SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D.C. 20549




                                                   FORM  10-QSB

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

                      For the quarterly period ended  April 30, 1999

                                                        or

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

                     For the transition period from              to


Commission File Number:  33-5820-LA




                                       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            (I.R.S. Employer
incorporation or organization)             Identification Number)


                     554 North State Road, Briarcliff Manor, New York  10510

                         (Address of principal executive offices)


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


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

                                                  Yes X   No


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


            Class                               Outstanding at April 30, 1999

Common Stock, par value $.001
 per share                                               10,838,500




<PAGE>



                                                      INDEX


Part I.   Financial Information


   Item 1.  Consolidated financial statements:

         Balance sheet as of April 30, 1999                             F-2

         Statement of income for the three months
       April 30, 1999 and 1998                                          F-3

         Statement of comprehensive income for the three months
           ended April 30, 1999 and 1998                                F-4

         Statement of cash flows for the three months ended
           April 30, 1999 and 1998                                      F-5

         Notes to consolidated financial statements                  F-6 - F-15


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



Part II.  Other information


   Signatures







<PAGE>


                                      SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (Formerly Semicon Tools, Inc. and Subsidiaries)

                                   CONSOLIDATED BALANCE SHEET - APRIL 30, 1999



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

                                                      ASSETS

Current assets:
  Cash                                                                                                 $  106,794
  Accounts receivable, less allowance
   for doubtful accounts of $10,500                                                                       435,229
  Inventory                                                                                               770,538
  Prepaid expenses and other assets                                                                       137,315
  Deferred tax asset, current portion                                                                      95,000
                                                                                                       ----------

    Total current assets                                                                                1,544,876
                                                                                                        ---------

Property and Equipment                                                                                    580,021
                                                                                                          -------

Other assets:
   Goodwill, net of amortization                                                                          115,247
   Security deposits                                                                                       20,425
   Deferred tax asset, net of current portion                                                             245,900
   Loan receivable, officer                                                                                 6,532
                                                                                                       ----------
                                                                                                          388,104
                                                                                                          -------

                                                                                                       $2,513,001
                                                                                                       ==========



                                       LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
  Current portion of long-term debt                                                                    $  146,024
  Notes payable, bank                                                                                     425,000
  Accounts payable                                                                                        259,620
  Accrued expenses                                                                                         41,046
                                                                                                       ----------

    Total current liabilities                                                                             871,690
                                                                                                          -------

Long-term debt, net of current portion                                                                    267,826
                                                                                                       ----------

Deferred lease liability                                                                                    6,000
                                                                                                            -----

Commitments and contingencies

Shareholders' equity:
  Common stock par value $.001; 100,000,000
   shares authorized; 10,838,500 shares issued                                                             10,838
  Additional paid in capital                                                                            2,871,835
  Currency translation adjustment                                                                    (   152,981)
  Retained earnings (deficit)                                                                        ( 1,347,041)
                                                                                                      ----------
                                                                                                        1,382,651
  Less common shares held in treasury, 49,400
   shares at cost                                                                                          15,166
                                                                                                           ------

  Total shareholder's equity                                                                            1,367,485
                                                                                                        ---------

                                                                                                       $2,513,001
                                                                                                       ==========

</TABLE>


     See notes to consolidated financial statements
                                                                         F-2


<PAGE>



                                       SETO HOLDINGS, INC. AND SUBSIDIARIES)
                                 (Formerly Semicon Tools, Inc. and Subsidiaries)

                                      CONSOLIDATED STATEMENT OF INCOME (LOSS)

                                    THREE MONTHS ENDED APRIL 30, 1999 AND 1998






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


                                                                                                          1998
                                                                                       1999             Restated

Net sales                                                                             $900,787           $580,825

Cost of sales                                                                          493,255            116,431
                                                                                      --------           --------

Gross profit                                                                           407,532            464,394

Selling, general and administrative
 expenses                                                                              395,668            320,048
                                                                                      --------           --------

