SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549




                                   FORM 10-QSB

              (X)       Quarterly  Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

                      For the quarterly period ended    April 30, 1998

                                       or

              ( )     Transition Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1939

                      For the transition period from              to


Commission File Number:  33-5820-LA




                               SEMICON TOOLS, INC.
       (Exact name of small business issuer as specified in its charter)




          Nevada                                77-0082545
(State or other jurisdiction of            (I.R.S. Employer
incorporation or organization)             Identification Number)


             554 North State Road, Briarcliff Manor, New York 10510

                    (Address of principal executive offices)


Issuer's telephone number, including area code:           (914) 923-5000
                                                        -----------------


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


Indicate the number of Shares  outstanding  of each of the  Issuer's  classes of
common stock, as of the latest practicable date.


            Class                             Outstanding at April 30, 1998

Common Stock, par value $.001
 per share                                               20,042,500




<PAGE>





























                                      INDEX


Part I.   Financial Information


   Item 1.  Condensed consolidated financial statements:

         Balance sheet as of April 30, 1998                             F-2

         Statement of income for the three months ended
           April 30, 1998 and 1997                                      F-3

         Statement of cash flows for the three months ended
           April 30, 1998 and 1997                                      F-4

         Notes to condensed consolidated financial statements        F-5 - F-13


   Item 2.  Management's discussion and analysis of
                 financial condition



Part II.  Other information


   Signatures







<PAGE>



                      SEMICON TOOLS, INC. AND SUBSIDIARIES

              CONDENSED CONSOLIDATED BALANCE SHEET - APRIL 30, 1998
                                   (UNAUDITED)




                                     ASSETS

Current assets:
  Cash                                                          $   435,307
  Cash, fixed deposits with bank                                    921,053
  Accounts receivable, less allowance
   for doubtful accounts of $7,500                               11,832,888
  Inventory                                                       6,001,319
  Prepaid expenses and other assets                                 607,648
  Deferred tax asset, current portion                                64,693
                                                                 -----------

    Total current assets                                         19,862,908
                                                                 ----------

Property and equipment                                           12,666,912
                                                                 ----------

Other assets:
   Security deposits                                                 9,249
   Goodwill, net of amortization                                    98,042
   Deferred tax asset, net of current portion                      129,386
                                                                -----------

                                                                   236,677
                                                                -----------

                                                               $32,766,497
                                                               ===========



                      LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
  Current portion of long-term debt                           $ 1,391,810
  Notes payable, bank                                           6,061,251
  Notes payable, other                                          9,939,944
  Accounts payable                                              1,841,288
  Accrued expense and payroll taxes payable                     1,140,113
  Income taxes payable                                            205,803
                                                               -----------

    Total current liabilities                                  20,580,209
                                                               ----------

Long-term debt, net of current portion                          3,554,535
                                                              -----------

Commitments and contingencies

Shareholders' equity:
  Common stock par value $.001; 100,000,000
   shares authorized; 20,042,500 shares issued and
   outstanding                                                    20,043
  Additional paid in capital                                   9,140,664
  Currency translation adjustment                           (    113,131)
  Retained earnings (deficit)                               (    415,823)
                                                              -----------

                                                               8,631,753
                                                               ---------

                                                             $32,766,497
                                                             ===========




     See notes to condensed consolidated financial statements.
                                                                            F-2


<PAGE>



                      SEMICON TOOLS, INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENT OF INCOME

                   THREE MONTHS ENDED APRIL 30, 1998 AND 1997
                                   (UNAUDITED)














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



                                                                                       1998               1997
                                                                                       ----               ----

Net sales                                                                          $ 9,265,060        $   422,603

Cost of sales                                                                        7,283,734            125,236
                                                                                   -----------        -----------

Gross profit                                                                         1,981,326            297,367

Selling, general and
 administrative expenses                                                               421,206            241,720
                                                                                   -----------        -----------

Income from operations                                                               1,560,120             55,647

Other charge, interest expense                                                         805,536              9,825
                                                                                   -----------        -----------

Income before income taxes                                                             754,584             45,822

Deferred income tax expense                                                             20,171             12,495
                                                                                   -----------        -----------

