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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-QSB

|           |  |                                                                                                                                          
|---------- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|(Mark One)
|X          |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange act of 1934
For the quarterly period ended October 31, 2002  
|           |  |                                                                                                                                          
|OR        
|           |  |                                                                                                                                          
|           |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                to

Commission file number 33-5820-LA

SETO HOLDINGS, INC,

(Formerly Semicon Tools, Inc.)
(Exact name of small business issuer as specified in its charter)


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

554 North State Road, Briarcliff Manor, New York, 10510

(Address of principal executive offices)


(914) 923-5000

(Registrants telephone number, including area code)


N/A

(Former name, former address, and former fiscal year, if changed since last report)


Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days.

Yes X No ___

Shares outstanding of Registrants common stock:

|                             |  |                                
|---------------------------- |  | -------------------------------
|Class                        |  | Outstanding at October 31, 2002
|                             |  |                                
|Common stock $.001 par Value |  | 14,484,700                     





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TABLE OF CONTENTS



|                                                                                               |  |  |  |  |  |  |  | 
|---------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|CONSOLIDATED CONDENSED BALANCE SHEET  OCTOBER 31, 2002                                       
|CONSOLIDATED CONDENSED STATEMENTS OF INCOME                                                   
|CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME                                      
|CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS                                                
|Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
|SIGNATURES                                                                                    
|Certifications                                                                                
|CERTIFICATION                                                                                 



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INDEX

|         |  |                                                             |  |                                                                                                                                  |  |  |            | 
|-------- |  | ----------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------- |  |  | ---------- | 
|Part I.  |  | Financial Information                                       |  |                                                                                                                                  |  | 
|Item 1.  |  | Consolidated Condensed Financial Statements:                |  |                                                                                                                                  |  | 
|         |  |                                                             |  | Consolidated Condensed Balance Sheet as of October 31, 2002                                                                      |  |  | F-2        | 
|         |  |                                                             |  | Consolidated Condensed Statement of Income for the nine
and three months ended October 31, 2002 and 2001, restated               |  |  | F-3        | 
|         |  |                                                             |  | Consolidated Condensed Statement of Comprehensive Income
for the nine and three months ended October 31, 2002 and
2001, restated |  |  | F-4        | 
|         |  |                                                             |  | Consolidated Condensed Statement of Cash Flows for the
nine months ended October 31, 2002 and 2001, restated                     |  |  | F-5        | 
|         |  |                                                             |  | Notes to Financial Statements                                                                                                    |  |  | F-6 - F-11 | 
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition |  |                                                                                                                                  |  | 
|Part II. |  | Other Information                                           |  |                                                                                                                                  |  | 
|         |  |                                                             |  | Signatures                                                                                                                       |  |  |            | 





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##### Table of Contents



SETO HOLDINGS, INC. AND SUBSIDIARIES




CONSOLIDATED CONDENSED BALANCE SHEET  OCTOBER 31, 2002

(UNAUDITED)


|                                                   |                                                                                       |                            |                                            |           |           |           |  | 
|-------------------------------------------------- | ------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | --------- | --------- | --------- |  | 
|                                                   |                                                                                       |                            |                                            |           |           | 2002     
|                                                   |                                                                                       |                            |                                            |           |           |          
|ASSETS                                            
|CURRENT ASSETS                                     |                                                                                       |                            |                                            |          
|                                                   | Cash (restricted cash, $130,000)                                                      |                            | $                                          | 617,528   |          
|                                                   | Accounts receivable, less allowance for doubtful accounts of $20,000                  |                            |                                            | 1,206,864 |          
|                                                   | Note receivable                                                                       |                            |                                            | 396,693   |          
|                                                   | Inventory                                                                             |                            |                                            | 883,201   |          
|                                                   | Prepaid expenses and other current assets                                             |                            |                                            | 118,658   |          
|                                                   | Deferred tax asset, current portion                                                   |                            |                                            | 465,500   |          
|                                                   |                                                                                       |                            |                                            |          
|                                                   |                                                                                       | TOTAL CURRENT ASSETS       |                                            |           | 3,688,444 |          
|                                                   |                                                                                       |                            |                                            |          
|PROPERTY, PLANT AND EQUIPMENT, NET OF DEPRECIATION |                                                                                       |                            | 631,294                                    |          
|                                                   |                                                                                       |                            |                                            |          
|OTHER ASSETS                                       |                                                                                       |                            |                                            |          
|                                                   | Goodwill, net of amortization                                                         |                            |                                            | 82,935    |          
|                                                   | Security deposits and other assets                                                    |                            |                                            | 53,539    |          
|                                                   | Net assets of discontinued operations, less liabilities                               |                            |                                            | 43,559    |          
|                                                   | Deferred tax asset, net of current portion                                            |                            |                                            | 286,460   |          
|                                                   |                                                                                       |                            |                                            |          
|                                                   |                                                                                       |                            | 466,493                                    |          
|                                                   |                                                                                       |                            |                                            |          
|                                                   |                                                                                       |                            | TOTAL ASSETS                               |           | $         | 4,786,231 | 
|                                                   |                                                                                       |                            |                                            |          
|LIABILITIES AND SHAREHOLDERS EQUITY              
|CURRENT LIABILITIES                                |                                                                                       |                            |                                            |          
|                                                   | Current portion of long-term debt                                                     |                            | $                                          | 28,660    |          
|                                                   | Notes payable                                                                         |                            |                                            | 638,022   |          
|                                                   | Accounts payable                                                                      |                            |                                            | 323,920   |          
|                                                   | Accrued expenses                                                                      |                            |                                            | 279,414   |          
|                                                   |                                                                                       |                            |                                            |          
|                                                   |                                                                                       | TOTAL CURRENT LIABILITIES  |                                            |           | 1,270,016 |          
|                                                   |                                                                                       |                            |                                            |          
|OTHER LIABILITIES                                  |                                                                                       |                            |                                            |          
|                                                   | Deferred lease liability                                                              |                            |                                            | 27,000    |          
|                                                   | Long-term debt, net of current portion                                                |                            |                                            | 23,090    |          
|                                                   |                                                                                       |                            |                                            |          
|                                                   |                                                                                       | TOTAL OTHER LIABILITIES    |                                            |           | 50,090    |          
|                                                   |                                                                                       |                            |                                            |          
|SHAREHOLDERS EQUITY                               |                                                                                       |                            |                                            |          
|                                                   | Common stock par value $.001; 100,000,000
shares authorized; 14,558,400 shares issued |                            |                                            | 14,558    |          
|                                                   | Additional paid in capital                                                            |                            |                                            | 4,469,448 |          
|                                                   | Currency translation adjustment                                                       |                            |                                            | (150,522  | )        
|                                                   | Retained earnings (deficit)                                                           |                            |                                            | (851,655  | )        
|                                                   |                                                                                       |                            |                                            |          
|                                                   |                                                                                       |                            | 3,481,829                                  |          
|                                                   | Less common shares held in treasury, 73,700 shares at cost                            |                            |                                            | (15,704   | )        
|                                                   |                                                                                       |                            |                                            |          
|                                                   |                                                                                       | TOTAL SHAREHOLDERS EQUITY |                                            |           | 3,466,125 |          
|                                                   |                                                                                       |                            |                                            |          
|                                                   |                                                                                       |                            | TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |           | $         | 4,786,231 | 
|                                                   |                                                                                       |                            |                                            |          

See Notes to Consolidated Condensed Financial Statements.

