SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

     Annual   Report under Section 13 or 15(d) of the Securities Exchange Act of
              1934 for the fiscal year ended September 30, 2001


                        Commission File Number 000-32875

<TABLE>
<CAPTION>

                         ALLOY STEEL INTERNATIONAL, INC.
                 (Name of Small Business Issuer in its charter)
<S>   <C>                                                                 <C>

                  Delaware                                                  98-0233941
      (State or other jurisdiction of                                     (I.R.S. Employer
       incorporation or organization)                                     Identification No.)

          42 Mercantile Way Malaga
       P.O. Box 3087 Malaga D C 6945
             Western Australia
  (Address of Principal Executive Offices)

Issuer's telephone number:  61 + (8) + 9248 3188

Securities registered under Section 12(b) of the Exchange Act:                   None

Securities registered under Section 12(g of the Exchange Act:         Common Stock, $0.01 Par Value
of the Exchange Act:
</TABLE>


      Check  whether  the issuer (1) filed all  reports  required to be filed by
      section 13 or 15(d) of the  Exchange Act during the past 12 months (or for
      such  shorter  period  that  the  registrant  was  required  to file  such
      reports),  and (2) has been  subject to such filing  requirements  for the
      past 90 days. Yes: [X ] No: [ ___ ]

      Check if there is no disclosure  of delinquent  filers in response to Item
      405 of Regulation  S-B contained in this form,  and no disclosure  will be
      contained,  to the best of registrant's  knowledge, in definitive proxy or
      information  statements  incorporated by reference in Part III of the Form
      10-KSB or any amendment to this Form 10-KSB [_]

      The  Issuer's  revenue  for the fiscal year ended  September  30, 2001 was
      $2,862,228.

      The aggregate market value of voting stock held by  non-affiliates  of the
      registrant was $3.7 million as of January 17, 2002.

      As of January 17,  2002,  the issuer had a total of  16,950,000  shares of
      Common Stock outstanding.  Transitional  Small Business  Disclosure Format
      (check one):

                                         Yes [ ] No [ X ]

<PAGE>

                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

      Alloy Steel International,  Inc. was incorporated in Delaware in May 2000.
Our principal executive office is located at 42 Mercantile Way Malaga,  Malaga D
C 6945,  Western  Australia.  Our telephone  number is 61 + (8) + 9248 3188. Our
Internet address is www.alloysteel.net.


      OVERVIEW OF BUSINESS


      ARCOPLATE

      We manufacture and distribute Arcoplate, a wear-resistant fused-alloy-clad
steel wear plate,  through a patented production process.  The Arcoplate process
enables an alloy overlay to be smoothly and evenly  applied to a sheet of steel,
creating a metallurgical  bond between the alloy and the steel that is resistant
to wear caused by impact,  abrasion and erosion.  We believe that, in the mining
and mineral processing  industries,  wear is the primary cause of down time, the
period of time when machinery is not in operation due to wear or malfunction. We
believe that our Arcoplate product line will  substantially  lower down time and
the resulting loss of production for our  customers.  Alloy Steel  International
was incorporated in Delaware in May 2000.

      Although  welded wear plates have been used in the  manufacturing,  mining
and construction industries for more than half a century, they are characterized
by several functional limitations. Conventional welded wear plates have:

      o     the tendency to separate into chips or fragments  when  subjected to
            high impact;

      o     uneven base metal dilution resulting in uneven alloy content; and

      o     rough surfaces resulting in poor material flow.

      We believe that  Arcoplate  has  properties  that allow it to overcome the
limitations of conventional  wear plate.  Based upon independent  laboratory and
field tests we believe  that  Arcoplate  is up to six times more  wear-resistant
than  conventional  single or multiple layer wear plates due to a higher carbide
content  and  a  more  homogeneous  surface  layer.  In  addition,   based  upon
independent  laboratory  and field tests,  we believe that  Arcoplate wear plate
sheets will withstand rolling and pressing,  within the fabrication  guidelines,
into various shapes for commercial distribution.

      Our equipment is presently operating at full capacity.  We anticipate that
additional machinery to expand our capacity will be completed in March 31, 2002.
Upon completion of the additional equipment, we intend to increase our sales and
marketing efforts.

      We are presently  marketing  Arcoplate products to customers in the United
States,  South  America  and  Australia.  We intend to expand our  marketing  to
include mining companies,  original equipment  manufacturers,  cement plants and
dredging  companies  in  Australia,  as  well  as in  Korea,  India,  Indonesia,
Singapore, South Africa, Japan and China.

      Unless the context  otherwise  requires,  the description of our business,
includes  the  operations  of our  predecessor,  the  Arcoplate  Division of the
Collier Unit Trust and the following:

      o     the   acquisition   of  a  license  for  the  worldwide   rights  to
            commercially  exploit the Arcoplate  process,  with the exception of
            the United States, in May 2000;

      o     the  acquisition of certain plant  equipment  assets of Collier Unit
            Trust in October 2000; and

      o     the  acquisition of the 3-D Pipe Fitting  Cladder Process in October
            2000.

      The Arcoplate Division of Collier Unit Trust commenced  operations in 1990
and is an entity  controlled  by Gene  Kostecki,  our chief  executive  officer,
director and principal  stockholder.  Our initial prototype  equipment commenced

<PAGE>

producing  Arcoplate for sale to customers in 1991. It is  anticipated  that the
Collier Unit Trust will  continue to  distribute  railroad  spares to the mining
industry.  Arcoplate  Holdings  (UK) PLC holds the United  States  rights to the
Arcoplate process through  Arcoplate,  Inc. Arcoplate Holdings (UK) PLC received
these  rights  from  Kenside  Investments  Ltd.,  an  entity  controlled  by Mr.
Kostecki,  our chief  executive  officer,  director and  principal  stockholder.
Presently,  such rights are not being exploited.  Arcoplate Holdings (UK) PLC is
an  affiliate  of Mr.  Kostecki,  our  chief  executive  officer,  director  and
principal  stockholder and Mr. Winduss,  our chief financial officer,  principal
stockholder and a director.  Arcoplate Holdings (UK) PLC is in violation of this
license and Kenside  Investments  Ltd. has attempted to revoke the license.  ___
Certain directors of Arcoplate  Holdings (UK) PLC are disputing this revocation.
Until this matter is resolved,  neither Arcoplate  Holdings (UK) PLC nor Kenside
Investments  Ltd.  are in a position  to grant to us a U.S.  license.  Once this
matter  is  resolved,  we  will  attempt  to  negotiate  a  U.S.  license  in an
arms-length transaction.


      3-D PIPE FITTING CLADDER PROCESS

      We intend to commercially  utilize the 3-D Pipe Fitting Cladder process, a
computer-driven and software-based mechanical system for industrial use. The 3-D
Pipe Fitting Cladder process enables wear resistant alloy coatings to be applied
to pipe  fittings,  where wear is most likely to occur.  In  pipefittings,  wear
generally  occurs in pipe bends,  elbow pipe joints,  pipe "T" sections and pipe
"Y"  sections.  Through the 3-D Pipe  Fitting  Cladder  process,  we apply alloy
coatings to the interior  surfaces of  pipefittings.  We believe that the mining
and mineral  industries,  among others,  would benefit from the reduced abrasive
wear  and  downtime  associated  with  the use of the 3-D  Pipe-Fitting  Cladder
process.



      THE WEAR PLATE SOLUTIONS INDUSTRY

      We believe  that wear in the  operating  workplace  is the largest  factor
leading  to  production  losses  in the  mining,  mineral-processing,  and steel
manufacturing industries and, consequently, wear plate solutions are an integral
resource for businesses with wear-related  concerns.  The wearing of metal parts
is generally  defined as a gradual decay or breakdown of the metal. A metal part
is usually worn by combinations  of two or more types of wear.  Because the wear
of  equipment  may have  multiple  causes,  the  selection  of alloy  wear plate
solutions  can be a relatively  complex  process.  There are five major types of
wear: abrasive wear, sliding wear, erosion, fretting and gouging.

      In order to minimize the effects of wear,  businesses  have  traditionally
employed such  wear-combating  materials as rubber  compounds,  ceramics,  alloy
castings,  welded  overlay wear plate,  and  quenched and tempered  carbon steel
plate. We believe that each of these materials  offers a limited solution to the
problem of wear, and that conventional  welded overlay wear plate has a tendency
to spall  (separate)  under high impact  conditions.  While tungsten  carbide is
generally recognized by the mining,  mineral-processing  and steel manufacturing
industries as the most wear-resistant  material available for industrial use due
to its high carbide content,  we believe that the costs associated with tungsten
carbide are too high to be a practical wear plate solution for most  businesses.
We believe that the Arcoplate process provides businesses with solutions to most
wear-related problems at a cost competitive with traditional welded overlay wear
plate, and substantially  lower than tungsten carbide.  In addition,  we believe
that the 3-D Pipe Fitting Cladder process will provide businesses with solutions
for the  problem of wear and down time in pipe  fitting  systems,  reducing  the
costs associated with lost production and the replacement of worn pipe fittings.


      OUR STRATEGY

      Our   objective   is  to  become  an   international   market   leader  in
wear-resistant  alloy steel products and to establish  significant  market share
and brand  awareness  for  Arcoplate  and the 3-D Pipe Fitting  Cladder  process
within  the  mining,  mineral-processing  and  steel  industries.  We  intend to
accomplish our objectives by first  establishing a market presence in Australia,
and then developing an international  market presence,  focusing on India, South
America,  Brazil,  Indonesia,  the United States, and Canada. We believe that we
can capitalize on our existing patented process for producing  Arcoplate through
the  direct  manufacture  and  sale  of  Arcoplate-based  products  to  original
equipment  manufacturers  and  distributors  worldwide.  At the local level,  we
intend  to  combine  targeted  marketing  with  advertising  in trade  journals,
newspapers and magazines.  At the  international  level,  we intend to establish
market  presence by visiting  international  trade shows,  presenting  technical
papers at industry conferences, and appointing distributors who will be supplied
with samples of Arcoplate and who will be trained to present Arcoplate  products
as a solution for wear-related problems.


                                       3


<PAGE>

      Products And Applications


      Characteristics Of Arcoplate

      Many  of our  claims  with  respect  to the  physical  characteristics  of
Arcoplate have been  subjected to studies and testing,  performed by independent
laboratories,  universities and other testing facilities, of Arcoplate's various
properties  such  as  bond  strength,   specific  hardness,  density,  hardness,
resonance and wear resistance.

      Based  upon  independent  laboratory  and field  tests,  we  believe  that
Arcoplate  is  adaptable to a wide range of  industrial  applications,  and that
Arcoplate significantly reduces wear in any application where abrasive materials
come into contact with steel surfaces.

      Arcoplate is designed for installation and use where the wear of parts and
machinery frequently occurs, including:

      o     the mining of iron, gold, nickel, copper and other ores;

      o     brick and cement works and power stations;

      o     the manufacture of ore feed bins, transfer chutes,  dredging systems
            and conveyor side skirts;

      o     bulldozer arms and blades; and

      o     truck box liners and bucket loader liners.

      Our product lines include a range of standard  alloy overlay  plates.  Our
products are designed  for ease of handling  and can be  fabricated  to suit our
customers' equipment and needs regarding shape, size, weight, and other factors.
Sheets of Arcoplate can be welded together to cover large surface areas, and can
be cut into a range of shapes,  while still  maintaining  resistance to wear. We
also provide consultation  services to customers and their design engineers with
particular  wear-related  problems,  and we can formulate  Arcoplate to meet the
specific requirements of our customers.

      Based upon  independent  laboratory  and field tests,  we believe that our
proprietary method of manufacturing Arcoplate results in a product that has many
technical advantages over conventional weld clad plates.  Conventional weld clad
plates are generally  characterized  by structural  weaknesses  and limited wear
resistance resulting from inefficient  production methods. In order to achieve a
wear-resistant flat surface, conventional wear plates must be rolled and pressed
after its  layers of  hardfacing  have been  welded  together.  Post  production
rolling and  pressing  can result in a weakened  surface  structure  that cannot
withstand high impact  conditions.  The Arcoplate  process does not require post
production  rolling and  pressing.  During the Arcoplate  process,  the plate is
coated with the desired  alloy  thickness  in one  application,  resulting  in a
uniform and, therefore,  structurally sound, surface. The Arcoplate process also
ensures that the overlay has a uniform and high carbide content, which makes the
plate more  resistant to wear than a traditional  welded wear plate.  The higher
content of carbide in Arcoplate greatly increases its wear resistance.


      CHARACTERISTICS OF THE 3-D PIPE FITTING CLADDER PROCESS


      We believe that the 3-D Pipe Fitting Cladder process overcomes many of the
problems associated with pipe fitting wear. Pipefittings are extensively used in
the  dredging,   mineral   processing,   coal-fired  power  generation,   cement
manufacturing,  and oil refinery  industries,  where  materials  are  frequently
transported  in enclosed  pipe.  Due to their angled and/or  curved  structures,
pipefittings generally have higher wear resulting in a much shorter working life
than ordinary  straight  pipe,  because  material  flow does not flow  uniformly
through  pipe  fittings.  In  order  to  increase  the  wear-resistance  of  the
pipefittings,  the 3-D Pipe Fitting Cladder process deposits a profiled layer of
wear-resistant alloy on to wear-susceptible interior surfaces.

     We believe that the wear of  pipefittings  in  industrial  pipe results in
substantial  production  losses  due to down  time  and  cost  expenditures  for
replacement parts. By uniformly applying alloy coatings to the interior surfaces
of pipe fittings with the 3-D Pipe Fitting Cladder process,  we believe that the
need for replacement parts, abrasive wear and down time will be greatly reduced.
We  believe  that the 3-D Pipe  Fitting  Cladder  process  enables a variety  of
different  alloys to coat the  interior  surfaces of  pipefittings,  and it will
therefore be adaptable for use in many different industrial settings.


                                       4

<PAGE>

      INDEPENDENT LABORATORY AND FIELD TESTS

      We base our beliefs  regarding  Arcoplate's  high  wear-resistance  on our
observations of Arcoplate's  performance in industrial  use, our  correspondence
with mining and mineral processing businesses that have used Arcoplate,  and the
results of independent laboratory and field tests.