Net income                                                                         $   734,413        $    33,327
                                                                                   ===========        ===========

Income per common share                                                            $      .031        $      .003
                                                                                   ===========       ============

Weighted average number of common shares
 outstanding                                                                        23,279,000         11,367,500
                                                                                   ===========        ===========







</TABLE>












     See notes to condensed consolidated financial statements.
                                                                           F-3


<PAGE>



                      SEMICON TOOLS, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                   THREE MONTHS ENDED APRIL 30, 1998 AND 1997
                                   (UNAUDITED)




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



                                                                                        1998              1997
                                                                                        ----              ----

Operating activities:
  Net income                                                                        $  734,413           $ 33,327
  Adjustments to reconcile net income to
   cash provided from operating activities:
     Depreciation and amortization                                                     218,194             10,311
     Changes in other operating assets and
      liabilities:
        Accounts receivable                                                       ( 2,594,412)         (   7,339)
        Inventories                                                                   741,387          (  13,390)
        Prepaid expenses and other current assets                                      22,958             28,259
        Accounts payable, accrued expenses and
         payroll taxes payable                                                    (   296,336)         (   9,413)
                                                                                   ----------           --------

        Net cash provided by (used in) operating
         activities                                                               ( 1,173,796)             41,755
                                                                                   ----------            --------

Investing activities:
  Decrease in other assets                                                             23,995             12,495
  Purchase of property and equipment                                              (   538,268)         (   5,212)
                                                                                   ----------           --------

        Net cash provided by (used in) investing
         activities                                                               (   514,273)              7,283
                                                                                   ----------            --------

Financing activities:
  Proceeds from financing                                                           1,985,001
  Proceeds from issuance of common stock                                                8,750
  Decrease in notes payable, shareholders'                                                             (  84,668)
  Payment of debt                                                                 (   713,657)         (   8,245)
                                                                                   ----------           --------

        Net cash provided by (used in) financing
         activities                                                                 1,280,094          (  92,913)
                                                                                    ----------          --------

Effect of exchange rate changes on cash and
 cash equivalents                                                                     471,869

Net increase (decrease) in cash                                                        63,894          (  43,875)

Cash, beginning of period                                                             371,413             116,334
                                                                                    ----------           --------

Cash, end of period                                                                $  435,307            $ 72,459
                                                                                    ==========           ========

Supplemental disclosure:
  Cash paid during the period for:
    Interest                                                                        $  790,536           $      0
                                                                                    ==========           ========
    Income taxes                                                                    $        0           $      0
                                                                                    ==========           ========

</TABLE>





     See notes to condensed consolidated financial statements.
                                                                           F-4


<PAGE>



                      SEMICON TOOLS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS







1.      The accompanying unaudited financial statements have been prepared in
         accordance with generally accepted accounting principles for interim
         financial information and with the instructions to Form 10-QSB.
         Accordingly, they do not include all of the information and footnotes
         required by generally accepted accounting principles for complete
         financial statements.  In the opinion of management, all adjustments
         considered necessary for a fair presentation have been included.  The
         results of operations for the three months ended is not necessarily
         indicative of the results to be expected for the full year. For further
         information, refer to the consolidated financial statements and
         footnotes thereto included in the Company's annual report for the year
         ended January 31, 1998 included in its Annual Report filed on Form 10-
         KSB.


2. Organization of the Company:

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

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

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

        The Company's other wholly-owned subsidiary,  Teik Tatt Holding Co., SDN
         BHD, a Malaysian corporation,  manufactures rubber bands, plastic ropes
         and recycles plastic and metal from wire cable,  electronic devices and
         circuit broads.  In November 1997, The Company issued 10,000,000 shares
         of  unregistered  common shares in exchange for 100% of the outstanding
         shares of Teik Tatt Holding Co., SDN BHD, the value of the shares being
         the  net  book  value  of  the  acquired   Company  of   $6,560,040  or
         approximately  $.66 per share.  The  acquisition was accounted for as a
         purchase.







