U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    For the fiscal year ended March 31, 2000

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    For the transition period from _______________ to _________________

                        Commission file number: 33-28417

                            PRODEO TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

         Delaware                                                86-0923886
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

                             1817 West Fourth Street
                              Tempe, Arizona 85281
                    (Address of principal executive offices)

                    Issuer's telephone number: (602) 921-8555

        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None
                                (Title of Class)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was  required to file such  report(s)),  and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ].

        Indicate by check mark if disclosure of  delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  Registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

        The aggregate  market value of the voting and  non-voting  common equity
held by  non-affiliates  of the registrant,  based upon the closing bid price of
the registrant's  Common Stock as reported on the OTC Bulletin Board on June 15,
2000 was approximately $26,694,202.  Shares of Common Stock held by each officer
and director and by each person who owns 30% or more of the  outstanding  Common
Stock have been  excluded in that such  persons may be deemed to be  affiliates.
This determination of affiliate status is not necessarily conclusive.

        The number of  outstanding  shares of the  registrant's  Common Stock on
June 15, 2000 was 12,321,146.
<PAGE>
                            PRODEO TECHNOLOGIES, INC.
                             FORM 10-K ANNUAL REPORT
                            YEAR ENDED MARCH 31, 1999

                                TABLE OF CONTENTS


PART I                                                                         1
        ITEM 1.   DESCRIPTION OF BUSINESS                                      1
        ITEM 2.   PROPERTIES                                                   7
        ITEM 3.   LEGAL PROCEEDINGS                                            7
        ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS          7

PART II                                                                        8
        ITEM 5.   MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERS                                                      8
        ITEM 6.   SELECTED FINANCIAL DATA                                     10
        ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS               11
        ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                 16
        ITEM 9.   CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT                16

PART III                                                                      17
        ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT          17
        ITEM 11.  EXECUTIVE COMPENSATION                                      17
        ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                    AND MANAGEMENT                                            17
        ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS              17

PART IV                                                                       17
        ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
                    ON FORM 8-K                                               17

SIGNATURES                                                                   S-1

FINANCIAL STATEMENTS                                                         F-1

EXHIBITS                                                                     E-1

                                        i
<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

Prodeo Technologies,  Inc., a Delaware corporation ("Prodeo"), formerly known as
Sitek,   Incorporated,   manufactures  and  sells  semiconductor   manufacturing
equipment and provides certain wafer processing  foundry services for the global
semiconductor  electronics  manufacturing industry. As of March 31, 2000, Prodeo
was  the  parent  of  three  wholly-owned  subsidiary   corporations:   Advanced
Technology Services,  Inc. ("ATSI"),  CMP Solutions,  Inc. ("CMP Solutions") and
VSM Corporation ("VSM"), all located in Tempe, Arizona.

ATSI, an Arizona corporation, is in the business of buying and selling pre-owned
semiconductor manufacturing equipment. CMP Solutions, an Arizona corporation, is
in the early development stages of providing chemical  mechanical  planarization
("CMP") foundry (wafer  processing) and engineering  services for  semiconductor
fabrication customers and manufacturers of optical and micromechanical  devices.
In addition,  CMP Solutions provides installation and refurbishment services for
certain pre-owned CMP manufacturing  tools. VSM, an Arizona  corporation,  which
was acquired by Prodeo in April 1999, is a supplier of wafer processing furnaces
and  complex,  ultra  high  purity  gas and vapor  control  systems  used in the
manufacture of semiconductor wafers.

Prodeo's  executive  offices  are  located at 1817 West  Fourth  Street,  Tempe,
Arizona  85281,  and its telephone  number is  480-921-8555.  The Prodeo website
address is www.prodeotech.com.

ORGANIZATIONAL HISTORY AND STRUCTURE

Although  Prodeo was  incorporated  in  Delaware on June 30, 1998 under the name
Sitek,  Incorporated,  its  predecessor,  the  Elgin  Corporation,  had  been in
existence for over 10 years.  Until merging with Prodeo,  Elgin  Corporation and
its successors were dormant and did not engage in any commercial operations. The
Elgin  Corporation,  incorporated  in Delaware on April 5, 1989,  entered into a
merger from which the ultimate surviving corporation was Dentmart Group, Inc. on
February 15, 1991.

Elgin was  originally  established  to create a publicly held  corporation  with
which a suitable  privately  held company or companies  could be merged.  Toward
that  goal,  Elgin  filed  a  registration  statement  with  the  United  States
Securities and Exchange  Commission on Form S-18 that was declared  effective on
November 30, 1989. Elgin filed a certification  and notice of suspension of duty
to file reports under Section  15(d) of the  Securities  Exchange Act of 1934 on
Form 15 in February 1991 and remained dormant until April 14, 1998 when Dentmart
filed a current report with the Securities and Exchange Commission reporting its
change in fiscal year from  December 31 to March 31, its number of  shareholders
exceeding  300 and its  intention  to resume  filing of periodic  reports  under
Section 15(d) of the Securities Exchange Act of 1934.

On July 14, 1998,  Dentmart then merged into and became part of its wholly-owned
subsidiary,  Sitek, Incorporated.  Sitek, Incorporated then entered into a Stock
Purchase  Agreement with CMP Solutions,  Inc. to acquire all of its  outstanding
stock and create a wholly-owned subsidiary on July 14, 1998. Sitek, Incorporated
formed Advanced Technology Services,  Inc. as a wholly-owned  subsidiary in July
1998 to handle the  Company's  interest in purchasing  and  reselling  pre-owned
semiconductor  manufacturing tools and systems. Sitek, Incorporated acquired VSM
Corporation as a wholly-owned subsidiary on April 28, 1999 when it purchased all
of the outstanding stock of VSM.

VSM brought proprietary products, services, equipment manufacturing,  design and
engineering  capabilities to the Company as well as on-going sales revenues. VSM
Corporation  was acquired for cash obtained  through  short-term debt financing.
VSM  manufactures  and  re-manufactures   semiconductor  process  equipment  and
subassemblies,  including  ultra-pure  gas and  chemical  handling  systems  and
thermal systems used in semiconductor wafer manufacturing operations.
<PAGE>
VSM's capabilities include large frame fabrication,  machining,  system assembly
and ultra clean tubing welding and clean-room assembly operations. The VSM staff
is also  skilled at  equipment  refurbishment,  which  complements  both the VSM
business as well as the Company's pre-owned equipment business.

On June 5, 2000, Sitek,  Incorporated  changed its name to Prodeo  Technologies,
Inc.

Prodeo is internally organized into three divisions: Finance and Administrative;
Sales and Marketing; and Technology.

FINANCE  AND  ADMINISTRATIVE  DIVISION.   This  division  of nine  employees  is
responsible for all general  management  administrative,  finance and accounting
operations  in the  Company.  The Company  plans to move all  operations  in the
subsidiaries into the parent,  Prodeo, in the next fiscal year to take advantage
of efficiencies in centralized accounting, reporting and operations.

SALES AND MARKETING  DIVISION.  The Sales and Marketing Division was established
in the fiscal year ending  March 31,  2000 to provide a  consolidated  sales and
marketing  support  system for the entire  Company,  with the  exception of ATSI
which maintains its own sales force for pre-owned equipment sales. The sales and
marketing  division  has six  employees  that  provide  sales  support,  product
introduction,  and post-sale  product support for the pre-owned  equipment,  the
Corona Polishing Head, Wet-Q-2000 wet buffer station, TCS Flash Evaporator,  the
Magnetic  Anneal  Model  910,  and the VSM  furnace  and fluid  delivery  system
products. See "Products."

A special project was initiated in the Sales and Marketing  Division to sell the
residual  inventory  from the equipment  purchased  from Fujitsu  Limited at the
former Durham County, United Kingdom fabrication plant.

The  Sales  and  Marketing  Division  has  the  responsibility  for  trade  show
management,  advertising and sales support and customer  relations.  It has also
been instrumental in the generation of corporate press releases during the year.

TECHNOLOGY  DIVISION.  The Technology Division ("TD") is responsible for product
development and process engineering for the Company. The nature of almost all of
the ongoing applied  engineering and product  development  projects must be kept
confidential for competitive  reasons.  The TD's 12 engineers are experienced in
product  design,  with between eight and 20 years of experience in  development,
testing and market introduction of silicon wafer manufacturing  products. In the
fiscal year  ending  March 31,  2000,  the Company  purchased  $26,767  worth of
state-of-the-art   tools  for  the   division   staff  to  enhance   engineering
capabilities and to shorten  engineering cycles and the time to market for newly
developed  products.  During the last fiscal  year,  the TD  launched  three new
products,  the Corona Head,  the Wet-Q-2000  and the TCS Flash  Evaporator.  See
"Products" and "Research and Development."

The TD includes the machine and factory  automation  group,  whose purpose is to
exploit  the  Prodeo  "Control  Act"  automation  software  development  package
developed  originally  by Honeywell  Corp.  and  SEMATECH,  Inc. and licensed to
Prodeo. This automation  software,  when applied to semiconductor  manufacturing
equipment will automate some of the processes and controls traditionally handled
by fabrication  engineers and product staff.  These "smart" machines will handle
many  routine  engineering  decisions,  safety  and  malfunction  issues and the
application of physics and chemical principles to the processes under control.

PRODUCTS AND SERVICES

PRE-OWNED  EQUIPMENT  SALES.  Prodeo's  subsidiary  ATSI is in the  business  of
purchasing  and  re-selling  pre-owned,  semiconductor  manufacturing  tools and
systems. The pre-owned semiconductor equipment market is estimated to be over $1
billion per year, with Comdisco Inc. having the largest market share.

In April, 1999, Prodeo was able to purchase with debt financing  essentially all
of the  manufacturing  equipment  in the Fujitsu  semiconductor  plant in Durham
County,  United Kingdom for $5.2 million.  The equipment was  subsequently  sold
during  the  year or moved  to the  Prodeo  warehouse  in  Eaglescliffe,  United
Kingdom.  During  the  fiscal  year ended  March 31,  2000,  sales of the Durham
inventory  and other pre-owned equipment accounted for $17.4 million in revenues

                                       2
<PAGE>
and cash receipts of the Company  (approximately 76% of the Company's  revenue),
enabling the Company to meet its cash  requirements  for the year with  minimal,
short term debt financing and no additional  equity  financing.  Prodeo has sold
70% of the equipment at the U.K. warehouse and is seeking other opportunities to
purchase pre-owned equipment.

Like all the  subsidiaries of Prodeo,  ATSI will be undergoing  restructuring in
the next fiscal year. ATSI's  restructuring will be followed by the departure of
its president, Julian Gates, and the sale of the shell company to Mr. Gates. See
"Item 7 -- Plan of Operations."

CMP SOLUTIONS  FOUNDRY  SERVICES.  CMP Solutions'  foundry provides the chemical
mechanical   planarization   process   of   silicon   wafers  to   semiconductor
manufacturers  on an outsourced  basis.  Management  believes that CMP Solutions
offers the only CMP  foundry  service to  fabricate  products  for small  and/or
emerging circuit and micro-mechanical  manufacturers in the world. Additionally,
the foundry offers emerging  suppliers of CMP related  slurries,  pads and other
consumables the opportunity to test their products without making the investment
in CMP facilities themselves.

In the fiscal  year ending  March 31,  2000,  CMP  Solutions  implemented  major
enhancements  to its foundry and clean-room  facilities  and process  library as
well as conducting  extensive tests for the Corona wafer carrier.  CMP Solutions
is in a developmental and emerging stage.

CORONA POLISHING HEAD. The Corona Polishing Head is a polishing head retrofit to
the  IPEC  472  CMP  tool.  "CMP"  refers  to  the  term  "chemical   mechanical
planarization,"  a  critically  important  process by which  surface  films on a
silicon wafer (or "chip") are made very uniformly flat on a microscopic scale to
make  it  possible  to  fabricate  several  layers  of   interconnecting   metal
(conductor) patterns on modern, highly complex integrated circuits.  The process
is applied to both  insulator  (various  oxide,  nitride and organic)  films and
metal films (generally tungsten or copper). In addition to electronic integrated
circuits used in advanced  technology computer chips, the CMP process is finding
useful  application  in optical  circuits  and new  "micro-mechanical"  ("MEMS")
devices.  The Corona Polishing Head is a new product introduced in January 2000.
The Company made its first installation of this equipment in the June 2000.

The Corona  Polishing Head improves the polishing  processes on the surface film
of the silicon  wafer by the IPEC 472 CMP. The Corona Head allows  manufacturers
using  the IPEC 471 CMP to  upgrade  the  equipment  rather  than  purchase  new
equipment. It is estimated that at least 300 units of the IPEC 472 CMP tools are
installed  in the field.  The Corona  Polishing  Head has been  demonstrated  to
increase  machine  throughput  and to  reduce  wasted  area at the  edges of the
wafers. The Corona Polishing Head is manufactured by VSM.

WET-Q-2000.   The   Wet-Q-2000   system  is  a  stand  alone  unit  that  stores
semiconductor  wafers in water during certain  processing  steps.  Because it is
necessary to keep wafers wet during CMP  processing,  the Wet-Q-2000 can be used
in conjunction  with or as a stand alone storage unit for wafers  undergoing CMP
processing. This product was only recently introduced to the market.

TCS FLASH  EVAPORATOR.  The TCS Flash  Evaporator  is used for silicon  chemical
vapor deposition ("CVD") applications. TCS is the shortname for trichlorosilane,
which is commonly used starting  material for the CVD of silicon films.  The TCS
Flash  Evaporator  precisely  meters  liquid  TCS to the  reactor  in very small
amounts and replaces  cumbersome and poorly controlled hydrogen `bubbler' units.
This product was only recently introduced to the market.

FLUID  DELIVERY  PRODUCTS.  VSM  offers  a  variety  of  products  for  storing,
controlling and delivery of ultra-high purity chemicals.

THERMAL  PRODUCTS.  VSM  offers a series of new and  re-manufactured  horizontal
diffusion  and low  pressure  Chemical  Vapor  Deposition  ("CVD")  systems  for
processing 100-200 mm semiconductor wafers.

THE MAGNETIC ANNEAL MODEL 910. The Magnetic Anneal Model 910 system is a furnace
that aligns the magnetic  polarization of films on silicon wafers and is used in
manufacturing non-volatile memory products. The system has been adapted to batch
rapid thermal processing applications without a magnetic field. Ongoing research
on this  system is focused on  increasing  the  magnetic  field  strength of the

                                       3
<PAGE>
system in order to serve a wider range of  customers  and compete  with  current
competitors,  who have limited  their  systems to single wafer  processing.  The
Prodeo  machines will process  batches of more than 25 silicon wafers at a time.
The Magnetic Anneal Model 910 is manufactured by VSM. Patent  applications  have
been  filed with the U.S.  Patent and  Trademark  Office for  protection  of the
intellectual property associated with this product.

RELIABILITY  TOOLKIT.   Prodeo  acquired  the  rights  to  an  advanced  machine
reliability  tracking software system,  "The Reliability  Toolkit," that will be
marketed to both  semiconductor and  non-semiconductor  equipment  suppliers and
users. The Company has not yet marketed this product.