      A study  conducted by the Central Power  Research  Institute of Bangalore,
India,  in 1997,  concluded  that Arcoplate has 13.6 times less erosion loss and
65.0 times less  abrasion  than mild steel.  The study  further  concluded  that
Arcoplate  offers  wear-resistance  against  low stress  abrasion at a factor of
6.5:1 or greater  over  several  times of multiple  layer wear  plates.  A study
conducted by Metlabs (a division of AUST-AMET Pty. Ltd.) of Welshpool, Australia
in  November  1997  reported  that  "[t]he   abrasion  and  wear  resistance  of
[Arcoplate]  would  be  expected  to be  good  due  to  the  consistency  of the
microstructure  and high hardness values and the underlying steel structures." A
trial  of  Arcoplate  conducted  by  the  Hamersley  Iron  Paraburdoo  iron  ore
processing plant, in October 1992 in Western Australia, concluded that Arcoplate
was  eight  times  more  wear  resistant  than its  multiple  layer  wear  plate
counterpart.


      SALES AND MARKETING

      To date, most of our orders have been the result of unsolicited  inquiries
from  prospective  customers  who have  learned of our  Arcoplate  products on a
word-of-mouth basis in their respective industries. For the year ended September
30,  2001,  29 customers  accounted  for 96% of sales.  Sales to such  customers
ranged from 1% of sales to 25% of sales.

      We intend to achieve market penetration in selected major markets through
a multi-step process consisting of:

      o     presentation of technical papers at industry related seminars;

      o     initial  discussions of the application  highlighting the advantages
            of Arcoplate;

      o     initial  discussions of the application  highlighting the advantages
            of the 3-D Pipe Fitting Cladder process;

      o     an engineering and marketing  evaluation by the prospective customer
            of sample material and demonstration products; and

      o     licensing a production  program where  appropriate  expenditures are
            made on tooling,  equipment and quality control necessary to fulfill
            market requirements.

      We anticipate  incurring  increased  expenditures  in connection  with our
marketing  activities.  Our  marketing  activities  are also expected to include
substantial  applications  engineering  support to assist in the  development of
products for specific customers and markets, evaluation of Arcoplate and the 3-D
Pipe Fitting  Cladder by  institutions  that  specialize  in  technology  and/or
markets  of this  type,  development  of  appropriate  sales  materials  such as
specification sheets and corporate brochures,  and promotion through appearances
at selected  trade shows and  selective  advertising  in journals  and the trade
press.

      In order to develop our  Australian  and  international  customer base, we
intend to  contact  many  major  mining  and  mineral  processing  companies  to
determine  their current  methods for minimizing  down time due to  wear-related
problems.  We intend to  establish  initial  contact  with  these  companies  by
telephone, followed by a targeted mailing containing a letter with brochures and
case histories provided to us by current customers.  After prospective customers
have had the opportunity to review the contents of our targeted mailing, we will
attempt to set up a meeting with key  employees of the  prospective  customer in
order  to  review  their  operations,   materials,  wear-related  problems,  and
frequency of shut-downs so that we may then suggest specific Arcoplate products,
3-D Pipe Fitting Cladder procedures and other solutions to reduce down time. For
original equipment manufacturers,  we will attempt to review existing operations
in order to  determine  how our  products  may  assist  in  enhancing  equipment
performance.  We intend to hold  seminars in our offices,  or at our  customers'
places of business,  with operations managers,  maintenance  superintendents and
maintenance schedulers,  individuals who are directly responsible for production
and machinery performance.

      In  addition,  we intend to market our  Arcoplate  products to  consultant
engineering  companies  so  that  they  may  ultimately   incorporate  Arcoplate
materials into their  equipment  designs.  We will offer the services of our own
engineering  department to assist  consultant  engineers with design planning in
order to maximize material flow, and to minimize wear and down time.


                                       5


<PAGE>

      ACQUISITION OF TECHNOLOGY

      In May 2000 we acquired an exclusive  license  from  Kenside  Investments,
Ltd.,  for a 25 year term,  to develop  and  market  the  proprietary  Arcoplate
process,  and to  commercially  exploit the patent rights and technology  rights
related to the  Arcoplate  process  worldwide,  with the exception of the United
States in exchange for 4,760,000  shares of our common stock.  The patent rights
include those rights  encompassed by a U.S.  patent and a Canadian  patent which
were initially  assigned to investors  George W. Browne and Gene  Kostecki,  our
chief executive officer. The rights to the patents, and the underlying Arcoplate
process technology,  were ultimately  transferred to Kenside  Investments,  Ltd.
Pursuant to the license from Kenside  Investments,  we have the option to extend
the license for three terms of 10 years each.  The license  provides for royalty
payments to Kenside Investments, Ltd., in an amount equal to 2% of our net sales
of Arcoplate products. Gene Kostecki, our chief executive officer,  director and
principal stockholder, controls Kenside Investments, Ltd.

      In October  2000, we acquired,  from Gene  Kostecki and Alan Winduss,  the
right to utilize and  commercially  exploit the 3-D Pipe Fitting Cladder process
in exchange for an aggregate of  3,413,750  shares of common  stock.  In October
2000,  we acquired  from Collier Unit Trust,  certain mill and office  equipment
assets  relating to the  manufacture,  sale and  distribution  of  Arcoplate  in
exchange for  1,250,000  shares of common  stock.  In October 2000, we acquired,
from Collier Unit Trust,  certain plant machinery  relating to the  manufacture,
sale and  distribution  of  Arcoplate  for a  purchase  price of  $880,891.  Mr.
Kostecki controls Collier Unit Trust.


      INTELLECTUAL PROPERTY

      We believe that  protection  of our licensed  proprietary  technology  and
know-how  is critical  to the  development  of our  business.  We have  obtained
patents for process in United States,  Mexico,  Brazil,  Canada,  Japan,  Burma,
South Korea, Australia,  France, Germany, Great Britain, Greece, Italy, Belgium,
Netherlands and Sweden. We do not have intellectual  property protection for the
3-D Pipe Fitting Cladder process.  We cannot assure you that our existing patent
rights,  or any  other  patent  rights  that may be  granted,  will be valid and
enforceable or provide us with meaningful protection from competitors. We cannot
assure you that any pending  patent  application  will issue as a patent or that
any claim thereof will provide protection against  infringement.  If our present
or future patent rights are  ineffective in protecting us against  infringement,
our marketing  efforts and future  revenues  could be  materially  and adversely
affected.  In addition,  if a competitor were to infringe our patent rights, the
costs of enforcing our patent rights may be substantial or even prohibitive.


      RESEARCH AND DEVELOPMENT

      We are engaged in the development of new products and  improvements to our
existing  products  and we intend to maintain  laboratory  facilities  for these
purposes  as well as a network  of outside  independent  test  laboratories  and
specialty subcontractors. Our past research and development efforts were focused
on Arcoplate's wear resistance, as compared with the wear plate solutions of our
competitors.  For the year ended September 30, 2001, we incurred no research and
development  expenses.  In the future,  we intend to allocate  one-half of 1% of
sales to research and  development  expenditures.  We expect that our techniques
will continue to be developed and refined through  empirical tests and prototype
development. We expect that we will devote substantial resources to research and
development efforts.


      MANUFACTURING AND SUPPLY


      The raw materials we employ are principally  steel and a proprietary alloy
compound.  We presently  purchase  steel from and alloy  materials  from various
suppliers. Two of our suppliers, Cometals and Di Candilo Steel City, account for
more than 10% of the raw material we require. They supply our Company with Ferro
Chrome and mild steel plates. We also rely heavily on the use of fluxes, devices
designed to remove impurities, during the manufacturing process. We purchase our
requirements  for fluxes from various  suppliers,  we cannot  assure you that we
will be able to continue to obtain desired quantities of steel, alloy and fluxes
on a timely  basis at prices and terms deemed  reasonable  by us. We monitor the
quality of our  products by frequent  tests and material  certification,  and we
intend to  maintain a strict  internal  quality  control  system to monitor  the
quality of production at our facility.



      GOVERNMENT REGULATION

      Our Arcoplate  manufacturing plant is subject to many laws and regulations
relating to the protection of the environment. These laws and regulations impose
requirements  concerning,  among  other  matters,  the  treatment,   acceptance,
identification,  storage,  handling,  transportation  and disposal of industrial
by-products,  hazardous and solid waste  materials,  waste water, air emissions,


                                       6
<PAGE>

noise emissions,  soil  contamination,  electromagnetic  radiation,  surface and
groundwater pollution,  employee health and safety,  operating permit standards,
monitoring  and  spill  containment  requirements,  zoning,  and  land  use.  We
frequently  examine ways to minimize any impact on the environment and to effect
cost savings relating to environmental compliance.  Our management believes that
we are in material  compliance with all applicable  environmental  laws and that
our products and  processes do not present any unusual  environmental  concerns.
Our  management  further  believes  that  the  cost of  compliance with all
applicable environmental laws is approximately $15,000 per year.

      Our  operations  are also  governed  by laws and  regulations  relating to
workplace  safety and  health,  principally  under the  Australian  Occupational
Safety and Health Act -- 1984 (WA), which, among other  requirements,  establish
employee  training,  supervision  and general safety  standards.  Our management
believes that we are in material compliance with all applicable workplace safety
and health laws and that our products  and  processes do not present any unusual
safety concerns.

      We require,  and must comply  with,  various  authorizations,  permits and
licenses to conduct our operations.  Government agencies continually monitor our
compliance  with  authorization,  permits and  licenses and our  facilities  are
subject  to  periodic  unannounced   inspection  by  local,  state  and  federal
authorities.  Violations of any permit or license, if not remedied, could result
in our incurring substantial fines, or suspension of our operations.


      COMPETITION

      The wear plate solutions industry is highly competitive. We compete in our
chosen markets against several larger multi-national companies, all of which are
well-established  in those markets and have substantially  greater financial and
other resources than we do. Competitive market conditions could adversely affect
our results of operations if we were required to reduce product prices to remain
competitive  or if we are unable to achieve  significant  sales of our products.
Wear-resistant  alloy steel  plates are  manufactured  by numerous  corporations
worldwide.  In the United States and Canada,  major manufacturers of wear plates
include Triton, Inc. and Trimay, Ltd. In Australia,  major manufacturers of wear
plates include Australian  National  Industries,  Ltd. and Australian  Overseas,
Ltd.  Other major  manufacturers  in the European  Union and Asia include Vautid
(Gmd.) and Duraweld.


      EMPLOYEES

      We  employed  17 persons on a  full-time  basis as of  October  23,  2001,
including two executive officers, six manufacturing  personnel and three persons
engaged in sales and marketing activities.  None of our employees is a member of
a labor union.  We consider our  relationship  with our employees to be good. We
anticipate hiring  approximately  six additional  manufacturing  employees,  two
additional research and product  development  employees and two additional sales
and marketing employees in the next 12 months.


ITEM 2.  DESCRIPTION OF PROPERTY

      We lease our facility in Perth,  Australia,  at a monthly rental of $7,083
per month.  The lease expires in June 2005. Of the total 26,000 square foot area
of the  facility,  approximately  4,000  square feet will be utilized for office
space and  approximately  22,000 square feet will be utilized for  manufacturing
operations  dedicated  to  Arcoplate  manufacturing,   secondary  processes  and
warehousing.  The  facility is designed  for  expansion of capacity to match our
anticipated  needs.  We believe  that the  replacement  value of the facility is
presently adequately covered by insurance.


ITEM 3.  LEGAL PROCEEDINGS

      There are no material legal proceedings pending or, to our best knowledge,
threatened against us.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No  matters  were  submitted  to a vote of  security-holders  through  the
solicitation of proxies or otherwise during the three months ended September 30,
2001.


                                       7
<PAGE>


                           FORWARD-LOOKING STATEMENTS

      Information  included  or  incorporated  by  reference  in this filing may
contain  forward-looking  statements  within the  meaning of Section  27A of the
Securities Act and Section 21E of the Exchange Act. This information may involve
known and unknown  risks,  uncertainties  and other  factors which may cause our
actual results,  performance or achievements to be materially different from the
future  results,  performance  or  achievements  expressed  or  implied  by  any
forward-looking   statements.    Forward-looking   statements,   which   involve
assumptions  and describe our future plans,  strategies  and  expectations,  are
generally  identifiable by use of the words "may," "will,"  "should,"  "expect,"
"anticipate,"  "estimate,"  "believe,"  "intend" or "project" or the negative of
these words or other variations on these words or comparable terminology.

      This filing  contains  forward-looking  statements,  including  statements
regarding,   among  other  things,   (a)  Alloy  Steel's   projected  sales  and
profitability,  (b) Alloy Steel's growth  strategies,  (c) anticipated trends in
Alloy Steel's  industry,  (d) Alloy Steel's future financing plans and (e) Alloy
Steel's  anticipated  needs for working  capital.  These statements may be found
under "Management's Plan of Operation" and "Business," as well as in this filing
generally.  Actual events or results may differ  materially from those discussed
in forward-looking  statements as a result of various factors. In light of these
risks and  uncertainties,  there can be no  assurance  that the  forward-looking
statements  contained  in this  filing  will in fact  occur.  In addition to the
information  expressly required to be included in this filing,  Alloy Steel will
provide such further material  information,  if any, as may be necessary to make
the  required  statements,  in light of the  circumstances  under which they are
made, not misleading.


                                       8

<PAGE>



                                     PART II


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

      Alloy  Steel's  common  stock  has  been  quoted  on the  Over-the-Counter
Bulletin Board  maintained by National  Association of Securities  Dealers since
August 28,  2001.  Since August 28, 2001,  Alloy  Steel's  common stock has been
quoted under the symbol "AYSI."

      The following table sets forth the range of high and low bid quotations
for each calendar quarter for Alloy Steel's common stock since it stock began
quotation on August 28, 2001.

                                                   Bid Price Per Share
                                                   -------------------

                                                     High        Low
                                                     ----        ---

              August 28, 2001 - September 28, 2001  $2.50       $1.00

              October 1, 2001 - December 31, 2001   $3.50       $1.02

              January 1, 2002 - January 15, 2002    $1.02        $.60

      The above prices were obtained from Nasdaq, Inc. The quotations  represent
inter-dealer quotations, without retail mark-up, markdown or commission, and may
not necessarily represent actual transactions.

      As of January 16, 2002, Alloy Steel's believes there were approximately 32
holders of record of Alloy Steel's common stock.

      The  Directors  may from time to time  declare,  and Alloy  Steel may pay,
dividends  on its  outstanding  shares  in the  manner  and upon the  terms  and
conditions  provided by law. To date, no dividends have been declared or paid by
Alloy Steel.