Income from operations                                                                  11,864            144,346
                                                                                      --------           --------

Other income (expenses):
  Interest expense                                                                  (  23,424)         (  10,107)
  Loss on foreign currency exchange                                                                    (   1,288)
                                                                                                        --------   --------
                                                                                    (  24,712)         (  10,107)
                                                                                     --------           --------


Income (loss) before income taxes (benefit)                                                            (  12,848)  134,239

Deferred income tax (benefit)                                                       (  16,900)              3,600
                                                                                     --------            --------

Income from continuing operations                                                                           4,052   130,639
                                                                                                         --------  --------

Discontinued operations:
  Income from operations of subsidiary,
   net of income tax of $16,571                                                                           603,774
                                                                                      --------           --------

Net income                                                                            $  4,052           $734,413
                                                                                      ========           ========

Earnings per share information:
  Income from continuing operations                                                   $    .00           $    .01

  Discontinued operations:
   Income from operations of subsidiary                                                                       .02
                                                                                       --------          --------

Net income per share                                                                  $    .00            $   .03
                                                                                       ========            =======




</TABLE>










     See notes to consolidated financial statements
                                                                            F-3


<PAGE>



                                       SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (Formerly Semicon Tools, Inc. and Subsidiaries)

                                  CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                    THREE MONTHS ENDED APRIL 30, 1999 AND 1998



















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



                                                                                        1999                1998
                                                                                        ----                ----



Net income                                                                            $  4,052           $734,113
                                                                                      --------

Other comprehensive income, net of tax:
  Foreign currency translation adjustment                                                               ( 472,369)
                                                                                      --------            -------

Comprehensive income                                                                  $  4,052           $261,744
                                                                                      ========           ========




</TABLE>
























     See notes to consolidated financial statements.
                                                                            F-4


<PAGE>



                                       SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (Formerly Semicon Tools, Inc. and Subsidiaries)

                                       CONSOLIDATED STATEMENT OF CASH FLOWS

                                    THREE MONTHS ENDED APRIL 30, 1999 AND 1998





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


                                                                                                           1998
                                                                                        1999             Restated

Operating activities:
  Income from continuing operations                                                   $  4,052           $130,639
  Adjustments to reconcile net income to cash
   provided by continuing operations:
     Depreciation and amortization                                                      16,394             13,861
     Loss on foreign currency exchange
     Changes in other operating assets and
      liabilities:
        Accounts receivable                                                         (  46,765)         (  33,160)
        Inventories                                                                 (   9,840)         ( 101,181)
        Prepaid expenses and other current assets                                        2,749         (  47,971)
        Deferred tax assets                                                         (  16,900)              3,600
        Other assets                                                                (   4,875)         (   8,615)
        Accounts payable, and accrued expenses                                      (   3,894)             58,879
        Deferred lease liability                                                         1,500
                                                                                      --------           --------

        Net cash provided by (used in) operating
         activities                                                                 (  57,579)             16,052
                                                                                     --------            --------

Investing activities:
  Purchase of property and equipment                                                (  15,688)         (  92,963)
  Decrease in loan receivable, officer                                                   4,282
                                                                                      --------           --------

        Net cash used in investing activities                                       (  11,406)         (  92,963)
                                                                                     --------           --------

Financing activities:
  Proceeds from issuance of common stock                                                92,500              8,750
  Proceeds from financing                                                               90,000            175,000
  Payment of debt                                                                   (  66,849)         (  91,673)
                                                                                     --------           --------

        Net cash provided by financing activities                                      115,651             92,077
                                                                                      --------           --------

Effect of exchange rate changes on cash                                             (   5,924)
                                                                                     --------            --------

Net increase (decrease) in cash                                                         40,742         (  15,166)

Cash, beginning of period                                                               66,052            106,573
                                                                                      --------           --------

Cash, end of period                                                                   $106,794           $121,739
                                                                                      ========           ========




</TABLE>








     See notes to consolidated financial statements.
                                                                           F-5