MARKETS

PRE-OWNED EQUIPMENT MARKET.  Prodeo participates in the worldwide  semiconductor
equipment and materials markets, a market forecasted to reach $35 to $45 billion
in sales for the calendar year 2000. The market for pre-owned equipment sales is
forecasted to reach over $1 billion for the calendar  year 2000.  Because of the
growing   demand  for   semiconductors   and  the  impending   shortage  of  new
manufacturing  equipment  and  silicon  materials,   the  market  for  pre-owned
equipment  could  grow  substantially  for the next  several  years.  This is an
important  factor in the Prodeo strategic plan since these sales provide much of
the cash required by the Company to support growth in other areas. In the fiscal
year ended March 31, 2000,  pre-owned  equipment  sales accounted for 76% of the
Company's revenue.  An important  competitive  advantage for Prodeo derives from
the  Company's  engineering  support for resales in this industry  segment.  See
"Item 7 -- Plan of Operations."

CMP FOUNDRY  MARKET.  The CMP foundry  operations will serve the market segments
for  products   that  require  one  or  at  most  three  CMP  cycles,   such  as
micro-machines,  or optical  distribution  devices.  CMP Solutions believes that
such foundry services will likely grow in time as more and more applications are
found for the CMP technology. Demand from small and/or emerging circuit and MEMS
manufacturers  for CMP foundry services  provided by CMP Solutions has increased
in the last fiscal  year due to  increased  use of  outsourcing.  CMP  Solutions
believes   the  demand  for  its  foundry   services   will   increase   because
semi-conductor manufacturers will find it more cost effective to outsource their
CMP  needs  due to the lack of  trained  technicians  and the  high  cost of CMP
equipment.

FURNACE MARKET. The VSM furnace market is dominated  primarily by Silicon Valley
Group/Thermco,  which has approximately 60% market share. With the resurgence in
demand for semiconductor  equipment worldwide,  Silicon Valley Group/Thermco and
other suppliers have had some  difficulties  meeting customer  commitments,  and
have out-sourced  parts of their business to other suppliers.  This out-sourcing
has opened the door for quality  products to gain market share and  recognition.
Prodeo  believes this is an opportunity  for VSM's  diffusion/LPCVD  furnaces to
gain a larger share of the market.

Prodeo  distinguishes  itself from its furnace competitors by providing turn-key
solutions with guaranteed process results.  Prodeo further  distinguishes itself
by providing custom and semi-custom  furnace designs and refurbishments that are
tailored  to meet  customer  needs.  Prodeo has also  designed  and  developed a
proprietary  lamp heated rapid batch  magnetic  anneal  system.  This system was
originally  designed to support the growing MRAM nonvolatile  memory market. The
Company  also  sees  broader   applications   for  this  tool  in   conventional
semiconductor  device  processes  such  as  junction  anneals,  gate  dielectric
formation, silicide formation, dielectric reflow and alloying.

FLUID  DELIVERY  SYSTEMS  MARKET.  The other VSM  products  compete in the fluid
delivery  system  market.  Within the fluid  delivery  system  market,  the main
segments Prodeo serves are gas cylinder cabinets,  valve manifold boxes (VMB's),
valve manifold  panels  (VMP's),  bulk chemical  delivery  systems,  gas sticks,
weldments and on-tool gas panels.  These market segments are dominated primarily
by Kinetics  Fluid  Systems,  a subsidiary of United States Filter  Corporation.
Although gross margins are very  competitive  in the fluid delivery  market with
20-40% being  typical,  Prodeo is enhancing its technical  capabilities,  design
tools and  methodologies,  processing  tools, and the quality of its products to
stay  competitive  and gain  market  share.  Additionally,  Prodeo is  selecting
strategic  partners  to  form  alliances  with  to meet  the  broadening  market
requirements.  Prodeo is also  concentrating its efforts to develop advanced new
products to serve niche markets,  such as its new TCS Flash Vaporizer system for
epitaxial reactors.

                                       4
<PAGE>
MANUFACTURING PROCESS AUTOMATION.  An emerging market Prodeo plans to explore is
automation of semiconductor  manufacturing processes. The semiconductor industry
is  facing  a  period  of  increased  demand  coupled  with a  short  supply  of
manufacturing  capacity  and  skilled  personnel  to  handle  the  manufacturing
challenges  coming.  The  shortages are  attributable  to the  industry's  level
performance and growth period that lasted five years from 1995 through 1999, due
to  limited  demand for  semiconductor  wafers  during  that time  period.  Many
equipment and silicon  suppliers were severely  damaged financially  during this
period.  Skilled  engineers and  technologists  have focused on  e-commerce  and
internet  opportunities,  thereby  making  the  shortage  problems  worse.  As a
consequence,  Prodeo has invested in creating  manufacturing  automation systems
like  the  "Control  Act" to  compensate  for  shortages  in both  capacity  and
personnel.

SALES

Prodeo  intends to expand its sales and  marketing  staff in fiscal  year ending
March 31, 2001 by  implementing a combination of adding internal sales personnel
and contract sales  representatives  (non-employee)  in key locations around the
world, such as in Korea, China and Europe. See "Sales and Marketing Division."

Prodeo sales for the year were  distributed  among a global market for all types
of equipment  sales and services,  with 9% of Prodeo's sales in the Pacific Rim,
52% of Prodeo's  sales in Europe and 37% of Prodeo's sales in the United States.
Prodeo  invoices in U.S.  dollars.  Sales of  pre-owned  equipment  to Filtronic
Components Semiconductor,  Ltd. accounted for approximately 16% of the Company's
sales  revenues  for the year  ending  March 31,  2000.  There  were no  foreign
currency exchange issues in fiscal year 2000.

RESEARCH AND DEVELOPMENT

The applied engineering and product development  operations in Prodeo consist of
13  professionals,  all of whom hold degrees  ranging from bachelor to doctorate
degrees.  The in-house staff is supplemented by university staff consultants and
engineers on an as needed basis.

Prodeo's   research  and  development   efforts  focus  on  product  design  and
development and process engineering.  Each project has a business objective. The
Company is not positioned to do pure research which is left to the  universities
or  larger  companies  with  which it  deals.  The  Company  actively  seeks out
potential  corporate  and  university  partners  for joint  product  development
programs.

Expenditures  for applied  development  in fiscal  2000  totaled  $1,755,387  as
opposed to none in fiscal 1999. The Company expects to budget  approximately 10%
of sales revenues to fund  development  projects,  and plans to actively solicit
development  funding  from  U.S.  government  agencies  and other  sources.  See
"Technology Division."

COMPETITION

PRE-OWNED  EQUIPMENT.   Prodeo's  competition  in  the  pre-owned  semiconductor
fabrication  equipment market consists of two or three very large firms, such as
Comdisco,  Inc., a large company that specializes in financing new equipment and
reselling pre-owned equipment,  and numerous,  small "broker" firms, such as TLC
in  Colorado  and  Spares  L.L.C.  in Austin  Texas.  There are also a number of
specialty firms that  re-furbish  only equipment  related to one or two types of
products.  A new consortium has been formed,  "SEC/N" which has head-quarters in
the Phoenix area.  SEC/N is comprised of about 30 member  companies,  both large
and small who are invited to  participate  in agreeing to meet rigid ethical and
operating  standards.  Prodeo has been  invited  to join  SEC/N and  anticipates
becoming a member.

Competitors  such as  Comdisco  are very  large and have  substantially  greater
financial  resources and  established  clientele.  Prodeo  intends to compete by
providing a high level of experienced engineering support.

CMP FOUNDRY SERVICES.  The Company is not aware of competitors for Prodeo in the
CMP  wafer  services  emerging  market,   other  than  the  original   equipment
manufacturers  that have installed internal  demonstration  laboratories that do
produce small lots of silicon wafers for key potential customers.  If the market
for CMP wafer  services  grows,  particularly  in the MEMS  arena,  the  Company
expects  competitors to enter the service market in the fiscal year ending March
31, 2001.  However,  the Company  believes that it has a market  advantage  over
later market entrants by virtue of having entered the market before  competitors
and the high cost and lengthy start up costs.

                                       5
<PAGE>
The present state of CMP process  technology is complex and highly  dependent on
skilled  engineering staff.  Prodeo intends to compete by building a much higher
level of automation and engineering  decision making into its foundry  machines.
This  will  enable  Prodeo's  key CMP  employees  to  handle a greater number of
machines in response to higher demand for CMP services.

FURNACE  AND GAS  CONTROL  PRODUCTS - VSM  PRODUCTS.   There  are  three  major
competitors  for  the  Prodeo  horizontal   furnace  business:   Silicon  Valley
Group/Thermco, Amtech and MRL Industries. There are also several major suppliers
of ultra-pure gas control  systems.  The market is extremely price  competitive.
Large competitors are known to compete with low prices or by acquiring competing
businesses.  Prodeo believes that its staff with  fabrication  experience  gives
Prodeo a competitive edge in process control, flexibility and know-how. Prodeo's
competitive  strategy also includes  providing higher  value-added  products and
avoiding the sale of low-margin products.

The  Prodeo  Magnetic  Anneal  Model  910  is  designed  for  production   scale
operations,  which is currently  limited to a magnetic  field  strength of 3,000
gauss.  There is a single  competitor in the market with a low-cost,  laboratory
scale product.  If higher  magnetic  fields (up to 20,000 gauss) are required by
customers,  then the Company intends to offer  superconducting  electro magnets.
See "Products."

INTELLECTUAL PROPERTY

The Company  currently has two patents pending for the Corona Polishing Head and
Magnetic Anneal Model 910. Additionally, Prodeo became the exclusive licensee in
two  U.S.  patents  related  to   semiconductor   apparatus  and  processing  of
semiconductor  films. Prodeo also has a non-exclusive,  royalty-bearing  license
from  Raytheon  Corporation  to use,  make and sell  apparatus and processes for
depositing  borophosphosilicate  glass,  which is a dielectric  film used in the
manufacture of advanced  semiconductor  devices.  Prodeo uses such technology in
VSM's  thermal  product  line.  The  Company  makes it a policy to  require  key
employees to enter into non-compete agreements.

EMPLOYEES

As of March 31,  2000,  Prodeo  employed 62 people,  all of whom were  full-time
employees.  Six employees were engaged in sales and service,  seven were engaged
in  administrative  activities,  13 were in engineering  and 36 were  production
associates.  None  of  the  employees  is  covered  by a  collective  bargaining
agreement,  and  management  believes that its relations  with its employees are
good.

REPORTS TO SHAREHOLDERS

Prodeo  intends to send an annual  report to  stockholders  which  will  include
audited financial statements.

                                       6
<PAGE>
ITEM 2. PROPERTIES

Prodeo leases general office and warehouse facilities in Tempe,  Arizona.  These
facilities  are  designed  and  constructed  for   manufacturing   services  and
administration.  In addition,  Prodeo leases the CMP foundry  facility in Tempe,
Arizona  which  includes a clean room site.  The CMP foundry  facility  lease is
described below:

                            Approx. Square
Location      Feet          Leased Expires               Description
--------      ----          --------------               -----------

Tempe         7,088         Sept. 30, 2001      Single story, block construction

ITEM 3. LEGAL PROCEEDINGS

On April 1,  1999,  Sitek  Incorporated  was named as a  defendant  in a lawsuit
involving two separate claims by two  plaintiffs;  EDMOND L. LONERGAN AND ROBERT
F. RUSSO, JR. V. SITEK,  INCORPORATED,  ET AL.,  Superior Court for the State of
Arizona, County of Maricopa,  Case No. CV 99-05785. The first plaintiff,  Edmond
Lonergan,  alleges  that he was not  paid  for  consulting  services  by  Global
Semiconductor  Technologies,  Inc., a company controlled by certain shareholders
of Sitek  Incorporated.  Mr.  Lonergan  also claims  that  Global  Semiconductor
Technologies,  Inc. and/or the other defendants misappropriated trade secrets in
conducting  the reverse  merger of Dentmart  into Sitek.  The second  plaintiff,
Robert Russo, Jr., was a former employee of Global  Semiconductor  Technologies,
Inc. Mr. Russo claims that he was  wrongfully  terminated.  On January 10, 2000,
Mr. Russo filed a Stipulation  for Dismissal with Prejudice  dropping his claims
against Sitek et al. On April 26, 2000, Mr. Lonergan filed a motion to amend his
complaint alleging securities fraud involving the same set of facts set forth in
his original  complaint.  Sitek has prepared its response opposing the motion on
the basis  that there are no grounds  upon  which a valid  claim for  securities
fraud could exist and denying the allegations of the claim.  Sitek is continuing
to defend itself  vigorously.  Mr.  Lonergan has demanded the value of 1,000,000
shares of Sitek's  capital  stock and other damages to be proven at trial in his
complaint.

On April 9, 2000, Sitek and Don Jackson,  the Company's chief executive officer,
were  named as  defendants  in a lawsuit  filed in the state of  Colorado:  JOHN
BOTDORF V. SITEK, INC., ET AL., District Court, City and County of Denver, State
of Colorado,  Case No.  00CV1951.  Mr.  Botdorf  alleges  that Sitek  breached a
contract  entered into with Mr. Botdorf in July of 1999 for consulting  services
involving equity funding for Sitek. Additionally,  Mr. Botdorf claims that Sitek
made false  representations  and fraudulent  non-disclosure  with respect to the
July 1999  agreement.  Sitek  currently is preparing its response and intends to
defend itself  vigorously.  Mr. Botdorf is seeking an option to purchase 600,000
shares of Sitek  capital stock at $0.25 per share and other damages in an amount
to be proven at trial.

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

On March 3, 2000 by majority written consent, shareholders approved an amendment
to the Certificate of Incorporation  authorizing the issuance of preferred stock
with rights,  privileges,  preferences  and  limitations to be determined by the
board of directors upon issuance.

                                Shareholder Votes

      Votes For          Votes Against          Withheld          Abstained
      ---------          -------------          --------          ---------

      5,693,760               N/A                  N/A               N/A

                                       7
<PAGE>
                                     PART II

ITEM 5. MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Prodeo's common stock,  $.005 par value,  trades on the OTC Bulletin Board under
the symbol  "PDEO."  However,  because of the  limited  and  sporadic  nature of
Prodeo's stock quotations  during the last fiscal year,  Prodeo does not believe
there is an established public trading market for Prodeo's stock.

The  range of high  and low bid  quotations  for the  quarterly  periods  of the
current and prior fiscal years were as follows:

          Year Ended March 31, 2000            High*           Low*
          -------------------------            -----           ----

          First Fiscal Quarter                 6.75            5.50
          Second Fiscal Quarter                6.50            2.50
          Third Fiscal Quarter                 4.63            2.50
          Fourth Fiscal Quarter               15.81            4.63

          Year Ended March 31, 1999            High*           Low*
          -------------------------            -----           ----

          First Fiscal Quarter                 N/A (1)         N/A (1)
          Second Fiscal Quarter               $7              $5
          Third Fiscal Quarter                $6   (2)        $6   (2)
          Fourth Fiscal Quarter               $6.50           $5.50

----------
*   Bid  quotations as reported by the OTC Bulletin  Board reflect  inter-dealer
    prices,  without  retail  mark-up,  mark-down,  or  commission  and  may not
    represent actual  transactions.  Because of the limited and sporadic trading
    of Prodeo's  stock,  Prodeo does not believe an  established  public trading
    market has been created for the common stock.

