<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

            ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the fiscal year ended September 30, 1998

                         Commission File Number 33-98404

                                  T.J.T., INC.
                 (Name of small business issuer in its charter)

         WASHINGTON                                 82-0333246
(State or other jurisdiction of                    (IRS Employer
incorporation or organization)                    Identification No.)

             843 NORTH WASHINGTON, P.O. BOX 278, EMMETT, IDAHO 83617
                    (Address of principal executive offices)

                                 (208) 365-5321

                           (Issuer's telephone number)

--------------------------------------------------------------------------------
        Securities registered under Section 12 (b) of the Exchange Act:

      Title of each class              Name of each exchange on which registered
Common Stock, $.001 par value                     Nasdaq SmallCap Market 
Redeemable Common Stock Purchase Warrants

Securities registered under Section 12 (g) of the Exchange Act:
                          Common Stock, $.001 par value
                                (Title of class)
                    Redeemable Common Stock Purchase Warrants
                                (Title of class)

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

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

                                                        Exhibit Index on Page 35

                                     Page 1

<PAGE>

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

Registrant's revenues for the fiscal year ended September 30, 1998 were
$34,073,000.

Based on the stock's closing price of $1.25 on November 30, 1998, non-affiliated
market capital was approximately $2,875,000.

As of November 30, 1998, there were 4,854,739 shares of the registrant's $.001
par value common stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

The registrant's definitive proxy statement to be dated on or after January
1999, for use in connection with the annual meeting of stockholders to be held
on February 23, 1999, portions of which are incorporated by reference into Part
III of the Form 10-KSB.

Transitional Small Business Disclosure Format:  Yes [  ]; No [X]


                                     Page 2
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

ITEM 1(a). GENERAL DEVELOPMENT OF BUSINESS

RECENT DEVELOPMENTS

Acquisition of Hanger Enterprises and Ken's Mobile Tire

Effective June 1, 1998, T.J.T., Inc. (TJT or the Company) acquired specified
assets and assumed specified liabilities of Hanger Enterprises and Ken's Mobile
Tires, both located in Eugene, Oregon. We hired Kenneth Lee, the former owner of
these two companies, to manage the operations consisting of manufacturing
hanging parts used by manufactured housing producers to attach axles and tires
to the homes, and limited recycling of axles and tires. We paid Mr. Lee $320,000
and assumed $58,000 of debt to complete the transaction.

In July 1998, we entered into an agreement to purchase Ford's Tires and Axles
located in Chandler, Arizona. As part of the purchase agreement, we also agreed
to manage Ford's Tires and Axles until we completed our due diligence and
finalized the terms of the purchase transaction. The management agreement allows
us to provide operating capital and expertise to improve the operation prior to
actually acquiring them. The state of Arizona is showing strong growth in the
manufactured housing industry and is on our list of most desirable new markets.

GENERAL

TJT is engaged in the business of repairing and reconditioning axles and tires
for the manufactured housing industry. We also distribute vinyl and steel
siding, primarily to the constructed or "site-built" housing market, and supply
skirting and other after-market accessory products to manufactured housing
dealers and set-up contractors.

Manufactured or factory-built homes are generally produced in sections or
"units" which are customarily 12 to 14 feet wide and 70 feet in length. The
individual units are then connected at the home site according to the size of
the home purchased and the lot available. Most manufactured houses consist of
two units or a "double-wide" home of 24 to 28 feet in width, although some
larger homes are assembled as triple-wide homes of up to 42 feet in width. When
transported from the factory or the dealer, manufactured houses are customarily
sold as single- or doublewide.

Manufactured housing producers transport houses to dealers on large steel frames
using three to six axles and two tires per axle to support the weight of the
houses. According to 

                                     Page 3
<PAGE>

regulations promulgated by the Housing and Urban Development Authority (HUD),
axles on the frames must be inspected and refurbished or replaced after each
trip. Housing manufacturers customarily supply the tires and axles to
manufactured housing dealers with the finished house, and include the cost and
profit relating to the axles and tires in the dealer price of the house.
Historically, dealers transported the manufactured house to the home site and
left the used axles and tires at the site, thereby creating potential
environmental problems as well as wasting otherwise serviceable steel and rubber
products. As a market for used axles and tires developed, dealers began
stockpiling these items.