<PAGE>



                                       SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (Formerly Semicon Tools, Inc. and Subsidiaries)

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.      Organization of the Company:

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



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



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



     The Company's other wholly-owned subsidiary,  Fuji Fabrication,  SDN BHD, a
Malaysian  corporation,  manufactures cellular phone replacement  batteries.  On
June 30, 1998,  the Company issued  100,000  shares of its  unregistered  common
shares in exchange for 100% of the outstanding  shares of Fuji Fabrication,  SDN
BHD,  the  value of the  shares  being  $1.00 per  share.  The  acquisition  was
accounted for as a purchase.



2. Summary of significant accounting policies:

  Principles of consolidation:

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



   Cash and cash equivalents:

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



    Inventories:

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


    Per share amounts:


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

                                                                          F-6


<PAGE>



                                       SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (FORMERLY SEMICON TOOLS, INC. AND SUBSIDIARIES)

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




2.      Summary of significant accounting policies (continued):

        Foreign currency translation policy:


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


        Property and equipment:


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

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



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


     Income taxes:

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



     Deferred taxation:

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



        Post retirement benefits:


   On December 31, 1990, the Financial Accounting Standards Board (FASB) issued
Statement  of  Financial   Accounting  Standards  (SFAS)  No.  106,  "Employers'
Accounting  for Post  Retirement  Benefits  Other Than  Pensions."  SFAS No. 106
requires that companies  recognize the cost of providing post retirement  health
care and other non-pension benefits over the employees' service periods,  rather
than as the benefits are paid. The Company does not provide any non-pension post
retirement benefits at the present time.


    Allowance for doubtful accounts:


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


                                                                            F-7


<PAGE>



                                      SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (FORMERLY SEMICON TOOLS, INC. AND SUBSIDIARIES)

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




2.      Summary of significant accounting policies (continued):

        Use of estimates:

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

        Hire purchase obligations:


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


3. Nature of operation, risks and uncertainties:

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



4. Property and equipment:


    Major classifications of property and equipment are as follows:

        Leasehold improvements                                $   95,659
        Manufacturing equipment                                  989,325
        Office equipment                                          56,959
                                                               ----------
                                                               1,141,943
        Less accumulated depreciation                            561,922
                                                               ---------
                                                              $  580,021
                                                              ==========


5.      Goodwill:

     On January 26, 1990,  the Company  acquired  East Coast Sales  Company (its
wholly-owned subsidiary) for a cost of $309,000. The purchase price exceeded the
fair value of the assets by $134,281 which amount was assigned to goodwill,  and
is being  amortized  on a  straight-line  basis  over forty  years.  Accumulated
amortization of goodwill aggregated $39,596 at April 30, 1999.


     On June 30, 1998, the Company acquired Fuji Fabrication, SDN BHD for a cost
of $100,000.  The purchase  price  exceeded fair value of the assets by $20,999,
which amount was assigned to goodwill and is being  amortized  over a forty year
period. Accumulated amortization of goodwill aggregated $437 at April 30, 1999.



                                                                            F-8


<PAGE>



                                      SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (FORMERLY SEMICON TOOLS, INC. AND SUBSIDIARIES)

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



6. Commitments and contingencies:

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


                     April 30, 2000                      $ 60,000
                     April 30, 2001                        60,000
                     April 30, 2002                        60,000
                     April 30, 2003                        60,000
                     April 30, 2004                        64,500
                     Thereafter                           624,000
                                                         --------
                                                         $928,500
                                                         ========


        Rent expense  amounted to $18,079 for the three  months  ended April 30,
         1999.

        The Company also leases three vehicles under operating leases with terms
         expiring  through  1999.  Total lease  expense was $9,044 for the three
         months ended April 30, 1999.


7. Common stock:

     During the current period,  the Company issued 290,000 shares of its common
shares with net proceeds of $92,500  upon the  exercise of certain  common stock
purchase options.