      RECENT SALES OF UNREGISTERED SECURITIES

      Since our  inception,  we have sold  unregistered  securities as described
below. There were no underwriters involved in the transactions and there were no
underwriting  discounts or commissions paid in connection  therewith,  except as
disclosed below. Unless otherwise  indicated,  the issuances of these securities
were  considered  to be  exempt  from  registration  under  Section  4(2) of the
Securities Act of 1933, as amended, and the regulations  promulgated thereunder.
The purchasers of the securities in such transaction represented their intention
to acquire the securities for investment only and not with a view to or for sale
in connection with any distribution thereof and appropriate legends were affixed
to  the  certificates  for  the  securities  issued  in  such  transaction.  The
purchasers  of the  securities  in  the  transactions  had  adequate  access  to
information about us.

      On May 4, 2000,  Kenside  Investments,  Ltd, an accredited  investor,  was
issued  4,760,000  shares of common stock for a license to commercially  exploit
the  Arcoplate  process  worldwide,  under Section 4(2) of the  Securities  Act.
Kenside  Investments,  Ltd. is controlled by Gene Kostecki,  our chief executive
officer, director, and principal stockholder.

      In June  2000,  in  connection  with a  private  financing  to  accredited
investors  pursuant to Rule 506  Regulation D, we sold  2,217,500  shares of our
common stock to the individuals and in the amounts set forth below.
<TABLE>
<CAPTION>

                                                                                      PRICE
                                                                   NUMBEROF            PER
DATE OF CLOSING    NAME                                             SHARES            SHARE
                                                                   --------          ------
<S>                <C>                                             <C>              <C>

June 30, 2000      Janice Magill                                   31,250           $0.16
June 30, 2000      Jennifer Richards                               31,250           $0.16


                                       9


<PAGE>

                                                                   NUMBEROF            PER
DATE OF CLOSING    NAME                                             SHARES            SHARE
---------------    ----                                            --------          ------

June 30, 2000      Judith Saunders                                 31,250           $0.16
June 30, 2000      Barbara Kearney                                 31,250           $0.16
June 30, 2000      Jillian Clazie                                  31,250           $0.16
June 30, 2000      Norma Kearney                                   31,250           $0.16
June 30, 2000      Gene Kostecki                                   919,500          $0.16
June 30, 2000      Alan Winduss                                    308,000          $0.16
June 30, 2000      Balmere Assets Ltd.                             40,000           $0.25
June 30, 2000      Robert McDougall                                400,000          $0.25
June 30, 2000      Allan Bray                                      100,000          $0.25
June 30, 2000      Dave Peters                                     40,000           $0.25
June 30, 2000      Yeowart Gregory                                 20,000           $0.25
June 30, 2000      Terry Taylor                                    10,000           $0.25
June 30, 2000      New Wave Nominees Pty. Ltd.                     62,500           $0.25
June 30, 2000      Gillian Woodford                                100,000          $0.25
June 30, 2000      Darren Whittaker                                10,000           $0.25
June 30, 2000      Joris Claessens                                 20,000           $0.25

--------------------------------------------------------------------------------------------
      Between  June and July 2000,  in  connection  with a private  financing to
accredited  investors  pursuant to pursuant to Rule 506 of Regulation D, we sold
1,718,750  shares  of our  common  stock at a price of  $0.16  per  share to the
individuals listed below.

                                                                          Number of
Date of Closing    Name                                                    Shares
---------------    ----                                                   ---------

June 28, 2000      Hong Zhu                                              62,500
June 28, 2000      Po-Chin King                                          125,000
June 28, 2000      Wei Z. Yen                                            250,000
June 28, 2000      Jinsheng Yi                                           62,500
June 28, 2000      Shuhai Guo                                            62,500
June 28, 2000      Xiangdong Liang                                       125,000
June 29, 2000      Peter Che Nan Chen                                    593,750
June 29, 2000      Sui Wa Chau                                           312,500
July 5, 2000       Chung Kuan Yen                                        125,000
</TABLE>


      On October 2, 2000, Gene Kostecki, our chief executive officer,  director,
and principal  stockholder  and an  accredited  investor,  was issued  2,731,000
shares of common stock in  connection  with the purchase of the 3-D Pipe Fitting
Cladder process, under Section 4(2) of the Securities Act.

      On October 2, 2000, Alan Winduss,  our chief financial officer,  director,
and principal stockholder and an accredited investor,  was issued 682,750 shares
of common stock in connection  with the purchase of the 3-D Pipe Fitting Cladder
process, under Section 4(2) of the Securities Act.

      On  October  2,  2000,  Collier  Unit  Trust,  an  affiliate  of our chief
executive  officer and director,  was issued 1,250,000 shares of common stock in
connection  with the purchase of plant equipment  assets,  under Section 4(2) of
the Securities Act.

      On October 2, 2000,  Alan  Winduss  Pty.  Ltd.,  an affiliate of our chief
financial officer and director,  was issued 312,500 shares of common stock under
Section  4(2) of the  Securities  Act for  financial  consulting  services  with
respect to doing business in Australia.

      On October 2, 2000,  Ames  Nominees  Pty Ltd.,  an  affiliate of our chief
executive officer and director,  was issued 937,500 shares of common stock under
Section 4(2) of the Securities Act with respect to technical advisory services.

      On October 2, 2000, Berryhill Investments, Ltd., a sophisticated investor,
was issued 150,000 shares of common stock for corporate  development  consulting
services under Section 4(2) of the Securities Act.

                                       10

<PAGE>

      On October 2, 2000,  Chartreuse  Nominees  Pty.  Ltd., an affiliate of our
chief financial officer and director,  was issued 500,000 shares of common stock
under Section 4(2) of the Securities Act for financial  consulting services with
respect to doing business in Latin America.

      On  October  2, 2000,  Persia  Consulting  Group,  Inc.,  a  sophisticated
investor,  was issued 1,350,000 shares of common stock for financial  consulting
services with respect to doing  business in the United States under Section 4(2)
of the Securities Act.

      On October 2, 2000, Ragstar  Investments,  Ltd., an affiliate of our chief
financial  officer and director,  was issued 90,000 shares of common stock under
Section  4(2) of the  Securities  Act for  financial  consulting  services  with
respect to doing business in China.


      On October 2, 2000, Silverman,  Collura & Chernis, P.C., former counsel to
Alloy Steel,  was issued 300,000 shares of common stock for legal services under
Section 4(2) of the  Securities  Act. Alloy Steel  disputes  whether  Silverman,
Collura & Chernis, P.C. are entitled to these shares.

      In the second quarter of 2001,  David Gonzalez,  our Vice  President,  was
issued  50,000 shares of common stock for legal  services  under Section 4(2) of
the Securities Act.


      In September  2001,  we entered into an Equity Line of Credit  pursuant to
which we could  sell up to $10  million  of  common  stock  to  Cornell  Capital
Partners.  We issued 200,000 shares of common stock to Cornell Capital Partners.
In January 2002, we terminated the Equity Line of Credit.  We are  negotiating a
new Equity  Line of Credit with  Cornell  Capital  Partners,  which we expect to
complete within the next several weeks.



                                       11


<PAGE>


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

      You should read the  following  discussion  and analysis of our  financial
condition  and  results  of  operations  in   conjunction   with  our  financial
statements,  the  notes to our  financial  statements  and the  other  financial
information contained elsewhere in this filing.


      OVERVIEW

      We manufacture and distribute Arcoplate, a wear-resistant fused-alloy-clad
steel  plate,  which is  manufactured  by a  patented  production  process.  The
Arcoplate  process enables an alloy overlay to be evenly applied to a mild steel
backing, creating a metallurgical bond between the alloy and the mild steel that
is  resistant to wear caused by impact,  abrasion  and erosion.  We believe that
wear is the primary cause of down time and lost production in mining and mineral
processing,  and that our Arcoplate  product line will  substantially  lower the
down time and lost production for our customers.


      We are also  developing,  for manufacture and  distribution,  the 3-D Pipe
Fitting Cladder process, a computer-driven and software-based  mechanical system
for industrial  use. The 3-D Pipe Fitting Cladder process enables wear resistant
alloy  coatings  to be applied  to  pipefittings,  where wear is most  likely to
occur. In pipefittings,  wear generally occurs in pipe bends, elbow pipe joints,
pipe "T" sections and pipe "Y"  sections.  Through the 3-D Pipe Fitting  Cladder
process,  we apply alloy coatings to the interior  surfaces of pipefittings.  We
believe that the mining and mineral industries, among others, would benefit from
the  reduced  abrasive  wear  and  downtime  associated  with the use of the 3-D
Pipe-Fitting Cladder process.



      PLAN OF OPERATION

      Our  objective  during  the next 12 months is to expand  our  capacity  to
produce  Arcoplate.  We believe that additional  machinery to produce  Arcoplate
will be operational by March 31, 2002 and will cost an additional $175,000.  The
additional  machinery  will  supplement  our prototype  machinery  which we have
utilized  to  generate  our sales.  We  believe  that with the  addition  of new
equipment  we will have the  capacity  to  produce  Arcoplate  which will have a
resale  value of  $15-$20,000,000.  However,  we cannot  assure you that we will
achieve such  capacity or generate  such sales.  We will also attempt to further
increase the capacity of our  facility.  We believe that the cost of  additional
equipment which would result in a capacity to produce additional  Arcoplate with
a $15,000,000 - $20,000,000 resale value would cost $1,500,000 to $2,000,000. In
addition,  we intend to build the  machinery  for the 3-D Pipe  Fitting  Cladder
Process,  the  cost of  which  is  approximately  $500,000.  We  intend  to seek
additional  financing for these capital  expenditures,  but we cannot assure you
that we will be able to obtain such financing. In the event that we are not able
to  obtain  such  additional   financing,   we  will  attempt  to  finance  such
expenditures out of operations or we will attempt to continue operations without
such capital expenditures.

      Based  upon  our  expanded  capacity  as a  result  of the  completion  of
additional  machinery in March 2002, we intend to add two employees to our sales
and marketing staff, six employees to our manufacturing  staff and two employees
to our research and development  staff. We intend to achieve market  penetration
through a multi-step process consisting of:

      o    presentation of technical papers at industry related seminars;

      o    initial  discussions of the application  highlighting the advantages
            of Arcoplate;

      o     an engineering and marketing  evaluation by the prospective customer
            of sample material and demonstration products; and

      o     licensing a production  program where  approximate  expenditures are
            made on tooling,  equipment and quality control necessary to fulfill
            market requirements.

      We also intend to continue our research and  development  activities  with
respect to our products. We intend to allocate  approximately  one-half of 1% of
sales to research and development activities.


                                       12


<PAGE>

      RESULTS OF OPERATIONS


      SALES

      Alloy Steel had sales of $2,862,228 for the year ended September 30, 2001.
These  sales  consist   primarily  of  the  sale  of  our   Arcoplate   product.
Substantially all of our sales during the periods were denominated in Australian
dollars.  Sales  were  converted  into U.S.  dollars at the  conversion  rate of
$0.52369  representing  the  average  foreign  exchange  rate for the year ended
September 30, 2001.


      COSTS OF SALES

      Alloy Steel had cost of sales of $1,235,181  for the year ended  September
30,  2001,  resulting  in gross  profit of  $1,627,047.  Cost of sales  consists
primarily of the cost of metals used to manufacture the Arcoplate.


      SELLING, GENERAL AND ADMINISTRATIVE EXPENSES


      Alloy Steel had selling, general and administrative expenses of $1,524,457
for the year ended September 30, 2001. Our general and  administrative  expenses
consist  primarily  of  administrative   expenses  $621,956,   compensation  and
consulting  expenses of $534,400,  royalties  $55,859,  legal expenses  $36,639,
marketing  expenses of $74,661,  distribution  expenses of $97,445,  and rent of
$103,497.



      INCOME BEFORE TAXES


      Alloy  Steel's  income  before  taxes  was  $103,733  for the  year  ended
September 30, 2001.



      INCOME TAXES

      Alloy Steel had income taxes of $247,072 for the year ended  September 30,
2001. This income tax expense related to taxes payable in Australia.


      NET LOSS


      Alloy Steel had net loss of $(143,339) or $(0.01) per share,  for the year
ended September 30, 2001.



      LIQUIDITY


      For the year  ended  September  30,  2001,  the  total  cash  provided  by
operating  activities was $535,220,  consisting primarily of common stock issued
for  compensation  and services of $542,400 and an increase in accounts  payable
and other current  liabilities of $646,563.  These amounts were partially offset
by a net loss of $(143,339),  an increase in accounts receivable of $222,365 and
an increase in inventories of $275,425.  During the same period,  our total cash
used in investing  activities was ($270,365),  consisting  primarily of payments
for property, plant and equipment.

      We have funded our  requirements  for working  capital through the sale of
Alloy Steel's securities and the sale of the Arcoplate products.  As of the year
ended  September 30, 2001, we had working  capital  (i.e.,  current assets minus
current liabilities) of $10,576.


      Although we have no material  commitments  for  capital  expenditures,  we
anticipate a substantial  increase in our capital  expenditures  consistent with
anticipated growth in operations, infrastructure and personnel. Our primary need
for cash over the next 12 months will be to purchase equipment and machinery and
to fund our  working  capital  needs,  including  hiring  10 new  employees.  We
anticipate  that the funding of our working  capital  needs will come  primarily
from the cash  generated  from  our  operations.  Funding  for the  purchase  of
machinery  and  equipment  is  expected  to  come  primarily  from  the  sale of
securities.  To the extent that the cash  generated  from our operations or from
the sale of securities are insufficient to meet our working capital needs or the
purchase of machinery or equipment,  then we will need to raise capital from the
sale of securities in private  offerings or loans.  We have no  commitments  for
capital.  The sale of additional  equity or convertible  debt  securities  could
result in dilution to our stockholders. There can be no assurance that financing
will be available in amounts or on terms acceptable to us, if at all.

      We  anticipate  that the  machinery  to expand  our  capacity  to  produce
Arcoplate will be completed in March 2002 and will cost approximately  $175,000.