We purchase used axles and tires ordinarily from the manufactured housing
dealer, pick up the axles and tires primarily at the lot site of the dealer and
repair and refurbish them at our facilities in Emmett, Idaho; Centralia,
Washington; Salem, Oregon; Woodland, California; and Platteville, Colorado.
Axles are refurbished to substantially "like-new" condition. We sell the
reconditioned axles and, to the extent usable, used tires back to the housing
manufacturers. Manufactured home production growth in Idaho, Oregon, Washington
and California increased by approximately 7% compared to last year. Separate
information for Colorado is not available to the public. Housing manufacturers
currently find it more cost-effective to use reconditioned axles and tires to
transport their houses rather than continually purchasing new axles and tires.
The majority of the factories in our market area use recycled axles and tires
when available.

We also distribute skirting and related housing accessories to the manufactured
housing industry and vinyl siding to the site-built housing industry and
manufactured housing factories. We believe activity in the manufactured housing
market will create demand for manufactured housing accessories.

Terrence J. Sheldon and a former partner founded TJT in 1977 to recondition
tires and axles. Geographic expansion of our business took place during the
1980's when we opened additional reconditioning facilities in Kansas, Oregon and
Texas. From 1983 to 1991, the manufactured housing industry experienced a
significant decline in production. TJT was forced to sell its unprofitable
operations in Kansas and Texas in 1986. We began distribution activities in
1991. At September 30, 1998, the Company had 182 employees.

INDUSTRY OVERVIEW

Our current service area includes Idaho, Oregon, Washington, California,
Colorado, Utah, Montana, Nevada, Wyoming and Arizona. The western United States
produces about one tenth of the manufactured homes built in the United States.

                                     Page 4
<PAGE>

During the years 1983 to 1991, the manufactured housing industry in the United
States suffered from generally declining shipments. Factors that contributed to
the decline in shipments include:

-    Widespread unemployment in the oil and energy industry regions led to lack
     of demand for new manufactured homes and existing manufactured home
     repossessions; and

-    Repossessed homes filled dealer lots causing lack of demand for new
     manufactured homes.

The factors contributing to the manufactured housing industry recovery include:

-    Depletion of manufactured home excess inventory; 

-    Lower purchase price of a completed manufactured home versus a comparable 
     site-built home;

-    Changing land use and zoning policies that allow more desirable locations
     for manufactured housing; 

-    More favorable financing terms (similar to the traditional financing 
     available to site-built homes) for the increasing percentage of 
     manufactured homes set on permanent foundations; and 

-    Improved home designs and amenities offered for manufactured homes.

The traditional manufactured home buyers are retirees, "empty nesters" and
low-income, blue-collar wage earners. Manufactured homes have taken on some of
the characteristics of site-built homes with the introduction of multi-section
homes. These larger, more customized homes have attracted consumers in the
middle-income range. The multi-section units are more popular in the Pacific
Northwest because they are similar to existing home styles.

The manufactured housing industry and the site-built construction industry are
seasonal within much of our market area. Typically, sales for the months from
November through March are lower than for other months due to weather and ground
conditions. Assuming normal weather conditions, we expect the quarters ended
September 30 and June 30 to be the high volume quarters and the quarter ended
March 31 to be the lowest volume quarter.

AXLE AND TIRE RECONDITIONING

We buy used axles and tires from manufactured housing dealers. The axles and
tires are picked up at the dealer's lot or at the home site after the
manufactured home is placed on its pad or foundation. We also buy axles and
tires from independent brokers.

After receiving the used axles and tires, production workers at our five
facilities dismantle the axle and check all major moving parts, including
brakes, cleaning and rebuilding parts as required. Approximately 30 axles can be
rebuilt in 8 man-hours. The axles are re-cambered on presses, refurbished and
then reassembled. New or reconditioned tires are shipped with the axles to the
customers.

                                     Page 5
<PAGE>

Our facilities may recondition a single axle on multiple occasions. The national
average trip length for transporting a manufactured home from the factory to the
dealer and the home site is approximately 300 miles. Each axle and tire assembly
is used approximately three times a year.

HUD regulations govern the maximum load limit per tire, which in turn dictates
the number of axles needed to transport a manufactured home. The number of axles
used to transport a manufactured home ranges from three to six and the average
is about four axles. HUD also requires a periodic inspection of the recycling
facility by an approved third party inspector.