8. Notes payable and long-term debt:

     The Company has an outstanding line of credit with the a bank for $500,000.
Interest  is payable  monthly at a rate of 1% per year over  prime.  The loan is
secured by the personal  guarantee of the Company's  president and the assets of
Seto Holdings, Inc. At April 30, 1999, the Company had utilized $425,000 of this
line.


    Long-term debt consists of the following:
                                                     Balance
                                                    April 30,
                                      Rate            1999          Maturity

    Notes payable:
      Bank                  (a)     Prime + 1%      $ 36,141          2001
      Shareholder           (b)            10%        95,015          2002
      Shareholder           (c)            15%       178,255          2004
      Shareholder           (d)            10%       104,439          2002
                                                                    --------
                                                                   413,850
      Less current portion                                         146,024
                                                                   -------

                                                                  $267,826
                                                                  ========






                                                                           F-9


<PAGE>



                                      SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (FORMERLY SEMICON TOOLS, INC. AND SUBSIDIARIES)

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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

        (a)      The note is payable in monthly installments of $1,989 including
                 interest.  Machinery  and  equipment  with a cost of $57,000 is
                 pledged as collateral.

        (b)      The note is payable in monthly installments of $4,053 including
                 interest.

        (c) The note is payable as follows:

                               May 15, 1999                   $13,500

              The  remaining  balance is payable  in  monthly  installments  of
                $4,731, March 15, 1999 through February 2003.

        (d)     The note is payable in monthly installments of $3,633 including
                interest.

        The maturities of these loans are as follows:

                        April 30, 2000                      $146,024
                        April 30, 2001                       145,940
                        April 30, 2002                        77,670
                        April 30, 2003                        44,216


9. Income taxes:

        Effective  February 1, 1993, the Company adopted  Statement of Financial
         Accounting  Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
         109"),  the  cumulative  effect  of  which  was  not  material  to  the
         consolidated  financial  statements  and  is  therefore  not  presented
         separately.  Under  the  asset and  liability  method of SFAS No.  109,
         deferred tax assets and  liabilities  are recognized for the future tax
         consequences  attributable  to the  differences  between the  financial
         statement carrying amounts of existing assets and liabilities and their
         respective tax bases and operating  loss and tax credit  carryforwards.
         Deferred  tax assets and  liabilities  are measured  using  enacted tax
         rates  expected  to apply to taxable  income in the year in which those
         temporary  differences  are expected to be recovered or settled.  Under
         SFAS No. 109,  the effect on deferred tax assets and  liabilities  of a
         change in tax rates is recognized in income in the period that includes
         the enactment  date;  this effect was  immaterial  for the years ending
         January 31, 1999 and 1998. The deferred tax asset less the deferred tax
         liabilities has been reduced by a valuation  allowance equal to the net
         tax benefit in excess of the  estimated  taxable  profits over the next
         three years.

        Provision for income taxes (benefit):
                                                      1999              1998
                                                      ----              ----

                  Current                               0                  0
                  Deferred                      ($ 16,900)            20,171
                                                 --------            --------
                    Total (benefit) expense     ($ 16,900)          $ 20,171
                                                 ========            ========






                                                                           F-10


<PAGE>



                                       SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (FORMERLY SEMICON TOOLS, INC. AND SUBSIDIARIES)

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







9.      Income taxes (continued):

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

                                                           1999          1998
                                                           ----          ----
                 Income tax computed at the
                  federal statutory rates                     0       $277,538
                 State tax (net of federal benefit)           0          4,247
                 Foreign income                               0      ( 261,614)
                 Reduction in valuation allowance      ($16,900)
                                                         -------      --------

                   Net income tax expense (benefit)    ($16,900)      ($20,171)
                                                        =======        =======


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

        Deferred tax asset:

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

                 Total deferred tax asset                        480,000

                 Valuation allowance                             139,100
                                                                 -------

                                                                $340,900
                                                                ========



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


10. Employment and consulting agreements:

        Employment agreements:

        On May 1, 1996, the Company entered into employment  agreements with its
         President and Vice President.  The term of the agreements covers a five
         year period  expiring April 30, 2003.  Compensation is set at a base of
         $100,000   and  $75,000   for  the   President   and  Vice   President,
         respectively,  with each  getting a bonus of 5% of the increase in Seto
         Holdings,  Inc./East Coast Sales  consolidated  net income over the net
         income from the previous years.  Each employee also received  1,000,000
         stock  options at $.25,  1,000,000  stock  options at $.10 and  500,000
         stock  options  at  $.50.  The  options  were  not  part  of  the  1997
         Non-statutory Stock Option Plan effectuated March 25, 1997. As of April
         30, 1999, none of these options had been exercised.








                                                                          F-11


<PAGE>



                                      SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (FORMERLY SEMICON TOOLS, INC. AND SUBSIDIARIES)

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


10.  Employment and consulting agreements (continued):

        On July 15, 1998, the Company entered into an employment  agreement with
         the acting secretary of the Company. The term of the agreement covers a
         five year period expiring July 15, 2003.  Compensation is set at a base
         of  $55,000  with a  bonus  of 2% of any  increase  in  Seto  Holdings,
         Inc./East Coast Sales  consolidated net income over the net income from
         the previous  years.  The employee also received  500,000 stock options
         exercisable at $.50 per share,  none of which have been exercised as of
         April 30, 1999.  These options were not part of the 1997  non-statutory
         stock option Plan effectuated March 25, 1997.

        Consulting agreements:

        On February 9, 1998, the Company entered into a consulting agreement for
         the period February 9, 1998 to December 31, 1998, subsequently extended
         to December 2000 for strategic planning, corporate planning, merger and
         acquisition and divestiture advice. In consideration for the consulting
         services,  the Company  granted an option to the consultant to purchase
         600,000  shares  of  common  stock at a price of $.50 per  share  for a
         period of two years  commencing  four  months from the date of signing.
         This option was reduced to 300,000 shares at $.25 per share. The shares
         underlying  these options were issued  pursuant to the  Company's  1997
         non-statutory  Stock Option Plan, 140,000 shares were issued during the
         quarter ended April 30, 1999.

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

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


11. Computation of earnings per share:
                                                    1999                1998
                                                    ----                ----
              Weighted average number of
               common shares outstanding        10,693,500          10,011,500

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

              Weighted average number of
               common shares outstanding        10,693,500          13,279,000
                                                ==========          ==========


        The  conversion  of stock  options was not assumed for the period  ended
         April 30, 1999 as the effect would be immaterial.



                                                                       F-12


<PAGE>



                                       SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (FORMERLY SEMICON TOOLS, INC. AND SUBSIDIARIES)

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







12. Common stock options outstanding:

     On March 25, 1997,  the Company  effectuated a  Non-statutory  Stock Option
Plan  for  the  purpose  of  advancing  the  interests  of the  Company  and its
stockholders  by helping  the  Company  obtain and  retain the  services  of key
management  employees,   officers,   directors  and  consultants.  The  Plan  is
administered  by the  Non-statutory  Stock  Option  Committee  of the  Board  of
Directors of the Company.  The  committee has full  authority and  discretion to
determine  the  eligible  participants  to be granted the  options,  the date of
issuance,  exercise  price and  expiration  date. The total number of shares set
aside for the Plan is  6,500,000.  As of January 31, 1999,  950,000  options had
been issued under the Plan, of which 250,000 had been exercised by April 1999.