                                       13


<PAGE>

In order to further expand  capacity,  we anticipate that we would incur capital
expenditures for machinery of approximately $1,500,000 to $2,000,000 for further
production  equipment over the next two years.  In addition,  we anticipate that
the cost of the  machinery  necessary for the 3-D Pipe Fitting  Cladder  process
will be approximately  $500,000.  This machine is expected to be in operation by
March 2002. The 3-D Pipe Fitting  Cladder  machinery  includes a computer driven
software  mechanical system which has been designed to overlay with super alloys
wear resistant coating into pipe fittings.  We have no material  commitments for
the  additional  financing  for the  addition  of the  machinery  to expand  our
capacity to produce  Arcoplate or the machinery for the 3-D Pipe Fitting Cladder
process.

      In May  2000,  we  acquired  an  exclusive  worldwide  license,  with  the
exception of the United States,  from Kenside  Investments,  Ltd., for a 25-year
term, in connection  with certain  patent and  technology  rights related to the
Arcoplate  process,  in exchange for 4,760,000  shares of our common stock.  The
license provides for royalty payments to Kenside Investments, Ltd., in an amount
equal to 2% of our net sales of Arcoplate products. Our Chief Executive Officer,
director and principal shareholder,  Gene Kostecki controls Kenside Investments,
Ltd.

      In June 2000, we completed the sale of 2,217,500 shares of common stock at
a price of $0.16 and $0.25 per share in a private  financing  transaction  to 18
accredited investors resulting in gross proceeds of $420,000. In August 2000, we
completed  the sale of  1,718,750  shares  of  common  stock to nine  accredited
investors  at a price of $0.16  per  share in a  private  financing  transaction
resulting in gross proceeds of $275,000.  The net proceeds of the offerings were
utilized for construction of equipment in the amount of  approximately  $555,000
and the balance of the funds were  utilized in connection  with working  capital
and registration expenses.

      In October  2000, we acquired,  from Gene  Kostecki and Alan Winduss,  the
right to utilize and  commercially  exploit the 3-D Pipe Fitting Cladder process
in exchange for an aggregate of  3,413,750  shares of common  stock.  In October
2000,  we acquired  from Collier Unit Trust,  certain mill and office  equipment
assets  relating to the  manufacture,  sale and  distribution  of  Arcoplate  in
exchange for  1,250,000  shares of common  stock.  In October 2000, we acquired,
from Collier Unit Trust,  certain plant machinery  relating to the  manufacture,
sale and  distribution  of  Arcoplate  for a  purchase  price of  $880,891.  Mr.
Kostecki controls Collier Unit Trust.

      In October 2000 we entered into five-year employment  agreements with Gene
Kostecki,  our president and chief executive officer and Alan Winduss, our chief
financial  officer,  which provide for annual  salaries of $150,000 and $80,000,
respectively.

      In September  2001,  we entered into an Equity Line of Credit  pursuant to
which we could  sell up to $10  million  of  common  stock  to  Cornell  Capital
Partners.  We issued 200,000 shares of common stock to Cornell Capital Partners.
In January 2002, we terminated the Equity Line of Credit.  We are  negotiating a
new Equity  Line of Credit with  Cornell  Capital  Partners,  which we expect to
complete within the next several weeks.


      SIGNIFICANT CHANGES IN NUMBERS OF EMPLOYEES

      We anticipate hiring approximately six additional manufacturing employees,
two  additional  research and product  development  employees and two additional
sales and marketing employees in the next 12 months.


      PURCHASE OR SALE OF PLANT AND SIGNIFICANT EQUIPMENT

      We  anticipate  that the  machinery  to expand  our  capacity  to  produce
Arcoplate will be completed in March, 2002 and will cost approximately $175,000.
In order to further expand  capacity,  we anticipate that we would incur capital
expenditures for machinery of approximately $1,500,000 to $2,000,000 for further
production  equipment over the next two years.  In addition,  we anticipate that
the cost of the  machinery  necessary for the 3-D Pipe Fitting  Cladder  process
will be approximately  $500,000.  This machine is expected to be in operation by
March 2002. The 3-D Pipe Fitting  Cladder  machinery  includes a computer driven
software  mechanical system which has been designed to overlay with super alloys
wear resistant coating into pipe fittings.  We have no material  commitments for
the  additional  financing  for the  addition  of the  machinery  to expand  our
capacity to produce  Arcoplate or the machinery for the 3-D Pipe Fitting Cladder
process.


      EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS


      In July  2001,  the  Financial  Accounting  Standards  Board  issued  SFAS
("SFAS")  No.'s 141 and 142,  "Business  combinations"  and  "Goodwill and Other
Intangibles".  SFAS No. 141 requires all business  combinations  initiated after
June 30, 2001 to be accounted for using the purchase method. Under SFAS No. 142,
goodwill is no longer subject to  amortization  over its estimated  useful life.
Rather,  goodwill is subjected to at least an annual  assessment  for impairment
applying a fair-market value based test.  Additionally,  an acquired  intangible
asset should be separately  recognized if the benefit of the intangible asset is
obtained through  contractual or other legal rights,  or if the intangible asset
can be sold,  transferred,  licensed,  rented,  or exchanged,  regardless of the



                                       14

<PAGE>

acquirer's intent to do so. We do not anticipate these  pronouncements will have
a  significant  impact on our  consolidated  financial  position  and results of
operations.


                                       15
<PAGE>

                                  RISK FACTORS

      Alloy  Steel is  subject to various  risks  that may  materially  harm our
business,  financial  condition and results of operations.  YOU SHOULD CAREFULLY
CONSIDER THE RISKS AND  UNCERTAINTIES  DESCRIBED BELOW AND THE OTHER INFORMATION
IN THIS FILING BEFORE  DECIDING TO PURCHASE OUR COMMON STOCK.  THESE ARE NOT THE
ONLY  RISKS  AND  UNCERTAINTIES   THAT  WE  FACE.  IF  ANY  OF  THESE  RISKS  OR
UNCERTAINTIES  ACTUALLY OCCURS, OUR BUSINESS,  FINANCIAL  CONDITION OR OPERATING
RESULTS  COULD BE  MATERIALLY  HARMED.  IN THAT CASE,  THE TRADING  PRICE OF OUR
COMMON STOCK COULD DECLINE AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.


      WE HAVE A LIMITED  OPERATING  HISTORY AND WE MAY NOT BE ABLE TO ACHIEVE OR
      MAINTAIN PROFITABILITY

      We have a limited operating  history.  We may incur significant  operating
losses as we attempt to develop and grow our business. We cannot assure you that
we will achieve or maintain  profitability.  Until we achieve the  manufacturing
capacity   sufficient   to  sustain   continuous   production  of  Arcoplate  or
Arcoplate-based  products,  we will have substantial  production under capacity,
and we may be unable to fill  customer  orders.  Such  events  could cause us to
incur substantial operating losses.


      WE WILL NOT GENERATE  SUFFICIENT REVENUE TO CONTINUE  OPERATIONS IF WE ARE
      UNABLE TO PRODUCE  SIGNIFICANT  COMMERCIAL  QUANTITIES  OF  ARCOPLATE  AND
      FUTURE ALLOY-BASED PRODUCTS

      Although  we  have  prototype  equipment,  we do not  currently  have  the
equipment necessary for the manufacturing of Arcoplate in significant commercial
quantities.  We do not anticipate the completion of additional  equipment  until
March, 2002 at the earliest.  In addition,  we do not currently  manufacture the
commercial  equipment  necessary for the  implementation of the 3-D Pipe Fitting
Cladder process.  Accordingly,  we have limited internal  manufacturing capacity
and no experience  in  manufacturing  our products in industrial or  significant
commercial quantities.  Due to our limited production capacity, we may be unable
to meet demand for our products. In addition,  our manufacturing  operations use
certain  equipment  which,  if  damaged  or  otherwise  rendered  inoperable  or
unavailable, could result in the disruption of our manufacturing operations. Any
extended  interruption of operations at our manufacturing  facility would have a
material adverse effect on our business.


      IF WE ARE UNABLE TO RAISE ADDITIONAL CAPITAL, WE MAY NOT BE ABLE TO EXPAND
      OPERATIONS

      We  believe  that  the  available  cash and  anticipated  cash  flow  from
operations  will be sufficient to satisfy our anticipated  capital  requirements
for  approximately  6 months.  Accordingly,  we anticipate  that we will require
additional  financing to expand  operations  and pursue our plans for expansion.
Such  financing  may take the form of the  issuance of common stock or preferred
stock or debt  securities,  or may involve  bank or other lender  financing.  We
cannot assure you that we will be able to obtain such additional  financing on a
timely basis, on favorable terms, or at all.


      IF WE ARE UNABLE TO EFFECTIVELY MANAGE OUR PLAN OF EXPANSION,  WE WILL NOT
      ACHIEVE PROFITABILITY

      We plan to rapidly expand all aspects of our operations.  As a result,  we
need to expand our  financial and  management  controls,  reporting  systems and
procedures.  We will also have to  expand,  train and  manage our work force for
marketing,  sales, engineering and technical support,  product development,  and
manage  multiple  relationships  with  various  customers,   vendors,  strategic
partners and other third parties. We will need to continually expand and upgrade
our technology  and develop new products.  If we are unable to manage our growth
effectively,  we may be  unable  to  handle  our  operations,  control  costs or
otherwise function in a profitable manner, or at all.


      THE LOSS OF ANY KEY PERSONNEL  WOULD DISRUPT OUR  OPERATIONS  AND HURT OUR
      PROFITABILITY

      Our  future  success  depends  to a  significant  extent on the  continued
services of our senior  management and other key personnel,  particularly,  Gene
Kostecki,  Chairman  and  Chief  Executive  Officer,  and  Alan  Winduss,  Chief
Financial  Officer.  We do not presently  maintain  keyman life insurance on the
life of either Mr.  Kostecki  or Mr.  Winduss.  The loss of the  services of Mr.
Kostecki or Mr. Winduss would likely have a significantly  detrimental effect on
our business.  We currently have employment agreements with each of Mr. Kostecki
and Mr. Winduss.  However,  if Mr. Kostecki or Mr. Winduss becomes  unwilling or
unable to continue in their current  positions,  it would be significantly  more
difficult to operate our business,  which could hurt our financial condition and
results of operations.

                                       16

<PAGE>


      IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY,  WE COULD LOSE OUR
      COMPETITIVE ADVANTAGE

      We currently have only limited patent  protection for our technology,  and
may be unable to obtain even limited  protection for our proprietary  technology
in certain foreign countries.  Currently,  we have patents in various countries.
We cannot assure you that any granted patent or pending patent  application will
provide protection against infringement.


      IF WE DO NOT CORRECTLY  ANTICIPATE THE MAGNITUDE AND DIRECTION OF CURRENCY
      EXPOSURE,  THERE COULD BE A MATERIAL  ADVERSE  IMPACT ON OUR PROSPECTS FOR
      PROFITABILITY

      All of our  production  will  take  place  overseas,  and  many of the raw
materials and supplies for our products will be purchased in foreign currencies.
In addition, international sales will likely be denominated in local currencies.
These factors may combine to expose us to currency  gains and losses in addition
to gains and losses from our basic  operations.  The  magnitude and direction of
future currency exposure cannot be predicted, nor can we assure you that we will
be able to manage such exposure to our benefit or to a neutral effect.


      WE HAVE MANY COMPETITORS  WHICH HAVE  SUBSTANTIALLY  GREATER FINANCIAL AND
      OTHER RESOURCES THAN WE DO AND THESE COMPETITORS MAY NEGATIVELY AFFECT OUR
      BUSINESS

      The wear plate solutions industry is highly competitive.  We have numerous
competitors worldwide, including Triton, Inc., Trimay, Ltd., Australian National
Industries,  Ltd., Australian Overseas, Ltd., Abresist Corporation and Duraweld,
Ltd. We compete in our chosen  markets  against  several  larger  multi-national
companies,  all of which are  well-established  and have  substantially  greater
financial and other resources than we maintain.  Competitive  market  conditions
could  adversely  affect our results of  operations if we are required to reduce
product prices to remain competitive or if we are unable to achieve  significant
sales of our products.


      OUR BUSINESS WOULD BE MATERIALLY AND ADVERSELY  AFFECTED IF WE WERE UNABLE
      TO RECEIVE MATERIALS AT PRICES AND ON TERMS PRESENTLY MADE AVAILABLE TO US
      BY OUR PRINCIPAL SUPPLIERS

      We  presently  purchase  our  principal  raw  materials,  steel  and alloy
compound  components,  from a limited number of suppliers.  There are no written
contracts  between us and our suppliers,  and  requirements  are purchased using
individual purchase orders, with customary terms regarding payment,  quality and
delivery. Although we believe that alternatives are readily available from other
suppliers,  we  cannot  assure  you that we will be able to  continue  to obtain
desired  quantities of materials on a timely basis at prices and on terms deemed
reasonable by us. Our business would be materially and adversely  affected if we
are unable to continue to receive materials at prices and on terms comparable to
those presently made available to us by our principal suppliers.


      SINCE WE DEPEND  HEAVILY UPON  ELECTRICAL  POWER FOR OUR  OPERATIONS,  ANY
      INCREASE IN PRICES WOULD ADVERSELY AFFECT OUR BUSINESS AND PROFITABILITY

      We consume a large  amount of  electrical  power  during  production.  The
amount of electrical  power  consumed  during the Arcoplate  process  represents
approximately 5% of our overall  production costs.  There may be fluctuations in
the price of electricity  due to changes in the regulation of utility  companies
in Australia,  and in other jurisdictions where we may engage in production.  We
cannot assure you that we will be able to continue to obtain our energy supplies
at current  prices,  and any material  increase in prices of  electricity  would
adversely affect our business and profitability.


      OUR  COMMON  STOCK MAY BE  AFFECTED  BY  LIMITED  TRADING  VOLUME  AND MAY
      FLUCTUATE SIGNIFICANTLY

      There has been a limited  public market for our common stock and there can
be no assurance that an active trading market for our common stock will develop.
As a result,  this could adversely affect our shareholders'  ability to sell our
common  stock in short time  periods,  or possibly at all.  Our common stock has
experienced,  and is likely to experience in the future,  significant  price and
volume fluctuations, which could adversely affect the market price of our common
stock without regard to our operating performance.  In addition, we believe that
factors such as quarterly  fluctuations in our financial  results and changes in
the overall  economy or the condition of the  financial  markets could cause the
price of our common stock to fluctuate substantially.