(1) Prodeo was formed in June 1998 and therefore its common stock had no trading
    activity prior to that date.

(2) Prodeo's  trading activity in this quarter was limited to one day's trading,
    which accounts for the identical high and low bids for this quarter.

Prodeo  has never  paid any cash  dividends  on its  common  stock,  nor does it
anticipate  paying  dividends  on its common  stock in the  foreseeable  future.

The number of  stockholders  of record of Prodeo's  common  stock as of June 15,
2000 was 537. This figure does not include individual participants in securities
position listings of registered clearing agencies. Trading activity with respect
to the common stock has been limited and the volume of  transactions  should not
of itself be deemed to  constitute an  "established  public  trading  market." A
public  trading  market  having  the  characteristics  of depth,  liquidity  and
orderliness  depends upon the existence of market makers as well as the presence
of willing buyers and sellers,  which are  circumstances  over which Prodeo does
not have control.

                                       8
<PAGE>
During the fiscal  year  ending  March 31,  2000  Prodeo  was  involved  in four
transactions involving the sale of unregistered securities.  First, on March 29,
2000 Prodeo sold 250,000  shares of Prodeo's  Series A Preferred  Stock,  with a
$0.01 par value to Intel Corporation,  a Delaware  corporation,  for $1,500,000.
Each share of Series A Preferred Stock is initially  convertible  into one share
of common stock of Prodeo,  with par value $0.005, and is adjusted by subsequent
sales prices of the common stock of Prodeo.

Prodeo  issued the Series A Preferred  Stock  pursuant to a Rule 506  exemption,
promulgated under Regulation D, from registration pursuant to the Securities Act
of 1933.  Prodeo satisfied the requirements of Rule 506, because (a) Prodeo made
no general  solicitation  or offer to sell the  Series A  Preferred  Stock;  (b)
Prodeo  reasonably  believes  it  sold  the  Series  A  Preferred  Stock  to one
purchaser;  and (c) Prodeo  sold the Series A Preferred  Stock to an  accredited
investor.

Second,  on April 4, 2000 Prodeo  issued  13,333  shares of Prodeo common stock,
with a $0.005 par  value,  to Magnum  Financial  Group,  LLC,  in  exchange  for
investor  relations  services  rendered.  Prodeo  issued such shares of stock to
Magnum  Financial Group, LLC pursuant to a Letter of Engagement (the "Engagement
Letter")  between Magnum  Financial Group, LLC and Sitek dated October 28, 1998.
The Engagement Letter, which was terminated in February 1999, required Prodeo to
issue Magnum  Financial  Group, LLC warrants to purchase 10,000 shares of Prodeo
common stock at the end of each month during which Magnum  Financial  Group, LLC
was engaged to provide investor  relations  services.  The exercise price of the
warrants was $6.00,  which was the average closing bid price for the ten trading
days  preceding  the last day of each of the four  months  during  which  Magnum
Financial Group, LLC was engaged to provide investors  relations  services.  The
Engagement Letter provided for a cashless exercise of the warrants.

Prodeo issued the warrants  pursuant to a Rule 504 exemption,  promulgated under
Regulation D, from  registration  pursuant to the Securities Act of 1933. Prodeo
satisfied  the  requirements  of Rule 504,  because  (a) Prodeo  made no general
solicitation or offer to sell the warrants; and (b) the aggregate offering price
for the warrants did not exceed  $1,000,000,  less the aggregate  offering price
for all  securities  sold  within  the  preceding  twelve  months and during the
offering of securities  under Rule 504, in reliance on any exemption under 3(b),
or in violation of Section 5(a) of the Securities Act of 1933.

Third,  on September 17, 1999,  Prodeo issued a warrant to purchase 4,562 shares
of Prodeo  common  stock to AA Capital  Ventures,  LLC in exchange  for services
rendered in connection with the sale of certain convertible debentures discussed
below. The warrant expires on December 31, 2004.

Prodeo issued the warrant  pursuant to a Rule 504 exemption,  promulgated  under
Regulation D, from  registration  pursuant to the Securities Act of 1933. Prodeo
satisfied  the  requirement  of Rule 504,  because  (a)  Prodeo  made no general
solicitation or offer to sell the warrant;  and (b) the aggregate offering price
for the warrant did not exceed $1,000,000, less the aggregate offering price for
all  securities  within the  preceding  twelve months and during the offering of
securities  under Rule 504,  in  reliance on any  exemption  under  3(b),  or in
violation of Section 5(a) of the Securities Act of 1933.

Fourth,  June 14, 1999  through  September  10,  1999,  Sitek issued a series of
convertible debentures in the aggregate of $182,500 maturing on June 7, 2001 and
bearing an interest rate of 9.5% per year. The convertible  debentures were sold
for cash. The convertible  debentures are convertible  into the number of common
shares  determined by dividing the dollar amount of the interest  payable at the
time of conversion by the market price,  which means 80% of the average of the 5
day closing bid prices,  as reported by Bloomberg,  LP for the five  consecutive
trading days immediately preceding the date of conversion,  but in no event at a
price lower than $3.50 per share or higher than $5.00 per share.

Prodeo  issued the  convertible  debentures  pursuant  to a Rule 506  exemption,
promulgated under Regulation D, from registration pursuant to the Securities Act
of 1933.  Prodeo satisfies the requirements of Rule 506, because (a) Prodeo made
no general solicitation or offer to sell the convertible debentures;  (b) Prodeo
reasonably  believes  it  sold  the  convertible  debentures  to  no  more  than
thirty-five  purchasers;  and (c)  Prodeo  sold the  convertible  debentures  to
accredited investors only.

                                       9
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                           Fiscal year ending           Fiscal year ending
                                                             March 31, 2000               March 31, 1999
                                                             --------------               --------------
<S>                                                      <C>                           <C>
                                                             (in thousands)               (in thousands)
                                                         (except per share data)      (except per share data)

CONSOLIDATED STATEMENT OF OPERATIONS
Net Sales                                                        22,727                        2,721
Gross profit                                                     12,077                          690
Operating expenses                                                8,080                        1,337
Loss from operations                                              3,996                         (647)
Net Income                                                        1,930                         (924)

CASH FLOW
Net cash (used in) operating  activities                          5,231                       (5,446)
Net cash (used in) investing activities                            (897)                         (85)
Net cash provided by financing activities                        (4,119)                       5,532

BALANCE SHEET DATA

Cash                                                                215                            1
Total assets                                                      8,343                        7,322
Current liabilities                                               4,573                        7,989
Long-term liabilities                                             1,104                          254
Shareholders' equity                                              2,582                         (921)

INCOME PER COMMON SHARE OUTSTANDING,
  BASIC AND DILUTED                                           0.09/0.09                         (.08)
</TABLE>

                                       10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

RESULTS OF OPERATIONS

Prodeo began  operations  on July 14, 1998 when it acquired all the  outstanding
stock of CMP  Solutions,  Inc. ("CMP  Solutions").  On July 24, 1998, all of the
outstanding stock of Advanced Technology Services, Inc. ("ATSI") was contributed
to Prodeo as a  wholly-owned  subsidiary.  As Prodeo was in its initial  year of
operations, there are no financial statements prior to the year ending March 31,
1999.  Due to the current state of operations  and  relatively  short  operating
history,  period  to  period  comparisons  of  results  of  operations  are  not
meaningful.

REVENUES.  Net sales of  $22,727,729,  in the fiscal year ended March 31,  2000,
were  principally  due to sales of pre-owned  semiconductor  capital  equipment,
which resulted in a gross profit of 53% of net sales.  Pre-owned equipment sales
accounted for 76% of the Company's  revenues  ($17.4 million) in the fiscal year
ending March 31, 2000, with sales from VSM making almost all of the other sales.
Almost all of the $17.4 million of the pre-owned equipment revenues for the last
fiscal  year  arose out of the sale of  inventory  in the  United  Kingdom.  The
Company  began   reselling  this  equipment  in  April  of  1999  and  has  sold
approximately  70%  of  the  inventory.  The  Company  has  acquired  additional
equipment for resale on a smaller basis from time to time. The Company continues
to seek  opportunities  to purchase  pre-owned  equipment for resale,  on both a
piece-by-piece and as a whole fabrication plant basis. However,  there can be no
assurance  the Company will be able to acquire  additional  equipment or will be
able to acquire additional  equipment on as favorable terms and conditions as in
the past.

SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Prodeo incurred  $6,325,117 or
27.8% of net sales in selling, general and administrative expenses in the fiscal
year ending  March 31, 2000.  The  majority of the SG&A  expenses are related to
continuing  start-up  activities,  the  acquisition of VSM and general  business
activities.  Because the Company was able to purchase its inventory of pre-owned
equipment  in the United  Kingdom for  approximately  $5.2  million,  the profit
margins on the sale of the equipment  have been high.  The profit margins on the
Company's  other products have been lower,  due in part to the products'  recent
introduction to the market.

The  Company  expects  that sales from the VSM  products  and,  eventually,  CMP
Solutions services will become a larger portion of the Company's revenues in the
future,  particularly with the recent introduction of the Corona Polishing Head,
the Magnetic  Anneal 910, the  Wet-Q-2000 and the TCS Flash  Evaporator,  all of
which are manufactured by VSM.  However,  as with all new products,  the Company
cannot know what the products' sales will be.

PLAN OF OPERATIONS

As  Prodeo's  predecessors  were  dormant  until April 1998 and did not have any
revenues from operations in any of the last three fiscal years, the following is
management's  discussion of Prodeo's  plan of operations  for the next 12 months
ending March 31, 2001.

In  March  1999,  the  Company  purchased  substantially  all of  the  pre-owned
semiconductor  production  equipment  from a  semiconductor  plant in the United
Kingdom.  Prodeo  realized  $17.4 million of its  revenues,  or 76% of the total
revenues,  from equipment resale  operations during the fiscal year ending March
31, 2000. Most of the Company's  pre-owned  equipment revenues are from the sale
of the United Kingdom  equipment,  70% of which has been sold. Prodeo expects to
continue sales of pre-owned  equipment utilizing the remaining 30% of the United
Kingdom assets as well as other smaller market acquisitions. Prodeo continues to
seek  various  sources  from which to purchase  pre-owned  equipment,  including
individual equipment and complete plant inventories, to sell. However, there can
be no assurance the Company will be able to acquire additional equipment or will
be able to acquire additional  equipment on as favorable terms and conditions as
in the past. Lack of new or adequate  inventory could have a materially  adverse
impact on the Company as sales of the  pre-owned  equipment has provided most of
the cash required to support the  Company's  growth in its VSM and CMP Solutions
businesses.

During the fiscal year,  CMP Solutions  continued in the  development  phase and
made efforts in initial marketing activities as well as in operating its silicon
wafer  processing  clean room  facility.  CMP Solutions had revenues of $288,578
during the current fiscal year.  Prodeo expects continued  development  expenses
for CMP  Solutions  during  the next 12 months  without  significant  offsetting
revenues from CMP in the immediate future.

On  April  28,  1999,  Prodeo  purchased  all  the  outstanding  shares  of  VSM
Corporation  ("VSM")  for  $1,000,000,  of which  $50,000 had been paid prior to
March 31, 1999, in cash and for $200,000 to settle an  outstanding  liability to

                                       11
<PAGE>
the current shareholders of the target company. VSM is located in Tempe, Arizona
and is engaged in the manufacture and/or refurbishment of semiconductor  process
equipment  and  subassemblies.  The VSM  ultra-pure  gas and  chemical  handling
systems furnace units have wide applications in wafer  manufacturing  operations
and plant  facilities.  VSM has  recently  introduced  the  Magnetic  Anneal 910
furnace system that is utilized in the fabrication of nonvolatile  semiconductor
memory circuits and other devices. VSM has sold two Magnetic Anneal 910 furnaces
and is demonstrating it to other customers.

Prodeo has developed a new CMP wafer carrier called the Corona  Polishing  Head,
which is expected to improve  customer device yields.  The Company has installed
the Corona Polishing Head with two customers for evaluation.

The Company  plans to  consolidate  its  subsidiaries'  operations in the parent
company,  Prodeo,  by the end of the  next  fiscal  year to  take  advantage  of
economies of scale and reduce  administrative  costs.  After the  consolidation,
each of the  subsidiaries  will remain in  existence  as a  non-operating  shell
company.

Prodeo  has  already  entered  into  an  agreement  with  ATSI's  president  and
co-founder  Julian  Gates to sell to Mr. Gates all of the  outstanding  stock of
ATSI on August 1, 2000, after all ATSI's pre-owned  equipment inventory has been
transferred to Prodeo.  Mr. Gates will be terminating his employment with Prodeo
and will continue to operate ATSI as a pre-owned equipment supplier.

After the sale of ATSI, Prodeo will continue to operate its pre-owned  equipment
sales  operations  through the parent  company.  In  anticipation of Mr. Gates's
departure,  Prodeo has hired a new employee to take over the pre-owned equipment
sales  operations.  The new  head  of  pre-owned  equipment  has  over 12  years
experience in the semiconductor industry with four years in equipment sales and,
more recently, with Motorola procuring semiconductor equipment and designing and
building  fabrication plants.  Prodeo is confident in its ability to continue to
develop this line of sales.  However, in connection with the sale of ATSI to Mr.
Gates, the Company released Mr. Gates from his obligation not to compete against
the  Company  in the field of  pre-owned  equipment  sales.  Mr.  Gates  will be
competing with the Company in the field of pre-owned  equipment sales, for which
the Company  will receive a 5% royalty on all of ATSI's  sales  through  January
2002.  Although  the  Company  believes  it will  continue  to grow this line of
business,  there is no assurance how the sale of ATSI and Mr. Gates's  departure
will affect the Company's ability to compete.

Prodeo plans to raise additional  capital during fiscal year 2001 with a private
equity  placement  of up to $7  million  of  undetermined  number  of  shares of
Prodeo's common stock.  Prodeo intends to apply any such  additional  capital to
product development,  corporate  acquisitions,  and working capital requirements
above those  funded from  operations.  The Company has not yet entered  into any
agreements for this planned private equity  funding.  See "Liquidity and Capital
Resources."

LIQUIDITY AND CAPITAL RESOURCES

Prodeo  believes it will need  additional  capital  during the next 12 months to
meet its funding  needs,  including  repayment  of debt  obligations  (described
below),  product  development,  and  the  continued  costs  of  compliance  with
reporting  requirements  of the  Securities  Exchange  Act of 1934.  Prodeo  has
several lines of credit with banking  institutions  and private funding sources.
Assuming the Company's revenues continue at their current level, Prodeo believes
the private funds and the available  credit will be adequate to support Prodeo's
plan of  operations.  There can be no assurance  that  revenue will  continue at
their current level and, if revenues are inadequate,  there is no assurance that
Prodeo  will be able to  attract  additional  capital  or  that  the  funds,  if
acquired,  will be  sufficient to complete and  integrate  acquisitions  or meet
Prodeo's product development or operating capital requirements.