                                                                          F-5


<PAGE>



                      SEMICON TOOLS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS







3. Summary of significant accounting policies:

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



4. Property and equipment:

        Major classifications of property and equipment are as follows:

                                                                    April 30,
                                                                      1998
                                                                      ----


        Land                                                     $   355,184
        Buildings and improvements                                 2,523,300
        Manufacturing equipment                                   12,236,860
        Office equipment                                             565,348
        Automotive equipment                                         177,662
                                                                  -----------
                                                                  15,858,354
        Less accumulated depreciation                              3,191,442
                                                                  ----------

                                                                 $12,666,912
                                                                 ===========


5.      Goodwill:

        On January 26, 1990, the Company  acquired East Coast Sales Company (its
         wholly-owned  subsidiary)  for a cost of $309,000.  The purchase  price
         exceeded  the fair value of the  assets by  $134,281  which  amount was
         assigned to goodwill,  and is being amortized on a straight-line  basis
         over forty  years.  Accumulated  amortization  of  goodwill  aggregated
         $36,239 as of April 30, 1998.


6. Commitments and contingencies:

        In November  1995 the Company  moved its  operations  and was  obligated
         under a lease agreement for office and manufacturing  facilities.  This
         lease,  which expired on May 31, 1998,  required the  following  future
         minimum rental payments:


                           April 30, 1998                            $3,543
                                                                     ------






                                                                           F-6


<PAGE>



                      SEMICON TOOLS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS











6.      Commitments and contingencies (continued):


        Rental  expense for the period ended April 30, 1998 and 1997 amounted to
         $9,641.

        In April  1998,  the  Company  moved  its  New  York  operations  and is
         currently  obligated under a lease agreement with a related party 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.  The Company also paid two months
         rent at $3,000  per  month to an  outside  party for the same  premises
         before the property  was  purchased  by the related  party.  This lease
         requires the following future minimum rental payments:





                           April 30, 1999                      $ 60,000
                           April 30, 2000                        60,000
                           April 30, 2001                        60,000
                           April 30, 2002                        60,000
                           April 30, 2003                        60,000
                           Thereafter                           690,000
                                                               --------

                                                               $990,000
                                                               ========





        The Company also leases three vehicles under operating leases with terms
         expiring  through  1998.  Total lease expense was $8,133 and $7,838 for
         the period ended April 30, 1998 and 1997, respectively.

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












                                                                         F-7


<PAGE>



                      SEMICON TOOLS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS











7. Common stock:

        During the three months ended April 30, 1998, the Company issued 175,000
         shares of its  common  shares  with net  proceeds  of  $8,750  upon the
         exercise of certain common stock purchase options.




8. Long-term debt:

 
<TABLE>
<CAPTION>
<S>                                      <C>         <C>                 <C>           <C>              <C>   
                                                                            Long-term       Current
                                                              Rate           Portion        Portion      Maturity



        Note payable, Bank of New York   (a)              Prime + 1%       $   19,767    $    8,233        2001

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

        Note payable, shareholder        (c)                  10%              95,015        37,779        2002

        Notes payable, bank (foreign)    (d)             1.75% to 2%
                                                       above bankers
                                                       base lender's
                                                            rates           1,688,305       126,806  undetermined
        Notes  payable, capital leases,
         bank, (foreign)                 (e)               Approx 8%        1,651,448     1,218,992        1999
                                                                           ----------    ----------

                                                                           $3,554,535    $1,391,810
                                                                           ==========    ==========

</TABLE>



        (a)    Note   payable,   Bank  of  New  York,   is  payable  in  monthly
               installments of $686, excluding interest. Machinery and equipment
               with a cost of $33,000 is pledged as collateral on this note.

        (b)    Note payable,  shareholder,  became due when the note to Citibank
               was paid in full in 1997. The  shareholder  has waived his demand
               right and the Company is currently  negotiating terms for payment
               of the note.














