<PAGE>



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


                       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: March 31, 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.
================================================================================


<PAGE>


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 March 31, 1998.





                                       2
<PAGE>



                       KII HOLDING CORP. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>


                                     ASSETS                                      March 31,        December 31,
                                                                                   1998                1997
                                                                                   ----                ----
                                                                                (Unaudited)
<S>                                                                             <C>               <C>

      CURRENT ASSETS:
          Cash and cash equivalents                                                 $960,000           $1,152,200
          Account receivables, net                                                 5,932,400            5,446,700
          Inventories                                                             13,370,900           12,817,100
          Prepaid and other assets                                                   420,900              916,700
          Deferred income taxes                                                      531,800              531,800
                                                                                 -----------          -----------

          Total current assets                                                    21,216,000           20,864,500
      Property, plant and equipment, net                                          14,785,000           14,458,900
      Deferred financing costs, net                                                  958,300              983,200
      Other assets                                                                 1,112,200            1,059,100
                                                                                 -----------          -----------
          Total assets                                                           $38,071,500          $37,365,700
                                                                                 ===========          ===========

                       LIABILITIES & SHAREHOLDERS' EQUITY
      CURRENT LIABILITIES:
        Current portion of long term obligations                                 $   137,200          $   139,700
        Accounts payable                                                           2,008,100            1,638,400
        Customer deposits                                                            223,800              116,700
        Accrued liabilities                                                        2,056,500            2,190,800
                                                                                 -----------          -----------

        Total current liabilities                                                  4,425,600            4,085,600
      Long-term obligations, less current portion                                 25,609,500           25,624,800
      Deferred employee benefits                                                   1,439,500            1,405,700
      Unfunded pension benefits                                                      298,300              298,300
      Deferred income taxes                                                        1,746,200            1,693,400
                                                                                  -----------         -----------
        Total liabilities                                                         33,519,100           33,107,800

      Equity Put Rights on common stock                                            1,793,500            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                                                         (1,213,000)            (792,100)
                                                                                 -----------          -----------
          Total shareholders' equity                                               2,758,900            3,179,800
                                                                                 -----------          -----------
          Total liabilities and shareholders' equity                             $38,071,500          $37,365,700
                                                                                 ===========          ===========
</TABLE>


      See accompanying notes to unaudited consolidated financial statements



                                       3
<PAGE>



                       KII HOLDING CORP. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           Three Months
                                                               Ended
                                                              March 31,
                                                       1998               1997
                                                       ----               ----
                                                                      (Predecessor)

<S>                                                  <C>               <C>
Sales                                                $8,271,100        $ 6,441,600
Cost of sales                                         5,876,400          4,647,700
                                                     ----------        -----------
    Gross profit                                      2,394,700          1,793,900
Selling, general and administrative                   1,913,000            888,700
                                                     ----------        -----------
Income from operations                                  481,700            905,200
                                                     ----------        -----------
Other income (expense):
    Interest expense                                   (610,800)          (181,600)
    Other income (expense)                              (58,400)           (10,900)
                                                     ----------        -----------
    Total other expense                                (669,200)          (192,500)
                                                     ----------        -----------
Income (loss) before provision for income taxes        (187,500)           712,700
Provision (benefit) for income taxes                    211,100            285,100
                                                     ----------        -----------
Net income (loss)                                      (398,600)           427,600
Preferred stock dividends                               (22,300)                -
                                                     ----------        -----------
Income (loss) applicable to common shareholders      $ (420,900)        $  427,600
                                                     ===========        ==========

</TABLE>

     See accompanying notes to unaudited consolidated financial statements.




