |           |         | 305,603  |       
|                                       
|                                       
|                                       
|                                       
|                                        | Purchase of property and equipment                                             |                                                    |                                                        | (182,270 | )       |           |         | (164,453 | )     
|                                       
|                                       
|                                       
|                                       
|                                        | Proceeds from sale of assets                                                   |                                                    |                                                        |          |         |           |         | 2,659    |       
|                                        |                                                                                |                                                    |                                                        |          |         |           |         |         
|                                        |                                                                                |                                                    | Net cash provided by (used in) investing
activities    |          |         | (182,270  | )       |          |        | 143,809  |  
|                                        |                                                                                |                                                    |                                                        |          |         |           |         |         
|Financing activities:                  
|                                       
|                                       
|                                       
|                                       
|                                        | Proceeds from issuance of common stock                                         |                                                    |                                                        | 723,927  |         |           |         | 90,000   |       
|                                       
|                                       
|                                       
|                                       
|                                        | Proceeds from financing                                                        |                                                    |                                                        | 919,899  |         |           |         | 290,000  |       
|                                       
|                                       
|                                       
|                                       
|                                        | Payment of debt                                                                |                                                    |                                                        | (616,897 | )       |           |         | (450,238 | )     
|                                        |                                                                                |                                                    |                                                        |          |         |           |         |         
|                                        |                                                                                |                                                    | Net cash provided by financing
activities              |          |         | 1,026,929 |         |          |        | (70,238  | )
|                                        |                                                                                |                                                    |                                                        |          |         |           |         |         
|Effect of exchange rate changes on cash |                                                                                |                                                    | (20,144                                                | )        |         |           | (79,601 | )       
|                                        |                                                                                |                                                    |                                                        |          |         |           |         |         
|Net increase in cash                    |                                                                                |                                                    | 386,959                                                |          |         |           | 290,105 |         
|                                       
|                                       
|                                       
|                                       
|Cash, beginning of period               |                                                                                |                                                    | 356,157                                                |          |         |           | 66,052  |         
|                                        |                                                                                |                                                    |                                                        |          |         |           |         |         
|Cash, end of period                     |                                                                                | $                                                  | 743,116                                                |          |         | $         | 356,157 |         
|                                        |                                                                                |                                                    |                                                        |          |         |           |         |         

See notes to consolidated financial statements.