On January 10, 2000,  Prodeo entered into a revolving  line of credit  agreement
with  Imperial  Bank in the  principal  amount  of  $2,000,000.  The loan  bears
interest  at  prime  plus  4%,  matures  January  9,  2001,  and is  secured  by
substantially   all  assets  of  Prodeo.   The  credit   agreement   required  a
non-refundable  fee of $30,000 that will be amortized over the life of the loan.
Prodeo may borrow the lesser of $2,000,000 or a percentage of the borrowing base
which  consists of eligible  accounts  receivable  and eligible  inventory.  The
current outstanding balance is approximately $600,000.

In July 1999,  Prodeo  entered into a six-month  credit  agreement with Imperial
Bank in the amount of $3,000,000.  The loan was secured by substantially  all of
the assets associated with the United Kingdom, which currently is located in the
United Kingdom and personally  guaranteed by a shareholder.  The loan required a
non-refundable fee of $75,000, that was amortized over the life of the loan. The
principal balance of this loan was repaid in full and the shareholder  guarantee
has been released.

Prodeo entered into a $5.8 million  short-term  note payable  agreement with TLD
Funding Group on March 15, 1999 for funds used to acquire  substantially  all of
the pre-owned  semiconductor  production equipment from a semiconductor plant in
Durham County,  United  Kingdom.  The note included  $656,000 of financing fees,
which were  amortized  over the life of the loan. On July 16, 1999,  Prodeo paid
the  principal  balance of this note in full with the  $3,000,000  loan obtained
from Imperial Bank in July 1999.

                                       12
<PAGE>
In April 1999,  Prodeo  entered into a loan  agreement with TLD Funding Group to
borrow $1,000,000 used to purchase all the outstanding shares of VSM. Payment is
due on April 28,  2001.  Interest  is charged at 1% per month for the initial 90
days and 2% per month thereafter.  The note includes a financing fee of $70,000,
which was amortized over the life of the loan. The loan is unsecured.  A portion
of this loan was refinanced with the $3,000,000 loan from Imperial Bank obtained
in July, 1999. The current outstanding balance is approximately $532,000.

In February 1999,  Prodeo borrowed  $207,000 from TLD Funding Group under a line
of credit, which will expire on February 4, 2001. Interest is due monthly on the
unpaid  balance  at 1.5%.  The line is  personally  guaranteed  by two of Prodeo
shareholders and two related companies.

Prodeo also has available a line of credit with TLD Funding Group for amounts up
to $1 million to be utilized to purchase  equipment  for resale.  The line bears
interest on each advance at 1% of the advance amount for the initial 90 days and
2% per month  thereafter.  An initial  financing  fee of $20,000 was paid at the
origination of the agreement.  Prodeo also must pay a financing fee of 5% at the
time  of  each  advance  under  the  line.  At  March  31,  2000,   Prodeo  owed
approximately $377,000 under this line of credit.

Prodeo paid $910,000 in Value Added Tax ("VAT")  associated with the purchase of
the Durham  County,  United  Kingdom  inventory.  The VAT was refunded by the UK
government upon filing appropriate returns.

Prodeo has issued convertible  debentures of $80,000 at 6% interest and $182,500
at 9.5% interest. The 6% debentures are convertible any time before the two year
anniversary  of their purchase and  automatically  convert into common shares at
the two year  anniversary.  The conversion  price of 80% of the average five day
closing  bid prices as  reported by  Bloomberg,  LP for the five days  preceding
conversion.

The 9.5% debentures are convertible into common stock at any time after one year
from purchase  through their maturity date of June 7, 2001. The debentures  bear
interest  annually,  payable  annually in restricted  common  stock.  If paid in
common stock,  the  debentures are  convertible  into common stock at 80% of the
average of the five day closing bid prices, as reported by Bloomberg, LP for the
five consecutive trading days immediately preceding the date of conversion,  but
in no event at a price  lower  than  $3.50 per share or  higher  than  $5.00 per
share. The debentures are subject to a mandatory  conversion  feature on June 7,
2001, at which time all  debentures  outstanding  will be converted to shares of
common stock.  There is no beneficial  conversion feature associated with the 6%
or 9.5%  convertible  debentures  if the fair market  value,  as  determined  by
independent valuation, is lower than the bid price.

September 17, 1999,  Prodeo issued a warrant to purchase  4,562 shares of common
stock of Prodeo to AA Capital Ventures, LLC. The warrants have an exercise price
of $5.00 per share.

Effective May 20, 1999,  Prodeo agreed to pay a finder's fee to Bruar Associates
in exchange  for efforts in arranging  the  purchase of pre-owned  semiconductor
equipment located in the United Kingdom.  The fee is based upon 15% of net sales
proceeds  relating  to the  purchased  equipment  when and if such sales  exceed
$6,583,000.  Fees are due on the  supplement net sales  proceeds.  The agreement
expires on May 31, 2002. As of March 31, 2000, Prodeo has recognized  $1,154,000
in finder's fees expenses due to Bruar Associates.

Advances from a shareholder  of $160,941 were received by Prodeo,  of which only
$60,941 is now  outstanding  as of March 31, 2000.  There is no interest paid on
this borrowing. The Company plans to pay this debt in August 2000.

Neither  management nor other of Prodeo's  shareholders  has made commitments to
provide additional funds to Prodeo. Accordingly,  there can be no assurance that
any  additional  funds  will be  available  to  Prodeo  to allow it to cover its
capital  needs.  Management  has a  contingency  plan to allow Prodeo to sustain
itself without  additional  funding.  However,  the success of this plan depends
upon: (i) Prodeo retaining its market position and substantially  increasing its
sales  revenues  in  fiscal  2001;  (ii)  CMP  reaching  production  status  and
attracting  customers  with minimal  funding;  (iii) VSM  generating  sufficient
revenues  to fund  its  operations;  (iv)  collecting  receivables  in a  timely
fashion;  and  (v)  new  products  introduced  in  fiscal  year  2000  achieving
reasonable market acceptance. If the Company's contingency plan is unsuccessful,
the Company will fund  operations by borrowing on its existing  lines of credit.
However,  because of the costs associated with this type of debt financing,  the
Company  would also be forced to slow its  development  of products,  reduce its
purchases of pre-owned  equipment  inventory  and/or  reduce its  production  of
semiconductor  equipment  generally all of which could have a materially adverse
effect on the Company.

                                       13
<PAGE>
NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financing  Accounting Standards Board ("FASB") issued SFAS No.
133,  ACCOUNTING FOR DERIVATIVE  FINANCIAL  INSTRUMENTS AND HEDGING  ACTIVITIES.
SFAS No. 133, as amended,  becomes  effective  for the Company April 1, 2001 and
requires  that  entities  record  all  derivatives  as assets  and  liabilities,
measured at fair value,  with the change in fair value recognized in earnings or
in comprehensive  income,  depending on the use of the derivative and whether it
qualifies for hedge  accounting.  The Company is evaluating the impact,  if any,
that will result from the adoption of this standard.

YEAR 2000 COMPLIANCE

Prodeo did not experience any interruptions or slowdown of its operations due to
Year 2000 Compliance issues.

SPECIAL RISKS

FORWARD  LOOKING  STATEMENTS.    Certain  of the  statements  contained  in this
document  that  are  not  historical  facts,   including  statements  of  future
expectations,  projections  of results of operations  and  financial  condition,
statements of future economic performance and other  forward-looking  statements
within the meaning of the Private Securities  Litigation Reform Act of 1995, are
subject to known and unknown  risks,  uncertainties  and other factors which may
cause  the  actual  results,  performance  or  achievements  of Prodeo to differ
materially from those contemplated in such forward-looking statements. There can
be no  assurances  that the  forward-looking  information  will be accurate.  In
addition to the specific matters referred to herein, important factors which may
cause actual results to differ from those  contemplated in such  forward-looking
statements  include:  the  future  supply of  silicon;  the  future  demand  for
semiconductor and CMP products;  world economic conditions;  potential costs and
delays  in  integrating  acquisitions;   timing  of  market  introductions;  the
availability and cost of additional funding; and  higher-than-expected  costs of
product development.

Developments in any of these areas, which are more fully described  elsewhere in
"Item 1.  Description of Business"  which is  incorporated  into this section by
reference,  could cause Prodeo' s results to differ materially from results that
have been or may be projected by or on behalf of Prodeo.

Prodeo  cautions that the foregoing list of important  factors is not exclusive.
Prodeo does not undertake to update any  forward-looking  statement  that may be
made from time to time by or on behalf of Prodeo.

NEED FOR ADDITIONAL FINANCING.  Prodeo has limited funds, and such funds may not
be adequate to take advantage of any available business  opportunities.  Even if
Prodeo's  funds prove to be  sufficient to acquire an interest in, or complete a
transaction with, a business opportunity,  Prodeo may not have enough capital to
exploit the opportunity.  Prodeo's  ultimate success may depend upon its ability
to raise  additional  capital.  If  additional  capital is  needed,  there is no
assurance  that funds will be available  from any source or, if available,  that
they can be obtained on terms acceptable to Prodeo.  If not available,  Prodeo's
operations  will be  limited  to those  that  can be  financed  with its  modest
capital.

DEPENDENCE ON KEY  CUSTOMERS.  In the fiscal year ending March 31, 2000,  27% of
the Company's revenue were from sales to two customers, the Company believes its
relationship with these key customers is good.  However,  losing either customer
would have a materially adverse effect on the Company's revenue.

SPORADIC SUPPLY OF PRE-OWNED EQUIPMENT.  During the fiscal year ending March 31,
2000, 76% of Prodeo's revenues were generated by its subsidiary  involved in the
sale  of  pre-owned  semiconductor  equipment.   However,  the  availability  of
pre-owned  semiconductor equipment is sporadic and determined in part by the age
of  semiconductor   equipment  currently  used  by  companies  in  the  industry
semiconductor companies decisions to sell their capital equipment,  both factors
which are beyond the control of Prodeo. A material reduction in the availability
of  pre-owned  semiconductor  equipment  may have a material  adverse  effect on
Prodeo's business, financial condition, and the results of operations.

RELIANCE ON KEY EXECUTIVES.  Prodeo's  success depends on the efforts of Dr. Don
M. Jackson,  Jr. , Chief Executive  Officer and Paul Jackson,  Chief  Technology
Officer  and  Secretary  of  Prodeo.  Dr.  Jackson  has been the key  individual
responsible  for financing for the  development of Prodeo.  Paul Jackson and Dr.
Don  Jackson  were  co-founders  of CMP  Solutions,  Inc.  Prodeo  believes  its
relationships  with these individuals are good.  However,  it cannot ensure that
the  services of these  individuals  will  continue to be available to us in the

                                       14
<PAGE>
future.  Prodeo has an employment  agreement with Dr. Jackson  effective June 7,
1999 with a term of five years that  automatically  renews for additional  three
year terms unless  either Dr.  Jackson or Prodeo  gives the other party  written
notice of  non-renewal  at least one year prior to the expiration of the initial
term or Dr.  Jackson gives Prodeo 30 days written  notice that he is terminating
his  employment  agreement.  Prodeo also has an employment  agreement  with Paul
Jackson  effective  March 27, 2000 with a term of four years that  automatically
renews for  additional  three year terms  unless  either Paul  Jackson or Prodeo
gives the other party written  notice of  non-renewal at least one year prior to
the  expiration  of the then  current term or Mr.  Jackson  gives Prodeo 30 days
written notice that he is terminating  his employment  agreement.  Julian Gates,
ATSI's President and co-founder, will be departing as of August 1, 2000.

LIMITED OPERATING HISTORY.  Prodeo faces all of the same risks as a new business
and the special risks inherent in the investigation, acquisition, or involvement
in new  business  opportunities.  Prodeo has only  completed  its second year of
operations and therefore has all of the unforeseen  costs,  expenses,  problems,
and difficulties to which such young ventures are subject.

NO  FORESEEABLE  DIVIDENDS.  Prodeo has not paid dividends on its stock and does
not anticipate paying such dividends in the foreseeable future.

LOSS OF CONTROL BY PRESENT  MANAGEMENT AND STOCKHOLDERS . Prodeo may consider an
acquisition  in  which  it  would  issue  as  consideration   for  the  business
opportunity to be acquired an amount of Prodeo's  authorized but unissued common
stock that would,  upon  issuance,  represent  the great  majority of the voting
power and equity of Prodeo.  The result of such an acquisition would be that the
acquired  company's  stockholders  and  management  would  control  Prodeo,  and
Prodeo's  management  could be replaced by persons  unknown at this time. Such a
merger would result in a greatly  reduced  percentage  of ownership of Prodeo by
its current shareholders.

LIMITED  PUBLIC  MARKET.  There is a developing,  but limited  public market for
Prodeo's common stock,  and no assurance can be given that a market will develop
or that a  shareholder  ever will be able to liquidate  his  investment  without
considerable  delay, if at all. Prodeo's common stock is still thinly traded and
the price is still  volatile and sensitive to relatively  low levels of trading.
Factors  such as those  discussed  in this  "Risk  Factors"  section  may have a
significant impact upon the market price of the securities offered hereby. Owing
to the low price of the  securities,  many brokerage firms may not be willing to
effect  transactions  in the  securities.  Even if a  purchaser  finds a  broker
willing  to  effect  a  transaction  in these  securities,  the  combination  of
brokerage commissions, state transfer taxes, if any, and any other selling costs
may exceed the selling price. Further, many lending institutions will not permit
the use of such securities as collateral for any loans.

REGULATION OF PENNY STOCKS.  Prodeo's securities are subject to a Securities and
Exchange  Commission rule that imposes special sales practice  requirements upon
broker-dealers  who sell such  securities  to  persons  other  than  established
customers  or  accredited  investors.  For  purposes  of the  rule,  the  phrase
"accredited  investors"  means,  in general terms,  institutions  with assets in
excess of $5,000,000,  or individuals having a net worth in excess of $1,000,000
or having an annual income that exceeds  $200,000 (or that, when combined with a
spouse's income,  exceeds $300,000).  For transactions  covered by the rule, the
broker-dealer  must make a special  suitability  determination for the purchaser
and receive the purchaser's  written  agreement to the transaction  prior to the
sale.  Consequently,  the rule may affect the ability of  broker-dealers to sell
Prodeo's  securities  and also may affect  the  ability  of  purchasers  in this
offering to sell their securities in any market that might develop therefor.