Sales of reconditioned axles and tires were 76% and 73% of total revenues for
the years ended September 30, 1998 and 1997, respectively.

DISTRIBUTION ACTIVITIES

We sell manufactured housing accessories such as vinyl skirting, piers and other
ancillary products to manufactured housing dealers and set-up contractors. We
also sell vinyl siding to the site-built housing market and limited amounts of
vinyl siding accessories to certain manufactured housing factories. The
site-built housing market includes both new construction and re-siding
contractors. Our vinyl distribution activity began in 1991.

Sales of manufactured housing accessories and vinyl siding were 24% and 27% of
total revenues for the years ended September 30, 1998 and 1997, respectively.

SALES AND MARKETING

Our customer base consists of manufactured housing factories, manufactured
housing dealers, siding contractors and manufactured housing set-up contractors.
We advertise in trade publications and attend manufactured housing and
construction industry trade shows.

We have certain major customers for reconditioned axles and tires, all of which
are manufactured housing producers. Fleetwood Homes represented 11% of our total
sales in 1998 and 14% in 1997. We had no single supplier of axles and tires or
accessories that represented 10% or more of total purchases.

COMPETITION

We were one of the original entrants in the axle and tire refurbishing industry,
which was established in or about 1977. Axle and tire refurbishing companies
tend to be located near manufactured housing production centers. The largest
axle and tire refurbishing companies are located in the Southeast where the
majority of the manufactured housing production takes place. We do not compete
with these refurbishers since they do not currently operate in our ten-state
market area of Idaho, Oregon, Washington, California, Colorado, Utah, Nevada,
Montana, Wyoming and Arizona.

                                     Page 6
<PAGE>

Within our ten-state market area, the largest competitor is in southern
California. The competition in this industry is intense, both in terms of the
price paid to dealers and independent brokers for supplies of used axles and
tires, and the price charged to the factories for refurbished axles and tires.
Competition is also based heavily on reputation for reliability and customer
service.

We also distribute after-market accessories in our ten-state market area. Within
that market area, we have three to four major competitors. We have four to six
competitors in its vinyl siding market area, which consists of southwestern
Idaho, southern Idaho, eastern Oregon, northern Utah and northern Nevada.

ITEM 2.  DESCRIPTION OF PROPERTY

We lease 13 properties and own two properties. The two properties we own are an
11,360 square foot warehouse in Emmett, Idaho and a 9,000 square foot processing
facility in Platteville, Colorado.

We have four leased properties covering 145,000 square feet Emmett, Idaho. Three
of those properties covering 82,000 square feet are leased from T.J.T.
Enterprises (1)(3). Three properties covering 85,000 square feet are located in
Oregon. One property, located in Centralia, Washington covering 593,000 square
feet is leased from MBFI, Inc. (2)(3). Two properties covering 50,000 square
feet are located in California, one of which, located in Woodland, California
covering 44,000 square feet, is leased from Ulysses B. Mori (3).

(1)      T.J.T. Enterprises is a partnership consisting of Terrence Sheldon,
         President and Chief Executive Officer of the Company, and Jerry L. 
         Radandt, a former officer of the Company. Mr. Sheldon Mr. Radandt are
         equal partners in T.J.T. Enterprises.

(2)      MBFI, Inc. is a corporation owned by the Bradley family. Patricia I.
         Bradley, Executive Vice President of the Company, owns approximately 
         95% of MBFI, Inc.

(3)      We believe that the lease terms obtained from TJT Enterprises, MBFI,
         Inc., and Ulysses B. Mori, Senior Vice President of the Company, are as
         favorable as unaffiliated third party terms.

ITEM 3. LEGAL PROCEEDINGS

We have been named as a defendant, along with other parties, in a lawsuit
seeking recovery for wrongful death arising out of an accident in Northern
Idaho. A wheel we supplied came off a manufactured home in transit and struck
the claimant's vehicle. The claimant is the husband and children of the 
deceased. Counsel retained by the insurance company to provide a defense has 
advised us that the range of liability does not exceed our policy limits.

