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

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q/A

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 for the quarterly period ended: September 30, 1998

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


                       Commission File Number 333-41939-01

                           STELLEX TECHNOLOGIES, INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

              DELAWARE                                 13-3971931
      (STATE OF INCORPORATION)             (IRS EMPLOYER IDENTIFICATION NO.)

     680 FIFTH AVENUE, 8TH FLOOR
          NEW YORK, NEW YORK                             10019
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)                (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 931-5333

                            STELLEX INDUSTRIES, INC.
              1430 BROADWAY, 13TH FLOOR, NEW YORK, NEW YORK 10018
                        (FORMER NAME AND FORMER ADDRESS)

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 reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No

As of May 1, 1999, the number of shares outstanding of the registrant's Common
Stock, no par value, was 1,000 shares. There is no trading market for the Common
Stock. Accordingly, the aggregate market value of the Common Stock held by
non-affiliates of the registrant is not determinable.

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EXPLANATORY NOTE:

     The quarterly report on Form 10-Q filed by Stellex Industries, Inc. on
November 16, 1998 is being amended for the sole purpose of filing the quarterly
consolidated financial statements of KII Holding Corp., a majority owned
subsidiary, for the period ended September 30, 1998.

                                       2

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                       KII HOLDING CORP. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS


             ASSETS                                September 30,    December 31,
                                                       1998             1997
                                                       ----             ----
                                                    (Unaudited)

CURRENT ASSETS:
  Cash and cash equivalents                         $   490,500     $ 1,152,200
  Account receivables, net                            5,780,200       5,446,700
  Inventories                                        14,220,900      12,817,100
  Prepaid and other assets                              266,100         916,700
  Deferred income taxes                                 581,000         531,800
                                                    -----------     -----------
    Total current assets                             21,338,700      20,864,500

Property, plant and equipment, net                   14,972,400      14,458,900
Deferred financing costs, net                           908,300         983,200
Other assets                                          1,196,700       1,059,100
                                                    -----------     -----------
    Total assets                                    $38,416,100     $37,365,700
                                                    ===========     ===========

   LIABILITIES & SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long term obligations          $ 1,846,300     $   139,700
  Accounts payable                                    1,906,200       1,638,400
  Customer deposits                                     347,300         116,700
  Accrued liabilities                                 2,653,600       2,190,800
                                                    -----------     -----------
  Total current liabilities                           6,753,400       4,085,600
Long-term obligations, less current portion          22,107,200      25,624,800
Deferred employee benefits                            1,512,000       1,405,700
Unfunded pension benefits                               298,300         298,300
Deferred income taxes                                 1,957,000       1,693,400
                                                    -----------     -----------
  Total liabilities                                  32,627,900      33,107,800

Equity Put Rights on common stock                     3,343,300       1,078,100

SHAREHOLDERS' EQUITY:
Common stock, no par value, 20,000 shares
  authorized, 8,010 issued and outstanding            3,131,900       3,131,900
Series A Preferred stock, $10,000 stated value,
  400 shares authorized, 84 shares
  issued and outstanding                                840,000         840,000
Series B Preferred stock, $10,000 stated value,
  75 shares  authorized,  none issued
  and outstanding                                            --              --
Undesignated Preferred stock, $10,000
  stated value, 25 shares authorized, none
  issued and outstanding                                     --              --
Accumulated deficit                                  (1,527,000)       (792,100)
                                                    -----------     -----------
  Total shareholders' equity                          2,444,900       3,179,800
                                                    -----------     -----------
  Total liabilities and shareholders' equity        $38,416,100     $37,365,700
                                                    ===========     ===========


      See accompanying notes to unaudited consolidated financial statements

                                       3

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                       KII HOLDING CORP. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                               Three Months        Nine Months    Six Months
                                                   Ended              Ended         Ended
                                               September 30,       September 30,   June 30,
                                             1998         1997         1998          1997
                                             ----         ----         ----          ----
                                                                                 (Predecessor)