                                       17

<PAGE>

      WE NEED TO RAISE ADDITIONAL CAPITAL TO FINANCE OPERATIONS

      We have relied on significant  external  financing to fund our operations.
Such financing has  historically  come from a combination of borrowings from and
sale of common stock to third parties and funds provided by certain officers and
directors.  We may  need to raise  additional  capital  to fund our  anticipated
operating  expenses and future  expansion.  We cannot assure you that  financing
whether from external  sources or related parties will be available if needed or
on  favorable  terms.  The sale of our common  stock to raise  capital may cause
dilution  to  our  existing  shareholders.  Our  inability  to  obtain  adequate
financing will result in the need to reduce or curtail our business  operations.
Any of these events would be  materially  harmful to our business and may result
in a lower stock price.


      WE HAVE A LIMITED CUSTOMER BASE

      At present,  our customer base consists primarily of companies involved in
the mining and dredging industries. Our ability to operate depends on increasing
our customer  base and  achieving  sufficient  gross profit  margins.  We cannot
assure  you that we will be able to  increase  our  customer  base or to operate
profitably.  If any of our major  customers  stop or delay its  purchases of our
products,  our revenue and profitability  would be adversely  affected.  For the
year ended  September 30, 2001, 29 customers  accounted for 96% of our sales. We
anticipate  that sales of our products to relatively few customers will continue
to account for a significant  portion of our revenue.  If these customers cancel
or delay  their  purchase  orders,  our revenue may decline and the price of our
common  stock may fall.  We cannot  assure you that our current  customers  will
continue  to place  orders  with us,  that  orders by  existing  customers  will
continue  at the  levels of  previous  periods or that we will be able to obtain
orders from new customers.  Although our financial  performance depends on large
orders from a key customers and  resellers,  we do not have binding  commitments
from any of them.


      OUR  COMMON  STOCK IS DEEMED TO BE "PENNY  STOCK,"  WHICH MAY MAKE IT MORE
      DIFFICULT  FOR  SHAREHOLDERS  TO  SELL  THEIR  SHARES  DUE TO  SUITABILITY
      REQUIREMENTS

      Our common stock is deemed to be "penny  stock" as that term is defined in
Rule 3a51-1 promulgated under the Securities  Exchange Act of 1934. Penny stocks
are stock:

      o     With a price of less than $5.00 per share;

      o     That are not traded on a "recognized" national exchange;

      o     Whose prices are not quoted on the Nasdaq automated quotation system
            (Nasdaq  listed stock must still have a price of not less than $5.00
            per share); or

      o     In issuers with net  tangible  assets less than $2.0 million (if the
            issuer has been in continuous operation for at least three years) or
            $5.0 million (if in continuous operation for less than three years),
            or with  average  revenues  of less than $6.0  million  for the last
            three years.

      Broker/dealers  dealing in penny stocks are required to provide  potential
investors  with a  document  disclosing  the  risks of penny  stocks.  Moreover,
broker/dealers  are required to determine whether an investment in a penny stock
is a suitable  investment for a prospective  investor.  These  requirements  may
reduce  the  potential  market for our common  stock by  reducing  the number of
potential investors.  This may make it more difficult our shareholders to resell
shares to third  parties or to otherwise  dispose of them.  This could cause our
stock price to decline.


      WE FACE SIGNIFICANT COMPETITION WITHIN OUR MARKET

      We expect  competition to persist and intensify in the future. Our current
and potential  competitors  offer a variety of competitive  products,  including
products offered by Triton, Inc., Trimay, Ltd.,  Australian National Industries,
Ltd., Australian Overseas, Ltd., Abresist Corporation and Duraweld, Ltd.

      Many of our competitors (including those identified above) are
substantially larger than we are and have significantly greater financial,
sales, marketing, technical, manufacturing and other resources and more
established distribution channels. These competitors may be able to respond more
quickly to new or emerging technologies and changes in customer requirements or
devote greater resources to the development, promotion and sale of their
products than we can. Furthermore, some of our competitors may make strategic
acquisitions or establish cooperative relationships to increase their ability to
rapidly gain market share by addressing the needs of our prospective customers.
These competitors may enter our existing or future markets with solutions that
may be less expensive, provide higher performance or additional features or be


                                       18


<PAGE>

introduced earlier than our solutions. If any technology is more reliable,
resistant, and less expensive or has other advantages over our technology, then
the demand for our products and services would decrease, which would seriously
harm our business.

      We expect our competitors to continue to improve the performance of their
current products and introduce new products and technologies as industry
standards and customer requirements evolve. These new products and technologies
could supplant or provide lower cost alternatives to our products. To be
competitive, we must continue to invest significant resources in research and
development, sales and marketing, and customer support.

      Increased competition is likely to result in price reductions, reduced
gross margins, longer sales cycles, and loss of market share, any of which would
seriously harm our business and results of operations.


      WE HAVE LIMITED MARKETING AND SALES CAPABILITY

      Because of our limited working  capital,  we have not had the resources to
fully  implement  our  marketing  and sales  strategy.  In order to increase our
revenues,  we are in the process of further  implementing  a marketing and sales
force with  technical  expertise and  marketing  capability.  Currently,  we are
dependant on the technical expertise,  sales, and marketing capability,  of Gene
Kostecki, our Chief Executive Officer, and a small marketing force. There can be
no assurance that we will be able to:

      o     Establish and develop such a sales force;

      o     Gain market acceptance for our products;

      o     Obtain and retain qualified sales personnel on acceptable terms; and

      o     Meet our proposed marketing schedules or plans.

      To the extent that we arrange with third  parties to market our  products,
the success of such products may depend on the efforts of such third parties.


      MANAGEMENT CONTROLS  APPROXIMATELY 74.0% OF OUR OUTSTANDING CAPITAL STOCK,
      WHICH  MEANS  THAT  MANAGEMENT  HAS THE  ABILITY  TO  APPROVE  ANY  MATTER
      REQUIRING SHAREHOLDER APPROVAL

      Management controls  approximately 74.0% of our outstanding capital stock.
Management  can  approve  any  matter  requiring  the vote of our  shareholders,
including the election of directors.  As such,  management could,  without other
shareholders,  vote to approve a transaction that is not necessarily in the best
interests of other  shareholders  or to reject a transaction  that may be in the
best interests of other shareholders.  For example, management's stock ownership
may prevent a third party from  acquiring a  controlling  position in our common
stock.  In many  instances,  a third party  desiring  to purchase a  controlling
position  is willing to pay a premium to the market  price.  Management's  stock
ownership in Alloy Steel would likely prevent such an event from occurring.


                                       19

<PAGE>
ITEM 7.  FINANCIAL STATEMENTS

      Alloy Steel's audited consolidated financial statements for the year ended
September 30, 2001 are attached to this filing.


ITEM 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

      On August 14, 2001,  Alloy Steel dismissed  Feldman Sherb and Co., P.C. as
its independent  certified  public  accountant.  Feldman Sherb's report on Alloy
Steel's financial  statements from May 4, 2000 (inception) to September 30, 2000
did not  contain an adverse  opinion or a  disclaimer  of  opinion,  and was not
qualified or modified as to uncertainty,  audit scope, or accounting principles.
Feldman Sherb's dismissal was recommended and approved by Alloy Steel's Board of
Directors.  Since May 4, 2000  (inception),  as well as any  subsequent  interim
period  prior  to  dismissal,  there  were no  disagreements  on any  matter  of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedures,  which  disagreements if not resolved to their satisfaction
would have caused them to make reference in connection with their opinion to the
subject matter of the disagreement.  Since May 4, 2000  (inception),  as well as
any subsequent  interim period prior to dismissal,  Feldman Sherb did not advise
Alloy Steel of any of the matters identified in paragraph  (a)(1)(iv)(B) of Item
304 of Regulation S-B.

      On August  14,  2001,  Alloy  Steel  engaged HJ &  Associates,  LLC as its
principal  accountant to audit Alloy Steel's financial  statements.  Alloy Steel
did not consult HJ &  Associates,  LLC on any  matters  described  in  paragraph
(a)(2)(i) or (ii) of Item 304 of Regulation S-B since Alloy Steel's inception on
May 4, 2000 or any subsequent  interim period prior to engaging HJ & Associates,
LLC.

      On January 16, 2002,  Alloy Steel  dismissed HJ &  Associates,  LLC as its
independent  certified public  accountant.  HJ & Associates,  LLC reviewed Alloy
Steel's  quarterly  reports  for the  period  ended June 30,  2001,  but did not
initiate  an audit  or  render  an  audit  report  on  Alloy  Steel's  financial
statements.  HJ & Associates,  LLC's  dismissal was  recommended and approved by
Alloy  Steel's  Board of  Directors.  For the interim  periods  reviewed by HJ &
Associates, LLC prior to dismissal, there were no disagreements on any matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedures,  which  disagreements if not resolved to their satisfaction
would have caused them to make reference in connection with their opinion to the
subject matter of the  disagreement.  For the interim  periods  reviewed by HJ &
Associates,  LLC prior to dismissal,  HJ & Associates,  LLC did not advise Alloy
Steel of any of the matters identified in paragraph (a)(1)(iv)(B) of Item 304 of
Regulation S-B.

      On January 16, 2002, Alloy Steel engaged Rothstein,  Kass & Company,  P.C.
as its principal  accountant to audit the Alloy  Steel's  financial  statements.
Alloy  Steel did not  consult  Rothstein,  Kass & Company,  P.C.  on any matters
described in paragraph  (a)(2)(i)  or (ii) of Item 304 of  Regulation  S-B since
Alloy Steel's inception on May 4, 2000 or any subsequent interim period prior to
engaging Rothstein, Kass & Company, P.C.


                                       20


<PAGE>
                                    PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

      Alloy Steel's present directors and executive officers are as follows:

               NAME              AGE      POSITION
               ----              ---      --------

               Gene Kostecki     56       President, Chief Executive
                                          Officer and Director

               Alan Charles      60       Chief Financial Officer and
               Winduss                    Director

               David Gonzalez    30       Corporate Secretary and Vice
                                          President

      The  following  is a brief  summary of the  background  of each  executive
officer and director:


      Gene Kostecki has served as our Chief Executive  Officer,  President,  and
Director since June 2000. From July 1997 to the present,  Mr. Kostecki served as
the Chief  Executive  Officer and  director of  Arcoplate,  Inc.  and  Arcoplate
Holdings (UK) PLC. From July 1995 to July 1997, Mr.  Kostecki served as Managing
Director of the Collier Unit Trust,  an  engineering  business  and  distributor
based in Western Australia. Mr. Kostecki intends to resign from his positions in
Arcoplate, Inc. and Arcoplate (UK) PLC. He intends to act as President and Chief
Executive Officer of Alloy Steel International on a full-time basis.

      Alan  Charles  Winduss  has served as our Chief  Financial  Officer,  Vice
President  and  Director  since June 2000.  From July 1997 to the  present,  Mr.
Winduss served as the Chief  Financial  Officer and director of Arcoplate,  Inc.
and Arcoplate Holdings (UK) PLC. From July 1979 to the present,  Mr. Winduss has
served as the senior  principal of Winduss & Cook, an accounting firm in Western
Australia,  which  specializes in commercial  accounting,  corporate finance and
management.  Mr. Winduss intends to resign from his positions in Arcoplate, Inc.
and Arcoplate  (UK) PLC. He intends to devote  approximately  70% of his time to
his  duties  as  Chief   Financial   Officer  and  a  director  of  Alloy  Steel
International.

      David  Gonzalez has served as our Corporate  Secretary and Vice  President
since June 2001.  From October 1998 to the present Mr.  Gonzalez has served as a
partner at the law firm of Butler  Gonzalez LLP and  specializes  in the area of
securities law. Mr. Gonzalez and his firm are general counsel to Cornell Capital
Partners, LP.


      BOARD COMPOSITION

      Our board of directors currently consists of two directors. At each annual
meeting of our stockholders,  all of our directors are elected to serve from the
time of  election  and  qualification  until the next annual  meeting  following
election. In addition,  our bylaws provide that the maximum authorized number of
directors may be changed by resolution of the  stockholders  or by resolution of
the board of directors.

      Each officer is elected by, and serves at the discretion of, our board of
directors. There are no family relationships among any of our directors,
officers or key employees.


      CONTROL BY OFFICERS AND DIRECTORS

      Our  directors  and  executive  officers  own  approximately  74.0% of the
outstanding shares of our common stock. Accordingly,  these stockholders possess
substantial  control over our  operations.  This control may allow them to amend
corporate  filings,  elect  all of our  board of  directors,  and  substantially
control all matters requiring  approval by our stockholders,  including approval
of significant corporate transactions. If you purchase our common stock, you may
have no effective voice in our management.


      DIRECTORSHIPS HELD IN REPORTING COMPANIES

      None of the  executive  officers or directors  held any  directorships  in
reporting companies.


                                       21


<PAGE>

      COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

      Section  16(a) of the  Securities  Exchange  Act of 1934,  as amended (the
"Exchange Act"), requires our directors and executive officers,  and persons who
beneficially  own more than ten percent of a registered  class of Alloy  Steel's
equity  securities,  to file with the  Securities and Exchange  Commission  (the
"Commission")  initial  reports of ownership and reports of changes in ownership
of Common  Stock and the  other  equity  securities  of Alloy  Steel.  Officers,
directors,  and  persons  who  beneficially  own  more  than  ten  percent  of a
registered  class of Alloy Steel's  equities are required by the  regulations of
the  Commission  to furnish  Alloy Steel with copies of all Section  16(a) forms
they  file.  To our  knowledge,  based  solely on  review of the  copies of such
reports  furnished to us, during the fiscal year ended  September 30, 2001,  our
officers,  directors,  and greater than ten percent  beneficial  owners complied
with all Sections 16(a) filing requirements applicable to them.


ITEM 10.  EXECUTIVE COMPENSATION

      Our executives did not receive any cash or non-cash  compensation  for the
period from May 4, 2000  (inception)  through  September 30, 2000. The following
table sets forth the annual  cash  compensation  for  services  rendered  by the
officers noted for the fiscal year ended September 30, 2001:
<TABLE>
<CAPTION>

                              SUMMARY COMPENSATION TABLE

                                 ANNUAL COMPENSATION
                                                                Securities
                                                                Underlying  All Other
Name and Position           Year        Salary     Bonus     Awards    Options   Compensation
-----------------           ----        ------     -----     ------    -------   ------------

<S>                         <C>        <C>          <C>        <C>        <C>         <C>


Gene Kostecki               2001       $75,000      $0         --         --          --
President, Chief
Executive Officer and
Director


Alan Charles Winduss,       2001       $40,000      $0         --         --          --
Chief Financial Officer
and Director
</TABLE>


      STOCK OPTION PLAN

      In May 2000,  we adopted the 2000 Stock  Option  Plan.  The purpose of the
plan is to enable us to attract,  retain and motivate key employees,  directors,
and consultants, by providing them with stock options. Options granted under the
plan may be either  incentive  stock options,  as defined in Section 422A of the
Internal Revenue Code of 1986, or non-qualified  stock options. We have reserved
500,000  shares of common stock for issuance  under the plan.  As of the date of
January 15, 2002, no options have been granted pursuant to the plan.