F-2



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SETO HOLDINGS, INC. AND SUBSIDIARIES




CONSOLIDATED CONDENSED STATEMENTS OF INCOME

NINE AND THREE MONTHS ENDED OCTOBER 31, 2002 AND 2001
(UNAUDITED)

|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |         |  
|------------------------------------------------------------- | --------------------------------------------------------- | - | ----------------- | --------- | ------------------ | - | ---------- | --------- | -------- | - | ---------- | --------- | ---- | - | ---------- | ------- | -
|                                                              |                                                           |   | Nine Months Ended |           | Three Months Ended
|                                                              |                                                           |   | October 31        |           | October 31        
|                                                              |                                                           |   |                   |           |                   
|                                                              |                                                           |   |                   |           |                    |   | 2001       |           |          |   |            |           | 2001
|                                                              |                                                           |   | 2002              |           | Restated           |   | 2002       |           | Restated
|                                                              |                                                           |   |                   |           |                    |   |            |           |         
|Net revenues                                                  |                                                           | $ | 5,816,794         |           |                    | $ | 2,502,634  |           |          | $ | 2,434,711  |           |      | $ | 1,028,222  |        
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|Costs and expenses:                                           |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|                                                              | Cost of sales                                             |   |                   | 2,689,793 |                    |   |            | 1,016,922 |          |   |            | 1,219,769 |      |   |            | 465,724 |  
|                                                              | Selling, general and administrative expenses              |   |                   | 1,613,894 |                    |   |            | 1,111,898 |          |   |            | 640,376   |      |   |            | 419,711 |  
|                                                              | Amortization of acquisition-related intangibles and costs |   |                   | 2,518     |                    |   |            | 2,518     |          |   |            | 560       |      |   |            | 560     |  
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|Operating costs and expenses                                  |                                                           |   | 4,306,205         |           |                    |   | 2,131,338  |           |          |   | 1,860,705  |           |      |   | 885,995    |        
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|Operating income                                              |                                                           |   | 1,510,589         |           |                    |   | 371,296    |           |          |   | 574,006    |           |      |   | 142,227    |        
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|Interest and other, net                                       |                                                           |   | (69,676           | )         |                    |   | (62,850    | )         |          |   | (2,480     | )         |      |   | (18,474    | )      
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|Income before income taxes (benefit)                          |                                                           |   | 1,440,913         |           |                    |   | 308,446    |           |          |   | 571,526    |           |      |   | 123,753    |        
|Income taxes (benefit)                                        |                                                           |   | (267,780          | )         |                    |   | 4,003      |           |          |   | (206,456   | )         |      |   | 724        |        
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|Income from continuing operations                             |                                                           |   | 1,708,693         |           |                    |   | 304,443    |           |          |   | 777,982    |           |      |   | 123,029    |        
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|Discontinued operations:                                      |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|                                                              | Income (loss) from operations of subsidiaries             |   |                   | (123,005  | )                  |   |            | 163,191   |          |   |            | (51,441   | )    |   |            | 10,720  |  
|                                                              | Loss on disposal of subsidiaries                          |   |                   | (906,942  | )                  |   |            | (12,309   | )        |   |            | (878,096  | )    |   |            | (12,309 | )
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|                                                              |                                                           |   | (1,029,947        | )         |                    |   | 150,882    |           |          |   | (929,537   | )         |      |   | (1,589     | )      
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|Net income (loss)                                             |                                                           | $ | 678,746           |           |                    | $ | 455,325    |           |          | $ | (151,555   | )         |      | $ | 121,440    |        
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|Earning per share information:                                |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|                                                              | Income from continuing operations
Basic                   |   | $                 | 0.12      |                    |   | $          | 0.02      |          |   | $          | 0.05      |      |   | $          | 0.01    |  
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|                                                              | Diluted                                                   |   | $                 | 0.12      |                    |   | $          | 0.02      |          |   | $          | 0.05      |      |   | $          | 0.01    |  
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|                                                              | Discontinued operations:                                  |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |         |  
|                                                              | Basic                                                     |   | $                 | (0.07     | )                  |   | $          | 0.01      |          |   | $          | (0.06     | )    |   | $          | (0.00   | )
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|                                                              | Diluted                                                   |   | $                 | (0.07     | )                  |   | $          | 0.01      |          |   | $          | (0.06     | )    |   | $          | (0.00   | )
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|Weighted average common shares outstanding                    |                                                           |   | 14,484,700        |           |                    |   | 14,428,311 |           |          |   | 14,484,700 |           |      |   | 14,271,000 |        
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        
|Weighted average common shares outstanding, assuming dilution |                                                           |   | 14,484,700        |           |                    |   | 14,809,080 |           |          |   | 15,226,079 |           |      |   | 14,271,000 |        
|                                                              |                                                           |   |                   |           |                    |   |            |           |          |   |            |           |      |   |            |        

See Notes to Consolidated Condensed Financial Statements.

F-3



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##### Table of Contents



SETO HOLDINGS, INC.




CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME

NINE AND THREE MONTHS ENDED OCTOBER 31, 2002 AND 2001
(UNAUDITED)







|                                        |  |                   |         |                    |  |      |         |          |  |   |          |      |  |   |         |  
|--------------------------------------- |  | ----------------- | ------- | ------------------ |  | ---- | ------- | -------- |  | - | -------- | ---- |  | - | ------- | -
|                                        |  | Nine Months Ended |         | Three Months Ended
|                                        |  | October 31        |         | October 31        
|                                        |  |                   |         |                   
|                                        |  |                   |         |                    |  | 2001 |         |          |  |   |          | 2001
|                                        |  | 2002              |         | Restated           |  | 2002 |         | Restated
|                                        |  |                   |         |                    |  |      |         |         
|NET INCOME                              |  | $                 | 678,746 |                    |  | $    | 455,325 |          |  | $ | (151,555 | )    |  | $ | 121,440 |  
|Other comprehensive income, net of tax: |  |                   |         |                    |  |      | (68,543 | )        |  |   |          |      |  |   | (68,543 | )
|                                        |  |                   |         |                    |  |      |         |          |  |   |          |      |  |   |         |  
|COMPREHENSIVE INCOME                    |  | $                 | 678,746 |                    |  | $    | 386,782 |          |  | $ | (151,555 | )    |  | $ | 52,897  |  
|                                        |  |                   |         |                    |  |      |         |          |  |   |          |      |  |   |         |  







See Notes to Consolidated Condensed Financial Statements.

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SETO HOLDINGS, INC. AND SUBSIDIARIES




CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

NINE MONTHS ENDED OCTOBER 31, 2002 AND 2001
(UNAUDITED)