F-5



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

YEARS ENDED JANUARY 31, 2001 AND 2000

|                                                                                             |  |        |            |       |  |         |        |             |  |            |            |              |  |            |           |               |  |  |             |       |  |  |          |   |  |   |            |  
|-------------------------------------------------------------------------------------------- |  | ------ | ---------- | ----- |  | ------- | ------ | ----------- |  | ---------- | ---------- | ------------ |  | ---------- | --------- | ------------- |  |  | ----------- | ----- |  |  | -------- | - |  | - | ---------- | -
|                                                                                             |  |        |            |       |  |         |        |             |  |            |            |              |  | Equity    
|                                                                                             |  |        |            |       |  |         |        |             |  |            |            |              |  | adjustment
|                                                                                             |  |        |            |       |  |         |        |             |  | Additional |            | from foreign |  | Accumu-    |           |               |  |  |             | Total
|                                                                                             |  |        |            |       |  | Common  |        | paid in     |  | currency   |            | lated        |  | Treasury   |           | Stockholders'
|                                                                                             |  | Shares |            | stock |  | capital |        | translation |  | (deficit)  |            | stock        |  | equity    
|                                                                                             |  |        |            |       |  |         |        |             |  |            |            |              |  |           
|Balance, January 31, 1999                                                                    |  |        | 10,548,500 |       |  | $       | 10,549 |             |  | $          | 2,779,625  |              |  |            | ($119,374 | )             |  |  | ($1,378,772 | )     |  |  | ($15,166 | ) |  | $ | 1,276,862  |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Issuance of shares regarding acquisition
of subsidiary, Hong Kong Batteries
Industries, Ltd. |  |        | 1,500,000  |       |  |         | 1,500  |             |  |            | 725,500    |              |  |            |           |               |  |  |             |       |  |  |          |   |  |   | 727,000    |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Issuance of shares regarding acquisition
of subsidiary, Fimes, SDN BHD                       |  |        | 5,250,000  |       |  |         | 5,250  |             |  |            | 4,513,112  |              |  |            |           |               |  |  |             |       |  |  |          |   |  |   | 4,518,362  |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Shares issued for cash                                                                       |  |        | 330,000    |       |  |         | 330    |             |  |            | 87,170     |              |  |            |           |               |  |  |             |       |  |  |          |   |  |   | 87,500     |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Shares issued for services                                                                   |  |        | 510,000    |       |  |         | 510    |             |  |            | 129,290    |              |  |            |           |               |  |  |             |       |  |  |          |   |  |   | 129,800    |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Shares cancelled                                                                             |  |        | (20,000    | )     |  |         | (20    | )           |  |            | (82,622    | )            |  |            |           |               |  |  |             |       |  |  | 6,140    |   |  |   | (76,502    | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Foreign currency translation adjustment
for the year ended January 31, 2000                  |  |        |            |       |  |         |        |             |  |            |            |              |  |            | (79,601   | )             |  |  |             |       |  |  |          |   |  |   | (79,601    | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Net income for the year ended January
31, 2000                                               |  |        |            |       |  |         |        |             |  |            |            |              |  |            |           |               |  |  | 86,241      |       |  |  |          |   |  |   | 86,241     |  
|                                                                                             |  |        |            |       |  |         |        |             |  |            |            |              |  |            |           |               |  |  |             |       |  |  |          |   |  |   |            |  
|Balance, January 31, 1999                                                                    |  |        | 18,118,500 |       |  |         | 18,119 |             |  |            | 8,152,075  |              |  |            | (198,975  | )             |  |  | (1,292,531  | )     |  |  | (9,026   | ) |  |   | 6,669,662  |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Shares issued for cash                                                                       |  |        | 1,262,500  |       |  |         | 1,262  |             |  |            | 643,833    |              |  |            |           |               |  |  |             |       |  |  |          |   |  |   | 645,095    |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Shares issued for services                                                                   |  |        | 180,000    |       |  |         | 180    |             |  |            | 50,220     |              |  |            |           |               |  |  |             |       |  |  |          |   |  |   | 50,400     |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Shares cancelled                                                                             |  |        | (200,000   | )     |  |         | (200   | )           |  |            | (6,982     | )            |  |            |           |               |  |  |             |       |  |  |          |   |  |   | (7,182     | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Cancellation of shares regarding
acquisition of Fimas, SDN BHD                               |  |        | (5,000,000 | )     |  |         | (5,000 | )           |  |            | (4,450,000 | )            |  |            |           |               |  |  |             |       |  |  |          |   |  |   | (4,455,000 | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Foreign currency translation adjustment
for the year ended January 31, 2001                  |  |        |            |       |  |         |        |             |  |            |            |              |  |            | (20,144   | )             |  |  |             |       |  |  |          |   |  |   | (20,144    | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Net loss for the year ended January 31, 2001                                                 |  |        |            |       |  |         |        |             |  |            |            |              |  |            |           |               |  |  | (659,991    | )     |  |  |          |   |  |   | (659,991   | )
|                                                                                             |  |        |            |       |  |         |        |             |  |            |            |              |  |            |           |               |  |  |             |       |  |  |          |   |  |   |            |  
|Balance, January 31, 2001                                                                    |  |        | 14,361,000 |       |  | $       | 14,361 |             |  | $          | 4,389,146  |              |  |            | ($219,119 | )             |  |  | ($1,952,522 | )     |  |  | ($9,026  | ) |  | $ | 2,222,840  |  
|                                                                                             |  |        |            |       |  |         |        |             |  |            |            |              |  |            |           |               |  |  |             |       |  |  |          |   |  |   |            |  

See notes to consolidated financial statements.