Stockholders  should  be  aware  that,  according  to  Securities  and  Exchange
Commission  Release No.  34-29093,  the market for penny  stocks has suffered in
recent  years from  patterns  of fraud and abuse.  Such  patterns  include:  (i)
control of the market for the security by one or a few  broker-dealers  that are
often related to the promoter or issuer;  (ii)  manipulation  of prices  through
prearranged  matching  of  purchases  and sales and false and  misleading  press
releases;  (iii) "boiler room" practices  involving  high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and
(v) the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level,  along with the resulting
inevitable  collapse  of those  prices  and  with  consequent  investor  losses.
Prodeo's  management is aware of the abuses that have occurred  historically  in
the penny stock market.  Although  Prodeo does not expect to be in a position to
dictate the behavior of the market or of  broker-dealers  who participate in the
market,  management will strive within the confines of practical  limitations to
prevent the described  patterns from being  established with respect to Prodeo's
securities.

COMPETITION.  There are other companies in the new  semiconductor  equipment and
pre-owned  semiconductor  equipment  and  businesses  which may be better funded
and/or better established than Prodeo.

                                       15
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                       Page
                                                                       ----

Report of Independent Certified Public Accountants..................... F-1

Financial Statements:

  Consolidated Balance Sheet as of March 31, 2000...................... F-3

  Consolidated Statements of Operations for the year ended
  March 31, 2000 and the period from June 23, 1998, date of
  inception, to March 31, 1999......................................... F-4

  Consolidated Statements of Stockholders' Equity (Deficit) for
  the year ended March 31, 2000 and the period from June 23, 1998,
  date of inception, to March 31, 1999................................. F-5

  Consolidated Statements of Cash Flows for year ended
  March 31, 2000 and the period from June 23, 1998, date
  of inception, to March 31, 1999...................................... F-6

  Notes to Consolidated Financial Statements........................... F-8

Schedules  other than those  listed  above have been  omitted  because  they are
either not required,  inapplicable,  or the required  information is included in
the Consolidated Financial Statements or notes thereto.

The accompanying notes are an integral part of these financial statements.

ITEM 9. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

On May 2,2000,  Prodeo  dismissed its current  accountants,  McGladrey & Pullen,
LLP, and hired Deloitte & Touche, LLP.

The auditor's reports from McGladrey & Pullen, LLP for the Company's past fiscal
year did not contain  adverse  opinion or a disclaimer  of opinion,  and was not
qualified or modified as to uncertainty,  audit scope, or accounting principles.
McGladrey  & Pullen  became the  Company's  auditors  for the fiscal year ending
March 31, 1999.

The  decision  to  engage  Deloitte  &  Touche,  LLP was  approved  by the audit
committee and the Board of Directors.

During the Company's most recent fiscal year and the  subsequent  interim period
preceding the change,  there has been one disagreement  with McGladrey & Pullen,
LLP on a matter  involving  revenue  recognition  that was not  resolved  before
McGladrey and Pullen,  LLP's  dismissal.  The matter has been transferred to the
Company's new accountants,  Deloitte & Touche,  LLP for their  consideration.  A
transaction valued at approximately $690,000 involving the exchange of inventory
owned by a third  party for the  Company's  inventory  was  contemplated  in the
quarter  ended  March 31,  2000.  McGladrey  & Pullen,  LLP  disagreed  with the
Company's Chief  Financial  Officer desire to recognize the $690,000 as revenue.
The Company indicated to McGladrey & Pullen, LLP that it would send all required
documentation on this issue to its new accountants,  Deloitte & Touche,  LLP and
would follow whatever  recommendation  it received from Deloitte & Touche,  LLP.
The  Company  had not  received a  recommendation  on this matter at the time of
McGladrey & Pullen, LLP's dismissal. The outstanding issue regarding the revenue
recognition  was not a factor in the  dismissal of McGladrey & Pullen,  LLP. The
Company has  authorized  McGladrey & Pullen,  LLP to respond  fully to inquiries
from Deloitte & Touche, LLP concerning this disagreement.

                                       16
<PAGE>
Since the dismissal of McGladrey & Pullen,  LLP, the Company has consulted  with
its new auditors about the revenue recognition matter and informed them that the
inventory  exchange  was  restructured  and  would  not be  completed  until the
following fiscal year. No revenues relating to the transaction has been recorded
as of March 31, 2000.  Should the exchange occur in the future,  the Company has
agreed  to  apply  generally  accepted  accounting  principles,   including,  if
applicable, APB 29 "Accounting for Nonmonetary Transactions" to the transaction,
to which Deloitte & Touche LLP orally concurred.

Deloitte and Touche, LLP was given a copy of this disclosure prior to its filing
and given the  opportunity to furnish the  Securities and Exchange  Commission a
letter  containing any new information or clarification of this disclosure which
it has determined was unnecessary.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information  in response to this Item is  incorporated  by  reference to (i) the
biographical  information  relating to the Company's directors under the caption
"Election of  Directors"  in the Company's  definitive  Proxy  Statement for its
Annual  Meeting  of  Stockholders  to  be  held  August  24,  2000  (the  "Proxy
Statement").  The Company anticipates filing the Proxy Statement within 120 days
after March 31, 2000.

ITEM 11. EXECUTIVE COMPENSATION

The information under the heading "Executive  Compensation" and "Compensation of
Directors" in the Proxy Statement is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  under the heading  "Voting  Securities  and Principal  Holders
Thereof - Security Ownership of Certain Beneficial Owners and Management" in the
Proxy Statement is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information under the heading "Certain  Transactions" in the Proxy Statement
is incorporated herein by reference.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

The following documents are filed as part of this report.

    (a) Financial Statements

        See F-pages attached

    (b) Reports on Form 8-K

        None

    (c) Exhibits

        See the Exhibit Index  immediately  following the signature  page and is
        incorporated by reference.

    (d) Financial Statements

        See Item 14(a).

                                       17
<PAGE>
                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                        PRODEO, INCORPORATED


Date: July 14, 2000                     By /s/ Dr. Don M. Jackson, Jr.
                                           -------------------------------------
                                           Dr. Don M. Jackson, Jr.
                                           President and Chief Executive Officer


                                        By /s/ David A. Bays
                                           -------------------------------------
                                           David A. Bays
                                           Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.


SIGNATURE                               TITLE                     DATE
---------                               -----                     ----


/s/ Don M. Jackson, Jr.                Director                July 14, 2000
--------------------------
Dr. Don M. Jackson, Jr.


/s/ Howard R. Neff                     Director                July 14, 2000
--------------------------
Howard R. Neff


/s/ Maurice L. McGill                  Director                July 14, 2000
--------------------------
Mr. Maurice L. McGill


/s/ Dan L. Shunk                       Director                July 14, 2000
--------------------------
Dr. Dan L. Shunk

                                       18
<PAGE>
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO.                            DESCRIPTION                               INCORPORATED BY REFERENCE TO:
-----------    ---------------------------------------------------------         -----------------------------
<S>            <C>                                                               <C>
    2.1        A copy of the Certificate of Ownership and Merger merging         Form 8-K filed with the SEC on
               DentMart into SITEK, including the Plan and Agreement of          August 17, 1998
               Merger

    2.2        A copy of the Articles of Merger or Share Exchange filed          Form 8-K filed with the SEC on
               in the State of Colorado                                          August 17, 1998

    2.3        A copy of the Certificate of Amendment and Restatement of         Filed Herewith
               Certificate of Incorporation of Sitek, Incorporated as
               filed in the State of Colorado

    2.4        A copy of the Amended and Restated Certificate of                 Filed Herewith
               Incorporation of Prodeo Technologies, Inc.

    3.1        Articles of Incorporation of Registrant                           Form 8-K filed with the SEC on
                                                                                 August 17, 1998

    3.2        Bylaws of Registrant                                              Form 10-K filed with the SEC on
                                                                                 April 17, 1998

   10.1        A copy of the Exchange Agreement                                  Form 8-K filed with the SEC on
                                                                                 August 17, 1998

   10.2        A copy of the Registration Rights Agreement                       Form 8-K filed with the SEC on
                                                                                 August 17, 1998

   10.3        Equipment Lease dated February 5, 1999, as Amended                Form 10-Q Filed with the SEC on
                                                                                 February 26, 1999

   10.4        Line of Credit Agreement with TLD Funding Group dated             Form 10-K Filed with the SEC on
               February 5, 1999                                                  July 14, 1999

   10.5        Finance Agreement with TLD Funding Group dated                    Form 10-K Filed with the SEC on
               March 19, 1999                                                    July 14, 1999

   10.6        $5.2 million Promissory Note and Equipment Finance                Form 10-K Filed with the SEC on
               Agreement dated March 11, 1999                                    July 14, 1999

   10.7        Amendment to Equipment Finance Agreement                          Form 10-K Filed with the SEC on
                                                                                 July 14, 1999

   10.8        Sitek, Incorporated Investor Rights Agreement entered into        Filed Herewith
               as of March 29, 2000 by and among Sitek, Incorporated and
               Intel Corporation, a Delaware corporation.

   10.9        Right of First Refusal, Co-Sale and Subordination Agreement       Filed Herewith
               made as of March 29, 2000 by and among Sitek, Incorporated
               (the "Company"), Intel Corporation, a Delaware corporation,
               and the following stockholders of the Company: Don Jackson,
               Vince Birdwell, Paul Burke, Julian Gates, Kevin Jackson,
               Paul Jackson and Parag Modi, and Richard Myers solely with
               respect to Sections 5,6,and 7 thereof.

   10.11       Founder, CEO Employment Agreement for Don M. Jackson, Jr.         Form 10-Q Filed with the SEC on
               dated June 7, 1999                                                August 16, 1999

   10.10       Founder-Executive Employment Agreement for Paul D. Jackson        Filed Herewith
               dated March 27, 2000

   10.11       Warrant Agreement                                                 Form 10-K Filed with the SEC on
                                                                                 July 14, 1999

   16.1        Letter from McGladry & Pullen, LLP to Securities and
               Exchange Commission regarding termination as Registrant's         Form 8-K/A Filed with the SEC on
               principal accountant                                              June 12, 2000

   21.1        Subsidiaries                                                      Filed Herewith

   23.1        Consent of Deloitte & Touche, LLP                                 Filed Herewith

   27.1        Financial Data Schedule                                           Filed Herewith
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Audit Committee
Prodeo Technologies, Inc. and Subsidiaries
Tempe, Arizona

We have audited the accompanying consolidated balance sheet of Prodeo
Technologies, Inc. (formerly Sitek Incorporated) and subsidiaries (the
"Company") as of March 31, 2000, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, such 2000 consolidated financial statements present fairly, in
all material respects, the financial position of the Company at March 31, 2000,
and the results of its operations and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.

The Company was in the development stage at March 31, 1999. During the year
ended March 31, 2000, the Company completed its development activities and
commenced its planned principal operations.

/s/ DELOITTE & TOUCHE LLP

June 30, 2000

                                      F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT

To the Audit Committee
SITEK, Incorporated and Subsidiaries (A Development Stage Company)
Tempe, Arizona

         We have audited the accompanying consolidated balance sheet of SITEK,
Incorporated and Subsidiaries (A Development Stage Company) as of March 31,
1999, and the related consolidated statements of operations, stockholders'
deficit, and cash flows for the period from June 23, 1998 (date of inception) to
March 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of SITEK,
Incorporated and Subsidiaries (A Development Stage Company) as of March 31,
1999, and the results of their operations and their cash flows for the period
from June 23, 1998 (date of inception) to March 31, 1999, in conformity with
generally accepted accounting principles.

/s/ McGladrey & Pullen, L.L.P.

Phoenix, Arizona
May 28, 1999

                                      F-2
<PAGE>
PRODEO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS                                                                     2000            1999
                                                                       -----------     -----------
<S>                                                                    <C>             <C>
CURRENT ASSETS:
  Cash                                                                 $   215,262     $       863
  Restricted cash (Note 9)                                               1,500,000
  Accounts receivable (net of allowance for doubtful
   accounts of $63,000 and $0 at March 31, 2000 and 1999)                1,500,860         207,934
  Inventories (Notes 2, 5 and 7)                                         3,418,979       5,389,000
  Prepaid expenses and other assets (Note 3)                               115,614       1,596,125
  Deferred income taxes (Note 13)                                          246,000
                                                                       -----------     -----------
         Total current assets                                            6,996,715       7,193,922
PROPERTY AND EQUIPMENT - Net (Note 4)                                      745,015          90,707
OTHER ASSETS                                                                76,406          37,466
INTANGIBLES - Net                                                          497,752
DEFERRED INCOME TAXES (Note 13)                                             28,000
                                                                       -----------     -----------
TOTAL                                                                  $ 8,343,888     $ 7,322,095
                                                                       ===========     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
  Payable to banks (Note 7)                                            $   600,000     $
  Advances from related parties (Note 15)                                   60,941         330,257
  Trade accounts payable                                                 1,322,598         268,774
  Other accrued liabilities                                              1,620,949         499,974
  VAT payable                                                               19,665         910,000
  Income tax payable (Note 13)                                             658,000
  Current portion of other borrowings                                      290,894       5,979,510
                                                                       -----------     -----------
         Total current liabilities                                       4,573,047       7,988,515
                                                                       -----------     -----------
Other borrowings (Note 8)                                                1,104,439         207,181
                                                                       -----------     -----------
Other liabilities                                                           84,224          47,215
                                                                       -----------     -----------
COMMITMENTS AND CONTINGENCIES (Notes 5, 9, 12 and 14)

STOCKHOLDERS' EQUITY (DEFICIT) (Notes 8, 9 and 11):
  Preferred stock, $.01 par value - authorized, 5,000,000
   shares; issued, 250,000 shares, liquidation value $1,500,000              2,500
  Common stock, $.005 par value - authorized, 50,000,000 shares;
   issued and outstanding, 12,307,813 (2000) and 12,230,813 (1999)
   shares; issuable, 0 shares (2000) and 5,000 shares (1999) (Note 5)       61,606          61,179
  Additional paid-in capital                                             2,361,323           2,475
  Retained Earnings                                                        156,749        (984,470)
                                                                       -----------     -----------
         Total stockholders' equity (deficit)                            2,582,178        (920,816)
                                                                       -----------     -----------
TOTAL                                                                  $ 8,343,888     $ 7,322,095
                                                                       ===========     ===========
</TABLE>

See notes to consolidated financial statements.

                                      F-3
<PAGE>
PRODEO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 2000 AND PERIOD FROM JUNE 23, 1998 (Date of Inception)
TO MARCH 31, 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                      2000              1999
                                                                  ------------      ------------
<S>                                                             <C>               <C>
SALES - Net (Notes 15 and 16)                                     $ 22,727,729      $  2,720,898

COST OF GOODS SOLD                                                  10,650,636         2,030,900
                                                                  ------------      ------------

         Gross profit                                               12,077,093           689,998
                                                                  ------------      ------------
OPERATING EXPENSES (Note 17):
  Selling, general and administrative                                6,325,117           911,668
  Research and development                                           1,755,387           425,828
                                                                  ------------      ------------

         Total operating expenses                                    8,080,504         1,337,496
                                                                  ------------      ------------

INCOME (LOSS) FROM OPERATIONS                                        3,996,589          (647,498)
                                                                  ------------      ------------
OTHER (EXPENSE) INCOME:
  Interest expense and financing costs                              (1,156,650)         (277,177)
  Miscellaneous income                                                  30,055               359
                                                                  ------------      ------------

         Total other expense-net                                    (1,126,595)         (276,818)
                                                                  ------------      ------------

INCOME (LOSS) BEFORE INCOME TAXES                                    2,869,994          (924,316)

INCOME TAX EXPENSE (Note 13)                                           939,000
                                                                  ------------      ------------

NET INCOME (LOSS)                                                 $  1,930,994      $   (924,316)
                                                                  ------------      ------------

Non cash discount on proceeds of preferred
  stock for beneficial conversion feature                             (789,775)
                                                                  ------------      ------------
Net income (loss) available to common stockholders                   1,141,219          (924,316)
                                                                  ------------      ------------
INCOME (LOSS) PER COMMON SHARE, BASIC AND DILUTED (Note 10):
    Basic                                                         $        .09      $      (0.08)
                                                                  ============      ============
    Diluted                                                       $       0.09      $      (0.08)
                                                                  ============      ============
</TABLE>

See notes to consolidated financial statements.