      Our board of directors  will  administer the plan. Our board has the power
to determine  the terms of any options  granted  under the plan,  including  the
exercise  price,  the number of shares subject to the option,  and conditions of
exercise.  Options  granted under the plan are generally not  transferable,  and
each option is generally  exercisable  during the lifetime of the holder only by
the holder.  The exercise price of all incentive stock options granted under the
plan must be at least  equal to the fair  market  value of the  shares of common
stock on the date of the grant.  With respect to any  participant who owns stock
possessing  more than 10% of the voting  power of all classes of our stock,  the
exercise  price of any incentive  stock option granted must be equal to at least
110% of the fair market value on the grant date. Our board of directors approves
the terms of each option.  These terms are  reflected in a written  stock option
agreement.


      EMPLOYMENT AGREEMENTS

      We have entered into  five-year  employment  agreements,  commencing as of
October 2, 2000, with Gene Kostecki,  our President and Chief Executive Officer,
and Alan Charles  Winduss,  our Chief  Financial  Officer,  which provide for an
annual salary of $150,000 and $80,000,  respectively.  The employment agreements
provide  that each of Mr.  Kostecki  and Mr.  Winduss  are  eligible  to receive
incentive bonus compensation, at the discretion of the board of directors, based
on their respective performance and contributions to our success. The employment
agreements  provide for  termination  based on death,  disability  or  voluntary
resignation  and each provides for severance  payments upon  termination  in the
event that there is termination  without cause,  if the employee  terminates his
employment  for good  reason  or in the event of a change  in  control  of Alloy


                                       22


<PAGE>

Steel.  The employment  agreement  defines "good reason" as any violation of the
employment  agreement  by  Alloy  Steel  International,  any  reduction  in  the
employee's  salary or  benefits  or the  assignment  to the  employee  of duties
inconsistent  with his  position.  If the  employment  agreement  is  terminated
without cause,  as a result of change of control,  or terminated by the employee
for good  reason,  the amount of the  severance  payment  will be equal to three
times that average annual compensation payable under the employment agreement.

      We have entered into  consulting  agreements  with Berryhill  Investments,
Ltd.,  Chartreuse  Nominees Pty.,  Ltd.,  Persia  Consulting  Group,  Inc., Ames
Nominees  Pty.  Ltd.,  Alan  Winduss  Pty.  Ltd and Ragstar  Investments,  Ltd.,
commencing as of October 2, 2000,  which provide for  compensation in the amount
of  150,000,   500,000,   1,350,000,   937,500,   312,500  and  90,000   shares,
respectively,  of our common stock. Pursuant to the terms of each agreement, the
consultants  shall provide  certain  advisory  services with regard to corporate
development.


      LIMITATIONS OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS

      Our  certificate  of  incorporation  and  bylaws  limit the  liability  of
directors and officers to the maximum extent  permitted by Delaware law. We will
indemnify any person who was or is a party,  or is threatened to be made a party
to, an action, suit or proceeding,  whether civil,  criminal,  administrative or
investigative,  if that person is or was a director,  officer, employee or agent
of ours or serves or served any other enterprise at our request.

      In addition,  our certificate of  incorporation  provides that generally a
director shall not be personally  liable to us or our  stockholders for monetary
damages for breach of the director's fiduciary duty. However, in accordance with
Delaware  law, a director  will not be  indemnified  for a breach of its duty of
loyalty, acts or omissions not in good faith or involving intentional misconduct
or a knowing  violation  or any  transaction  from  which the  director  derived
improper personal benefit.


                                       23

<PAGE>


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The  following  table sets forth as of January  15,  2002,  the number and
percentage of outstanding shares of common stock beneficially owned by:

      o     each  person  who we  know  beneficially  owns  more  than 5% of the
            outstanding shares of our common stock;

      o     each of our executive officers and directors; and

      o     all of our officers and directors as a group.

      Except as otherwise  noted,  the persons  named in this table,  based upon
information  provided by these persons,  have sole voting and  investment  power
with respect to all shares of common  stock owned by them.  The number of shares
of common stock  outstanding  used in calculating the percentage for each listed
person includes the shares of common stock  underlying  options or warrants held
by such  person that are  exercisable  within 60 days of the date of January 15,
2002, but excludes shares of common stock underlying options or warrants held by
any other person.  Unless  otherwise  indicated,  the address of each beneficial
owner is c/o Alloy Steel,  42  Mercantile  Way Malaga,  P.O. Box 3087 Malaga D C
6945, Western Australia.

                                                                 Percentage
                                                                     of
                                                                 Common
                                                                  Stock
                                                      Number     Beneficially
           Name of Beneficial Owner                  of Shares    Owned
           ------------------------                  ---------   ------------

           Gene Kostecki                             10,598,000(1)  62.5%

           Alan Charles Winduss                      1,893,250(2)   11.2%

           David Gonzalez                               50,000          *

           All present officers and directors as a   12,541,250     74.0%
           group (Three persons)

--------------------------------------------------------------------------------


(1)   The number of shares of common stock  beneficially  owned by Mr.  Kostecki
      includes (i) 4,760,000  shares issued to Kenside  Investments,  Ltd., (ii)
      1,250,000  shares issued to Collier Unit Trust,  and (iii) 937,500  shares
      issued to Ames Nominees Pty. Ltd.

(2)   The number of shares of common  stock  beneficially  owned by Mr.  Winduss
      includes (i) 500,000 shares issued to Chartreuse  Nominees Pty. Ltd., (ii)
      90,000  shares  issued to Ragstar  Investments,  Ltd.,  and (iii)  312,500
      shares issued to Alan Winduss Pty. Ltd.

*     Less than 1%.



                                       24


<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Messrs.  Gene Kostecki and  AlanWinduss  are both directors of Alloy Steel
International, Inc. and its subsidiary, Alloy Steel Australia (Int) Pty Ltd.

      Mr. Winduss is a director of a public accounting firm Winduss & Associates
Pty Ltd, which provides  accounting  and  secretarial  services to Alloy Steel's
subsidiary, Alloy Steel Australia (Int.) Pty Ltd. These services are provided at
normal  commercial  rates and conditions.  Total amount paid during the year was
$11,247.

      Alloy Steel Australia (Int.) Pty Ltd. paid rent of $90,881, for commercial
premises it occupied  during the year, to Raglan  Securities Pty Ltd., a company
controlled by Gene Kostecki.

      Alloy Steel Australia (Int.) Pty Ltd. purchased raw materials and finished
goods amounting to $111,987 from the Collier Unit Trust, an entity controlled by
Mr. Gene Kostecki.  This amount is included in Alloy Steel's accounts payable as
of September 30, 2001.

      During the year Alloy Steel  International,  Inc. sold manufacturing plant
and  equipment to Alloy Steel  Australia  (Int.) Pty Ltd.  This was at an agreed
valuation  between the  parties;  the basis of  valuation  being  either cost or
written down value. The amount paid for the plant and equipment was $880,981.

      In  October  2000,  Alloy  Steel  International,  Inc.  acquired  from Mr.
Kostecki and Mr. Winduss the right to utilize and  commercially  exploit the 3-D
Pipe Fitting Cladder process in exchange for 3,413,750 shares of common stock.

      During the year 50,000 shares of common stock were issued to Mr.  Gonzalez
as consideration for legal services at $0.16 per share.

      In May 2000,  we acquired an  exclusive  worldwide  license  from  Kenside
Investments,  Ltd.,  excluding  the  United  States,  for  a  25-year  term,  in
connection  with certain patent and  technology  rights related to the Arcoplate
process,  in exchange  for  4,760,000  shares of our common  stock.  The license
provides for royalty payments to Kenside  Investments,  Ltd., in an amount equal
to 2% of our net  sales of  Arcoplate  products.  Our Chief  Executive  Officer,
director and principal shareholder,  Gene Kostecki controls Kenside Investments,
Ltd. Research and development expenses of approximately $1,800,000 were incurred
in developing  the  technology  and building the equipment for the technology by
entities controlled by Mr. Kostecki.

      Arcoplate  Holdings  (UK)  PLC  holds  the  United  States  rights  to the
Arcoplate process through  Arcoplate,  Inc. Arcoplate Holdings (UK) PLC received
these rights from Kenside  Investments  Ltd.,  an entity  controlled  by Messrs.
Kostecki and Winduss. Presently, such rights are not being exploited.  Arcoplate
Holdings (UK) PLC is an affiliate of Mr. Kostecki,  our chief executive officer,
director and principal stockholder and Mr. Winduss, our chief financial officer,
principal  stockholder,  and a  director.  Arcoplate  Holdings  (UK)  PLC  is in
violation of this license and Kenside  Investments  Ltd. has attempted to revoke
the license. Certain directors of Arcoplate Holdings (UK) PLC are disputing this
revocation.  Until this matter is resolved,  neither Arcoplate Holdings (UK) PLC
nor Kenside Investments Ltd. are in a position to grant us a U.S. license.  Once
this matter is  resolved,  we will  attempt to  negotiate  a U.S.  license in an
arms-length transaction.

      In October  2000,  we  acquired  certain  assets of Collier  Unit Trust in
exchange for  1,250,000  shares of our common  stock.  In October  2000, we also
acquired the Arcoplate manufacturing plant and plant equipment from Collier Unit
Trust for an aggregate purchase price of $880,891.  Our Chief Executive Officer,
director and  principal  shareholder,  Gene  Kostecki  controls the Collier Unit
Trust.

      In October  2000,  we entered into  12-month  consulting  agreements  with
Chartreuse  Nominees Pty., Ltd., Ames Nominees Pty. Ltd., Alan Winduss Pty. Ltd.
and Ragstar  Investments,  Ltd., which provide for compensation in the amount of
500,000, 937,500, 312,500 and 90,000 shares, respectively.  Mr. Winduss controls
Chartreuse  Nominees Pty. Ltd., Alan Winduss Pty. Ltd. and Ragstar  Investments,
Ltd. Mr.  Kostecki  controls Ames  Nominees  Pty.  Ltd. Each of the  consultants
provided corporate  development and other advisory services including  strategic
planning,  investigation of potential strategic alliances, structuring potential
capital transactions,  preparation of internal financial statements, reports and
projections, and financial analysis of competitors and new operations.

                                       25

<PAGE>

      We entered into a 12-month  consulting  agreement  with Persia  Consulting
Group, Inc. in October 2000. Pursuant to the consulting agreement we have issued
1,350,000  shares of common stock to Persia  Consulting  Group.  The  consulting
services  to be  performed  by  Persia  will  primarily  be  performed  by Hamid
Fashandi.  Mr.  Fashandi  has been in the  financial  services  industry for six
years. Persia Consulting Group will provide services to us as we request. Persia
Consulting  Group has provided us with due  diligence  on potential  acquisition
candidates, provided advice on doing business in the United States and financial
advisory  services with respect to our  transition  from a private  company to a
public company.  Persia  Consulting  Group will also provide investor and public
relations services as well as crisis management services.

      In July 2000,  we entered into a lease  agreement  with Raglan  Securities
Pty. Ltd.,  for our office  facilities,  for a term of five years,  at an annual
rent of $85,000. Mr. Kostecki controls Raglan Securities Pty. Ltd.

      In June 2000, we sold 919,500 shares of our common stock to Gene Kostecki,
and 308,000  shares of our common  stock to Alan Winduss at a price of $0.16 per
share.

      Mr.  Kostecki  and Mr.  Winduss  may be deemed  promoters  of Alloy  Steel
International.


                                       26


<PAGE>

ITEM 13.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K

      (a)   The  following  exhibits  are  filed  as part  of this  registration
            statement:

EXHIBIT NO.    DESCRIPTION                        LOCATION
-----------    -----------                        --------

3.1            Certificate of Incorporation       Incorporated by reference to
                                                  Exhibit 3.1 to Alloy Steel's
                                                  Registration Statement on Form
                                                  SB-2, as amended (the
                                                  `Registration Statement"),
                                                  filed with the SEC on November
                                                  2, 2000.

3.2            By-laws                            Incorporated by reference to
                                                  Exhibit 3.2 to Alloy Steel's
                                                  Registration Statement.

4.1            Specimen Certificate               Incorporated by reference to
                                                  Exhibit 4.1 to Alloy Steel's
                                                  Registration Statement.

10.1           Stock Option Plan                  Incorporated by reference to
                                                  Exhibit 10.1 to Alloy Steel's
                                                  Registration Statement.

10.2           License Agreement, dated May 4,    Incorporated by reference to
               2000, between Alloy Steel and      Exhibit 10.2 to Alloy Steel's
               Kenside Investments, Ltd.          Registration Statement.

10.3           Employment Agreement, dated        Incorporated by reference to
               October 2, 2000, between Alloy     Exhibit 10.3 to Alloy Steel's
               Steel and Gene Kostecki            Registration Statement.

10.4           Employment Agreement, dated        Incorporated by reference to
               October 2, 2000, between Alloy     Exhibit 10.4 to Alloy Steel's
               Steel and Alan Winduss             Registration Statement.

10.5           Consulting Agreement, dated        Incorporated by reference to
               October 2, 2000, between Alloy     Exhibit 10.5 to Alloy Steel's
               Steel and Berryhill Investments,   Registration Statement.
               Ltd.

10.6           Consulting Agreement, dated        Incorporated by reference to
               October 2, 2000, between Alloy     Exhibit 10.6 to Alloy Steel's
               Steel and Chartreuse Nominees      Registration Statement.
               Pty. Ltd.

10.7           Amended and Restated Consulting    Incorporated by reference to
               Agreement, dated October 2, 2000,  Exhibit 10.7 to Alloy Steel's
               between Alloy Steel and Persia     Registration Statement.
               Consulting Group, Inc.