F-6



---



SETO HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. |  | Organization of the Company:
|-- |  | ----------------------------

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

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

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

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

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

Seto Technology dot com SDN BHD is a Malaysian corporation which sells
telecommunications products.



|2. |  | Summary of significant accounting policies:
|-- |  | -------------------------------------------

Principles of consolidation:
The consolidated financial statements of SETO Holdings, Inc. and
subsidiaries include all the accounts of SETO Holdings, Inc.,
and all of the subsidiaries listed above after elimination of
all significant intercompany transactions and accounts. The
financial statements give retroactive effect to the
disposition of Fimas, SDN BHD. (See Note 12)

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

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

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

F-7



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|2. |  | Summary of significant accounting policies (continued):
|-- |  | -------------------------------------------------------

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

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

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

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

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

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

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

F-8



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|2. |  | Summary of significant accounting policies (continued):
|-- |  | -------------------------------------------------------

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

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

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



|3. |  | Nature of operation, risks and uncertainties:
|-- |  | ---------------------------------------------

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



|4. |  | Property and equipment:
|-- |  | -----------------------

Major classifications of property and equipment are as follows:

|                              |  |   |           | 
|----------------------------- |  | - | --------- | 
|Leasehold improvements        |  | $ | 83,934    | 
|                             
|                             
|                             
|                             
|Manufacturing equipment       |  |   | 1,084,220 | 
|                             
|                             
|                             
|                             
|Office equipment              |  |   | 70,383    | 
|                              |  |   |           | 
|                              |  |   | 1,238,537 | 
|                             
|                             
|                             
|                             
|Less accumulated depreciation |  |   | 486,673   | 
|                              |  |   |           | 
|                              |  | $ | 751,864   | 
|                              |  |   |           | 

F-9



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|5. |  | Goodwill:
|-- |  | ---------

In January, 1990, the Company acquired East Coast Sales Company for a
cost of $309,000. The purchase price exceeded the fair value of the
assets by $134,281 which amount was assigned to goodwill, and is being
amortized on a straight-line basis over forty years. Accumulated
amortization of goodwill amounted to $45,471 as of January 31, 2001.

In June, 1998, the Company acquired Fuji Fabrication, SDN BHD for a
cost of $100,000. The purchase price exceeded fair value of the assets
by $20,999, which amount was assigned to goodwill and is being amortized
over a forty year period. Accumulated amortization of goodwill amounted
to $1,356 as of January 31, 2001.

In November, 1999, the Company acquired Hong Kong Batteries Industries,
Ltd. for a cost of $727,000. The purchase price exceeded the net book value of
the acquired company by $747,300 which amount was assigned to goodwill and is
being amortized on a straight-line basis over forty years. Accumulated
amortization of goodwill amounted to $21,752 as of January 31, 2001.



|6. |  | Commitments and contingencies:
|-- |  | ------------------------------

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

|                 |  |   |         | 
|---------------- |  | - | ------- | 
|January 31, 2002 |  | $ | 60,000  | 
|                
|                
|                
|                
|January 31, 2003 |  |   | 60,000  | 
|                
|                
|                
|                
|January 31, 2004 |  |   | 64,500  | 
|                
|                
|                
|                
|January 31, 2005 |  |   | 66,000  | 
|                
|                
|                
|                
|January 31, 2006 |  |   | 66,000  | 
|                
|                
|                
|                
|Thereafter       |  |   | 508,500 | 
|                 |  |   |         | 
|                 |  | $ | 825,000 | 
|                 |  |   |         | 

Rent expense amounted to $73,478 for the year ended January 31, 2001 and
$66,000 for 2000.

The Company also leases three vehicles under operating leases with terms
expiring through 2003. Total lease expense was $49,283 and $34,452 for the
years ended January 31, 2001 and 2000, respectively.

F-10



---



SETO HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|7. |  | Common stock:
|-- |  | -------------

During the year ended January 31, 2001, the Company issued 1,542,500
  shares of its common shares with net proceeds of $758,927 upon the
exercise of certain common stock purchase options, and restricted
private placement stock.



|8. |  | Notes payable and long-term debt:
|-- |  | ---------------------------------

The Company has an outstanding line of credit with a financial
institution in the amount of
$1,000,000. The line of credit
carries interest at an annual
rate of 2.9% plus the 30 day
dealer commercial paper rate
with an expiration date of
April 30, 2001. As of January
31, 2001, the Company had
utilized $981,153 of the line
of credit. The loan is secured
by the personal guarantee of
the Company President and the
assets of Seto Holding Inc.