|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |          |         |         |          |  
|----------------------------------------------------------------------------- | ---------------------------------- | -------------------------------------------------- | ----------------------------------- | ------------------------------------------------------ | ------ | -------- | --------- | -------- | ------- | ------- | -------- | -
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |          |         | 2001   
|                                                                              |                                    |                                                    |                                     |                                                        |        | 2002     |           | Restated
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         
|OPERATING ACTIVITIES                                                          |                                    |                                                    |                                     |                                                        |        |          |           |         
|                                                                              | Income from continuing operations  |                                                    | $                                   | 1,708,693                                              |        |          | $         | 304,443  |        
|ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED BY CONTINUING OPERATIONS |                                    |                                                    |                                     |                                                        |        |          |           |         
|                                                                              |                                    |                                                    | Depreciation and amortization       |                                                        |        | 81,385   |           |          |         | 53,512  |         
|                                                                              |                                    |                                                    | Provision for deferred income taxes |                                                        |        | (321,960 | )         |          |         |         |         
|                                                                              |                                    |                                                    | Compensatory stock surrendered      |                                                        |        |          |           |          |         | (25,200 | )       
|CHANGES IN OTHER OPERATING ASSETS AND LIABILITIES                             |                                    |                                                    |                                     |                                                        |        |          |           |         
|                                                                              |                                    |                                                    |                                     | Accounts and notes receivable                          |        |          | (390,561  | )        |         |         | (569,710 | )
|                                                                              |                                    |                                                    |                                     | Inventories                                            |        |          | (23,389   | )        |         |         | (122,361 | )
|                                                                              |                                    |                                                    |                                     | Prepaid expenses and other current assets              |        |          | (135,861  | )        |         |         | (32,845  | )
|                                                                              |                                    |                                                    |                                     | Other assets                                           |        |          | (2,302    | )        |         |         | (29,053  | )
|                                                                              |                                    |                                                    |                                     | Accounts payable, and accrued expenses                 |        |          | 283,519   |          |         |         | 307,976  |  
|                                                                              |                                    |                                                    |                                     | Deferred lease liability                               |        |          | 4,500     |          |         |         | 4,500    |  
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         
|                                                                              |                                    |                                                    |                                     | NET CASH PROVIDED BY (USED IN) CONTINUING OPERATIONS   |        |          | 1,204,024 |          |         |         | (108,738 | )
|                                                                              |                                    |                                                    |                                     | NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS |        |          | (125,330  | )        |         |         | 308,258  |  
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         
|                                                                              |                                    |                                                    |                                     | NET CASH PROVIDED BY OPERATING ACTIVITIES              |        |          | 1,078,694 |          |         |         | 199,520  |  
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         
|INVESTING ACTIVITIES                                                          |                                    |                                                    |                                     |                                                        |        |          |           |         
|                                                                              | Purchase of property and equipment |                                                    |                                     | (107,299                                               | )      |          |           | (117,885 | )      
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         
|                                                                              |                                    |                                                    |                                     | NET CASH USED IN INVESTING ACTIVITIES                  |        |          | (107,299  | )        |         |         | (117,885 | )
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         
|FINANCING ACTIVITIES                                                          |                                    |                                                    |                                     |                                                        |        |          |           |         
|                                                                              | Proceeds from financing            |                                                    |                                     | 400,370                                                |        |          |           | 83,847   |        
|                                                                              | Payment of debt                    |                                                    |                                     | (886,413                                               | )      |          |           | (170,278 | )      
|                                                                              | Purchase of treasury stock         |                                                    |                                     | (50,241                                                | )      |          |           |          |        
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         
|                                                                              |                                    |                                                    |                                     | NET CASH USED IN FINANCING ACTIVITIES                  |        |          | (536,284  | )        |         |         | (86,431  | )
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         
|NET INCREASE (DECREASE) IN CASH                                               |                                    |                                                    | 435,111                             |                                                        |        |          | (4,796    | )       
|CASH, BEGINNING OF PERIOD                                                     |                                    |                                                    | 182,417                             |                                                        |        |          | 111,236   |         
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         
|CASH, END OF PERIOD                                                           |                                    | $                                                  | 617,528                             |                                                        |        | $        | 106,440   |         
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                            |                                    |                                                    |                                     |                                                        |        |          |           |         
|                                                                              | CASH PAID DURING THE YEAR FOR:     |                                                    |                                     |                                                        |        |          |           |          |        
|                                                                              |                                    | Interest                                           |                                     | $                                                      | 92,192 |          |           | $        | 64,576  |        
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         
|                                                                              |                                    | Income taxes                                       |                                     | $                                                      | 5,515  |          |           |          |         |        
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         
|NONCASH TRANSACTIONS:                                                         |                                    |                                                    |                                     |                                                        |        |          |           |         
|                                                                              |                                    | Surrender of common shares for consulting contract |                                     |                                                        |        |          |           | $        | (25,200 | )      
|                                                                              |                                    |                                                    |                                     |                                                        |        |          |           |         

See Notes to Consolidated Condensed Financial Statements.

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##### Table of Contents



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)



|1. |  | PREPARATION OF INTERIM FINANCIAL STATEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The consolidated financial statements have been prepared by SETO
Holdings, Inc. (the Company) in conformity with accounting
principles generally accepted in the United States and are consistent
in all material respects with those applied in the Companys Annual
Report on Form 10-KSB for the year ended January 31, 2002. In the
opinion of management, the Companys interim financial statements
include all adjustments (consisting of normal recurring accruals and
adjustments necessary for adoption of new accounting standards)
necessary to present fairly the results of the interim periods shown.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
Securities and Exchange Commission rules. Management believes that
the disclosures made are adequate to make the information presented
not misleading. The results for the interim periods are not
necessarily indicative of results for the full year. The unaudited
financial statements contained herein should be read in conjunction
with the consolidated financial statements and notes thereto included
in the Companys January 31, 2002 Annual Report on Form 10-KSB.
Certain amounts presented for the nine and three months ended October
31, 2002 and 2001 have been reclassified to conform to the current
presentation.
|  
|   |  | The consolidated financial statements include the accounts of the
Company and its subsidiaries, which are wholly owned. All
significant intercompany transactions are eliminated in the
consolidation process.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|2. |  | RECENT ACCOUNTING PRONOUCEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | On February 1, 2002, the Company adopted Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets(Statement 144). Statement 144 supercedes
Financial Accounting Standards No. 121, Accounting for the Impairment
of Long-Lived Assets to be disposed of, and the accounting and
reporting provisions of APB Opinion No. 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, for the disposal of a segment of business.
Statement 144 also amends ARB No. 51, Consolidated Financial
Statements, to eliminate the exception to consolidation for a
subsidiary for which control is likely to be temporary. Adoption of
Statement 144 had no impact of the financial position of the Company
or its results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | In April 2002, the Financial Accounting Standards Board issued
Statement of Financial Standard No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections(Statement 145). Statement 145 rescinds FASB
Statement No. 4, Reporting Gains and Losses from Extinguishment of
Debt, and an amendment of that Statement, and FASB Statement No. 64,
Extinquishments of Debt Made to Satisfy Sinking-Fund Requirements.
Statement 145 also rescinds FASB Statement No. 44, Accounting for
Leases, to eliminate an inconsistency between the required accounting
for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are
similar to sale-leaseback transactions. Statement 145 also amends
other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under
changed conditions. Early adoption of Statement 145 is encouraged
and may be as of the beginning of the fiscal year or as of the
beginning of the interim period in which the statement issued. The
Company has elected to early adopt this statement effective February
1, 2002. At this time management does not believe adoption of this
statement materially impacted the Companys financial position or
results of operations.                                                                
|  
|   |  | In July 2002, the Financial Accounting Standards Board issued
Statement of Financial Standard No. 146, Accounting for Costs
Associated with Exit or Disposal Activities.SFAS No. 146
establishes standards of accounting and reporting for costs
associated with exit or disposal activities and nullifies EITF Issue
94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including certain costs
incurred in a Restructuring).SFAS No. 146 covers costs associated
with an exit activitythat does not involve a company that has been
newly acquired in a business combination,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