Leg-it Tire Company, Inc. and Ulysses Mori, one of our directors, have been
named as defendants in a lawsuit alleging harassment, discrimination and
retaliation. The suit is in the 

                                     Page 7
<PAGE>

discovery phase and does not specify damages. We are unable to determine the
probability of loss or the range of loss, if any, at this time.

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

Shareholders were not asked to vote on any matters during the quarter ended
September 30, 1998.

ITEM A. EXECUTIVE OFFICERS OF THE REGISTRANT

The schedule below shows the names and certain information regarding all of the
executive officers of TJT as of September 30, 1998. Each executive officer has a
one-year term of office.

<TABLE>
<CAPTION>
NAME                     AGE      POSITION
<S>                     <C>       <C>
Terrence J. Sheldon      56       President, Chief Executive Officer, Chief
                                  Operating Officer, and Chairman of the
                                  Board of Directors

Patricia I. Bradley      54       Executive Vice President and Member of
                                  the Board of Directors

Ulysses B. Mori          46       Senior Vice President and Member of
                                  the Board of Directors

Rickie K. Treadwell      50       Senior Vice President and Member of
                                  the Board of Directors

Scott M. Beechie         40       Vice President, Treasurer, Chief Financial
                                  Officer, and Member of the Board of Directors

April L. Kierstead       43       Assistant Treasurer, Secretary and Controller

</TABLE>
Terrence J. Sheldon - Mr. Sheldon is the founder and principal stockholder of
TJT and has served as President since October 1986 and Chief Executive Officer
since 1994 and Chief Operating Officer since 1998.

Patricia I. Bradley - Ms. Bradley has served as Senior Vice President from 
1996 through 1998 and Executive Vice President since 1998. From 1989 to 1996 
she served as Chief Executive Officer for Bradley Enterprises, Inc., and has 
experience in all areas of our operations.

Ulysses B. Mori - Mr. Mori has served as Senior Vice President since 1997. From
1980 to 1997 he served as President and Chief Executive Officer of Leg-it Tire
Co., and has experience in all areas of our operations.

                                     Page 8
<PAGE>

Rickie K. Treadwell - Mr. Treadwell has served as Senior Vice President since
1998. From 1978 to 1998, Mr. Treadwell served as the President of West States
Recycling.

Scott M. Beechie - Mr. Beechie is a CPA and has served as Vice President since
1996 and as Treasurer and Chief Financial Officer since 1997. From 1990 to 1996,
he served as Manager of Financial Reporting for U.S. Bancorp (formerly West One
Bancorp) in Boise, Idaho. Mr. Beechie received a B.B.A. in Finance from Idaho
State University in 1981.

April L. Kierstead - Ms. Kierstead has served as Assistant Treasurer and
Secretary of the Company since 1994, and Controller since 1997. From 1987 to
1994, she served as accounting manager for Acme Manufacturing Co., Inc., in
Filer, Idaho. Ms. Kierstead received a B.A. in Business Administration from
Southwest Baptist University in 1980.

                                     Page 9
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our Common Stock and Redeemable Common Stock Purchase Warrants are registered on
the Nasdaq SmallCap Market. The table below shows the high and low sales prices
of the Common Stock and the Warrants for each of the last eight fiscal quarters:

<TABLE>
<CAPTION>
                              Quarter              Quarter              Quarter             Quarter
                               Ended                Ended                Ended               Ended
                              9/30/98              6/30/98              3/31/98             12/31/97
                           ---------------      ---------------      ---------------     ---------------
<S>                     <C>                   <C>                 <C>                  <C>                         
Common Stock:

      High                     1 15/16              1 15/16               2  1/8             2  5/16
      Low                      1  1/16              1  7/16                    1             1  9/16
      Quarter-end              1  5/32               1  3/4              1 13/16             1  9/16

Warrants:

      High                         1/4                 5/16                  3/8               15/32
      Low                         1/16                 5/32                 5/32                7/32
      Quarter-end                 1/16                 3/16                  1/4                7/32

</TABLE>

<TABLE>
<CAPTION>
                               Quarter              Quarter              Quarter             Quarter
                                Ended                Ended                Ended               Ended
                               9/30/97              6/30/97              3/31/97             12/31/96

                            ---------------      ---------------      ---------------     ---------------
<S>                         <C>                   <C>                  <C>                <C>
Common Stock:

      High                      2  7/8              2 13/32               3  1/4                6 3/4
      Low                      1  9/16                    1                    1             2  9/16
      Quarter-end              2  3/16               1  7/8               1  1/8              2  5/8

Warrants:

      High                       19/32                  5/8                    1              3  5/8
      Low                          1/4                  1/8                  1/8                 5/8
      Quarter-end                15/32                 9/32                 5/32                 5/8
</TABLE>

The table below shows the approximate number of record holders of the Company's
Common Stock and Warrants at December 21, 1998:

<TABLE>
<CAPTION>
TITLE OF CLASS                                       NUMBER OF RECORD HOLDERS
--------------                                       ------------------------
<S>                                                   <C>
Common Stock, $.001 par value                                 1,411
Redeemable Common Stock Purchase Warrants                       970
</TABLE>

                                    Page 10
<PAGE>

TJT has never paid dividends to shareholders and does not expect to pay
dividends in the foreseeable future. We intend to use future earnings for
reinvestment in our business and to buy back TJT common stock. The Board of
Directors will determine whether any future cash dividends will be paid and
payment of any dividends will be dependent on our financial condition, results
of operations, capital requirements and other such factors as the Board of
Directors deems relevant.

ITEMS 6 AND 7.

The information called for by Items 6 and 7, inclusive of Part II of this Form
10-KSB, is contained in the following sections of this Report at the pages
indicated below:

                        CAPTIONS AND PAGES OF THIS REPORT

<TABLE>

<S>                                 <C>                                <C>
ITEM 6   Management's Discussion    "Management's Discussion
         and Analysis or Plan       and Analysis"................      Page 14
         of Operations

ITEM 7   Financial Statements       "Financial Statements".......      Page 19
</TABLE>

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

We did not change accountants within the last 24 months, nor were there any
reportable disagreements with our independent public accountants on any matter
of accounting principles or practices, financial statement disclosures, or
auditing scope or procedure.

                                    PART III

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

Our executive officers are identified in Item A (following Item 4) in Part I of
this Form 10-KSB.

The balance of this Item 9 is included in our definitive proxy statement under
the caption "Election of Directors" and "Compliance With Section 16(b) of the
Exchange Act" and is incorporated herein by reference.

                                     Page 11
<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

All cash compensation paid by TJT, as well as certain other compensation paid or
accrued, during the last three fiscal years to the persons serving as Chief
Executive Officer and the executive officers earning over $100,000 is shown
below.

                                          Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                LONG TERM COMPENSATION
------------------------------------------------------------------------------------------------------
                                    ANNUAL COMPENSATION(1)
                                    --------------------
                                                              Other Annual           Stock Options
NAME AND PRINCIPAL POSITION         YEAR    SALARY            COMPENSATION(2)        GRANTED
---------------------------         ----    ------            -------------          -------     
<S>                                 <C>     <C>               <C>                        <C>
Terrence J. Sheldon                 1998    $225,000          $47,036                    -
President, Chief Executive          1997    $225,000          $14,272                    -
Officer, Chief Operating            1996    $225,000          $23,842                    -
Officer and Director

Patricia I. Bradley                 1998    $209,477          $2,900                     -
Executive Vice President,           1997    $179,426               -                     -
Manager of Corporate Dealer         1996    N/A               N/A                        N/A
Sales and Director

Ulysses B. Mori(3)                  1998    $162,162          $2,596                     -
Senior Vice President,              1997     $34,038               -                     -
Manager of New Business             1996     N/A              N/A                        N/A
Development and Director

Rickie K. Treadwell(4)              1998    $46,154           -                          -
Senior Vice President               1997    N/A               N/A                        N/A
Manager of the Colorado             1996    N/A               N/A                        N/A
Facility and Director
</TABLE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Item 11 is included in our definitive proxy statement under the caption
"Security Ownership of Certain Beneficial Owners and Management" and is
incorporated herein by reference.

--------
(1) Excludes personal benefits and other forms of non-cash compensation that 
did not in the aggregate exceed 10% of the aggregate amount of cash 
compensation shown for the subject individuals.
(2) Includes participating contributions to the Company 401(k) Plan.
(3) Mr. Mori is currently under contract until June 24, 2001. The contract
provides for minimum annual base salary of $150,000. 
(4) Mr. Treadwell is currently under contract until May 31, 2002. The contract 
provides for minimum annual base salary of $150,000.