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

|                   |                      |  |      |   |      |   |             |         |  |  |      |  | 
|------------------ | -------------------- |  | ---- | - | ---- | - | ----------- | ------- |  |  | ---- |  | 
|                   |                      |  |      |   |      |   | Balance    
|                   |                      |  |      |   |      |   | January 31,
|                   |                      |  | Rate |   | 2001 |   | Maturity   
|                   |                      |  |      |   |      |   |            
|Equipment loan (a) |                      |  | 15   | % |      | $ | 50,109      |         |  |  | 2004 | 
|                  
|                  
|                  
|                  
|Shareholder (b)    |                      |  | 10   | % |      |   | 19,137      |         |  |  | 2001 | 
|                  
|                  
|                  
|                  
|Shareholder (b)    |                      |  | 15   | % |      |   | 101,046     |         |  |  | 2003 | 
|                  
|                  
|                  
|                  
|Shareholder (b)    |                      |  | 10   | % |      |   | 41,323      |         |  |  | 2002 | 
|                   |                      |  |      |   |      |   |             |        
|                   |                      |  |      |   |      |   | 211,615     |        
|                  
|                  
|                  
|                  
|                   | Less current portion |  |      |   |      |   |             | 117,527 | 
|                   |                      |  |      |   |      |   |             |        
|                   |                      |  |      |   |      | $ | 94,088      |        
|                   |                      |  |      |   |      |   |             |        



|(a) |  | The note is payable in monthly installments of $1,607 including
interest.                       
|--- |  | ------------------------------------------------------------------------------------------------
|   
|(b) |  | The notes are payable to shareholders in monthly amounts
aggregating 12,417, including interest.

The maturities of these loans are as follows:

|                 |  |   |         | 
|---------------- |  | - | ------- | 
|January 31, 2002 |  | $ | 117,527 | 
|                
|                
|                
|                
|January 31, 2003 |  |   | 66,286  | 
|                
|                
|                
|                
|January 31, 2004 |  |   | 21,573  | 
|                
|                
|                
|                
|January 31, 2005 |  |   | 6,229   | 
|                 |  |   |         | 
|                 |  | $ | 211,615 | 
|                 |  |   |         | 

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

|     |  |  |                   |  |  |   |        | 
|---- |  |  | ----------------- |  |  | - | ------ | 
|DTI:
|    
|    
|    
|    
|     |  |  | Capitalized lease |  |  | $ | 37,854 | 
|    
|    
|    
|    
|     |  |  | Current portion   |  |  |   | 9,868  | 
|     |  |  |                   |  |  |   |        | 
|     |  |  |                   |  |  | $ | 27,986 | 
|     |  |  |                   |  |  |   |        | 

F-11



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|9. |  | Income taxes:
|-- |  | -------------

Provision for income taxes (benefit):

|          |          |               |        |        |        |      |        |         |         |  
|--------- | -------- | ------------- | ------ | ------ | ------ | ---- | ------ | ------- | ------- | -
|          |          |               |        | 2001   |        | 2000
|          |          |               |        |        |        |     
|Domestic:
|         
|         
|         
|         
|          | Current  |               | $      | 6,895  |        |      | $      | 0       |        
|         
|         
|         
|         
|          | Deferred |               |        | 0      |        |      |        | (11,126 | )      
|          |          |               |        |        |        |      |        |        
|          |          | Total benefit |        |        | 6,895  |      |        |         | (11,126 | )
|          |          |               |        |        |        |      |        |        
|Foreign: 
|         
|         
|         
|         
|          | Current  |               |        | 0      |        |      |        | 0       |        
|         
|         
|         
|         
|          | Deferred |               |        | 24,197 |        |      |        | 37,592  |        
|          |          |               |        |        |        |      |        |        
|          |          |               | 24,197 |        |        |      | 37,592 |        
|          |          |               |        |        |        |      |        |        
|          |          | Total         |        | $      | 31,092 |      |        | $       | 26,466  |  
|          |          |               |        |        |        |      |        |        

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

|                                                            |  |      |        |      |  |   |         |  
|----------------------------------------------------------- |  | ---- | ------ | ---- |  | - | ------- | -
|                                                            |  | 2001 |        | 2000
|                                                            |  |      |        |     
|Income tax computed at the domestic
federal statutory rates |  | $    | 0      |      |  | $ | 0       |  
|                                                           
|                                                           
|                                                           
|                                                           
|State tax (net of federal benefit)                          |  |      | 6,895  |      |  |   | 0       |  
|                                                           
|                                                           
|                                                           
|                                                           
|Reduction on valuation allowance                            |  |      | 0      |      |  |   | (11,126 | )
|                                                           
|                                                           
|                                                           
|                                                           
|Foreign deferred taxes                                      |  |      | 24,197 |      |  |   | 37592   |  
|                                                            |  |      |        |      |  |   |         |  
|Provision (credit) for income taxes                         |  | $    | 31,092 |      |  | $ | 26,466  |  
|                                                            |  |      |        |      |  |   |         |  