F-6



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##### Table of Contents



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)



|   |  | which is addressed in EITF
Issue 95-3, Recognition of Liabilities in Connection With a Purchase
Business Combination.Statement 146 also does not apply to disposal
activities qualifying as a discontinued operation, which is covered
by SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets.SFAS No. 146 is effective for exit or disposal
activities initiated after December 31, 2002. Management will apply
SFAS No. 146 to activities initiated after December 31, 2002. The
adoption of SFAS No. 146 is not expected to have a material impact on
the Companys consolidated condensed statements of income or
financial position.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|3. |  | CASH AND CASH EQUIVALENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | At October 31, 2002, the Company had established a $130,000 standby
letter of credit as security for a term loan for future equipment
purchases in Malaysia. As of December 2, 2002 the Company cancelled
the term loan and standby letter of credit and the $130,000 was
returned to the Company.                                                                                                                                                                                                                                                                                                                                                                  
|  
|4. |  | NATURE OF OPERATIONS, 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 demand 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 in the
market.                                                                                                                                                                                                                                              
|  
|5. |  | INVENTORY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | Inventory at October 31, 2002 consist of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                |  |   |         | 
|--------------- |  | - | ------- | 
|Finished goods  |  | $ | 587,237 | 
|Work in Process |  |   | 63,230  | 
|Raw Materials   |  |   | 216,788 | 
|Supplies        |  |   | 15,946  | 
|                |  |   |         | 
|                |  | $ | 883,201 | 
|                |  |   |         | 



|6. |  | INTANGIBLE ASSETS AND GOODWILL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | On January 1, 2002, the Company fully adopted Statement of Financial
Accounting Standard No. 142, Goodwill and Other Intangible Assets
(Statement 142). Statement 142 addresses financial accounting and
reporting for acquired goodwill and other intangible assets and
supercedes APB Opinion No. 17, Intangible Assets. Statement 142
establishes new accounting for goodwill and other intangible assets
recorded in business combinations. Under the new rules, goodwill and
intangible assets arising from acquisitions after June 30, 2001, are
no longer amortized but are
subject to annual impairment tests in accordance with the statement.
Other intangible assets will continue to be amortized over their
useful lives.
|  
|   |  | In January 1990, the Company acquired East Coast Sales Company for
$309,000. The purchase price exceeded the fair value of the assets
by $134,281, which was assigned to goodwill and is being amortized on
the straight-line basis over forty years. As of October 31, 2002,
accumulated amortization of goodwill amounted to $51,346.                                                                                                                                                                                                                                                                                                                                                                                                 

F-7



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##### Table of Contents



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)



|7. |  | NOTES PAYABLE AND LONG-TERM DEBT                                                                                                                                                                                                                                                                                                                                                                                                    
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company has an available line-of-credit with a financial
institution in the amount $1,700,000. The line-of-credit carries an
annual rate of 2.9% plus the 30-day commercial paper rate with an
expiration date of December 31, 2002. As of October 31, 2002, the
Company had utilized $638,022 of the line-of-credit. The personal
guarantee of the Companys president and the assets of the Company
secure the line-of-credit.
|  
|8. |  | INTEREST AND OTHER, NET                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | Interest and Other, net included:                                                                                                                                                                                                                                                                                                                                                                                                   

|                                        |  |                   |         |                    |  |      |         |      |  |   |         |   |  |   |         |  
|--------------------------------------- |  | ----------------- | ------- | ------------------ |  | ---- | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                        |  | Nine Months Ended |         | Three Months Ended
|                                        |  | October 31        |         | October 31        
|                                        |  |                   |         |                   
|                                        |  | 2002              |         | 2001               |  | 2002 |         | 2001
|                                        |  |                   |         |                    |  |      |         |     
|Interest income                         |  | $                 | 23,663  |                    |  | $    | 2,539   |      |  | $ | 9,238   |   |  | $ | 1,963   |  
|Interest expense                        |  |                   | (92,192 | )                  |  | $    | (64,576 | )    |  |   | (11,330 | ) |  | $ | (19,809 | )
|Foreign currency exchange income (loss) |  |                   | (1,147  | )                  |  |      | (813    | )    |  |   | (388    | ) |  |   | (628    | )
|                                        |  |                   |         |                    |  |      |         |      |  |   |         |   |  |   |         |  
|Total                                   |  | $                 | (69,676 | )                  |  | $    | (62,850 | )    |  | $ | (2,480  | ) |  | $ | (18,474 | )
|                                        |  |                   |         |                    |  |      |         |      |  |   |         |   |  |   |         |  



|9. |  | 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 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:

|                 |  |   |         | 
|---------------- |  | - | ------- | 
|October 31, 2003 |  |   | 63,000  | 
|October 31, 2004 |  |   | 66,000  | 
|October 31, 2005 |  |   | 66,000  | 
|October 31, 2006 |  |   | 66,000  | 
|October 31, 2007 |  |   | 66,000  | 
|Thereafter       |  |   | 459,000 | 
|                 |  |   |         | 
|                 |  | $ | 786,000 | 
|                 |  |   |         | 



|    |  | Rent expense charged to operations was $49,500 in 2002 and 2001,
respectively.                                                                                                                                                    
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|10. |  | EARNINGS PER SHARE                                                                                                                                                                                                                
|   
|    |  | The following reconciles the number of common shares outstanding at
October 31 of 2002 and 2001 to the weighted average number of common
shares outstanding for the purposes of calculating basic and dilutive
earnings per share:

F-8



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##### Table of Contents



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)



| |  | Earnings per share (continued)
| |  | ------------------------------

|                                                             |  |                   |            |                    |  |      |            |          |  |  |            |      |  |  |            | 
|------------------------------------------------------------ |  | ----------------- | ---------- | ------------------ |  | ---- | ---------- | -------- |  |  | ---------- | ---- |  |  | ---------- | 
|                                                             |  | Nine Months Ended |            | Three Months Ended
|                                                             |  | October 31        |            | October 31        
|                                                             |  |                   |            |                   
|                                                             |  |                   |            |                    |  | 2001 |            |          |  |  |            | 2001
|                                                             |  | 2002              |            | Restated           |  | 2002 |            | Restated
|                                                             |  |                   |            |                    |  |      |            |         
|Weighted average common shares outstanding                   |  |                   | 14,484,700 |                    |  |      | 14,428,311 |          |  |  | 14,484,700 |      |  |  | 14,271,000 | 
|Effect of using diluted securities:                          |  |                   |            |                    |  |      |            |          |  |  |            |      |  |  |            | 
|Weighted average common equivalent shares
from stock options |  |                   |            |                    |  |      | 380,769    |          |  |  | 741,379    |      |  |  |            | 
|                                                             |  |                   |            |                    |  |      |            |          |  |  |            |      |  |  |            | 
|Diluted number of common shares outstanding                  |  |                   | 14,484,700 |                    |  |      | 14,809,080 |          |  |  | 15,226,079 |      |  |  | 14,271,000 | 
|                                                             |  |                   |            |                    |  |      |            |          |  |  |            |      |  |  |            | 



|    |  | At October 31, 2002 there were approximately 6,000,000 million shares
of common stock potentially issuable with respect to stock options,
which could dilute basic earnings per share in the future.                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|11. |  | STOCK REPURCHASE PROGRAM                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | During the first nine months of fiscal 2003, the Company repurchased
249,300 shares of common stock under the Companys authorized
repurchase program at a cost of $50,241. As of October 31, 2002 a
total of 750,700 shares remained available for repurchases under the
program.                                                                                                                                                                                                                                                                                                                
|   
|12. |  | DISPOSITION OF SUBSIDIARY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | On February 1, 2001, the Company adopted a formal plan to sell Fuji
Fabrication, SDN, BHD. The assets of Fuji Fabrication were sold and
consisted primarily of inventory and equipment. The sale of Fuji
Fabrication on October 1, 2001 resulted in a selling price of
$290,547 with the Company assuming a note. On October 1, 2002 the
Company recast the note for $396,693, which included additional
purchases of inventory and previously accrued interest. Interest is
stated at 10% (annually) and is payable in 12 monthly installments.
The note is payable in full on September 30, 2003
|   
|    |  | Net sales of Fuji Fabrication for the nine months ended October 31,
2002 and 2001 were $0 and $162,080, respectively. These amounts are
not included in net sales in the accompanying consolidated statement
of income.                                                                                                                                                                                                                                                                                                                                                                           