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



        Summary of options are as follows:

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

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

        Tan Hun Chin, Director                     11/27/97            500,000             .10           11/27/00
        Consultant                                 06/19/98            160,000             .25           06/09/00

</TABLE>

13. Principal products and segmentation of sales:

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





                                                                         F-13


<PAGE>



                                       SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (FORMERLY SEMICON TOOLS, INC. AND SUBSIDIARIES)

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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

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

<TABLE>
<CAPTION>
<S>                                                                                       <C>            <C>
                                                                                                       April 30,
                                                                                    April 30,            1998
                                                                                      1999             Restated
           Sales to customers:
            Industry A:
               Ceramics                                                            $  379,830          $  370,144
            Industry B:
               Diamond tools                                                          109,673             128,625
            Industry C:
               Cellular batteries                                                     312,110                   0
            Miscellaneous                                                              99,174              82,056
                                                                                   ----------          ----------
                                                                                   $  900,787          $  580,825
                                                                                   ==========          ==========

         Operating profit or loss:
            Industry A                                                             $    5,621         $   107,121
            Industry B                                                                  1,623              37,225
            Industry C                                                                  4,620                   0
                                                                                   ----------         -----------

                                                                                   $   11,864         $   144,346
                                                                                   ==========         ===========
         Identifiable assets:
            Industry A                                                             $  463,065          $  438,387
            Industry B                                                                996,815             722,420
            Industry C                                                                438,926                   0
                                                                                   ----------          ----------

                                                                                   $1,898,806          $1,160,807
                                                                                   ==========          ==========


        Two  customers  each  accounted  for more  than 10% of total  sales  and
         together  accounted for approximately 44% of total sales for the period
         ended April 30, 1999.

        Foreign and domestic operations and export sales:

                                                                                   April 30,           April 30,
                                                                                     1999                1998
           Sales to customers:
              United States                                                          $546,023            $352,075
              Far East                                                                162,337             104,675
              Canada                                                                  192,427             124,075
                                                                                     --------            --------
                                                                                     $900,787            $580,825
                                                                                     ========            ========


                                                                                                       April 30,
                                                                                   April 30,             1998
                                                                                     1999              Restated
           Operating profit:
              United States                                                        $    7,192          $   87,497
              Far East                                                                  2,138              26,014
              Canada                                                                    2,534              30,835
                                                                                   ----------          ----------
                                                                                   $   11,864          $  144,346
                                                                                   ==========          ==========

           Identifiable assets:
              United States                                                        $1,150,986          $  703,638
              Far East                                                                342,197             209,197
              Canada                                                                  405,623             247,972
                                                                                   ----------          ----------
                                                                                   $1,898,806          $1,160,807
                                                                                   ==========          ==========


</TABLE>

                                                                           F-14


<PAGE>



                                       SETO HOLDINGS, INC. AND SUBSIDIARIES
                                 (FORMERLY SEMICON TOOLS, INC. AND SUBSIDIARIES)

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








14. Year 2000 compliance:

     The Company operates date sensitive computer equipment in its operations in
the United States and Malaysia. The accounting and bookkeeping computer programs
have been  upgraded to be year 2000  compliant  at a cost of less then $1,000 in
the  United  States.  The  Company's  domestic  manufacturing  equipment  is not
date-sensitive.   The  Company  purchased  all-new  manufacturing  and  computer
equipment in Malaysia,  which is year 2000 compliant, at a cost of approximately
$200,000, during the previous fiscal year.


     Like many other businesses,  the Company is at risk from year 2000 failures
on the part of its suppliers.


15. Supplemental cash flow information:

<TABLE>
<CAPTION>
<S>                                                                                    <C>           <C>
                                                                                                          1998
                                                                                       1999             Restated

        Interest paid during period                                                  $ 23,424          $   10,107
                                                                                     ========          ==========
        Income taxes paid during the period                                          $      0          $        0
                                                                                     ========          ==========

        Supplemental schedule of non-cash investing and financing activities:
            Conversion of accrued interest to
             term loans                                                              $234,590
                                                                                     ========

        Reconciliation of increase in cash:
         Cash at beginning of period, as originally
           reported                                                                                     $ 371,413
         Decrease in cash resulting from disposition
           of foreign subsidiary                                                                          264,840
                                                                                                        ---------
         Cash at beginning of period, as restated                                                       $ 106,573
                                                                                                        =========

</TABLE>






















                                                                       F-15



<PAGE>




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

GENERAL

In fiscal year 1998, ending January 31, 1999, the Company altered its business
plans and objectives and reorganized its product lines for faster growth into
two major groupings:  Technical Products to Industry and Consumer Products.
This decision followed the Company's June 1998 acquisition of Fuji Fabrication
SDN. BHD. ("Fuji") and its cellular telephone battery line and its September,
1998 sale of Teik Tatt Holding Co. (1979) SDN. BHD. ("TTH") to its former
owner.