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

|                    |                                  |                          |         |         |         |   |         |         |         | 
|------------------- | -------------------------------- | ------------------------ | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|Deferred tax asset:
|                   
|                   
|                   
|                   
|                    | Net operating loss carry forward |                          | $       | 475,000 |         |   | $       | 475,000 |        
|                    |                                  |                          |         |         |         |   |         |        
|                    |                                  | Total deferred tax asset |         |         | 475,000 |   |         |         | 475,000 | 
|                   
|                   
|                   
|                   
|                    |                                  | Valuation allowance      |         |         | 139,874 |   |         |         | 139,874 | 
|                    |                                  |                          |         |         |         |   |         |        
|                    |                                  | $                        | 335,126 |         |         | $ | 335,126 |        
|                    |                                  |                          |         |         |         |   |         |        

The Company has a net operating loss carry forward of approximately
$1,600,000 for federal and state purposes which will expire in 2009.

F-12



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|10. |  | Employment and consulting agreements:
|--- |  | -------------------------------------

Employment agreements:

On May 1, 1996, the Company entered into employment agreements with its
President and Vice President. The term of the agreements have been extended to
April 30, 2006. Compensation is set at a base of $125,000 and $110,000 for the
President and Vice President, respectively, with each getting a bonus of 5% of
the increase in SETO Holdings, Inc./East Coast Sales consolidated net income
over the net income from the previous years. Each employee also received
1,000,000 stock options at $.25, 1,000,000 stock options at $.10 and 500,000
stock options at $.50. The Vice President also received 50,000 stock options
at $.50 in February 2000. The President was granted 250,000 unregistered
shares of common stock and the Vice President was granted 150,000 unregistered
shares of common stock. The options were not part of the 1997 Non-statutory
Stock Option Plan effectuated March 25, 1997. As of January 31, 2001, none of
these options had been exercised.

On July 15, 1998, the Company entered into an employment agreement with
the acting secretary of the Company. The term of the agreement has been
extended to April 30, 2006. Compensation is set at a base of $60,000 with a
bonus of 2% of any increase in SETO Holdings, Inc./East Coast Sales
consolidated net income over the net income from the previous years. The
employee also received 500,000 stock options exercisable at $.50 per share and
50,000 options at $.50 per share. These options were not part of the 1997
non-statutory stock option Plan effectuated March 25, 1997. As of January 31,
2001, none of these options had been exercised.



|11. |  | Computation of earnings per share:
|--- |  | ----------------------------------

|                                                     |  |      |            |      |  |  |            | 
|---------------------------------------------------- |  | ---- | ---------- | ---- |  |  | ---------- | 
|                                                     |  | 2001 |            | 2000
|                                                     |  |      |            |     
|Weighted average number of
common shares outstanding |  |      | 19,365,825 |      |  |  | 12,029,547 | 
|                                                    
|                                                    
|                                                    
|                                                    
|Assumed conversion of
stock options                  |  |      |            |      |  |  | 6,070,000  | 
|                                                     |  |      |            |      |  |  |            | 
|Weighted average number of
common shares outstanding |  |      | 19,365,825 |      |  |  | 18,099,547 | 
|                                                     |  |      |            |      |  |  |            | 

The conversion of stock options was not assumed for the year ended
January 31, 2001 as the effect would be antidilutive.

F-13



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|12. |  | Disposition of subsidiary, Fimas, SDN BHD:
|--- |  | ------------------------------------------