|                                             |  |                   |         |                    |  |      |         |      |  |   |         |  |  |   |         |  
|-------------------------------------------- |  | ----------------- | ------- | ------------------ |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | -
|                                             |  | Nine Months Ended |         | Three Months Ended
|                                             |  | October 31        |         | October 31        
|                                             |  |                   |         |                   
|                                             |  | 2002              |         | 2001               |  | 2002 |         | 2001
|                                             |  |                   |         |                    |  |      |         |     
|Net sales                                    |  |                   |         |                    |  | $    | 162,080 |      |  |   |         |  |  |   |         |  
|Cost of sales                                |  |                   |         |                    |  |      | 198,513 |      |  |   |         |  |  | $ | 17,257  |  
|                                             |  |                   |         |                    |  |      |         |      |  |   |         |  |  |   |         |  
|Gross income (loss)                          |  |                   |         |                    |  |      | (36,433 | )    |  |   |         |  |  |   | (17,257 | )
|                                             |  |                   |         |                    |  |      |         |      |  |   |         |  |  |   |         |  
|Selling, general and administrative expenses |  |                   | 6,384   |                    |  |      | 12,399  |      |  | $ | 1,829   |  |  |   | 2,845   |  
|                                             |  |                   |         |                    |  |      |         |      |  |   |         |  |  |   |         |  
|Other income (expense)                       |  |                   | 129,703 |                    |  |      | 59,027  |      |  |   | 129,703 |  |  |   | 3,195   |  
|                                             |  |                   |         |                    |  |      |         |      |  |   |         |  |  |   |         |  
|Net income (loss)                            |  | $                 | 123,319 |                    |  | $    | 10,195  |      |  | $ | 127,874 |  |  | $ | (16,907 | )
|                                             |  |                   |         |                    |  |      |         |      |  |   |         |  |  |   |         |  

F-9



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##### Table of Contents



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)



| |  | Due to increased competition from China and a decrease in
profitability, on October 31, 2002 the Company adopted a formal plan
to discontinue Hong Kong Batteries Industries, Ltd.                                                                
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The discontinuance of Hong Kong Batteries Industries, Ltd resulted in
the Company writing off $660,160 in goodwill along with an additional
$246,782 in disposal costs.                                                                           
|
| |  | Net sales of Hong Kong Batteries Industries, Ltd for the nine months
ended October 31, 2002 and 2001 were $445,641 and $1,738,902,
respectively. These amounts are not included in net sales in the
accompanying consolidated statement of income.

|                                             |  |                   |           |                    |  |      |           |      |  |  |           |   |  |   |         | 
|-------------------------------------------- |  | ----------------- | --------- | ------------------ |  | ---- | --------- | ---- |  |  | --------- | - |  | - | ------- | 
|                                             |  | Nine Months Ended |           | Three Months Ended
|                                             |  | October 31        |           | October 31        
|                                             |  |                   |           |                   
|                                             |  | 2002              |           | 2001               |  | 2002 |           | 2001
|                                             |  |                   |           |                    |  |      |           |     
|Net sales                                    |  | $                 | 445,641   |                    |  | $    | 1,738,902 |      |  |  |           |   |  | $ | 571,952 | 
|Cost of sales                                |  |                   | 368,534   |                    |  |      | 1,360,487 |      |  |  |           |   |  |   | 479,562 | 
|                                             |  |                   |           |                    |  |      |           |      |  |  |           |   |  |   |         | 
|Gross income                                 |  |                   | 77,107    |                    |  |      | 378,415   |      |  |  | 0         |   |  |   | 92,390  | 
|                                             |  |                   |           |                    |  |      |           |      |  |  |           |   |  |   |         | 
|Selling, general and administrative expenses |  |                   | 217,927   |                    |  |      | 234,131   |      |  |  | 101,271   |   |  |   | 66,224  | 
|                                             |  |                   |           |                    |  |      |           |      |  |  |           |   |  |   |         | 
|Other income (expense)                       |  |                   | (114,817  | )                  |  |      | 8,712     |      |  |  | (87,357   | ) |  |   | 1,461   | 
|                                             |  |                   |           |                    |  |      |           |      |  |  |           |   |  |   |         | 
|Income (loss) before income taxes            |  |                   | (255,637  | )                  |  |      | 152,996   |      |  |  | (188,628  | ) |  |   | 27,627  | 
|Income taxes (benefit)                       |  |                   | (9,313    | )                  |  |      |           |      |  |  | (9,313    | ) |  |   |         | 
|                                             |  |                   |           |                    |  |      |           |      |  |  |           |   |  |   |         | 
|Net income (loss)                            |  |                   | ($246,324 | )                  |  | $    | 152,996   |      |  |  | ($179,315 | ) |  | $ | 27,627  | 
|                                             |  |                   |           |                    |  |      |           |      |  |  |           |   |  |   |         | 



|13. |  | PRINCIPAL PRODUCTS AND SEGMENTATION OF SALES                                                                                                                                                                                                                                                                                                              
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Companys principal products are industrial ceramics and diamond
cutting tools. 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.
|   
|    |  | Financial information relating to the principal industry segments and
classes of products:                                                                                                                                                                                                                                                                

|                                    |  |                   |           |                    |  |      |           |          |  |   |           |      |  |   |           | 
|----------------------------------- |  | ----------------- | --------- | ------------------ |  | ---- | --------- | -------- |  | - | --------- | ---- |  | - | --------- | 
|                                    |  | Nine Months Ended |           | Three Months Ended
|                                    |  | October 31        |           | October 31        
|                                    |  |                   |           |                   
|                                    |  |                   |           |                    |  | 2001 |           |          |  |   |           | 2001
|                                    |  | 2002              |           | Restated           |  | 2002 |           | Restated
|                                    |  |                   |           |                    |  |      |           |         
|Sales to customers:                 |  |                   |           |                    |  |      |           |          |  |   |           |      |  |   |           | 
|Industry A  Ceramics               |  | $                 | 4,551,500 |                    |  | $    | 1,519,572 |          |  |   | 1,976,373 |      |  |   | 710,310   | 
|Industry B  Diamond tools          |  |                   | 677,573   |                    |  |      | 561,748   |          |  |   | 244,208   |      |  |   | 142,445   | 
|Industry C  Contract manufacturing |  |                   | 587,721   |                    |  |      | 421,314   |          |  |   | 214,130   |      |  |   | 175,467   | 
|                                    |  |                   |           |                    |  |      |           |          |  |   |           |      |  |   |           | 
|                                    |  | $                 | 5,816,794 |                    |  | $    | 2,502,634 |          |  | $ | 2,434,711 |      |  | $ | 1,028,222 | 
|                                    |  |                   |           |                    |  |      |           |          |  |   |           |      |  |   |           | 

F-10



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##### Table of Contents



SETO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)



| |  | Principal products and segmentation of sales (continued)
| |  | --------------------------------------------------------

|                            |                                     |   |                   |           |                    |   |         |          |          |   |         |          |      |   |         |          |  
|--------------------------- | ----------------------------------- | - | ----------------- | --------- | ------------------ | - | ------- | -------- | -------- | - | ------- | -------- | ---- | - | ------- | -------- | -
|                            |                                     |   | Nine Months Ended |           | Three Months Ended
|                            |                                     |   | October 31        |           | October 31        
|                            |                                     |   |                   |           |                   
|                            |                                     |   |                   |           |                    |   | 2001    |          |          |   |         |          | 2001
|                            |                                     |   | 2002              |           | Restated           |   | 2002    |          | Restated
|                            |                                     |   |                   |           |                    |   |         |          |         
|Operating income or (loss): |                                     |   |                   |           |                    |   |         |          |          |   |         |          |      |   |         |         
|                            | Industry A  Ceramics               |   | $                 | 1,621,012 |                    |   | $       | 518,593  |          |   |         | 643,351  |      |   |         | 226,974  |  
|                            | Industry B  Diamond tools          |   |                   | (214,471  | )                  |   |         | (236,279 | )        |   |         | (106,498 | )    |   |         | (101,342 | )
|                            | Industry C  Contract manufacturing |   |                   | 104,048   |                    |   |         | 88,982   |          |   |         | 37,153   |      |   |         | 16,595   |  
|                            |                                     |   |                   |           |                    |   |         |          |          |   |         |          |      |   |         |         
|                            |                                     | $ | 1,510,589         |           |                    | $ | 371,296 |          |          | $ | 574,006 |          |      | $ | 142,227 |         
|                            |                                     |   |                   |           |                    |   |         |          |          |   |         |          |      |   |         |         



| |  | Three customers each accounted for more than 10% of total sales and
together accounted for approximately 78% of total sales for the nine
months ended October 31, 2002.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-11