                                      F-4
<PAGE>
PRODEO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEAR ENDED MARCH 31, 2000 AND PERIOD FROM JUNE 23, 1998 (Date of Inception)
TO MARCH 31, 1999
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                       Preferred Stock       Common Stock      Additional
                                     -----------------  ---------------------   Paid-In      Retained
                                      Shares    Amount    Shares      Amount    Capital      Earnings     Total
                                      ------    ------    ------      ------    -------      --------      -----
<S>                                   <C>        <C>      <C>           <C>        <C>      <C>          <C>
ISSUANCE OF STOCK, JUNE 23, 1998                         1,000,000   $ 1,000                             $    1,000

 Effect of merger/recapitalization                      11,230,813    60,154                $  (60,154)

 Stock issuable for services (Note 5)                        5,000        25   $    2,475                     2,500

 Net loss                                                                                     (924,316)    (924,316)
                                                        ----------   -------   ----------   ----------   ----------

BALANCE, MARCH 31, 1999                                 12,235,813    61,179        2,475     (984,470)    (920,816)

 Issuance of preferred stock          250,000   $2,500                          2,287,275     (789,775)   1,500,000

 Issuance of common stock                                   72,000       427       71,573                    72,000

 Net income                                                                                  1,930,994    1,930,994
                                      -------   ------  ----------   -------   ----------   ----------   ----------
BALANCE, MARCH 31, 2000               250,000   $2,500  12,307,813   $61,606   $2,361,323   $  156,749  $2,582,178
                                      =======   ======  ==========   =======   ==========   ==========   ==========
</TABLE>

See notes to consolidated financial statements.

                                      F-5
<PAGE>
PRODEO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED MARCH 31, 2000 AND PERIOD FROM JUNE 23, 1998 (Date of Inception)
TO MARCH 31, 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                        2000                1999
                                                                    -----------         -----------
<S>                                                                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                 $ 1,930,994         $  (924,316)
  Adjustments to reconcile net income (loss) to net
   cash provided by (used in) operating activities:
   Amortization of prepaid financing fees                               543,509              87,467
   Depreciation and amortization                                        175,304              18,998
   Deferred taxes                                                      (246,000)
   Gain recognized on sale-leaseback transaction                        (20,644)             (3,441)
   Stock issuable for services                                                                2,500
   Bad debt expense                                                      63,000
   Deferred rent expense                                                 37,009               9,367
   Changes in assets and liabilities:
    Accounts receivable                                              (1,270,560)           (207,934)
    Inventories                                                       2,182,633          (5,389,000)
    Prepaids expenses and other assets                                  924,489            (117,592)
    Advances from related parties                                      (269,316)            330,257
    Accounts payable                                                    560,759             268,774
    Accrued expenses                                                    859,337             497,330
    Income tax payable                                                  638,000
    VAT payable                                                        (890,335)
    Other liabilities                                                    13,273
                                                                    -----------         -----------
         Net cash provided by (used in) operating activities          5,231,453          (5,445,590)
                                                                    -----------         -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of VSM - net of cash                                        (362,163)
  Purchase of property and equipment                                   (535,533)
  Proceeds from sale-leaseback transaction                                                  792,819
  Purchase of leasehold improvements and equipment, $340,000
   from a stockholder                                                                      (840,591)
  Payments on deposits                                                                      (37,466)
                                                                    -----------         -----------
           Net cash used in investing activities                       (897,696)            (85,238)
                                                                    -----------         -----------
</TABLE>
                                                                     (Continued)

                                      F-6
<PAGE>
PRODEO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED MARCH 31, 2000 AND PERIOD FROM JUNE 23, 1998 (Date of Inception)
TO MARCH 31, 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                       2000                1999
                                                                    -----------         -----------
<S>                                                                <C>                   <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings from bank                                                3,600,000
  Repayments to bank                                                 (3,000,000)
  Proceeds from issuance of convertible debentures                      182,500              80,000
  Proceeds from other borrowings                                      1,393,221           6,301,181
  Repayment of other borrowings                                      (6,367,079)           (850,490)
  Issuance of common stock                                               72,000               1,000
                                                                    -----------         -----------
         Net cash (used in) provided by financing activities         (4,119,358)          5,531,691
                                                                    -----------         -----------

NET INCREASE IN CASH                                                    214,163                 863
CASH, BEGINNING OF PERIOD                                                   863                  --
                                                                    -----------         -----------
CASH, END OF PERIOD                                                 $   215,026         $       863
                                                                    ===========         ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid                                                     $   488,486         $   162,462
                                                                    ===========         ===========
  Taxes paid                                                        $   542,000
                                                                    ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
  Debt proceeds to acquire VSM, Inc.                                $ 1,000,000
  Less:
    Working capital acquired - net of cash                              215,539
    Fair value of other assets acquired, principally
     property, and equipment                                            234,035
    Long-term debt assumed                                                7,371
                                                                    -----------
  Goodwill                                                          $  (557,797)
                                                                    ===========
  Preferred stock issued for restricted cash                        $ 1,500,000
  Financing Costs                                                                       $   656,000
                                                                    ===========         ===========
</TABLE>

See notes to consolidated financial statements.                      (Concluded)

                                      F-7
<PAGE>
PRODEO TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 2000 AND PERIOD FROM JUNE 23, 1998
(DATE OF INCEPTION) TO MARCH 31, 1999
--------------------------------------------------------------------------------

1.   NATURE OF BUSINESS, REORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

     NATURE OF BUSINESS - Prodeo Technologies, Inc., a Delaware corporation
     ("Prodeo"), formerly known as Sitek, Incorporated, manufactures and sells
     semiconductor manufacturing equipment and provides certain wafer processing
     foundry services for the global semiconductor electronics manufacturing
     industry. Prodeo is the parent of three wholly-owned subsidiary
     corporations: Advanced Technical Services, Inc. ("ATSI"), CMP Solutions,
     Inc. ("CMP Solutions") and VSM Corporation ("VSM"), all located in Tempe,
     Arizona.

     The Company was classified as a development stage enterprise at March 31,
     1999. During the year ended March 31, 2000, the Company experienced
     significant growth in revenue from its planned principal operation, and is
     no longer classified as a development stage enterprise.

     REORGANIZATION - On July 14, 1998, Dentmart Group, Inc. ("Dentmart"), an
     inactive public reporting entity, was merged into Sitek Incorporated
     ("Sitek"), with Sitek as the surviving corporation. Each stockholder of
     Dentmart received one share of Sitek's common stock for every 1.65 shares
     of Dentmart's common stock, resulting in 3,030,273 shares of Sitek's common
     shares outstanding.

     On July 14, 1998, a share exchange agreement between Sitek and CMP
     Solutions occurred, resulting in CMP Solutions being a 100 percent
     wholly-owned subsidiary of Sitek. Sitek acquired all of the issued and
     outstanding shares of CMP in exchange for 9,200,000 shares of Sitek common
     stock. CMP Solutions was incorporated on June 23, 1998 and had no activity
     prior to the merger. For accounting purposes, this transaction has been
     accounted for as a reverse acquisition with CMP Solutions being treated as
     the accounting acquirer and no step up in basis of the assets. In
     connection with the share exchange agreement, the stockholders have the
     right to require their stock to be registered in conjunction with another
     future registration of the Company's common stock.

     On July 24, 1998, two stockholders contributed all of the outstanding stock
     of ATSI as a 100 percent wholly-owned subsidiary of Sitek. ATSI had no
     activity prior to the merger.

     On April 28, 1999,  the Company  acquired VSM by paying  $1,000,000 in cash
     for all of the outstanding common stock. The acquisition has been accounted
     for as a purchase  with the excess of the total  acquisition  cost over the
     fair  value  of  the  net  assets  acquired  of  $557,798  recorded  in the
     consolidated  financial  statements.  The results of operations of VSM have
     been included in the consolidated  financial statements of the Company from
     the date of acquisition.

     The following unaudited pro forma combined condensed financial information
     for the period ended March 31, 1999 include the results of operations for
     the Company, presented as if the Company and VSM had been combined for all
     of such period, and are expected to have a continuing impact.

         Net sales...................................................$5,320,922
         Loss from operations........................................$ (273,255)
         Net loss....................................................$ (550,073)
         Basic net loss per common share.............................$    (0.05)

                                      F-8
<PAGE>
     Pro forma financial information is not presented for the year ended March
     31, 2000 because the Company purchased VSM on April 28, 1999, and the
     current year operations previous to the purchase would not have a material
     effect on the Company's operations.

     On June 5, 2000, Sitek, Incorporated changed its name to Prodeo
     Technologies, Inc.

     Management of the Company  believes it will need additional  capital during
     the next 12 months to meet its funding needs,  including  repayment of debt
     obligations,  product  development,  and the continued  costs of compliance
     with reporting  requirements  of the  Securities  Exchange Act of 1934. The
     Company has several lines of credit with banking  institutions  and private
     funding sources.  Assuming the Company's revenues continue at their current
     level, the Company believes the private funds and the available credit will
     be adequate to support the Company's  plan of  operations.  There can be no
     assurance  that  revenues  will  continue  at their  current  level and, if
     revenues are  inadequate,  there is no  assurance  that the Company will be
     able to attract additional capital or that the funds, if acquired,  will be
     sufficient to meet the Company's  product  development or operating capital
     requirements.  However,  management  has a  contingency  plan to allow  the
     Company  to sustain  itself  without  additional  funding,  which  includes
     revising the Company plan of operations to reflect the available funds.

     SIGNIFICANT ACCOUNTING POLICIES - The Company prepares its financial
     statements in accordance with accounting principles generally accepted in
     the United States of America. Significant accounting policies of the
     Company are as follows:

     a.   PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
          include the amounts of Prodeo and its wholly-owned subsidiaries: ATSI,
          CMP and VSM (collectively, the "Company"). All material intercompany
          accounts and transactions have been eliminated in consolidation.

     b.   REVENUE RECOGNITION - The Company recognizes revenue from the sale of
          products when the risks and rewards of ownership transfer to
          customers, which is generally at the time of shipment. No significant
          obligations remain after the product is shipped. Cost for installation
          and warranty is accrued when corresponding sales revenues are
          recognized. Revenues for services are recognized when performed.

     c.   INVENTORIES consist of raw materials, work-in-process and pre-owned
          equipment held for resale. Inventories are recorded at cost and are
          carried at the lower of cost or net realizable value. Manufactured
          items are removed from inventory using the first-in, first-out method,
          while pre-owned equipment held for resale is based on the specific
          identification.

     d.   PROPERTY AND EQUIPMENT are stated at cost. The equipment is being
          depreciated over its useful life, which is estimated to be between
          three and five years. Leasehold improvements are depreciated over the
          shorter of the lease term or the estimated useful lives of the
          improvements. Depreciation and amortization is computed using the
          straight-line method.

     e.   INTANGIBLES are recorded at cost. The Company acquires intangible
          assets in the normal course of business. The Company periodically
          reviews for changes in circumstances to determine whether there are
          conditions that indicate that the carrying amount of such assets may
          not be recoverable. If such conditions are deemed to exist, the
          Company will determine whether estimated future undiscounted cash
          flows are less than the carrying amount of such assets, in which case
          the Company will calculate an impairment loss. Impairment losses, if
          any, will be recorded as a component of operating earnings.
          Intangibles are amortized on a straight-line basis over two to seven
          years.

     f.   INCOME TAXES - The Company accounts for income taxes under the
          provisions of Statement of Financial Accounting Standards ("SFAS") No.
          109, ACCOUNTING FOR INCOME TAXES. Deferred income taxes are provided

                                      F-9
<PAGE>
          for differences between the tax base of certain assets and liabilities
          and the reported amounts in the financial statements that will result
          in taxable or deductible amounts in future years.

     g.   STOCK-BASED COMPENSATION - In 1995, SFAS No. 123, ACCOUNTING FOR
          STOCK-BASED COMPENSATION, the Company has elected to measure cost for
          its stock-based compensation plans with employees and directors using
          the intrinsic value method of accounting prescribed by Accounting
          Principles Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO
          EMPLOYEES. Accordingly, no compensation expense has been recognized
          for its stock-based compensation plan.

     h.   RESEARCH AND DEVELOPMENT COSTS are expensed as incurred.

     i.   BASIC EARNINGS (LOSS) PER COMMON SHARE is computed on the weighted
          average number of common shares outstanding during each period.
          Diluted earnings (loss) per common share is computed on the weighted
          average number of shares of common stock outstanding plus the dilutive
          effect of any stock options or warrants.

     j.   FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying values of cash,
          accounts receivable, accounts payable and loans payable approximate
          fair values due to the short-term maturities of these instruments. The
          fair value of payable to banks and other borrowings approximate the
          carrying value of these instruments because the terms are similar to
          those in the market place under which they could be replaced.

     k.   NEW ACCOUNTING PRONOUNCEMENT - In June 1998, the Financial Accounting
          Standards Board ("FASB") issued SFAS No. 133, ACCOUNTING FOR
          DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 133 requires
          that entities record all derivatives as assets or liabilities,
          measured at fair value, with the change in fair value recognized in
          earnings or in other comprehensive income, depending on the use of the
          derivative and whether it qualifies for hedge accounting. The
          statement (as amended) is effective for the Company's fiscal year
          ending March 31, 2002. The Company has not completed evaluating the
          effects this statement will have on its financial position or results
          of operations.

     l.   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
          financial statements and the reported amounts of revenues and expenses
          during the reporting period. Actual results could differ from those
          estimates.

     m.   RECLASSIFICATIONS - Certain reclassifications have been made to the
          prior period financial statements to conform to the current year
          presentation.

2.   INVENTORIES

     At March 31, inventories consisted of the following:

                                                     2000           1999
                                                  -----------    ----------

     Raw materials                                $   305,134
     Work-in-process                                  287,988
     Pre-owned equipment held for resale            2,985,857    $5,389,000
                                                  -----------    ----------

     Total                                          3,578,979     5,389,000
     Less allowance for obsolete inventories         (160,000)
                                                  -----------    ----------

     Inventories - net                            $ 3,418,979    $5,389,000
                                                  ===========    ==========

                                      F-10
<PAGE>
3.   PREPAID EXPENSES AND OTHER ASSETS

     At March 31, prepaid expenses and other assets consisted of the following:

                                                   2000             1999
                                                 --------        ----------

     Prepaid financing fees                      $ 61,084        $  568,533
     Prepaid VAT                                   11,836           910,000
     Other                                         42,694           117,592
                                                 --------        ----------

     Total                                       $115,614        $1,596,125
                                                 ========        ==========

     Prepaid VAT represents Value Added Tax paid or payable by the Company on
     inventory purchased in the United Kingdom.