                                       4
<PAGE>


                       KII HOLDING CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>


                                                              Three Months        Three Months
                                                                 Ended               Ended
                                                               March 31,           March 31,
                                                                 1998                1997
                                                                 ----                ----
                                                                                 (Predecessor)
<S>                                                           <C>                <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                             $  (398,600)         $  427,600
Reconciliation to net cash provided by (used in)
   operating activities:
   Depreciation and amortization                                  448,400             433,500
   Deferred income taxes                                           52,800              81,300
   Stock compensation                                             715,400                   -
   Other                                                           (2,600)             (1,900)
Changes in assets and liabilities:
   Accounts receivable                                           (485,700)           (459,100)
   Inventories                                                   (553,800)           (771,200)
   Prepaid and other assets                                       495,800             (88,900)
   Other assets                                                   (53,100)            (35,400)
   Accounts payable                                               369,700             191,300
   Accrued and other liabilities                                 (122,700)            236,600
   Customer deposits                                              107,100                 100
                                                                ---------          ----------
     Net cash provided by operating activities                    572,700              13,900
                                                                ---------          ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to fixed assets                                        (771,600)           (478,600)
Proceeds from sale of fixed assets                                 24,500              33,500
Net cash used in acquisitions                                           -                   -
                                                                ---------          ----------
     Net cash used in investing activities                       (747,100)           (445,100)
                                                                ---------          ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on line of credit                                        -             350,000
Repayment of debt                                                 (15,200)            (14,000)
Other                                                              (2,600)                  -
                                                                ---------          ----------

     Net cash provided by (used in) financing activities          (17,800)            336,000
                                                                ---------          ----------
     Net decrease in cash and cash equivalents                   (192,200)            (95,200)
Cash and cash equivalents, beginning of period                  1,152,200             406,000
                                                                ---------          ----------

Cash and cash equivalents, end of period                        $ 960,000          $  310,800
                                                                =========          ==========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during the period for:
    
    Interest                                                   $  513,976          $  183,100
                                                               ==========          ==========
    Income taxes, net                                          $        -          $   55,300
                                                               ==========          ==========

---------------------------------------------------------------------------------------------
</TABLE>



            See accompanying notes to unaudited financial statements




                                       5
<PAGE>


                       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.



                                       6
<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 month  period  ended
March 31, 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:

<TABLE>
<CAPTION>

                                                                          March 31,           December 31,
                                                                            1998                  1997
                                                                            ----                  ----
                                                                         (Unaudited)

<S>                                                                      <C>                  <C>
          Raw materials                                                  $ 1,302,700          $ 1,212,500
          Work-in-process                                                  6,970,200            6,250,300
          Finished goods                                                   5,098,000            5,354,300
                                                                         -----------          -----------
          Total                                                          $13,370,900          $12,817,100
                                                                         ===========          ===========
</TABLE>


5. LONG-TERM OBLIGATIONS

         Long-term obligations consisted of the following:

<TABLE>
<CAPTION>
                                                                           March 31,          December 31,
                                                                             1998                 1997
                                                                             ----                 ----
                                                                         (Unaudited)
 
<S>                                                                     <C>                  <C>         
          Demand note payable to Stellex Industries, Inc.               $ 20,943,000         $ 20,943,000
          7.785% Mortgage notes payable                                    2,608,800            2,624,000
          Sellers Notes Payable                                            1,750,000            1,750,000
          Obligations under capital leases                                   444,900              447,500
                                                                        ------------         ------------
                                                                          25,746,700           25,764,500
          Less current portion                                               137,200              139,700
                                                                        ------------         ------------
                            Total                                       $ 25,609,500         $ 25,624,800
                                                                        ============         ============
</TABLE>

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.


                                       7
<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 19, 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 19, 1999
---------------------    and Director of
    Richard L. Kramer    Stellex Technologies, Inc.

/s/ William L. Remley    Vice Chairman, President and Chief        May 19, 1999
---------------------    Executive Officer Treasurer and
    William L. Remley    Director of
                         Stellex Technologies, Inc.

/s/ P. Roger Byer        Chief Financial Officer of                May 19, 1999
---------------------    Stellex Technologies, Inc.
    P. Roger Byer



                                       8