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##### Table of Contents






Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations  Third Quarter of Fiscal 2003 Compared to Third Quarter of Fiscal 2002 (Restated)



| |  | Our Q3 fiscal 2003 net revenues of $2,434,711 were up $1,406,489, or 137%
compared to Q3 fiscal 2002. The increase in net revenues came from
SETOs Ceramic division, East Coast Sales Company, primarily due to a
significant increase in sales of our custom ceramic products for the
detection/protection and jet engine manufacturing industries. In
addition, our contract manufacturing segments sales increased $38,663, or
22%, primarily due to market acceptance of our personal electronic safety
devices.                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Cost of sales for Q3 fiscal 2003 increased $754,045 or 162% compared to
Q3 2002, primarily due to change in product mix that resulted in higher
raw material costs in our East Coast Sales operating segment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Our gross margin percentage decreased to 50% for Q3 2003 down from 55% in
Q3 2002, primarily due to a shift in product mix within SETOs Ceramic
division, East Coast Sales Company. This shift in product mix is
primarily due to the significant increase in sales of our custom ceramic
products for the detection/protection and jet engine manufacturing
industries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | On October 31, 2002, due to increased competition from China and a
significant decrease in profitability, we decided to discontinue our
industrial battery segment Hong Kong Batteries Industries, Ltd. The
discontinuance of Hong Kong Batteries Industries, Ltd resulted in a write
off $660,160 in acquisition related goodwill in addition to $217,936 in
disposal costs for Q3 fiscal 2003. In addition, for Q3 fiscal 2002 we
restated our financial statement to reflect the disposal of Hong Kong
Batteries Industries, Ltd and Fuji Fabrication, which was disposed of on
October 31, 2001. We recorded a loss on disposal of subsidiaries of
$12,309, of which $4,613 was amortization related to Hong Kong Batteries
Industries, Ltd and $7,696 was expenses pertaining to Fuji Fabrication.
These costs are reflected on our consolidated condensed statement of
income under loss on disposal of subsidiaries.

|                                             |  |                   |           |                    |  |      |           |          |  |   |           |      |  |   |           | 
|-------------------------------------------- |  | ----------------- | --------- | ------------------ |  | ---- | --------- | -------- |  | - | --------- | ---- |  | - | --------- | 
|                                             |  | Nine Months Ended |           | Three Months Ended
|                                             |  | October 31        |           | October 31        
|                                             |  |                   |           |                   
|                                             |  |                   |           |                    |  | 2001 |           |          |  |   |           | 2001
|                                             |  | 2002              |           | Restated           |  | 2002 |           | Restated
|                                             |  |                   |           |                    |  |      |           |         
|Net revenues                                 |  | $                 | 5,816,794 |                    |  | $    | 2,502,634 |          |  | $ | 2,434,711 |      |  | $ | 1,028,222 | 
|Cost of sales                                |  | $                 | 2,689,793 |                    |  | $    | 1,016,922 |          |  | $ | 1,219,769 |      |  | $ | 465,724   | 
|Depreciation                                 |  | $                 | 78,867    |                    |  | $    | 50,994    |          |  | $ | 27,646    |      |  | $ | 17,880    | 
|Selling, general and administrative expenses |  | $                 | 1,613,894 |                    |  | $    | 1,111,898 |          |  | $ | 640,376   |      |  | $ | 419,711   | 
|Acquisition-related goodwill                 |  | $                 | 2,518     |                    |  | $    | 2,518     |          |  | $ | 560       |      |  | $ | 560       | 



| |  | Ceramics Net revenues for the ceramic segment increased by $1,266,063 or
178% in Q3 2003 compared to Q3 2002. This increase in net revenues was
primarily due to significantly higher sales of our custom ceramic products
that are used in detection and protection systems and jet engine
manufacturing. Net operating profit increased by $416,377, or 183% for Q3
2003 compared to Q3 2002, primarily due to the increase in our custom ceramic
business.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Diamond Tools Net revenues for the Diamond Tool segment increased by
$101,763 or 71% in Q3 2003 compared to Q3 2002, primarily due to product
alterations and custom cutting for the Asian semiconductor markets. Net
operating loss increased by $5,156 or 5% for Q3 2003 compared to Q3 2002,
primarily due to higher overhead costs.                                                                                                                      
|
| |  | Contract Manufacturing Net revenues for the Contract Manufacturing Segment
increased $38,663 or 22% for Q3 2003 compared to Q3 2002, primarily due to
higher sales of our personal electronic safety devices. Net operating
profits increased $20,558 or 124% for Q3 2003 compared to Q3 2002, primarily
due to higher sales and gross margins of our personal electronic safety
devices.                                                                    

1



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##### Table of Contents



Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations



| |  | Selling, General and Administrative Expenses, and Other General and
administrative expenses increased $220,665 or 53% in Q3 2003 compared to Q3
2002, primarily due to increased payroll and other overhead costs incurred
during Q3 2003. Selling, general and administrative expenses were 26% of net
revenues in Q3 2003 and 41% of net revenues in Q3 2002.                                                                                                            
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Amortization of acquisition-related intangibles and costs was $560 in Q3
2003 and Q3 2002 and is now all related to our Ceramics division, East
Coast Sales Company.                                                                                                                                                                                                                                                                                                        
|
| |  | The third quarter of fiscal 2002 has been restated to reflect the
disposition of Hong Kong Batteries Industries, Ltd. For Q3 fiscal 2002
Hong Kong Batteries Industries, Ltd had net sales of $571,952 and net
income of $27,627. These amounts are not included in our consolidated
condensed statement of income under continuing operations.                                                                                                                             
|
| |  | In addition, the financial statements for the three months ended October
31, 2001 have been restated for comparison purposes due to the
discontinuance and sale of our Fuji Fabrication Sdn Bhd (Fuji)
operating segment. Fuji Fabrications operations are reflected in our
financial statements as discontinued operations. Fujis inventory,
equipment and supplies were sold for $290,547 with SETO holding a note
payable with 10% interest due on October 31, 2003.

Results of Operations  First
Nine Months of Fiscal 2003 Compared to First Nine Months of Fiscal 2002 (Restated)