<S>                                       <C>          <C>          <C>           <C>
Sales                                     $8,863,900   $8,889,800   $27,019,600   $14,296,000
Cost of sales                              6,210,100    6,746,900    18,816,500    10,139,600
                                          ----------   ----------   -----------   -----------
  Gross profit                             2,653,800    2,142,900     8,203,100     4,156,400
Selling, general and administrative        2,012,000    1,570,600     5,967,800     1,798,700
                                          ----------   ----------   -----------   -----------
Income from operations                       641,800      572,300     2,235,300     2,357,700
                                          ----------   ----------   -----------   -----------
Other income (expense):
  Interest expense                          (603,600)    (456,300)   (1,841,200)     (375,700)
  Other income (expense)                     (78,700)     (20,400)     (202,800)      (98,400)
                                          ----------   ----------   -----------   -----------
  Total other expense                       (682,300)    (476,700)   (2,044,000)     (474,100)
                                          ----------   ----------   -----------   -----------
Income (loss) before provision
  for income taxes                           (40,500)      95,600       191,300     1,883,600
Provision (benefit) for income taxes         251,000      287,600       857,900       753,400
                                          ----------   ----------   -----------   -----------
Net income (loss)                           (291,500)    (192,000)     (666,600)    1,130,200
Preferred stock dividends                    (23,400)          --       (68,300)           --
                                          ----------   ----------   -----------   -----------
Income (loss) applicable to common
  shareholders                            $ (314,900)  $ (192,000)  $  (734,900)  $ 1,130,200
                                          ==========   ==========   ===========   ===========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       4

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                       KII HOLDING CORP. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                     Nine Months    Three Months    Six Months
                                                       Ended           Ended          Ended
                                                    September 30,   September 30,    June 30,
                                                        1998            1997           1997
                                                        ----            ----           ----
                                                                                   (Predecessor)

<S>                                                 <C>             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                   $  (666,600)    $  (192,000)    $ 1,130,200
Reconciliation to net cash provided by
  (used in) operating activities:
  Depreciation and amortization                       1,364,200         363,400         878,200
  Deferred income taxes                                 214,400         760,500         125,100
  Stock compensation charge                           2,265,200            --              --
  Other                                                  (5,200)          9,800          (4,000)
Changes in assets and liabilities:
  Accounts receivable                                  (333,500)       (899,000)       (978,200)
  Inventories                                        (1,403,800)       (584,800)     (1,078,300)
  Prepaid and other assets                              650,600          17,800        (105,300)
  Other assets                                          (97,000)        (43,300)         (2,100)
  Accounts payable                                      267,800        (547,900)        559,000
  Accrued and other liabilities                         462,800         915,200         (42,100)
  Customer deposits                                     230,600          58,300          (3,100)
                                                    -----------     -----------     -----------
   Net cash provided by (used in)
    operating activities                              2,949,500        (142,000)        479,400
                                                    -----------     -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to fixed assets                            (1,794,400)       (559,500)       (868,500)
Proceeds from sale of fixed assets                       24,500              --          33,500
Net cash used in Kleinert acquisition                        --     (14,799,300)             --
                                                    -----------     -----------     -----------
  Net cash used in investing activities              (1,769,900)    (15,358,800)       (835,000)
                                                    -----------     -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on line of credit                             --              --         300,000
Repayment of bank debt and intercompany loans        (1,811,000)             --              --
Payment of financing costs                                   --      (1,326,800)             --
Proceeds from issuance of common and
  preferred stock                                            --       4,750,000              --
Repayment of debt in connection with
  Kleinert Acquisition                                       --      (6,800,000)             --
Proceeds from borrowings in connection
  with Kleinert Acquisition                                  --      19,300,000              --
Other                                                   (30,300)        (14,600)        (28,400)
                                                    -----------     -----------     -----------
  Net cash provided by (used in)
    financing activities                             (1,841,300)     15,908,600         271,600
                                                    -----------     -----------     -----------
  Net increase (decrease) in cash and
    cash equivalents                                   (661,700)        407,800         (84,000)
Cash and cash equivalents, beginning
  of period                                           1,152,200         322,000         406,000
                                                    -----------     -----------     -----------
Cash and cash equivalents, end of period            $   490,500     $   729,800     $   322,000
                                                    ===========     ===========     ===========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       5