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

In January 2001, the Company disposed of its subsidiary and took back the
common stock previously issued in the acquisition. The condensed results
of the discontinued operations were as follows:

|                                             |  |             |            |      |  |   |           |  
|-------------------------------------------- |  | ----------- | ---------- | ---- |  | - | --------- | -
|                                             |  | 2001       
|                                             |  | (Unaudited) |            | 2000
|                                             |  |             |            |     
|Net sales                                    |  | $           | 24,091,242 |      |  | $ | 3,084,519 |  
|                                            
|                                            
|                                            
|                                            
|Cost of sales                                |  |             | 22,889,911 |      |  |   | 2,811,100 |  
|                                             |  |             |            |      |  |   |           |  
|Gross                                        |  |             | 1,201,331  |      |  |   | 273,419   |  
|                                             |  |             |            |      |  |   |           |  
|Selling, general and administrative expenses |  |             | 1,206,932  |      |  |   | 107,079   |  
|                                            
|                                            
|                                            
|                                            
|Interest expense                             |  |             | 150,691    |      |  |   | 63,039    |  
|                                            
|                                            
|                                            
|                                            
|Other expenses (income)                      |  |             | (1,774     | )    |  |   | (2,974    | )
|                                             |  |             |            |      |  |   |           |  
|                                             |  |             | 1,355,849  |      |  |   | 167,144   |  
|                                             |  |             |            |      |  |   |           |  
|Income (loss) before income taxes            |  |             | (154,518   | )    |  |   | 106,275   |  
|                                            
|                                            
|                                            
|                                            
|Income taxes                                 |  |             | 0          |      |  |   | 15,979    |  
|                                             |  |             |            |      |  |   |           |  
|Net income (loss)                            |  |             | ($154,518  | )    |  | $ | 90,296    |  
|                                             |  |             |            |      |  |   |           |  

The Company recorded approximately $89,000 in a provision for severance
pay, lease obligations and other related costs, included in the loss on
discontinued operations in the accompanying statement of income (loss). The
operating results of Fimas SDN BHD prior to the date of disposition are shown
separately in the accompanying statements of income (loss), and the financial
statements for the year ended January 31, 2000 have been restated to reflect
the disposition of Fimas, SDN BHD.

F-14



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|13. |  | Common stock options outstanding:
|--- |  | ---------------------------------

On March 25, 1997, the Company effectuated a Non-statutory Stock Option
Plan for the purpose of advancing the interests of the Company and its
stockholders by helping the Company obtain and retain the services of key
management employees, officers, directors and consultants. The Plan is
administered by the Non-statutory Stock Option Committee of the Board of
Directors of the Company. The committee has full authority and discretion to
determine the eligible participants to be granted the options, the date of
issuance, exercise price and expiration date. The total number of shares set
aside for the Plan is 6,500,000. As of January 31, 2001, 950,000 options had
been issued under the Plan, of which 220,000 had been exercised.

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

Summary of options are as follows:

|                       |  |      |          |        |  |       |           |      |  |          |      |            |  |  |          | 
|---------------------- |  | ---- | -------- | ------ |  | ----- | --------- | ---- |  | -------- | ---- | ---------- |  |  | -------- | 
|                       |  |      |          |        |  |       |           |      |  | Exercise |      | Expiration
|                       |  | Date |          | Amount |  | Price |           | Date
|                       |  |      |          |        |  |       |           |     
|Eugene Pian, Officer   |  |      | 05/01/96 |        |  |       | 1,000,000 |      |  | $        | .25  |            |  |  | 05/01/06 | 
|                      
|                      
|                      
|                      
|Eugene Pian, Officer   |  |      | 02/13/97 |        |  |       | 1,000,000 |      |  |          | .10  |            |  |  | 05/01/06 | 
|                      
|                      
|                      
|                      
|Eugene Pian, Officer   |  |      | 07/15/98 |        |  |       | 500,000   |      |  |          | .50  |            |  |  | 05/01/06 | 
|                      
|                      
|                      
|                      
|Craig Pian, Officer    |  |      | 05/01/96 |        |  |       | 1,000,000 |      |  |          | .25  |            |  |  | 05/01/06 | 
|                      
|                      
|                      
|                      
|Craig Pian, Officer    |  |      | 02/13/97 |        |  |       | 1,000,000 |      |  |          | .10  |            |  |  | 05/01/06 | 
|                      
|                      
|                      
|                      
|Craig Pian, Officer    |  |      | 07/15/98 |        |  |       | 500,000   |      |  |          | .50  |            |  |  | 05/01/06 | 
|                      
|                      
|                      
|                      
|Craig Pian, Officer    |  |      | 02/04/00 |        |  |       | 50,000    |      |  |          | .50  |            |  |  | 02/04/02 | 
|                      
|                      
|                      
|                      
|Francine Pian, Officer |  |      | 07/15/98 |        |  |       | 500,000   |      |  |          | .50  |            |  |  | 05/01/06 | 
|                      
|                      
|                      
|                      
|Francine Pian, Officer |  |      | 02/04/00 |        |  |       | 50,000    |      |  |          | .50  |            |  |  | 05/01/06 | 
|                      
|                      
|                      
|                      
|Tan Hun Chin, Director |  |      | 05/22/00 |        |  |       | 100,000   |      |  |          | 1.50 |            |  |  | 04/18/01 | 
|                      
|                      
|                      
|                      
|Tan Hun Chin, Director |  |      | 11/27/98 |        |  |       | 500,000   |      |  |          | .10  |            |  |  | 11/27/01 | 
|                      
|                      
|                      
|                      
|Tan Hun Chin, Director |  |      | 07/15/98 |        |  |       | 50,000    |      |  |          | .50  |            |  |  | 02/04/02 | 
|                      
|                      
|                      
|                      
|Tan Wooi Chuon         |  |      | 05/01/00 |        |  |       | 25,000    |      |  |          | 1.50 |            |  |  | 04/18/01 | 
|                      
|                      
|                      
|                      
|Tan Hooi Chieh         |  |      | 05/08/00 |        |  |       | 25,000    |      |  |          | 1.50 |            |  |  | 05/08/02 | 
|                      
|                      
|                      
|                      
|Others                 |  |      | 02/04/00 |        |  |       | 265,000   |      |  |          | .50  |            |  |  | 02/04/02 | 