| |  | Our net revenues for the first nine months of fiscal 2003 (fiscal year
ending January 31, 2003) increased 132% compared to first nine months of
fiscal 2002. The increase in net revenues primarily came from SETOs
Ceramic division, East Coast Sales Company and our Contract manufacturing
division, SETO Technology, primarily due to a significant increase in
sales of our custom ceramic products for the detection and protection
industry and the acceptance of SETO Technologys personal electronic
safety devices.                                                     
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Cost of sales for the first nine months of fiscal 2003 increased 165%
compared to first nine months of fiscal 2002 while our gross margin
percentage decreased to 54% compared to 59% the first nine months of
fiscal 2002, primarily due to the increase in sales volume from our
custom ceramic business. See Outlook for a discussion of our gross
margin expectations.                                                                                                                                                                                                        
|
| |  | The financial statements for the nine months ended October 31, 2001 (fiscal
2002) have been restated for comparison purposes due to the disposal of Hong
Kong Batteries Industries, Ltd at October 31, 2002 and the discontinuance and
sale of our Fuji Fabrication Sdn Bhd (Fuji) operating segment. In
addition, Hong Kong Batteries Industries, Ltd and Fuji Fabrications
operations are reflected in our financial statements as discontinued
operations.                                                                                                                   
|
| |  | Ceramics Net revenues for the Ceramic segment increased by $3,031,928, or
200% in first nine months of fiscal 2003 compared to first nine months of
fiscal 2002. This increase in net revenues was primarily due to
significantly higher sales of our custom ceramic products that are used in
detection and protection systems and by manufacturers of jet engines. Net
operating profit increased by $1,102,419, or 213% for the
first nine months of fiscal 2003 compared to the first nine months of fiscal
2002, primarily due to the increase in our custom ceramic business.
|
| |  | Diamond Tools Net revenues for the Diamond Tool segment increased $115,825
or 21% in the first nine months of fiscal 2003 compared to the first nine
months of fiscal 2002. Net operating loss decreased $21,808 or 9%, primarily
due to product alterations and custom cutting for the Asian semiconductor
markets.                                                                                                                                                                                                                                                               
|
| |  | Contract Manufacturing Net revenues for the Contract Manufacturing Segment
increased $166,407 or 39% for the first nine months of fiscal 2003 compared
to the first nine months fiscal 2002, primarily due to higher sales and
market acceptance of our personal electronic safety products. Net operating
profits increased $15,066 or 17% for the first nine months of fiscal 2003
compared to the first nine months of fiscal 2002, primarily due to higher
sales volume.                                                                                                       
|
| |  | Selling, General and Administrative Expenses, Other and Taxes. General and
administrative expenses increased $501,996 or 45% in the first nine months of
fiscal 2003 compared to the first nine months of fiscal 2002, primarily due
higher payroll, commissions, insurance and travel costs for the first nine
months of fiscal 2003. Selling,                                                                                                                                                                                                                                     

2



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##### Table of Contents



Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations



| |  | general and administrative expenses were 28%
of net revenues in the first nine months of fiscal 2003 and 44% of net
revenues in the first nine months of fiscal 2002.                                                                                                                                                                                                                                                                                
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Amortization of acquisition-related intangibles and costs was $2,518 in Q3
2003 and Q3 2002 and is now all associated with our Ceramics division, East
Coast Sales Companys acquisition costs. We have implemented of Statement of
Financial Accounting Standards (SFAS) No. 142, as of the beginning of fiscal
2003. Under SFAS 142, acquisition-related goodwill is no longer amortized
for acquisitions occurring after June 2003.               
|
| |  | Our effective income tax rate was 4% for the first nine months of fiscal
2003 compared to 1% for the first nine months of fiscal 2002. Our
effective tax rate is lower than the statutory rate of 34%, primarily due
to our net operating loss carryforward of $2,200,000 and a portion of our
net income was from our foreign subsidiaries. Our Federal net operating
loss carryover is available to offset income from our U.S. operating
segments.

Financial Condition

Liquidity and Capital Resources



| |  | Our financial condition remains strong. At October 31, 2002, cash
totaled $617,528, up $435,111 from January 31, 2002, primarily due to the
substantial increase in sales from our Ceramics division. Total
short-term and long-term debt of $1,270,016 and $1,646,454 was 36% and
63% of shareholders equity as of the end of the third quarter of fiscal
2003 and 2002, respectively. This increase in our debt-to-equity ratio
was primarily due to our Ceramic divisions profitability, which allowed
us to pay down our line of credit and payoff a term loan                                                                                                                        
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | For the nine months ended October 31, 2002, cash provided by operating
activities was $1,078,694. Inventory levels slightly increased from
January 31, 2002, as we had to increase our ceramics inventory due to
increased demand. Accounts receivable increased, primarily due to record
sales from our Ceramics division. Our six largest customers accounted
for approximately 80% of net revenues for the first nine months of fiscal
2003. At October 31, 2002, these six customers accounted for
approximately 74% of net accounts receivable. The main non-operating
source of cash during the first nine months of fiscal 2003 was $400,370
that we drew down on our line-of-credit.
|
| |  | We fund our working capital requirements on a short-term basis primarily
through a line-of-credit with a major financial institution with maturity
that was currently extended to December 31, 2002.
Maximum borrowing capacity under the line-of-credit is $1,700,000. At
October 31, 2002 we had utilized $683,022 of the credit line.                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Major uses of cash during the first nine months included capital spending
of $107,299 for plant and equipment, and $886,413 was used to pay down
our short and long-term debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Our current ratio for Q3 fiscal 2003 was 2.90 compared to 1.38 for Q3
fiscal 2002, primarily due to an increase in accounts receivable and our
continuous efforts to pay down our line-of-credit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | We believe that we have the financial resources needed to meet our
business requirements for the next twelve months, including capital
expenditures, working capital requirements and potential future
acquisitions or strategic investments.                                                                                                                                                                                                                                                                                                                                                                                                                                               

Financial market risks



| |  | We are exposed to market risks from changes in interest rates and foreign
currency exchange rates. To manage exposures to these fluctuations, we
may occasionally enter into various hedging transactions. We do not use
derivatives for trading purposes, or do we generate income or engage in
speculative activity and we have never used leveraged derivatives to
hedge the value of its net investments in our foreign subsidiaries.                                                                                                                                                           
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Currency During the nine months ended October 31, 2002, our loss from
foreign currency exchange transactions totaled $1,147 compared to a loss
of $813 at October 31, 2001; neither materially impacted our operational
results. We feel that we can manage our foreign currency translation
gains and losses due to the fact that Malaysias currency rate is fixed
relative to the U.S. dollar. While future fluctuations in currency rates
could have a negative impact on our future operations, the current
conditions are expected to continue to provide strong revenue and
earnings growth.

3



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##### Table of Contents



Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations



| |  | Inflation We have not had a significant impact from general inflation
over the past five years due to our cash flow and the global economy.
Although it is difficult to predict the impact of inflation, we do not
anticipate that inflation will materially impact our margins, operating
costs and our results of operations for fiscal 2003.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Strategy



| |  | This strategy section and the following outlook section contain a number of
forward-looking statements, all of which are based on current expectations.
Actual results may differ materially. These statements do not reflect the
potential of any mergers, acquisitions or business combinations that had not
closed as of December 5, 2002.                                                                                           
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Our goal is to be a niche company, able provide products and services to a
variety of larger corporations who need contract manufacturing and or
made-to-order products. Our primary focus area is the fabricating of ceramic
parts for the airline security business and jet engine manufacturing along
with cutting blades for silicon wafers.                                                                                      
|
| |  | East Coast Sales Company East Coast Sales Company operating segment
specializes in the distribution and value added fabrication of technical
ceramic products for the airline security industry and jet engine
manufactures, and distributes clean room supplies and tools. Our strategy
for ceramic fabrication is to increase our production efficiency by utilizing
our foreign subsidiarys labor force and updating our machinery.
|
| |  | SETO Holdings and DTI Technology SETO Holdings and DTI Technology operating
segments strategy is to produce quality resin blades for the microchip
industry. We plan to do this with new equipment purchases and with our
highly trained foreign workforce.                                                                                                                                                                         
|
| |  | SETO Technology SETO Technologys strategy is providing
contract-manufacturing services for personal electronic safety devices and to
produce medical, automotive and mining safety devices. This segment is
currently developing and selling medical training products, auto safety
devices and safety helmets.                                                                                                                       