     Prepaid financing fees represent additional costs incurred by the Company
     to borrow funds. Prepaid financing fees are amortized over the term of the
     debt.

4.   PROPERTY AND EQUIPMENT

     Leasehold improvements and equipment as of March 31 consists of the
     following:

                                                          2000       1999
                                                        --------   --------

     Leasehold improvements                             $ 76,101   $ 70,151
     Machinery and equipment                             490,556     34,770
     Construction in process                             286,347
                                                        --------   --------
     Total                                               853,004    104,921
     Less accumulated depreciation and amortization      107,989     14,214
                                                        --------   --------

     Total                                              $745,015   $ 90,707
                                                        ========   ========

5.   SALE LEASEBACK TRANSACTION

     During the period ended March 31, 1999, the Company sold several pieces of
     equipment for $792,819 to TLD Funding Group ("TLD") realizing a gain of
     $61,993. Simultaneous with the sale, the Company entered into an agreement
     to lease back the equipment for a term of three years under a noncancelable
     operating lease. The future minimum lease payments are included in the
     total future commitments at Note 14. The gain resulting from the sale has
     been recorded as deferred revenue and is being amortized over the lease
     term. The unamortized balance at March 31, 2000 and 1999 was $37,848 and
     $58,492, respectively.

                                      F-11
<PAGE>
6.   INTANGIBLES

     At March 31, 2000, intangibles consisted of the following:

                                                                   2000
                                                                 ---------

     Goodwill                                                    $ 557,797
     Covenant not to compete                                        24,000
                                                                 ---------
     Total                                                         581,797
     Less accumulated amortization                                 (84,045)
                                                                 ---------

     Inventories, net                                            $ 497,752
                                                                 =========

7.   PAYABLE TO BANKS

     On January 10, 2000, the Company entered into a revolving line of credit
     agreement with a bank in the principal amount of $2,000,000. The loan bears
     interest at prime plus 4 percent per annum, matures January 9, 2001, and is
     secured by substantially all assets of the Company. The credit agreement
     required a non-refundable fee of $30,000 that is being amortized over the
     life of the loan. The Company may borrow the lesser of $2,000,000 or a
     percentage of the borrowing base which consists of eligible accounts
     receivable and eligible inventory. Outstanding borrowings under this
     agreement were $600,000 at March 31, 2000.

     The revolving line of credit agreement contains covenants that requires the
     maintenance of certain defined financial ratios and income and limits
     additional borrowings. The Company was not in compliance with all of these
     covenants at March 31, 2000, but has since obtained a waiver from the bank.

     In July 1999, the Company entered into a six-month credit agreement with a
     bank in the amount of $3,000,000. The loan was secured by substantially all
     of the assets located in the United Kingdom and personally guaranteed by a
     shareholder. The loan required a non-refundable fee of $75,000, that was
     amortized over the life of the loan. The principal balance of this loan was
     repaid in full and the shareholder guarantee has been released.

8.   OTHER BORROWINGS

     The Company has utilized TLD, a private investing group, to meet the
     majority of its capital needs. The Company also sold convertible debentures
     during 2000. A summary of these borrowings at March 31 consisted of the
     following:

                                                       2000          1999
                                                    ----------    ----------
     TLD:
       24-month financing agreement                 $  377,464
       Line of credit                                  207,181    $  207,181
       Note payable for purchase of VSM                532,431
       Debt repaid during 1999                                     5,899,510
     Other:
       6% convertible debentures                        80,000        80,000
       9.5% convertible debentures                     182,500
       Note payable, collateralized by
         automobile, 9%, due 2003                       15,757
                                                    ----------    ----------
     Total                                           1,395,333     6,186,691
     Less current portion                              290,894     5,979,510
                                                    ----------    ----------
     Other borrowings - net                         $1,104,439    $  207,181
                                                    ==========    ==========

                                      F-12
<PAGE>
     In April 1999, the Company entered into a 24-month finance agreement with
     TLD for amounts up to $1,000,000 to be utilized to purchase equipment for
     resale. The agreement bears interest at 1 percent of the advanced amount
     for the first 90 days and 2 percent monthly of the advanced amount
     thereafter. An initial financing fee of $20,000 was paid at the origination
     of the agreement. In addition, the Company must pay financing fees of 5
     percent for each advance at the time of payment to the equipment vendor.
     Outstanding borrowings under this agreement were $377,464 at March 31,
     2000.

     The Company also has borrowings available under terms of a line of credit
     with TLD expiring February 4, 2001, with maximum borrowings of $207,181 at
     any time on or before February 4, 2001. The minimum monthly payment is
     $3,107, applied first to interest at the rate of 1.5 percent per month and
     then to principal. The collateral for this line of credit consists of the
     personal guarantee of two stockholders and two related companies.
     Outstanding borrowings under this agreement were $207,181 at March 31, 2000
     and 1999.

     In April 1999, The Company entered into a loan agreement with TLD to borrow
     $1,000,000 used to purchase all the outstanding shares of VSM. Payment is
     due on April 28, 2001. Interest is charged at 1 percent per month for the
     initial 90 days and 2 percent per month thereafter. The note includes a
     financing fee of $70,000, which is being amortized over the life of the
     loan. The loan is unsecured. A portion of this loan was refinanced with the
     $3,000,000 bank loan obtained in July 1999. The balance at March 31, 2000
     is $532,431.

     During the period ended March 31, 1999, the Company issued $80,000 in 6
     percent convertible debentures (the "6 percent debentures"). A relative of
     a stockholder purchased $75,000 of the total convertible 6 percent
     debentures. The 6 percent debentures are convertible into the Company's
     common stock at any time after 90 days from purchase through their maturity
     date, 24 months subsequent to the date of purchase which ranges from
     September 1998 to March 1999. Also, the 6 percent debentures bear interest
     at 6 percent, payable annually on the anniversary date. The 6 percent
     debentures, plus accrued interest, are convertible in cash or common stock
     at the option of the purchaser. If paid in common stock, the 6 percent
     debentures are convertible into common stock at the lesser of (a) 80
     percent of the five-day average closing bid price, as reported by
     Bloomberg, for the five consecutive trading days immediately preceding the
     applicable conversion date or (b) 125 percent of the five-day average
     closing bid price, as reported by Bloomberg, for the five consecutive
     trading days immediately preceding the purchase date. The 6 percent
     debentures are subject to a mandatory 24-month conversion feature, at the
     end of which all 6 percent debentures outstanding will be automatically
     converted to shares of common stock. There was no beneficial conversion
     feature associated with the convertible 6 percent debentures as the fair
     market value, as determined by an independent valuation, is lower than the
     bid price.

     During the year ended March 31, 2000, the Company issued $182,500 in 9.5
     percent convertible debentures (the "9.5 percent debentures"). The 9.5
     percent debentures are convertible into the Company's common stock at any
     time after one year from purchase through their maturity date of June 7,
     2001. The 9.5 percent debentures bear interest at 9.5 percent, payable
     annually in restricted common stock. The 9.5 percent debentures are
     convertible into common stock at 80 percent of the average of the five day
     closing bid prices, as reported by Bloomberg, for the five consecutive
     trading days immediately preceding the date of conversion, but in no event
     at a price lower than $3.50 per share or higher than $5.00 per share. The
     9.5 percent debentures are subject to a mandatory conversion feature on
     June 7, 2001, at which time all debentures outstanding will be converted to
     shares of common stock. There is no beneficial conversion feature
     associated with the 9.5 percent debentures as the fair market value of the
     common stock at the time the debentures were sold, as determined by an
     independent valuation, is lower than the bid price.

                                      F-13
<PAGE>
     Future minimum maturities of other borrowings as of March 31, 2000 by
     fiscal years are as follows:

     2001                                                            $  290,894
     2002                                                             1,096,476
     2003                                                                 4,486
     2004                                                                 3,477
                                                                     ----------

     Total                                                           $1,395,333
                                                                     ==========

9.   STOCKHOLDERS' EQUITY

     PREFERRED STOCK - On March 29, 2000, the Company and a corporate investor
     entered into a Series A Preferred Stock Purchase Agreement pursuant to
     which the Company issued 250,000 shares of its Series A Preferred Stock
     (the "Series A Preferred") to the corporate investor and the corporate
     investor paid the Company $1,500,000 in "restricted cash". The Stock
     Purchase Agreement also provided for a possible future $1,500,000
     investment by the corporate investor for additional shares, priced at the
     lower of $6.00 per share and the 30-day trading average immediately prior
     to the purchase, subject to certain conditions. The Series A Preferred is
     convertible to common stock at a certain exchange ratio, which is initially
     one-to-one, but which is subject to adjustment upon certain events. Under
     the Stock Purchase Agreement, the corporate investor was granted
     registration rights, rights of first refusal and co-sale, as well as Board
     observation rights. In addition to the equity investment, the Company
     entered into an agreement for the development of certain technology. The
     Company is required to use the proceeds of the investment in furtherance of
     such agreement.

     The holders of the Series A Preferred are entitled to receive annual
     dividends of $.48 per share, payable when and if declared by the Board of
     Directors and in preference and priority to any payment of any dividend on
     the Company's common stock. The Series A Preferred dividends are not
     cumulative. Each share of the Series A Preferred is entitled to the number
     of votes equal to the number of shares of common stock into which such
     share could be converted.

     In the event of any liquidation of the Company, the holders of the Series A
     Preferred shall be entitled to receive, prior and in preference to any
     distribution of any of the assets or surplus of the Company to the holders
     of the common stock, the amount equal to the Initial Series A Preferred
     Price for each share of Series A Preferred than held by them and, in
     addition, an amount equal to all declared and unpaid dividends on the
     Series A Preferred. After setting apart or paying in full the preferential
     amounts due to the Series A Preferred holders, the remaining assets of the
     Company available for distribution to stockholders, if any, shall be
     distributed to the holders of the common stock on a pro rata basis, based
     on the number of shares of common stock then held by each holder.

     The Series A preferred had a beneficial conversion feature because the
     preferred stock was immediately convertible into common stock at a price
     less than the then current fair market value, which value was based on the
     price of recent sales of common stock at such time. The carrying amount of
     the preferred stock was discounted by the intrinsic value of the beneficial
     conversion feature, which was determined to be $789,775. The $789,775
     discount was immediately amortized and charged to accumulated deficit and
     is treated in a manner similar to a dividend to preferred stockholders.

     WARRANTS - During the period ended March 31, 1999, in relation to credit
     facilities provided, the Company issued TLD warrants to purchase 20,000
     shares of its common stock at an exercise price of $6 per share. The
     warrants are exercisable immediately anytime before February 5, 2004. No
     warrants were exercised during the period ended March 31, 2000 or 1999. The
     Company also approved a grant to TLD of 5,000 shares of stock for services
     in 1999. The shares were issued during the year ended March 31, 2000.

     Effective September 17, 1999, the Company issued warrants to purchase 4,562
     shares of its common stock for $5.00 per share to an organization for
     services rendered in connection with debenture sales. The warrants are
     exercisable immediately anytime before December 31, 2004. No warrants were
     exercised during the period ended March 31, 2000.

                                      F-14
<PAGE>
     During the period ended March 31, 1999, the Company issued warrants to
     purchase 40,000 shares of its common stock for $6.00 per share as
     compensation for consulting services. On January 18, 2000, the holder of
     the warrants notified the Company of its intention to exercise the warrants
     using a cashless exercise. Based on the closing price of the Company's
     common stock at time of exercise, the Company issued 13,333 shares
     subsequent to March 31, 2000.

     STOCKHOLDERS' AGREEMENT - The Company entered into a contract with certain
     of its stockholders as of August 1, 1999 in which the stockholders agree to
     restrict the transfer and disposition of their shares of common stock. The
     shareholders, which control a combined total of 8,371,477 shares of Prodeo
     common stock, agree to offer their shares first to the other stockholders
     participating in the agreement on the same basis as a third party offer,
     and then, if not fully exercised, to the Company. The Company is not
     obligated to purchase the shares. Upon termination of the stockholder's
     employment with the Company, each stockholder must offer to sell a portion
     of his or her shares to the other participating stockholders and to the
     Company at a predetermined price. The agreement expires August 1, 2001.

10.  BASIC AND DILUTED EARNINGS PER SHARE

     The following is a reconciliation of the numerators and denominators of
     diluted and basic per share computations for income from continuing
     operations as required by SFAS No. 128, EARNINGS PER SHARE, for the year
     ended March 31, 2000.

<TABLE>
<CAPTION>
                                                  Income         Shares      Per-share
                                                (Numerator)   (Denominator)    Amount
                                                 ----------    -----------    --------
<S>                                              <C>           <C>            <C>
     Net Income                                   1,930,944
     Less: Non cash discount
       on proceeds of preferred
       stock for beneficial
       conversion feature                          (789,775)

     Basic EPS -
       Income available to common stockholders   $1,141,219     12,299,021    $   0.09

     Effect of Dilutive Securities:
       Options                                                     802,771
       Warrants                                                        434
       Convertible preferred stock                                   1,366
       6% convertible debentures                      3,296         20,000
       9.5% convertible debentures                    9,719         35,638
                                                 ----------    -----------
     Diluted EPS:
       Income available to common stockholders
         and assumed conversions                 $1,154,234     13,159,230    $   0.09
                                                 ==========    ===========    ========
</TABLE>
     There were no dilutive securities for the year ended March 31, 1999.

     Warrants to purchase 60,000 shares of common stock at $6 per share were not
     included in the computation of diluted EPS because the warrants exercise
     price was greater than the average market price of the common shares. The
     warrants, which expire in 2004 were still outstanding at March 31, 2000.

                                      F-15
<PAGE>
11.  STOCK OPTIONS

     In 1999, the Board of Directors approved the 1999 Stock Incentive Plan (the
     "1999 plan") which provides for the granting of incentive and nonqualified
     stock options to officers, directors or employees of the Company. The 1999
     plan also provides for the granting of nonqualified stock options to any
     director, consultant or other individual whose participation the Board of
     Directors determines to be in the best interest of the Company. Total
     number of shares of Company stock that may be issued under the 1999 plan
     shall in aggregate not exceed 2,000,000 shares.

     During the period ended March 31, 1999, the Company granted 300,000 options
     to three directors with an exercise price of $1. The options vest over four
     years and expire 10 years after the grant date. During the year ended March
     31, 2000, the Company granted 160,000 shares to three directors with an
     exercise price equal to the fair market value at the time of the grant.