|14. |  | Principal products and segmentation of sales:
|--- |  | ---------------------------------------------

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

F-15



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|14. |  | Principal products and segmentation of sales (continued):
|--- |  | ---------------------------------------------------------

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

|                          |               |            |                        |         |             |           |             |         |           |           | 
|------------------------- | ------------- | ---------- | ---------------------- | ------- | ----------- | --------- | ----------- | ------- | --------- | --------- | 
|                          |               |            |                        |         | January 31, |           | January 31,
|                          |               |            |                        |         | 2001        |           | 2000       
|                          |               |            |                        |         |             |           |            
|Sales to customers:      
|                         
|                         
|                         
|                         
|                          | Industry A:  
|                         
|                         
|                         
|                         
|                          |               |            | Ceramics               |         | $           | 1,379,973 |             |         | $         | 1,324,519 | 
|                         
|                         
|                         
|                         
|                          | Industry B:  
|                         
|                         
|                         
|                         
|                          |               |            | Diamond tools          |         |             | 758,100   |             |         |           | 612,793   | 
|                         
|                         
|                         
|                         
|                          | Industry C:  
|                         
|                         
|                         
|                         
|                          |               |            | Cellular batteries     |         |             | 731,635   |             |         |           | 1,102,258 | 
|                         
|                         
|                         
|                         
|                          | Industry D:  
|                         
|                         
|                         
|                         
|                          |               |            | Rechargeable batteries |         |             | 2,576,773 |             |         |           | 376,486   | 
|                         
|                         
|                         
|                         
|                          | Miscellaneous |            |                        | 206,808 |             |           |             | 142,513 |          
|                          |               |            |                        |         |             |           |             |        
|                          |               | $          | 5,653,289              |         |             | $         | 3,558,569   |        
|                          |               |            |                        |         |             |           |             |        
|Operating profit or loss:
|                         
|                         
|                         
|                         
|                          |               | Industry A |                        | $       | 389,539     |           |             | $       | 325,167   |          
|                         
|                         
|                         
|                         
|                          |               | Industry B |                        |         | (388,250    | )         |             |         | (245,384  | )        
|                         
|                         
|                         
|                         
|                          |               | Industry C |                        |         | ( 54,844    | )         |             |         | 20,046    |          
|                         
|                         
|                         
|                         
|                          |               | Industry D |                        |         | 310,987     |           |             |         | 18,801    |          
|                          |               |            |                        |         |             |           |             |        
|                          |               | $          | 257,432                |         |             | $         | 118,630     |        
|                          |               |            |                        |         |             |           |             |        
|Identifiable assets:     
|                         
|                         
|                         
|                         
|                          |               | Industry A |                        | $       | 522,118     |           |             | $       | 434,250   |          
|                         
|                         
|                         
|                         
|                          |               | Industry B |                        |         | 1,708,303   |           |             |         | 1,660,441 |          
|                         
|                         
|                         
|                         
|                          |               | Industry C |                        |         | 618,086     |           |             |         | 626,089   |          
|                         
|                         
|                         
|                         
|                          |               | Industry D |                        |         | 857,815     |           |             |         | 543,287   |          
|                          |               |            |                        |         |             |           |             |        
|                          |               | $          | 3,706,322              |         |             | $         | 3,264,067   |        
|                          |               |            |                        |         |             |           |             |        

Two customers each accounted for more than 10% of total sales and
together accounted for approximately 44% of total
sales for the year ended January 31, 2001.