<PAGE>

                       KII HOLDING CORP. AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                     Nine Months    Three Months    Six Months
                                                       Ended           Ended          Ended
                                                    September 30,   September 30,    June 30,
                                                        1998            1997           1997
                                                        ----            ----           ----
                                                                                   (Predecessor)

<S>                                                 <C>             <C>            <C>
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:

  Cash paid during the period for:

  Interest                                          $ 1,479,447     $    329,300     $   377,800
                                                    ===========     ============     ===========
  Income taxes, net                                 $        --     $         --     $   633,000
                                                    ===========     ============     ===========

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
 Capital lease agreements for equipment             $    30,400     $         --     $        --
                                                    ===========     ============     ===========
 Assets acquired and liabilities assumed in
  connection with acquisitions:
  Fair value of assets acquired                     $        --     $ 35,541,200     $        --
  Liabilities assumed                                        --      (19,388,400)             --
                                                    -----------     ------------     -----------
  Cash paid                                                  --       16,152,800              --
  Less cash acquired                                         --        1,353,500              --
                                                    -----------     ------------     -----------
  Net cash used for business acquisition            $        --     $ 14,799,300     $        --
                                                    ===========     ============     ===========
</TABLE>

            See accompanying notes to unaudited financial statements

                                       6

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                       KII HOLDING CORP. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  ORGANIZATION AND DESCRIPTION OF BUSINESS

Predecessor

Kleinert  Industries,   Inc.  (predecessor)  ("Kleinert")  was  a  wholly  owned
subsidiary of Kleinert  Industrie  Holding A.G., a Swiss company (the "Parent"),
and was  organized  under the laws of the State of  California  on July 1, 1988,
commencing  operations  on  September  1, 1988,  and which  provided  management
services for its wholly owned subsidiaries - Paragon Precision Products ("PPP"),
Bandy Machining International ("BMI"),  Scanning Electron Analysis Laboratories,
Inc.  ("SEAL"),   and  General  Inspection   Laboratories,   Inc.  ("GIL").

PPP specializes in the manufacture of precision aerospace components. BMI
manufactures precision hinges, door panels and hinged assemblies for both
aerospace and industrial applications. SEAL specializes in materials analysis
and problem-solving for government and industry. GIL provides a complete array
of non-destructive testing services for inspecting critical parts and
manufactured components.

Acquisition and Successor

On July 1, 1997, KII Holding Corp. (successor), a Delaware company ("KII
Holding") incorporated on July 1, 1997, through a wholly owned subsidiary (KII
Acquisition Corp., a Delaware corporation), acquired all of the issued and
outstanding capital stock of Kleinert and Subsidiaries (predecessor company and
currently known as Stellex Aerospace and Subsidiaries) from Kleinert Industrie
Holding A.G. (the "Seller"). The acquisition has been accounted for using the
purchase method of accounting, and, accordingly, the net purchase price of
approximately $26.5 million (including the assumption of $2.65 million of
mortgage indebtedness and the issuance to the Seller of a note for $1.75
million) has been allocated to the assets purchased and the liabilities assumed
based upon the fair values at the date of acquisition. There was no excess
purchase price over the fair values on the net assets acquired in connection
with the acquisition. The acquisition was financed in part from new borrowings
totaling $19.3 million and the issuance of common and preferred stock totaling
$4.75 million. KII Holding is owned by Stellex Industries, Inc., a Delaware
corporation, which owns 80.1% of the issued and outstanding common stock of KII
Holding, with certain members of Stellex Aerospace's management holding the
remainder of its outstanding common stock. KII Holding is a holding company
whose operations are conducted through its operating subsidiaries. References to
the "Company" include both KII Holding and its predecessor, Kleinert.