10.8           Consulting Agreement, dated        Incorporated by reference to
               October 2, 2000, between Alloy     Exhibit 10.8 to Alloy Steel's
               Steel and Ragstar Investments,     Registration Statement.
               Ltd.

10.9           Consulting Agreement, dated        Incorporated by reference to
               October 2, 2000, between Alloy     Exhibit 10.9 to Alloy Steel's
               Steel and Alan Winduss Pty. Ltd.   Registration Statement.

10.10          Consulting Agreement, dated        Incorporated by reference to
               October 2, 2000, between Alloy     Exhibit 10.10 to Alloy Steel's
               Steel and Ames Nominees Pty. Ltd.  Registration Statement.

10.11          Lease Agreement, dated July 1,     Incorporated by reference to
               2000, between Alloy Steel and      Exhibit 10.11 to Alloy Steel's
               Raglan Securities Pty. Ltd.        Registration Statement.

10.12          Asset Purchase Agreement, dated    Incorporated by reference to
               October 2, 2000 between Alloy      Exhibit 10.12 to Alloy Steel's
               Steel and Collier Unit Trust       Registration Statement.

10.13          Equipment Purchase Agreement,      Incorporated by reference to
               dated October 2, 2000, between     Exhibit 10.13 to Alloy Steel's
               Alloy Steel and Collier Unit Trust Registration Statement.

10.14          Asset Purchase Agreement, dated    Incorporated by reference to
               October 2, 2000, by and among      Exhibit 10.14 to Alloy Steel's
               Alloy Steel and Gene Kostecki and  Registration Statement.
               Alan Winduss

23.1           Consent of Rothstein, Kass &       Provided herewith.
               Company, P.C.


                                       27
<PAGE>

      (b)   Reports on Form 8-K:


      We filed a Current  Report on Form 8-K on September 6, 2001.  The form 8-K
related to a change in the registrant's certified accountants under Item 4.

      We filed a Current  Report on Form 8-K on August  16,  2001.  The form 8-K
related to a change in the registrant's certified accountants under Item 4.

                                       28
<PAGE>

                                   SIGNATURES

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

Date:  February 12, 2002                   ALLOY STEEL INTERNATIONAL INC.

                                           By:    /s/ Gene Kostecki
                                                  ------------------------------
                                           Name:  Gene Kostecki
                                           Title: Chief Executive Officer


      In accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.

      We, the undersigned  officers and directors of Alloy Steel  International,
Inc. hereby severally constitute and appoint Gene Kostecki,  our true and lawful
attorney-in-fact  and agent  with full power of  substitution  for us and in our
stead,  in any and all  capacities,  to sign any and all  amendments  (including
post-effective  amendments)  to this  Registration  Statement  and all documents
relating  thereto,  and to file the same,  with all  exhibits  thereto and other
documents in connection  therewith with the Securities and Exchange  Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform  each and every act and thing  necessary  or advisable to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person,  hereby ratifying and confirming all that said  attorney-in-fact  and
agent or his substitute or  substitutes,  may lawfully do or cause to be done by
virtue hereof.

<TABLE>
<CAPTION>

SIGNATURE                        TITLE                                                                 DATE
-----------------------------    ------------------------------------------------------------------    -----------------------------
<S>                              <C>                                                                  <C>


                                                                                                       Date:   February  12, 2002
/s/ Gene Kostecki
-----------------------------
Gene Kostecki
Chairman, Chief Executive Officer
 and Director

/s/ Alan Winduss                 Chief Financial Officer (Principal Accounting Officer) and Director   Date:   February  12, 2002
-----------------------------
Alan Winduss


</TABLE>


<PAGE>

                 ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS
                                       AND
                          INDEPENDENT AUDITORS' REPORT

                               SEPTEMBER 30, 2001





<PAGE>
ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
(ITEM 7)


================================================================================





INDEPENDENT AUDITORS' REPORT                                                 F-2


CONSOLIDATED FINANCIAL STATEMENTS

   Consolidated Balance Sheet
   September 30, 2001                                                        F-3

   Consolidated Statements of Operations
   Year Ended September 30, 2001 and the Period May 4, 2000
   (Date of Inception) to September 30, 2000                                 F-4

   Consolidated Statements of Stockholders' Equity
   Year Ended September 30, 2001 and the Period May 4, 2000
   (Date of Inception) to September 30, 2000                                 F-5

   Consolidated Statements of Cash Flows
   Year Ended September 30, 2001 and the Period May 4, 2000
   (Date of Inception) to September 30, 2000                                 F-6

   Notes to Consolidated Financial Statements                           F-7 - 15





                                                                             F-1
<PAGE>


INDEPENDENT AUDITORS' REPORT




To the Board of Directors and Stockholders of
Alloy Steel International, Inc.


We have  audited  the  accompanying  consolidated  balance  sheet of Alloy Steel
International, Inc. and Subsidiary (the "Company") as of September 30, 2001, and
the related consolidated statements of operations, stockholders' equity and cash
flows for the year ended  September 30, 2001 and the period May 4, 2000 (date of
inception)  to  September  30,  2000.   These   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of the
Company as of September 30, 2001, and the results of its operations and its cash
flows for the year ended  September 30, 2001 and the period May 4, 2000 (date of
inception)  to September  30, 2000, in  conformity  with  accounting  principles
generally accepted in the United States of America.




                                          /s/ ROTHSTEIN, KASS & COMPANY, P.C.



Roseland, New Jersey
February 1, 2002




                                                                             F-2
<PAGE>


                 ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET
                               September 30, 2001



                                     ASSETS


CURRENT ASSETS
 Cash and cash equivalents                                  $            179,135
 Accounts receivable                                                     209,546
 Inventories                                                             259,547
 Prepaid expenses and other current assets                                50,217
                                                           ---------------------
    Total current assets                                                 698,445
                                                           ---------------------
PROPERTY AND EQUIPMENT, net                                             990,104
                                                           ---------------------
 Other assets
 Intangibles                                                              90,512
 Other                                                                     3,926
                                                           ---------------------
                                                                          94,438
                                                           ---------------------
                                                           $           1,782,987
                                                           =====================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and other current liabilities             $             451,890
Income taxes payable                                                     235,979
                                                           ---------------------
Total current liabilities                                                687,869
                                                           ---------------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
 Preferred stock, $.01 par value, authorized 3,000,000
 shares; issued and outstanding - none
 Common stock, $.01 par value, authorized 50,000,000
 shares; issued and outstanding 16,950,000 shares                        169,500
 Capital in excess of par value                                        1,173,382
 Accumulated deficit                                                   (163,198)
 Accumulated other comprehensive loss                                   (84,566)
                                                           ---------------------
    Total stockholders' equity                                         1,095,118
                                                           ---------------------
                                                           $          1,782,987
                                                           =====================


          See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>
<TABLE>
<CAPTION>

                                          ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY

                                              CONSOLIDATED STATEMENTS OF OPERATIONS
                                           Year Ended September 30, 2001 and the Period
                                      May 4, 2000 (Date of Inception) to September 30, 2000



                                                                                        2001                    2000
                                                                                        ---------------------   -------------------
<S>                                                                                     <C>                     <C>

SALES                                                                                   $          2,862,228    $                -

COST OF SALES                                                                                      1,235,181
                                                                                        ---------------------   -------------------
GROSS PROFIT                                                                                       1,627,047
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES                                                                                           1,524,457                19,859
                                                                                        ---------------------   -------------------
INCOME FROM OPERATIONS                                                                               102,590               (19,859)
INTEREST INCOME, net                                                                                   1,143
                                                                                        ---------------------   -------------------
INCOME BEFORE INCOME TAXES                                                                           103,733               (19,859)
INCOME TAXES                                                                                         247,072
                                                                                        ---------------------   -------------------
NET LOSS                                                                                 $          (143,339)    $         (19,859)
                                                                                         ====================   ===================

BASIC AND DILUTED LOSS PER COMMON SHARE                                                  $             (0.01)   $            (0.00)
                                                                                         ====================   ===================

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
 USED IN COMPUTING BASIC AND DILUTED LOSS
 PER COMMON SHARE                                                                                 16,688,335             5,202,325
                                                                                         ====================   ===================


          See accompanying notes to consolidated financial statements.

</TABLE>

                                      F-4

<PAGE>

<TABLE>
<CAPTION>

                 ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Year Ended September 30, 2001 and the Period
              May 4, 2000 (Date of Inception) to September 30, 2000

<S>                                                                 <C>            <C>           <C>               <C>


                                                                                                     Capital
                                                                       Common Stock                 in excess        Accumulated
                                                             ----------------------------------
                                                                  Shares            Amount        of par value         Deficit
                                                             ------------------  --------------  ----------------  ----------------



Balances, May 4, 2000, date of inception                                           $             $ -           -   $            -

Common stock issued in connection with private placement             3,936,250          39,363           655,637

Costs associated with issuance of common stock                                                           (95,588)

Common stock issued for license agreement                            4,760,000          47,600           (47,600)

Net loss                                                                                                                  (19,859)

                                                               ----------------  --------------    --------------    -------------

Balances, September 30, 2000                                         8,696,250          86,963           512,449          (19,859)

Costs associated with issuance of common stock                                                           (89,442)

Common stock issued for services                                     3,390,000          33,900           508,500

Common stock issued in connection with acquisitions                  4,663,750          46,637           243,875

Common stock issued in connection with the equity line of credit       200,000           2,000           598,000

Costs incurred in connection with issuance of common stock
  related to the equity line of credit                                                                  (600,000)

Net loss                                                                                                                 (143,339)

Other comprehensive loss, cummulative
 translation adjustment


Total comprehensive loss - Year ended September 30, 2001


                                                             ------------------  --------------  ----------------  ---------------

Balances, September 30, 2001                                        16,950,000         169,500   $     1,173,382   $     (163,198)
                                                             ==================  ==============  ================  ===============
</TABLE>
<TABLE>


                                                                                  Accumulated
                                                                                     Other            Total
                                                             Comprehensive       Comprehensive    Stockholders'
                                                                  Loss               Loss            Equity
                                                              -------------       -------------   --------------
<S>                                                          <C>             <C>                 <C>

Balances, May 4, 2000, date of inception                                     $            -      $             -

Common stock issued in connection with private placement                                                 695,000

Costs associated with issuance of common stock                                                           (95,588)

Common stock issued for license agreement

Net loss                                                                                                 (19,859)

                                                               -------------   -------------       --------------

Balances, September 30, 2000                                                                             579,553

Costs associated with issuance of common stock                                                           (89,442)

Common stock issued for services                                                                         542,400

Common stock issued in connection with acquisitions                                                      290,512

Common stock issued in connection with the equity line of cre                                            600,000

Costs incurred in connection with issuance of common stock
  related to the equity line of credit                                                                  (600,000)

Net loss                                                     $     (143,339)                            (143,339)

Other comprehensive loss, cummulative
 translation adjustment                                             (84,566)        (84,566)             (84,566)
                                                             ---------------
Total comprehensive loss - Year ended September 30, 2001     $     (227,905)
                                                             ===============
                                                                              --------------       ----------------
Balances, September 30, 2001                                                 $      (84,566)     $        1,095,118
                                                                              ==============       ================

</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-5

<PAGE>

<TABLE>
<CAPTION>

                         ALLOY STEEL INTERNATIONAL, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Year ended September 30, 2001 and the Period
              May 4, 2000 (Date of Inception) to September 30, 2000




                                                                                           2001                  2000
                                                                                    -----------------    ------------------
                                                                                    -----------------    ------------------

<S>                                                                                 <C>                   <C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                            $        (143,339)    $         (19,859)
Adjustments to reconcile net loss to net cash
 provided by operating activities:
Depreciation expense                                                                           40,087
Common stock issued for compensation
and services                                                                                  542,400
Deferred income taxes                                                                          (3,343)
Changes in operating assets and liabilities:
Accounts receivable                                                                          (222,365)
Inventories                                                                                  (275,425)
Prepaid expenses and other current assets                                                     (48,186)
Accounts payable and other current liabilities                                                398,320
Income taxes payable                                                                          247,071                19,859
                                                                                    ------------------    ------------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                                     535,220
                                                                                    ------------------    ------------------

NET CASH USED IN INVESTING ACTIVITIES, purchases
of property and equipment                                                                    (270,365)             (645,000)
                                                                                    ------------------    ------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from the issuance of common stock                                                                      645,000
Costs associated with the issuance of common stock                                            (89,442)
                                                                                    ------------------    ------------------

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                                           (89,442)              645,000
                                                                                    ------------------    ------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                         3,722
                                                                                    ------------------    ------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                                     179,135

CASH AND CASH EQUIVALENTS, beginning of period
                                                                                    ------------------    ------------------
CASH AND CASH EQUIVALENTS, end of period                                            $         179,135     $               -
                                                                                    =================     ==================

SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING
 AND FINANCING ACTIVITIES
Common stock issued in connection with acquisitions                                 $         290,512     $               -
                                                                                    =================     ==================


Accrued legal services related to common stock issued                               $          48,000     $          45,588
                                                                                    =================     ==================
</TABLE>

                                      F-6




<PAGE>
ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



================================================================================




1.    NATURE OF OPERATIONS

Alloy Steel  International  Inc. (ASII) was incorporated in Delaware in May 2000
and its wholly-owned subsidiary, Alloy Steel Australia (Int.) Pty Limited (ASAI)
(collectively   the  "Company").   The  Company   manufactures  and  distributes
Acroplate,  a  wear-resistant   fused-alloy  steel  plate,  through  a  patented
production process principally to customers in Australia.


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Company adheres to accounting  principles  generally  accepted in the United
States  of  America.  The  Company's   consolidated   financial  statements  are
denominated in United States dollars.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of ASII and ASAI. All
material   intercompany  balances  and  transactions  have  been  eliminated  in
consolidation.

REVENUE RECOGNITION

The Company  recognizes  revenues  when products are shipped and title passes to
customers.   Provisions  are  established,  as  appropriate,  for  uncollectible
accounts, returns and allowances and warranties in connection with sales.

CASH AND CASH EQUIVALENTS

The  Company  considers  all  highly-liquid  debt  instruments   purchased  with
maturities of three months or less to be cash equivalents.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair  value  of the  Company's  assets  and  liabilities  which  qualify  as
financial instruments under Statement of Financial Accounting Standards ("SFAS")
No. 107, "Disclosures About Fair Value of Financial  Instruments,"  approximates
the carrying amounts presented in the accompanying consolidated balance sheet.