Foreign and domestic operations and export sales:

|                    |               |   |             |           |             |   |           |           |  |  |  |  | 
|------------------- | ------------- | - | ----------- | --------- | ----------- | - | --------- | --------- |  |  |  |  | 
|                    |               |   | January 31, |           | January 31,
|                    |               |   | 2001        |           | 2000       
|                    |               |   |             |           |            
|Sales to customers:
|                   
|                   
|                   
|                   
|                    | United States |   | $           | 1,359,023 |             |   | $         | 1,579,586 | 
|                   
|                   
|                   
|                   
|                    | Far East      |   |             | 3,762,354 |             |   |           | 1,467,063 | 
|                   
|                   
|                   
|                   
|                    | Canada        |   |             | 531,912   |             |   |           | 511,920   | 
|                    |               |   |             |           |             |   |           |          
|                    |               | $ | 5,653,289   |           |             | $ | 3,558,569 |          
|                    |               |   |             |           |             |   |           |          

F-16



---



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|14. |  | Principal products and segmentation of sales (continued):
|--- |  | ---------------------------------------------------------

|                     |               |   |             |           |             |   |           |           | 
|-------------------- | ------------- | - | ----------- | --------- | ----------- | - | --------- | --------- | 
|                     |               |   | January 31, |           | January 31,
|                     |               |   | 2001        |           | 2000       
|                     |               |   |             |           |            
|Operating profit:   
|                    
|                    
|                    
|                    
|                     | United States |   | $           | 61,886    |             |   | $         | 67,760    | 
|                    
|                    
|                    
|                    
|                     | Far East      |   |             | 171,325   |             |   |           | 28,910    | 
|                    
|                    
|                    
|                    
|                     | Canada        |   |             | 24,221    |             |   |           | 21,960    | 
|                     |               |   |             |           |             |   |           |          
|                     |               | $ | 257,432     |           |             | $ | 118,630   |          
|                     |               |   |             |           |             |   |           |          
|Identifiable assets:
|                    
|                    
|                    
|                    
|                     | United States |   | $           | 1,639,943 |             |   | $         | 1,419,984 | 
|                    
|                    
|                    
|                    
|                     | Far East      |   |             | 1,906,393 |             |   |           | 1,650,697 | 
|                    
|                    
|                    
|                    
|                     | Canada        |   |             | 159,986   |             |   |           | 193,386   | 
|                     |               |   |             |           |             |   |           |          
|                     |               | $ | 3,706,322   |           |             | $ | 3,264,067 |          
|                     |               |   |             |           |             |   |           |          



|15. |  | Supplemental cash flow information:
|--- |  | -----------------------------------

|                                                                      |                                                        |   |           |  |      |   |         |           | 
|--------------------------------------------------------------------- | ------------------------------------------------------ | - | --------- |  | ---- | - | ------- | --------- | 
|                                                                      |                                                        |   | 2001      |  | 2000
|                                                                      |                                                        |   |           |  |     
|Interest paid during the year                                         |                                                        | $ | 152,953   |  |      | $ | 114,933 |          
|                                                                      |                                                        |   |           |  |      |   |         |          
|Income taxes paid during the year                                     |                                                        | $ | 0         |  |      | $ | 0       |          
|                                                                      |                                                        |   |           |  |      |   |         |          
|Supplemental schedule of non-cash investing
and financing activities:
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Issuance of common shares for purchase
of subsidiaries |   |           |  |      |   | $       | 5,245,362 | 
|                                                                      |                                                        |   |           |  |      |   |         |          
|Cancellation of common shares relating to
Disposition of subsidiary   |                                                        | $ | 4,518,362 |  |      |   |         |          
|                                                                      |                                                        |   |           | 

F-17