                                                                           F-8


<PAGE>



                      SEMICON TOOLS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








8.      Long-term debt (continued):


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

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

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


        The maturities of these loans are as follows:


                           April 30, 1999                     $1,391,810
                           April 30, 2000                      1,311,602
                           April 30, 2001                      1,174,764
                           April 30, 2002                      1,068,169
                                                               ----------

                                                              $4,946,345
                                                              ==========


9. Notes payable, banks:

        Bank overdrafts and  borrowings  for the foreign  subsidiary,  Teik Tatt
         Holding Co., in the amount of  $6,061,251  are secured in the amount of
         $5,479,578  by  leasehold  land and factory  building  of the  Company,
         freehold land and buildings of one of its  subsidiaries  and a property
         owned by a third party and the guarantee of all the directors. Interest
         is payable at 1% to 2% above the banks' base lending rates.

        The Company also has an outstanding  line of credit with the Bank of New
         York for  $175,000  at April  30,  1998.  The  loan is  secured  by the
         personal  guarantee of one of the Company's major  shareholders and the
         assets of Semicon Tools, Inc.


10. Income taxes:

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








                                                                       F-9


<PAGE>



                      SEMICON TOOLS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS






10.  Income taxes (continued):

         consequences  attributable  to the  differences  between the  financial
         statement carrying amounts of existing assets and liabilities and their
         respective tax bases and operating  loss and tax credit  carryforwards.
         Deferred  tax assets and  liabilities  are measured  using  enacted tax
         rates  expected  to apply to taxable  income in the year in which those
         temporary  differences  are expected to be recovered or settled.  Under
         SFAS No. 109,  the effect on deferred tax assets and  liabilities  of a
         change in tax rates is recognized in income in the period that includes
         the enactment  date;  this effect was immaterial for the periods ending
         April 30, 1998 and 1997.  The  deferred tax asset less the deferred tax
         liabilities has been reduced by a valuation  allowance equal to the net
         tax benefit in excess of the  estimated  taxable  profits over the next
         three years.
<TABLE>
<CAPTION>
<S>                                                                                  <C>               <C>    


        Provision for income taxes (benefit):
                                                                                        1998               1997

                                                                                        ----               ----

                    Current                                                           $     0            $     0
                    Deferred                                                           20,171             12,495
                                                                                      -------            -------

                      Total expense                                                   $20,171            $12,495
                                                                                      =======            =======
</TABLE>



        Areconciliation  of the  income tax  expense  provision  at the  federal
         statutory rate to the income tax provision at the effective tax rate is
         as follows:
<TABLE>
<CAPTION>
<S>                                                                               <C>                 <C>    

                                                                                        1998               1997
                                                                                        ----               ----

         Computed tax at the expected statutory rate                                 $294,288            $17,871
         Surtax exemption                                                          (  16,750)          (  3,678)
         State income taxes                                                             4,247              1,838
         Foreign income                                                            ( 261,614)          (  3,536)
                                                                                    --------            -------

         Income tax expense                                                          $ 20,171            $12,495
                                                                                     ========            =======

</TABLE>

      The  components  of  deferred  tax assets and  liabilities  consist of the
     following:
<TABLE>
<CAPTION>
<S>                                                                                 <C>   

                                                                                     April 30,
                                                                                      1998

            Deferred tax asset:

              Net operating loss carryforward                                        $480,000

                 Total deferred tax asset                                             480,000

                 Valuation allowance                                                  285,921
                                                                                      -------

                                                                                     $194,079
                                                                                     ========
</TABLE>






                                                                   F-10


<PAGE>



                      SEMICON TOOLS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS










10.  Income taxes (continued):

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

        The Company has made  adjustments  to eliminate the tax  provisions  for
         foreign  earnings  since said  earnings are  undistributed  and will be
         permanently  invested.  The cumulative amounts of foreign undistributed
         earnings are $1,049,384 at April 30, 1998.



11. Employment agreements:

        On May 1, 1996, the Company entered into employment  agreements with its
         President and Vice President.  The term of the agreements covers a five
         year period  expiring April 30, 2001.  Compensation is set at a base of
         $100,000   and  $75,000   for  the   President   and  Vice   President,
         respectively,  with  each  getting  a bonus  of 5% of the  increase  in
         Semicon  Tools/East  Coast Sales  consolidated  net income over the net
         income from the previous  years  exclusive of Teik Tatt Holding Co. Sdn
         Bhd. Each employee  also received  1,000,000  stock options at $.25 and
         1,000,000  stock options at $.10. The options were not part of the 1997
         Non-statutory Stock Option Plan effectuated March 25, 1997. As of April
         30, 1998, none of these options had been exercised.