INVENTORIES

Inventories  are valued at the lower of cost or net  realizable  value.  Cost is
determined  principally  on the  average  cost  method  which  approximates  the
first-in, first-out method.


                                                                             F-7
<PAGE>
ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



================================================================================



2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

IMPAIRMENT OF LONG-LIVED ASSETS

The Company periodically  assesses the recoverability of the carrying amounts of
long-lived  assets,  including  intangible  assets.  A loss is  recognized  when
expected undiscounted future cash flows are less than the carrying amount of the
asset. The impairment loss is the difference by which the carrying amount of the
asset exceeds its fair value.

PROPERTY AND EQUIPMENT

Property and  equipment  are stated at cost less  accumulated  depreciation  and
amortization.  Depreciation is computed using the straight-line  method over the
estimated useful lives of the assets as follows:

                                             ESTIMATED
      ASSET                                USEFUL LIVES
   Plant and equipment                      5-10 years
   Furniture and fixtures                    5-7 years
   Vehicles                                  3-5 years
   Office and computer equipment             3-5 years

Maintenance  and  repairs  are  charged to  operations,  while  betterments  and
improvements are capitalized.

INTANGIBLES

Intangibles include intellectual rights of $90,512, which will be amortized over
the lesser of the estimated useful or economic life, or five years.

ADVERTISING

Advertising  costs are charged to operations as incurred and were $7,085 and nil
for the year  ended  September  30,  2001 and the  period  May 4, 2000  (date of
inception) to September 30, 2000, respectively.

INCOME TAXES

The Company  complies with SFAS No. 109,  "Accounting  for Income Taxes",  which
requires an asset and  liability  approach  to  financial  reporting  for income
taxes.  Deferred  income tax assets and liabilities are computed for differences
between the  financial  statement and tax bases of assets and  liabilities  that
will result in future taxable or deductible  amounts,  based on enacted tax laws
and rates  applicable  to the periods in which the  differences  are expected to
affect taxable income. Valuation allowances are established,  when necessary, to
reduce deferred income tax assets to the amount expected to be realized.





                                                                             F-8

<PAGE>
ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



================================================================================


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NET LOSS PER COMMON SHARE

SFAS No. 128,  "Earnings  Per Share",  requires dual  presentation  of basic and
diluted  income  per  share  for all  periods  presented.  Basic  loss per share
excludes  dilution  and is  computed by dividing  net loss  available  to common
stockholders by the weighted-average  number of common shares outstanding during
the period.  Diluted  earnings per share  reflects the  potential  dilution that
could  occur  if  securities  or other  contracts  to issue  common  stock  were
exercised or  converted  into common stock or resulted in the issuance of common
stock that then  shared in the  earnings  of the  Company.  Diluted net loss per
common share was the same as basic net loss per common share since there were no
common stock equivalents outstanding.

USE OF ESTIMATES

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

NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board issued SFAS No.'s 141 and
142, "Business Combinations" and "Goodwill and Other Intangibles".  SFAS No. 141
requires all business combinations initiated after June 30, 2001 to be accounted
for using the purchase method. Under SFAS No. 142, goodwill is no longer subject
to amortization over its estimated useful life. Rather, goodwill is subjected to
at least an annual assessment for impairment  applying a fair-market value based
test. Additionally, an acquired intangible asset should be separately recognized
if the benefit of the intangible asset is obtained through  contractual or other
legal rights,  or if the intangible  asset can be sold,  transferred,  licensed,
rented, or exchanged,  regardless of the acquirer's intent to do so. The Company
does not anticipate these  pronouncements  will have a significant impact on its
consolidated financial position and results of operations.

FOREIGN CURRENCY TRANSLATION

Assets and liabilities of the Company's  wholly-owned  subsidiary are translated
into U.S.  dollars at year-end  exchange  rates,  and  revenues and expenses are
translated at average rates prevailing  during the year.  Resulting  translation
adjustments are recorded as a component of accumulated other comprehensive loss.



                                                                             F-9
<PAGE>
ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



================================================================================


3.    ACQUISITION

In October 2000, the Company acquired substantially all of the net assets of the
Collier  Unit  Trust-Acroplate  Division  from a related  party in exchange  for
1,250,000 shares of the Company's common stock, which was recorded for $200,000,
the  predecessor's  basis in the net  assets  (see Note 11).  In  addition,  the
Company  also  acquired  equipment  from  this  related  party,  which  is under
construction, for approximately $880,000.

The following unaudited pro forma condensed financial information for the period
May 4, 2000 (date of  inception) to September 30, 2000, is presented to show the
results  of  the  Company  as  if  the  Collier  Unit  Trust-Acroplate  Division
acquisition had occurred at the beginning of the period presented.


                                              Period
                                           May 4, 2000
                                             (Date of
                                            Inception)
                                                to
                                          September 30,
                                               2000
                                           (Unaudited)

Net revenues                                $     529,950

Net income                                         25,684

Basic and diluted income per
 common share
                                                    0.004


The above unaudited pro forma condensed  results are not necessarily  indicative
of results which actually would have occurred if the acquisition had occurred at
the beginning of the dates  presented.  Further,  the  summarized  unaudited pro
forma  condensed  consolidated  results are not intended to be a  projection  of
future  results  and do not  reflect  any  integration  costs  or  cost  savings
resulting from synergistic opportunities.


4.    INVENTORIES

Inventories consist of the following at September 30, 2001:


Raw materials                   $       32,343
Finished goods                         227,204
                                --------------

                                $      259,547
                                ==============



                                                                            F-10
<PAGE>
ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



================================================================================


5.    PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid  expenses and other current assets consist of the following at September
30, 2001:

Prepaid expenses                $       20,736
GST receivable                          25,227
Deferred income taxes                    4,254
                                --------------

                                $       50,217
                                ==============


6.          PROPERTY AND EQUIPMENT

Property and equipment consists of the following at September 30, 2001:


Plant and equipment                         $ 172,792
Furniture and fixtures                         15,423
Vehicles                                        6,752
Office and computer equipment                  20,313
                                          ------------

                                              215,280
Less accumulated depreciation                  37,776
                                          ------------

                                              177,504
Construction in progress                      812,600
                                          ------------

                                            $ 990,104
                                          ============

7.    ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES

Accounts  payable and other  current  liabilities  consist of the  following  at
September 30, 2001:

Trade accounts payable                      $ 264,524
Accrued salary                                115,000
Royalties payable                              55,859
Defered income taxes                            1,104
Other                                          15,403
                                          ------------

                                            $ 451,890

                                          ============


As of September 30, 2001,  approximately  $112,000 of accounts payable and other
current  liabilities are due to a related party for  inventories  purchased (see
Note 12).




                                                                            F-11
<PAGE>
ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



================================================================================


8.    INCOME TAX EXPENSE (BENEFIT)

Income (loss) before income taxes for the year ended  September 30, 2001 and the
period May 4, 2000 (date of  inception)  to September 30, 2000 were taxed in the
following jurisdictions:


                               2001        2000

Australia                     $ 725,371         $ -
US                             (621,638)
                            ------------------------

                              $ 103,733         $ -
                            ========================


The components of income tax expense (benefit) are as follows for the year ended
September  30, 2001 and the period May 4, 2000 (date of  inception) to September
30, 2000:

                               2001        2000

CURRENT
Foreign                       $ 250,415         $ -
                            ------------------------



DEFERRED
Foreign                          (3,343)
                            ------------------------

                              $ 247,072         $ -
                            ========================


As of  September  30, 2001,  the Company had net  operating  loss  carryforwards
expiring  through 2021, of  approximately  $622,000 for U.S.  federal income tax
purposes.   The  deferred  income  tax  asset  consists  principally  of  timing
differences for Australian tax purposes.








                                                                            F-12
<PAGE>
ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



================================================================================



8.    INCOME TAX EXPENSE (BENEFIT) (CONTINUED)

The components of the net deferred  income tax asset consist of the following at
September 2001 and 2000:

                                     2001         2000

Deferred tax assets
Net operating loss carryforwards    $ 217,783      $ 6,426
Other                                   4,254
                                  -------------------------

                                      222,037        6,426
Less valuation allowance              217,783        6,426
                                  -------------------------

                                        4,254
                                  -------------------------

Deferred tax liabilities
Other                                   1,104
                                  -------------------------

Net deferred income tax asset         $ 3,150          $ -
                                  =========================


SFAS No. 109, requires that the Company record a valuation  allowance when it is
more likely than not that some portion or all of the  deferred  income tax asset
will  not be  realized.  The  change  in the  valuation  allowance  amounted  to
approximately  $211,000  and nil for the year ended  September  30, 2001 and the
period May 4, 2000 (date of inception) to September 30, 2000, respectively.  The
ultimate  realization of this deferred income tax asset depends on the Company's
ability to generate sufficient taxable income in future years.

The effective tax rate in 2001 differs from the U.S.  federal  statutory  rate
as follows:

U.S. federal statutory rate                       34.0 %
Change in valuation allowance                    204.0
                                             ----------

Effective tax rate                               238.0 %
                                             ==========


9.    STOCK OPTIONS

During 2000,  the Company's  Board of Directors  adopted,  and the  stockholders
approved, the 2000 stock option plan (the Plan) pursuant to which 500,000 shares
of common stock were reserved for issuance upon the exercise of options  granted
to key  employees,  members of the Board of  Directors  and  consultants  of the
Company.  Options under the Plan may be incentive  stock  options,  nonqualified
stock  options,  or  any  combination   thereof,  and  the  Board  of  Directors
(Committee)  may grant  options at an exercise  price which is not less than the
fair  market  value on the date  such  options  are  granted.  The Plan  further
provides that the maximum period in which stock options may be exercised will be
determined by the Committee,  except that they may not be exercisable  after ten
years from the date of grant or five years from the date of grant for any person
owning more than ten percent of the voting power of all classes of the Company's
stock. At September 30, 2001, there were no stock options granted.


                                                                            F-13
<PAGE>
ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



================================================================================


10.   COMMITMENTS AND CONTINGENCIES

The Company leases its office and manufacturing  space from a related party, for
approximately  $85,000  per annum  plus  certain  expenses  (as  defined  in the
agreement). The lease expires on June 30, 2005.

Rent  expense for the year ended  September  30, 2001 and the period May 4, 2000
(date of inception) to September 30, 2000,  was  approximately  $91,000 and nil,
respectively.

ROYALTY AGREEMENTS

The Company has a licensing  agreement relating to the sale of certain products.
Under the terms of the agreement, the Company is required to pay royalties of 2%
on the net sales of the related products, calculated at the end of each quarter.
The agreement  expires in 2025 and has three ten-year  renewal options to extend
unless  written  notice of  non-renewal is given by either party within 120 days
prior to its  expiration.  At  September  30,  2001,  approximately  $56,000 was
payable  under this  agreement  and is included  in  accounts  payable and other
current liabilities (see Note 11).

Royalty expense was approximately  $56,000 and nil,  respectively,  for the year
ended  September  30,  2001 and the period May 4, 2000  (date of  inception)  to
September 30, 2000.

EMPLOYMENT AGREEMENT

The  Company  has  employment  agreements  with two of its  executives,  who are
principal  stockholders,   requiring  the  payment  of  a  minimum  annual  base
compensation  of  approximately  $80,000 and  $150,000,  adjusted  annually  for
increases  approved by the Board of  Directors,  but not less than the base year
amount, plus incentive  compensation based on the executives performance and the
Company's success.  The agreements expire in 2005 and are automatically  renewed
for an additional  year unless  written notice of non-renewal is given by either
party within 180 days prior to their expiration. Approximately $230,000 and nil,
have been expensed  under these  agreements in for the year ended  September 30,
2001 and the period May 4, 2000  (date of  inception)  to  September  30,  2000,
respectively, and are included in selling, general and administrative expenses.


11.   STOCKHOLDERS' EQUITY

COMMON STOCK

In May and June 2000, the Company issued 3,936,250  shares in private  placement
transactions.  The gross  proceeds to the Company  were  $695,000  and the costs
associated with the issuance of the shares were approximately $185,000.



                                                                            F-14
<PAGE>

ALLOY STEEL INTERNATIONAL, INC. AND SUBSIDIARY



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



================================================================================


11.   STOCKHOLDERS' EQUITY (CONTINUED)

In May 2000, the Company issued  4,760,000  shares of the Company's common stock
to  obtain  an  exclusive  license  from  one of  its  officers,  directors  and
stockholders,  to develop  and  market the  proprietary  Acroplate  process,  to
commercially  exploit  certain  rights  and  technology  rights  related  to the
Acroplate  process.  The license grants the licensee worldwide rights (except in
the United States) to the process and expires in 2025 (Note 10).

In October  2000,  the  Company  issued  1,250,000  shares of common  stock to a
related party to acquire substantially all of the net assets of the Collier Unit
Trust-Acroplate Division (Note 3).

In October 2000, the Company issued  3,413,750  shares of common stock to two of
its officers,  directors and stockholders of the Company to acquire a license to
utilize the 3-D Pipe Fitting Cladder process.  The Cladder is a computer-driven,
software-based  mechanical  system for industrial use, which the Company intends
to commercialize worldwide. The acquisition was recorded at $90,512.

In October 2000, the Company issued 3,340,000 shares of common stock in exchange
for consulting  services.  Aggregate  compensation for such services amounted to
$534,400,  of which  approximately  $486,400  relates to agreements with related
parties.

In 2001,  the Company  issued 50,000 shares to an officer and director for legal
services amounting to $8,000 recorded in the year ended September 30, 2001.

In September 2001, the Company issued 200,000 shares to Cornell Capital Partners
("Cornell") relating to an equity line of credit agreement pursuant to which the
Company could sell up to $10,000,000 of common stock back to Cornell. The equity
line  is  currently  being   restructured  to  comply  with  certain  securities
regulations.


12.   MAJOR CUSTOMERS AND SUPPLIERS

The Company had revenues from two and nil customers in the year ended  September
30, 2001 and the period May 4, 2000 (date of  inception)  to September  30, 2000
aggregating  approximately $981,000 and nil,  respectively.  Accounts receivable
due from these  customers  were  approximately  $62,000 and nil at September 30,
2001 and 2000, respectively.

For the year  ended  September  30,  2001 and the  period  May 4, 2000  (date of
inception) to September 30, 2000, the Company  purchased  approximately  62% and
nil of its inventories from three suppliers, including a related party (SEE NOTE
7) and nil suppliers, respectively.


                                                                            F-15