Outlook



| |  | The following outlook section contains a number of forward-looking
statements, all of which are based on current expectations. Actual
results may differ materially. These statements do not reflect the
potential impact of any mergers, acquisitions, divestitures or other
business combinations that had not closed as of the end of the third
quarter of fiscal 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The methods, estimates and judgments we use in applying our accounting
policies have a significant impact on the results we report in our
financial statements. Some of our accounting policies require us to make
difficult and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain. Our most critical
accounting estimates include: valuation of inventory, which impacts cost
of sales and gross margin; our deferred tax asset, which impacts income
tax expense (benefit); and the assessment of recoverability of goodwill
and other intangible assets, which impacts write-offs of goodwill and
intangibles. Below, we discuss these policies further, as well as the
estimates and judgments that are as difficult or subjective, such as our
policies for revenue recognition.
|
| |  | Uncertainty in global economic conditions continues to make it difficult
to predict product demand, but we expect that the current trends will
continue through fiscal 2003. For the fourth quarter of fiscal 2003, we
expect revenue to be between $1,100,000 and $1,400,000, compared to third
quarter revenue of $2,434,711, second quarter revenue of $1,928,518 and
first quarter revenue of $1,453,565. Our financial results are
substantially dependent on sales of ceramic products and diamond tools,
all of which are difficult to forecast. Revenue is also subject to the
impact of economic conditions in various geographic regions.                                                                                                                                                                                               
|
| |  | We can expect gross margins percentage in the fourth quarter of fiscal
2003 to be approximately 52%, plus or minus a couple of points, compared
to 50% in the third quarter. For the full year of fiscal 2003, our gross
margin percentage is expected to be 50%, plus or minus a few points. Our
expectation for fiscal 2003 reflects our early progress this year in
improving profitability, and is consistent with our view that the current
trends will continue through 2003. Our gross margin varies, depending on
sales volume and product pricing.                                                                                                                                                                                                                                                                                       

4



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##### Table of Contents



Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations



| |  | Our policy for valuation of inventory, including the determination of
obsolete inventory, requires us to estimate the future demand of our
products within specific time horizons, generally four months or less.
The estimates of future demand that we use in the valuation of inventory
are the basis for our published revenue forecast. If our demand forecast
for specific products is greater than actual demand and we do not reduce
manufacturing output accordingly, we could be required to record
additional inventory reserves, which would have a negative impact on our
gross margin.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | We currently expect capital spending will be approximately $175,000 in
fiscal 2003. If demand for our products does not continue to grow,
revenues and gross margins could be adversely affected. Depreciation is
expected to be $32,000 for the fourth quarter and $110,000 for fiscal
2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | We have completed the adoption of the SFAS Nos. 141 and 142 on accounting
for business combinations and goodwill as of the beginning of fiscal
2003. Accordingly, we will no longer amortize goodwill from future
acquisitions, but will continue to amortize acquisition-related
intangibles and costs. Consequently, we expect amortization of
acquisition-related intangibles and costs to be approximately $2,518 in
the fourth quarter of fiscal 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | In conjunction with the implementation of the new accounting rules for
goodwill, as of the beginning of fiscal 2003, we completed a goodwill
impairment review for East Coast Sales Company, the reporting unit that
has substantially all of our recorded goodwill, and found no impairment.
According to our accounting policy under the new rules, we will perform a
similar review annually, or earlier if indicators of potential impairment
exist. Our impairment review is based on a discounted cash flow approach
that uses our estimates of revenues and costs for these groups as well as
appropriate discount rates. If our revenue and cost forecasts are not
achieved, we may incur charges for impairment of goodwill.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Our future results of operations and the other forward-looking statements
contained in this outlook discussion involve a number of risks and
uncertaintiesin particular the statements regarding our goals, plans to
cultivate new business, future economic conditions and the tax rate. In
addition to the factors discussed above, among the other factors that
could cause actual results to differ materially are the following:
business and economic conditions and trends in the detection and
protection systems field and diamond tool industries in various
geographic regions; factors associated with doing business outside the
United States, including currency controls and fluctuations, and tariff,
import and other related restrictions and regulations; possible
disruption in commercial activities related to terrorist activity or
armed conflict in the United States and other locations, such as changes
in logistics and security arrangements, and reduced end-user purchases
relative to expectations; civil or military unrest or political
instability in a locale; changes in customer order patterns; competitive
factors such as manufacturing technologies and pricing pressures; excess
or obsolete inventory and variations in inventory valuation; the ability
to sustain and grow ceramic, diamond tools and custom manufacturing, and
successfully integrate and operate any acquired business; and litigations
involving intellectual property, stockholder and other issues.
|
| |  | We believe that we have the product offerings, facilities, personnel, and
competitive and financial resources for continued business success, but
future revenues, costs, margins and profits are all influenced by a
number of factors, including those discussed above, all of which are
inherently difficult to forecast.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

5



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##### Table of Contents






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: December 13, 2002  





---



##### Table of Contents






Certifications



I, Eugene J. Pian, certify that:



|1. |  | I have reviewed this quarterly report on form 10-QSB of SETO
Holdings, Inc;                                                                                                                                                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made not misleading with respect to the period covered
by this quarterly report;
|  
|3. |  | Based in my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this quarterly report; 
|  
|4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rule 13a-14 and 15d-14) for the registrant and
we have:                                                                                    



| | a. |  | Designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Evaluated the effectiveness of the registrants
controls and procedures as of a date with 90 days prior to the
filing date of this quarterly report (the Evaluation Date);
and                                                                                                               
|
| | c. |  | Presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | All significant deficiencies in the design or
operation of the internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weakness in internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Any, fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                         



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including and corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: December 13, 2002

/s/ Eugene J. Pian
Chief Executive Officer





---



##### Table of Contents



Certifications

I, Craig Pian, certify that:



|1. |  | I have reviewed this quarterly report on form 10-QSB of SETO
Holdings, Inc;                                                                                                                                                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made not misleading with respect to the period covered
by this quarterly report;
|  
|3. |  | Based in my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this quarterly report; 
|  
|4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rule 13a-14 and 15d-14) for the registrant and
we have:                                                                                    



| | a. |  | Designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Evaluated the effectiveness of the registrants
controls and procedures as of a date with 90 days prior to the
filing date of this quarterly report (the Evaluation Date);
and                                                                                                               
|
| | c. |  | Presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | All significant deficiencies in the design or
operation of the internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weakness in internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Any, fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                         



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including and corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: December 13, 2002

/s/ Craig Pian
Vice President





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##### Table of Contents



Certifications

I, Francine Pian, certify that:



|1. |  | I have reviewed this quarterly report on form 10-QSB of SETO
Holdings, Inc;                                                                                                                                                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made not misleading with respect to the period covered
by this quarterly report;
|  
|3. |  | Based in my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this quarterly report; 
|  
|4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rule 13a-14 and 15d-14) for the registrant and
we have:                                                                                    



| | a. |  | Designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Evaluated the effectiveness of the registrants
controls and procedures as of a date with 90 days prior to the
filing date of this quarterly report (the Evaluation Date);
and                                                                                                               
|
| | c. |  | Presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | All significant deficiencies in the design or
operation of the internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weakness in internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Any, fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                         



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including and corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: December 13, 2002

/s/ Francine Pian
Secretary





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##### Table of Contents






CERTIFICATION

Each of the undersigned hereby certifies, in accordance with 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his or
her
capacity as an officer of SETO Holdings, Inc. (SETO), that to his or her
knowledge, the Quarterly Report of SETO on Form 10-QSB for the period ended
October 31, 2002, fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934 and that the information contained in such
report fairly presents, in all material respects, the financial condition and
results of operations of SETO.

| |  |                         
| |  | ------------------------
| |  | By: /s/ Eugene J. Pian  
| |  |                         
| |  | Eugene J. Pian, Director
| |  |                         
| |  | By: /s/ Craig A. Pian   
| |  |                         
| |  | Craig A. Pian, Director 
| |  |                         
| |  | By: /s/ Francine Pian   
| |  |                         
| |  | Francine Pian, Director 
| |  |                         
| |  | Date: December 13, 2002