During the quarter ended April 30, 1999,  excluding the results of  discontinued
operations,  the  Company  experienced  the highest  quarterly  net sales of its
history,  attributable  principally to continued growth in fabricated industrial
ceramics at $375,389 and the growth of the Company's  cellular telephone battery
product line, which was launched in July 1998 (sales of $398,589).

The  Company's  financial  condition  remains  healthy.  At April 30, 1999,  the
Company  had total  assets  of  $2,513,000  and  current  assets of  $1,544,876,
increases  over January 31, 1999 of 9.5% and 13.8%  respectively.  Stockholders'
equity rose 7.1% over January 31, 1999, to $1,367,485.

As sales increase,  an increase in debt is expected to pay for the  expenditures
for  larger  volumes  of  material  and some labor to  manufacture  product.  In
addition, current liabilities increased by 10.1% to $871,690 and long term debt,
net of current portions, increased by 20.2% over January 31, 1999.

The company  conducts a substantial  portion of its  manufacturing  and assembly
operations in Malaysia.  Accordingly,  economic and political  conditions there,
and in  Southeast  Asia as a whole,  will remain of  importance  to the Company.
Management  believes  that steps  taken by the  Malaysian  Government  since the
outset of the area's downturn in mid-1977 involving financial uncertainties have
had a calming and stabilizing effect. In any event, although no assurance can ge
given,  the Company believes that regional  circumstances  will have no material
adverse effect on its operations or financial  condition  during the fiscal year
which began February 1, 1999.


FIRST QUARTER 1999 COMPARED TO 1998

Excluding  discontinued  operations,  the Company's net sales increased 55% from
$500,825 to $900,787,  and income from continuing  operations declined $132,482,
or 92%,  from  $144,346 to  $11,864.  The  decrease  in income  from  continuing
operations   principally   resulted   from   increased   selling,   general  and
administrative  expenses due to a $25,000  non-cash charge related to exercising
of stock options;  additional  expenses for public relations;  initial marketing
expenses  for the  cellular  phone  product  line  inclusive  of a new  internet
e-commerce  site  (although it is too soon to report,  it is believed the latter
expenses will realize significant sales results);  and the Company's  relocation
from  Armonk,  New  York to its  new  headquarters  and  manufacturing/warehouse
facilities in Briarcliff Manor, New York.

The  Company's  combined  gross profit margin is now at the level of 45% to 50%.
This is a result of the new mix of products  and is typified by East Coast Sales
Co.'s gross  profit of 62.4% and Fuji  Fabrication's  21.9%.  With sales  volume
increasing,  it is expected that the latter  number will improve.  Nevertheless,
the products  themselves and their  make/buy  breakdown will limit the degree of
improvement. This is to be expected and is normal.

With a backlog of orders on hand amounting to $1.25 million to be shipped within
the next 4 to 6 months and the elimination of a number of one time and anomalous
factors  mentioned  above  which  did  occur in the first  quarter  just  ended,
Management  believes  that sales will  continue to increase for the remainder of
the year and that the Company  should report an annual  profit of  approximately
$400,000 or 4 cents per share. Supporting this projection are reports from major
industry sources  relative to  semi-conductor  chips and cellular  phones,  both
together  impacting  essentially all of the Company's  product lines, that sales
will rise significantly in 1999.