     Information with respect to stock options granted and exercised for the
     periods ended March 31, at historical number of shares and option exercise
     price, is as follows:

                                                                      Weighted
                                                                       Average
                                                           Option      Option
                                                           Shares      Price
                                                         ----------   --------
     Outstanding at June 23, 1998 (date of inception)
       Granted                                              300,000   $   1.00
                                                         ----------

     Outstanding at March 31, 1999                          300,000       1.00
       Granted                                            1,410,000       3.04
       Forfeited                                            (50,000)      1.00
                                                         ----------

     Outstanding at March 31, 2000                        1,660,000       2.68
                                                         ==========

     Options are generally exercisable one year from the date of grant for up to
     ten years at a price equal to 100 percent of the fair market value at the
     date of grant or 85 percent of fair market value in the case of
     nonstatutory options. As of March 31, 2000 and 1999, exercisable options
     were 435,025 and 106,250, respectively.

     The following information, aggregated by option price ranges, is applicable
     to options outstanding at March 31, 2000:

<TABLE>
<CAPTION>
<S>                                                 <C>            <C>             <C>
     Range of exercise prices                       $.65 - $3.09   $4.69 - $6.08   $8.19 - $14.44

     Shares outstanding in range                      1,313,000       187,000         160,000

     Weighted-average exercise price                   $1.21           $5.43           $12.09

     Weighted-average remaining contractual life      9 years         9 years         10 years

     Shares currently exercisable                     150,000            0             40,000

     Weighted-average exercise price of shares
       currently exercisable                           $1.00             0              12.09
</TABLE>

     The estimated fair value of options granted during the years ended March
     31, 2000 and 1999 was $2.47 and $.17 per share, respectively. The Company
     applies Accounting Principles Board Opinion No. 25 and related
     Interpretations in accounting for its stock option plans. Accordingly, no
     compensation cost has been recognized for its

                                      F-16
<PAGE>
     fixed stock option plans. Had compensation cost for the Company's stock
     option plans been recognized based on the fair value at the grant dates for
     awards under those plans consistent with the method of SFAS No. 123, the
     Company's net income and earnings(loss) per share for the period ended
     March 31, 1999 and the year ended March 31, 2000 would have been reduced to
     the pro forma amounts indicated below:

                                                         2000          1999
                                                     -----------   -----------

     Net income (loss) - as reported                 $ 1,930,994   $  (924,316)
                                                     ===========   ===========

     Net income(loss) - pro forma                    $  (189,817)  $  (942,172)
                                                     ===========   ===========

     Diluted income (loss) per share - as reported   $      0.09   $     (0.08)
                                                     ===========   ===========

     Diluted income (loss) per share - pro forma     $      (.01)  $     (0.08)
                                                     ===========   ===========

     The fair value of each option grant is estimated on the date of grant is
     estimated on the date of grant using the Black-Scholes options pricing
     model. For the year ended March 31, 2000, the assumptions used for grants
     were no dividend yield, expected volatility of 45 to 171 percent, a
     risk-free interest rate of 6.51 percent and expected lives of 5 years. For
     the period ended March 31, 1999, the assumptions used for grants were no
     dividend yield, expected volatility of 45 percent, a risk-free interest
     rate of 5 percent, and expected lives of 10 years.

12.  PROFIT SHARING PLANS

     In connection with the acquisition referred to in Note 1, VSM had a profit
     sharing plan for the benefit of its employees. An employee must be 21 and
     work at least 1,000 hours in the plan year to be eligible. The Company did
     not make a contribution to the plan for the year ended March 31, 2000.

     Effective July 31, 1999, the Company established the Sitek, Incorporated
     Profit Sharing and 401(k) Plan. On September 28, 1999, the Company
     authorized the merger of the VSM profit sharing plan into the Sitek,
     Incorporated Profit Sharing and 401(k) Plan, which was completed during the
     year ended March 31, 2000. The Board of Directors has not established an
     employer matching contribution and has not declared a contribution for the
     year ended March 31, 2000.

13   INCOME TAXES

     The income tax provision for the year ended March 31, 2000 was as follows:

     Current                                                   $ 1,213,000
     Deferred                                                     (274,000)
                                                               -----------

     Total                                                     $   939,000
                                                               ===========

                                      F-17
<PAGE>
     The income tax provision differs from the amount of income tax determined
     by applying the U.S. federal income tax rate to pretax income for the
     period ended March 31 due to the following:

                                                           2000         1999
                                                        ----------    ---------
     Provision (benefit) calculated at
       statutory rate                                   $  976,000    $(324,000)

     Increase (decrease) in income taxes
       resulting from:
         State income taxes                                120,000      (32,000)
         Valuation allowance                              (255,000)     255,000
         Nondeductible expenses                             74,000      101,000
         Other                                              24,000
                                                        ----------    ---------

       Total                                            $  939,000    $      --
                                                        ==========    =========

     Net deferred tax assets consist of the following components as of March 31:

                                                           2000         1999
                                                        ----------    ---------
     Deferred tax assets:
       Accrued expenses                                 $  232,000
       Operating loss carryforwards                                   $ 233,000
       Other                                                42,000       22,000
                                                        ----------    ---------

     Total                                                 274,000      255,000
     Less valuation allowance                                          (255,000)
                                                        ----------    ---------

     Deferred tax assets - net                          $  274,000    $      --
                                                        ==========    =========

     During the period ended March 31, 1999, the Company recorded a valuation
     allowance of $255,000 on the deferred tax assets to reduce the total to
     zero. Although management believed the full amount of the deferred tax
     assets would ultimately be realized, the Company had no history and,
     therefore, management estimated that the Company did not meet the "more
     likely than not" threshold for recognizing the assets. Therefore, an
     allowance was recorded for the full amount of the deferred tax assets.
     Realization of the deferred tax assets is dependent upon sufficient future
     taxable income during the period that temporary differences and
     carryforwards are expected to be available to reduce taxable income. There
     was no other activity in the valuation allowance account during the period
     ended March 31, 1999. This allowance was fully reversed in 2000 due to a
     change in circumstances causing a change in judgment about the
     realizability of the deferred tax asset.

                                      F-18
<PAGE>
14.  COMMITMENTS AND CONTINGENCIES

     LEASE AGREEMENTS - The Company leases certain facilities and equipment
     under noncancelable operating lease agreements, with various renewal
     options. The leases expire through February 2004. The total minimum rental
     commitments are as follows:

     2001                                         $   576,405
     2002                                             535,838
     2003                                             205,592
     2004                                              34,000
                                                  -----------

     Total                                        $ 1,351,835
                                                  ===========

     Total rent expense for the periods ended March 31, 2000 and 1999
     approximated $724,000 and $132,000, respectively.

     FINDER'S FEE AGREEMENT - Effective May 20, 1999, the Company agreed to pay
     a finder's fee to Bruar Associates in exchange for efforts in arranging the
     purchase of pre-owned semiconductor equipment located in the United
     Kingdom. The fee is based upon 15 percent of net sales proceeds relating to
     the purchased equipment when and if such sales exceed $6,583,000. Fees are
     due on the next $8,417,000 in net sales proceeds. The agreement expires on
     May 31, 2002. As of and for the year ended March 31, 2000, the Company has
     recognized $1,154,000 in finder's fees.

     CONTINGENCIES - On April 1, 1999, the Company was named as a defendant in a
     lawsuit involving two separate claims by two plaintiffs. The first
     plaintiff, alleges that he was not paid for consulting services. Trade
     secrets were misappropriated in conducting the reverse merger of Dentmart
     into the Company. The second plaintiff claims that he was wrongfully
     terminated. On January 10, 2000, the second plaintiff filed a Stipulation
     for Dismissal with Prejudice dropping his claims against the Company. On
     April 26, 2000, the first plaintiff filed a motion to amend his complaint
     alleging securities fraud involving the same set of facts set forth in his
     original complaint. The Company has prepared its response opposing the
     motion on the basis that there are no grounds upon which a valid claim for
     securities fraud could exist and denying the allegations of the claim. The
     Company is continuing to defend itself vigorously. The plaintiff has
     demanded the value of 1,000,000 shares of the Company's capital stock and
     other damages to be proven at trial in his complaint.

     EMPLOYMENT AGREEMENT - The Company has entered into a five year employment
     agreement with its Chief Executive Officer under which if he is terminated
     without cause, the Company is obligated to pay him his salary for the
     remaining term of the agreement, plus an additional three years' salary.

15.  MAJOR CUSTOMER

     During the year ended March 31, 2000, two customers accounted for revenues
     of approximately $6,126,000. During the period ended March 31, 1999, one
     customer accounted for revenues of approximately $2,608,000.

16.  SEGMENT INFORMATION

     The Company's reportable segments are strategic business units that offer
     different products and services. They are managed separately because each
     business unit requires different strategies.

     There are three reportable segments - ATSI, CMP Solutions, and VSM. ATSI is
     in the business of buying and selling pre-owned semiconductor manufacturing
     equipment. CMP Solutions is in the early development stages of providing
     chemical mechanical planarization ("CMP") foundry (wafer processing) and
     engineering services for semiconductor fabrication customers and
     manufacturers of optical and micromechanical devices. In addition, CMP

                                      F-19
<PAGE>
     Solutions provides installation and refurbishment services for certain
     pre-owned CMP manufacturing tools. VSM, which was acquired by Prodeo in
     April 1999, is a supplier of wafer processing furnaces and complex, ultra
     high purity gas and vapor control systems used in the manufacturer of
     silicon wafers.

     The accounting policies applied to determine the segment information are
     the same as those described in the summary of significant accounting
     policies. Interest expense on long-term debt is allocated based upon the
     specific identification of debt incurred to finance leasehold improvements
     and equipment.

     Management evaluates the performance of each segment based on profit or
     loss from operations before income taxes, exclusive of nonrecurring gains
     and losses.

     Financial information with respect to the reportable segments follows:

<TABLE>
<CAPTION>
                                                                                    Corporate
                                                                                       and
     2000                                 ATSI           CMP            VSM        Unallocated       Total
                                       -----------   -----------    -----------    -----------    -----------
<S>                                    <C>           <C>            <C>            <C>            <C>
     Revenue from external customers   $17,364,746   $   288,578    $ 5,058,427    $    15,978    $22,727,729
     Interest expense                      909,644        51,483        (11,066)       206,589      1,156,650
     Depreciation and
       amortization                          2,997        47,363         26,434         98,511        175,305
     Segment profit (loss)               6,697,624    (1,198,697)       898,429     (4,466,362)     1,930,994
     Segment assets                      3,408,161       379,037      2,097,628      2,459,062      8,423,888
     Expenditures for segment assets        11,153       158,419        244,047        121,914        535,533

     1999

     Revenue from external customers   $ 2,692,250   $    28,648                                  $ 2,720,898
     Interest expense                      255,390        16,335                   $     5,452        277,177
     Depreciation and
       amortization                            438        18,560                                       18,998
     Segment profit (loss)                 233,775      (432,485)                     (725,606)      (924,316)
     Segment assets                      7,150,336       157,869                        72,051      7,380,256
     Expenditures for segment assets       321,401       519,190                                      840,591
</TABLE>

     The following table presents information about the Company's revenue
     (attributed to countries based on the location of the customer) and
     long-lived assets by geographic area:

                                    2000                        1999
                           ------------------------    ----------------------
                                         Long-Lived                 Long-Lived
                             Revenue       Assets       Revenue       Assets
                           -----------    ---------    ----------    --------
     United States         $ 8,100,127    $ 745,015    $  113,648    $ 90,707
     United Kingdom          8,480,129
     The Netherlands         2,169,509                  2,211,250
     Europe                  1,250,811                    396,000
     Pacific Rim             2,015,457
     Other                     711,696
                           -----------    ---------    ----------    --------

     Total                 $22,727,729    $ 745,015    $2,720,898    $ 90,707
                           ===========    =========    ==========    ========

                                      F-20
<PAGE>
17.  RELATED PARTY TRANSACTIONS

     Related party advances consist of the following amounts at March 31:

                                                           2000          1999
                                                         --------     ---------
     Advances from a stockholder                         $ 60,941     $ 160,940
     Advances (to) from an entity ("ACT") related
       through common ownership, net                      (24,492)      182,317
     Advances to an entity ("GST") related through
       common ownership, net                              (33,499)      (13,000)
                                                         --------     ---------
     Total                                                  2,950       330,257
     Valuation allowance on advances to entities
       related through common ownership                    57,991
                                                         --------     ---------
     Advances from related parties                       $ 60,941     $ 330,257
                                                         ========     =========

     During the year ended March 31, 2000, GST and ACT, entities related through
     common ownership, made advances to the Company for administrative services
     and rental facilities. The advances totaled $166,243 and $3,908,
     respectively, at March 31, 2000 and are included in operating expenses in
     the consolidated statements of operations.

     The net amount due from GST and ACT at March 31, 2000 is $33,499 and
     $24,492, respectively, for which the Company has recorded a valuation
     allowance due to the lack of operations at these entities.

     In addition, during the period ended March 31, 1999, a stockholder paid
     certain expenses on behalf of the Company totaling $160,941. At March 31,
     2000, the outstanding balance is $60,941.

     Prior to the sale leaseback transaction, the Company leased a portion of
     this equipment from a stockholder for six months at a total cost of
     $42,000. At the end of the six months, the Company purchased equipment for
     $340,000 from the stockholder.

     The Company had included in operating expense $125,000 which is payable to
     a stockholder at March 31, 1999. This amount was repaid in 2000.

18.  SUPPLEMENTAL FINANCIAL INFORMATION

     A summary of additions and deductions related to the allowances for
     accounts receivable and inventory for the year ended March 31, 2000
     follows:

                             Beginning
                              of Year     Additions    Deductions    End of Year
                              -------     ---------    ----------    -----------
     Allowance for doubtful       --        63,000                      63,000
       accounts
     Allowance for obsolete       --       400,000      (240,000)      160,000
       inventories

19.  SUBSEQUENT EVENTS

     On June 14, 2000 the Company entered into an agreement with ATSI's
     president and co-founder to sell all of the outstanding stock of ATSI on
     August 1, 2000, after all ATSI's pre-owned equipment inventory has been
     transferred to the Company the president of ATSI will be terminating his
     employment with the Company and will continue to operate ATSI as a
     pre-owned equipment supplier. The Company will receive royalty payments on
     the new ATSI's equipment sales through January 2002.

     After the sale of ATSI, the Company will continue to operate its pre-owned
     equipment sales operations through the parent Company. In anticipation of
     the presidents departure, the Company has hired a new employee to take over
     the pre-owned equipment sales operations.

     On April 9, 2000, the Company and Don Jackson, the Company's chief
     executive officer, were named as defendants in a lawsuit filed in the state
     of Colorado, alleging that the Company breached a contract entered into in
     July of 1999 for consulting services involving equity funding for the
     Company. Additionally, the plaintiff claims that the Company made false
     representations and fraudulent non-disclosure with respect to the July 1999
     agreement. The Company currently is preparing its response and intends to
     defend itself vigorously. The plaintiff is seeking an option to purchase
     600,000 shares of the Company capital stock at $0.25 per share and other
     damages in an amount to be proven at trial.

                                   * * * * * *

                                      F-21