2.   BASIS OF PRESENTATION

The accompanying consolidated financial statements dated prior to the
acquisition of Kleinert and Subsidiaries on July 1, 1997, include the accounts
of Kleinert and its wholly owned subsidiaries (the "Predecessor"). Financial
statements dated subsequent to the acquisition include the accounts of KII
Holding (the "Successor") and its wholly owned subsidiaries, KII Acquisition
Corp., Stellex Aerospace and Subsidiaries (PPP, BMI, SEAL and GIL). Intercompany
transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation, which were of a normal and
recurring nature, have been included. The results of operations for any interim
period are not necessarily indicative of the results for the year. These
unaudited consolidated financial statements should be read in conjunction with
the consolidated financial statements and related notes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.

                                       7

<PAGE>

3. RECENT ACCOUNTING STANDARDS

Effective January 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income." This statement requires
that all items recognized under accounting standards as components of
comprehensive income be reported in an annual financial statement that is
displayed with the same prominence as other annual financial statements. This
Statement also requires that an entity classify items of other comprehensive
income by their nature in an annual financial statement. For example, other
comprehensive income may include foreign currency translation adjustments,
minimum pension liability adjustments, and unrealized gains and losses on
marketable securities classified as available-for-sale. Annual financial
statements for prior periods will be classified, as required. The Company had no
items of other comprehensive income or loss for the three and nine-month periods
ended September 30, 1998.

In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information". The standard requires that companies
disclose "operating segments" based on the way management disaggregates the
company for making internal operating decisions. The new rules will be effective
for the Company's 1998 annual financial statements.

In February 1998, the FASB issued SFAS No. 132, "Employers" Disclosures about
Pensions and Other Postretirement Benefits," which standardizes the disclosure
requirement for pensions and other postretirement benefits. The implementation
of SFAS No. 132 is not expected to have an impact on the Company's financial
statements. The standard will be effective for the Company's 1998 annual
financial statements.

4. INVENTORIES

     Inventories consisted of the following:


                                               September 30,    December 31,
                                                   1998             1997
                                                   ----             ----
                                                (Unaudited)

      Raw materials                             $ 1,612,600      $ 1,212,500
      Work-in-process                             6,962,600        6,250,300
      Finished goods                              5,645,700        5,354,300
                                                -----------      -----------
      Total                                     $14,220,900      $12,817,100
                                                ===========      ===========

5. LONG-TERM OBLIGATIONS

     Long-term obligations consisted of the following:


                                               September 30,    December 31,
                                                   1998             1997
                                                   ----             ----
                                                (Unaudited)

      Demand note payable to Stellex
      Industries, Inc.                          $19,200,200      $20,943,000
      7.785% Mortgage notes payable               2,576,300        2,624,000
      Sellers Notes Payable                       1,750,000        1,750,000
      Obligations under capital leases              426,100          447,500
      Other long term obligations                       900               --
                                                -----------      -----------
                                                 23,953,500       25,764,500
      Less current portion                        1,846,300          139,700
                                                -----------      -----------
                Total                           $22,107,200      $25,624,800
                                                ===========      ===========

6. COMMITMENTS AND CONTINGENCIES

The Company is involved from time to time in lawsuits that arise in the normal
course of business. The Company actively and vigorously defends all lawsuits.
Management believes that there are no lawsuits that will have a material affect
on the Company's financial position.

                                       8

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused the Report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, as of May 14, 1999.

                           STELLEX TECHNOLOGIES, INC.

                            By: /s/ William L. Remley

                                      ----------------------
                                   William L. Remley,
                                   President and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed by the following persons in the capacities
and as of dates indicated.

       Signature                        Title                            Date
       ---------                        -----                            ----

/s/ Richard L. Kramer    Chairman of the Board of Directors        May 18, 1999
---------------------    and Director of
    Richard L. Kramer    Stellex Technologies, Inc.

/s/ William L. Remley    Vice Chairman, President and Chief        May 18, 1999
---------------------    Executive Officer Treasurer and
    William L. Remley    Director of
                         Stellex Technologies, Inc.

/s/ P. Roger Byer        Chief Financial Officer of                May 18, 1999
---------------------    Stellex Technologies, Inc.
    P. Roger Byer

                                       9