<PAGE>






LIQUIDITY AND CAPITAL RESOURCES

At April 30,  1999,  the Company had current  assets of  $1,544,876  and current
liabilities of $871,690 yielding a positive working capital position of $673,186
and a current ratio of 1.77:1,  both  improvements  over  comparable  figures at
January 31, 1999 of $526,575 and 1.6:1, respectively. These standard measures of
a company's ability to meet its current  obligations  reflect  positively on the
Company's liquidity and internal resources for the current level of business and
will  contribute  to satisfying  its  suppliers of goods and services  concerned
about credit-worthiness.

As for growth  capital,  to a large  extent it should be satisfied by the recent
consolidation of the outstanding line of credit and standby letters of credit in
the  amount of  $1,000,000  from the  Company's  bank.  However  because  of the
anticipated increase in sales,  especially in its cellular phone battery product
line,  the Company has been seeking  additional  lines of credit from  Malaysian
financial  sources.  Also,  the  Memorandum  of  Understanding  with a Hong Kong
manufacturer  of cellular  phone  accessories  (e.g.  hands free kit,  traveling
charger,  auto cord charger etc.) to form a marketing joint venture aimed at the
U.S. market place,  besides the finalization of certain legal and organizational
details,  requires  working  capital  of  approximately  $200,000  to  $250,000.
Although the Company is talking to a firm for loans in the amount of $500,000 to
$1,000,000 on what it considers  favorable terms, no definite funding source for
these  purposes has yet been  identified and no assurance can be given that such
financing will be obtained on commercially reasonable terms, or at all.

As at the end of the quarter,  there were no plans or material  commitments  for
capital expenditures for assets of any significant value.


EFFECTS OF FOREIGN CURRENCY FLUCTUATIONS

The Company's foreign  operations are subject to risks related to fluctuation in
foreign  currency  exchange rates.  During this quarter a nominal $1,298 loss in
foreign  currency  exchanges  were incurred in effect not impacting  operational
results.

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

A number  of  economists,  including  some high in  United  States  Government's
financial  circles,  believe that predictable  policies (e.g.,  pegging exchange
rates,  which Malaysia did in 1998, and is sticking to that policy) yields a key
element of financial  stability.  That is a course which  Malaysia has chosen to
follow.  At the moment,  the perception is that the financial crises which began
in mid-1997 in  Southeast  Asia has eased and  probably  has ended e.g.,  in the
first  quarter of 1999,  container  traffic from the West Coast to East Asia ran
10% ahead of projections. This appears to bode well for Malaysia.


DISCLOSURES ABOUT MARKET RISK

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

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


<PAGE>






YEAR 2000 COSTS

The Company currently operates numerous date-sensitive computer applications and
network systems throughout its business. As the century change approaches, it is
essential  for the Company to ensure that these systems  properly  recognize the
year 2000 and continue to process  operational  and financial  information.  The
company recently upgraded its computer systems and is year 2000 compliant.


IMPACT OF INFLATION

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



FORWARD-LOOKING STATEMENTS

This  "Management's  Discussion  and  analysis or Plan of  Operation",  contains
statements which are not historical facts and are forward-looking statements and
expressions  such  as  "expect",  "believe",  "anticipate",  "many"  or  similar
variations of such terms which reflect  management's  confidence,  expectations,
estimates and assumptions. Such statements are based on information available at
the time this form 10-QSB was prepared and involve risks and uncertainties  that
could cause future results, performance or achievements of the Company to differ
significantly  from  projected  results.  Factors that could cause actual future
results to differ materially  include,  among others,  partial dependence on the
semiconductor  industry,  availability  of raw materials,  intense  competition,
ecological  obsolescence,  continued  relationship  with major customers and the
risks of doing  business in Malaysia  and  Southeast  Asia,  including,  without
limitations,  economic and political  conditions,  foreign currency  translation
risks,  tariffs and other foreign trade  policies and  dependence on inexpensive
labor in such  countries.  SETO  assumes no  obligation  for  updating  any such
forward-looking statement, if any at any time.