12. Consulting agreements:

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

        On February 9, 1998, the Company entered into a consulting agreement for
         the period  February 9, 1998 to December 31, 1998. The consultant  will
         assist Semicon Tools, Inc. in strategic  planning,  corporate planning,
         merger and acquisition and divestitive advice. In consideration for the
         consulting  services,  Semicon  granted an option to the  consultant to
         purchase  1,200,000 shares of common stock of Semicon Tools,  Inc. at a
         price of $.50 per  share  for a period  of two  years  commencing  four
         months from the date of signing.







                                                                         F-11


<PAGE>



                      SEMICON TOOLS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








12.     Consulting agreements (continued):

         The  consultant  is also  entitled  to a  finders  fee in the event the
         consultant first introduces a potential  acquisition to the Company and
         such acquisition is ultimately  consummated.  The agreement calls for a
         payout based on the amounts expended for such acquisition. On March 12,
         1998,  the Company and the  consultant  extended  the  agreement  dated
         February 9, 1998 for a period of twelve months.  In  consideration  for
         extending the term of the agreement,  the Company  granted an option to
         purchase  an  additional  1,200,000  shares  under  the same  terms and
         conditions as the previous  agreement  except these  options  cannot be
         exercised before September 30, 1998.

        Also on  February  9,  1998,  the  Company  entered  into  a  consulting
         agreement  for the period  February 9, 1998 to December 31,  1998.  The
         consultant  will assist the Company in  strategic  planning,  corporate
         planning,   merger  and   acquisition  and   divestiture   advice.   In
         consideration  for the  consulting  agreement  The  Company  granted an
         option to purchase  100,000  shares of common  stock at a price of $.50
         per share for a period of two years  commencing  four  months  from the
         date of the  signing of this  agreement.  The shares  underlying  these
         options  will be  registered  under  the  Securities  Act of 1933.  The
         consultant  is  also  entitled  to a  finders  fee  in  the  event  the
         consultant first introduces a potential  acquisition to the Company and
         such acquisition is ultimately  consummated.  The agreement calls for a
         payout based on the amounts expended for such acquisition.

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



13. Computation of earnings per share:
<TABLE>
<CAPTION>
<S>                                                                               <C>                  <C>    

                                                                                       1998               1997
                                                                                       ----               ----


              Weighted average number of
               common shares outstanding                                           20,011,500           9,367,500

              Assumed conversion of
               stock options                                                        3,267,500           2,000,000
                                                                                   ----------          ----------

              Weighted average number of
               common shares outstanding                                           23,279,000          11,367,500
                                                                                   ==========          ==========


</TABLE>






                                                                           F-12


<PAGE>



                      SEMICON TOOLS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








14. Common stock options outstanding:

        Summary of options outstanding are as follows:


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

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

        Consultant                                 11/10/97             25,000             .05           11/10/99
        Consultant                                 11/27/97            500,000             .10           11/27/98
        Employee                                   11/05/97             25,000             .05           11/05/99
        Employee                                   11/05/97             25,000             .05           11/05/99

</TABLE>

        On March 25, 1997, the Company  effectuated a Non-statutory Stock Option
         Plan for the purpose of advancing  the interests of the Company and its
         stockholders  by helping the Company  obtain and retain the services of
         key management employees, officers, directors and consultants. The Plan
         will be administered by the Non-statutory Stock Option Committee of the
         Board of Directors of the Company. The committee has full authority and
         discretion  to determine  the eligible  participants  to be granted the
         options, the date of issuance,  exercise price and expiration date. The
         total  number of shares  set  aside  for the Plan is  6,500,000.  As of
         January 31, 1998,  750,000  options had been issued under the Plan,  of
         which 175,000 had been exercised by April 30, 1998.

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
















                                                                         F-13


<PAGE>







ITEM 2.  Management's Discussion and Analysis or Plan of Operation.


General

On November 26, 1997, the Company acquired all of the capital stock of Teik Tatt
Holding Co. (1979) Sdn. Bhd. ("TTH"), a Malaysian  corporation.  For the quarter
ended April 30, 1998, TTH and its subsidiaries  generated  approximately  93% of
the  Company's net sales and 84% of the  Company's  net income.  The  percentage
contributions  to the Company's net sales and net income by product line for the
three months ended April 30, 1998, the first complete quarter  incorporating the
results of TTH and its subsidiaries, are as follows:



                For the three months ended April 30, 1998

                                                           Percentage of
         Product Line                                Net Sales      Net Income

         Scrap metal recycling                          59%             46%
         Plastic rope                                   29%             27%
         Industrial ceramic products                     4%             20%
         Rubber bands                                    3%              2%
         Plastic recycling                               3%              9%
         Diamond cutting tools                           2%           (  3%)
         Clean room materials and supplies and
          miscellaneous products                         *            (  1%)
                                                                      ------


                                                                       100%
                                                                       ==== 

         * Less than 1%


First Quarter 1998 Results of Operations

During the three months ended April 30, 1998, the Company's net sales  increased
by 2,092% to $9,265,060 from $422,603,  and net income of $734,413, or $.031 per
share,  represented a 2,104%  increase over the $33,327,  or $.003 per share, in
the prior year's period.  The acquisition of TTH  contributed  $8,684,235 to net
sales,  $620,345 to net income and $795,430 interest  expense.  Gross profit was
$1,981,326,  or 21% of net sales, as compared to $297,367,  or 70% of net sales,
in the prior year's period. Although gross profit increased due to higher sales,
gross  profit as a  percentage  of net sales  decreased  principally  due to low
profit  margins  on  TTH's  operations,  especially  on its  recycling  business
revenues of $5,449,077.

Liquidity and Capital Resources

At April 30,  1998,  the Company had current  assets of  $19,862,908,  including
$1,356,360 of cash, and current  liabilities of  $20,580,209.  Accordingly,  the
Company had a working capital deficit of $717,301. In addition,  the Company had
long-term  debt of  $3,554,535  and interest  expense of  $805,536,  principally
attributable  to TTH.  Although no assurances can be given,  the Company expects
that internally generated funds and existing credit facilities will enable it to
meet its  obligations as they come due and finance its operations.  However,  in
order to reduce its debt and the related interest  expense,  which would improve
profitability,  and to purchase  recycling  equipment which the Company believes
would  improve  its  product  mix by  generating  additional  sales with  higher
margins,  the  Company is seeking  additional  equity  capital.  The Company has
received no funding  commitments,  and no assurances  can be given that any such
financing will be obtained on reasonable terms, if at all.



<PAGE>








Under  Malaysian  law,  TTH is required to maintain a statutory  reserve of five
percent (5%) of profit after taxation in accordance with the Foreign  Investment
Law until such reserve equals ten percent (10%) of legal capital.
Such reserve is non-distributable.

Effects of Foreign Currency Fluctuations

The  Company's  foreign  operations  are  subject  to certain  risks  related to
fluctuation in foreign  currency  exchange rates.  Due to a  strengthening  U.S.
dollar and a weaker  Malaysian  ringgit,  in the year ended January 31, 1998 the
Company  recognized  $37,719 in foreign currency exchange losses,  which did not
have a material  adverse  effect on net income.  While  future  fluctuations  in
currency  exchange  rates  could  impact  results  of  operations  or  financial
position, the Company does not expect they will be material.

Disclosures about Market Risk

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

The  Company's  exposure to foreign  exchange  rate  fluctuations  results  from
investment in foreign  ventures in Malaysia and from the Company's  share of the
earnings of these operations, which are denominated in the Malaysian ringgit.

Year 2000 Costs

The Company currently operates numerous date-sensitive computer applications and
network systems throughout its business. As the century change approaches, it is
essential  for the Company to ensure that these systems  properly  recognize the
year 2000 and continue to process  operational  and financial  information.  The
Company recently upgraded its computer systems and does not expect complications
related to year 2000 issues to arise.

Impact of Inflation

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

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-QSB 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, INTENSE COMPETITION AND TECHNOLOGICAL OBSOLESCENCE.


<PAGE>