                                     Page 12
<PAGE>

For purposes of calculating the aggregate market value of the voting stock held
by non-affiliates as set forth on the cover page of this Form 10-KSB, the
Company has assumed that affiliates are those persons identified in the portion
of the definitive proxy statement identified above.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Item 12 is included in Note J to the financial statements on page 31 of this
Report.

                                     Page 13

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion and analysis should be read in conjunction with the
accompanying financial statements of T.J.T., Inc. All references to year-end
periods include results from October 1 through September 30. This section may
contain certain forward-looking statements based on our current expectations.
Factors that could cause future results to vary materially from these
expectations include, but are not limited to, general economic conditions,
changes in interest rates, deposit flows, real estate values and competition;
changes in accounting principles, policies or guidelines; changes in
legislation or regulation; and other economic, competitive, governmental,
regulatory and technological factors affecting our operations, pricing, products
and services

BUSINESS AND INDUSTRY OVERVIEW

We are engaged in the business of repairing and reconditioning axles and tires
for the manufactured housing industry. TJT also supplies skirting and other
after-market accessory products to manufactured housing dealers and set-up
contractors, and we distribute vinyl siding primarily to the constructed or
"site-built" housing market.

Producers of manufactured housing transport houses to dealers on large steel
frames using three to six axles and two tires per axle to support the weight of
the houses. According to regulations promulgated by the Housing and Urban
Development Authority (HUD), axles on the frames must be inspected and
refurbished or replaced after each trip. Housing manufacturers customarily
supply the tires and axles to manufactured housing dealers with the finished
house, and include the cost and profit relating to the axles and tires in the
dealer price of the house.

We purchase used axles and tires ordinarily from the manufactured housing
dealer, pick up the axles and tires primarily at the lot site of the dealer, and
repair and refurbish them at our facilities in Emmett, Idaho; Centralia,
Washington; Woodland, California; Salem, Oregon; and Platteville, Colorado.
Axles are refurbished to substantially "like-new" condition. We then sell the
reconditioned axles and, to the extent usable, used tires back to the housing
manufacturers. The demand for our axle and tire reconditioning services has
increased over the last three years. Housing manufacturers currently find it
more cost-effective to use reconditioned axles and tires to transport their
houses rather than continually purchasing new axles and tires. Virtually all the
factories in our market area use recycled axles and tires when available.

We also distribute skirting and related housing accessories to the manufactured
housing industry and vinyl siding to the site-built housing industry and
manufactured housing factories. We believe that activity in the manufactured
housing market will create demand for manufactured housing accessories.

The manufactured housing industry and the site-built construction industry are
seasonal within our market area. Typically, sales for the months from November
through March are 

                                     Page 14
<PAGE>

lower than for other months due to weather and ground conditions. Assuming
normal weather conditions, we expect the quarters ended September 30 and June 30
to be the high volume quarters and the quarter ended March 31 to be the lowest
volume quarter.

ACQUISITIONS AND EXPANSION

In November 1996, we completed the acquisition of Bradley Enterprises, Inc.
(Bradley), an axle and tire recycler headquartered in Centralia, Washington. The
merger dramatically increased our presence in Washington and Oregon. We issued
940,000 restricted shares of our common stock and paid $500,000 to complete the
transaction which was accounted for as a purchase.

In July 1997, TJT completed the acquisition of Leg-it Tire Co., Inc. (Leg-it),
an axle and tire recycler headquartered in Woodland, California. The acquisition
gave us a presence in the central California market. We issued 291,176
restricted shares of our common stock and paid $412,500 to complete the
transaction which was accounted for as a purchase.

In September 1997, TJT opened a recycling facility in Platteville, Colorado. The
plant incurred start-up expenses during fiscal 1997 but generated no revenue.
The Platteville facility is strategically located in that there are currently no
other major recyclers with a physical presence in Colorado. The location helps
solidify our existing relationships with area factories obtained through the
Leg-it acquisition and allows us to compete more effectively for factory
relationships in southern and midwestern states.

In June 1998, we acquired specified assets and assumed specified liabilities of
Hanger Enterprises and Ken's Mobile Tires, both located in Eugene, Oregon. We
hired the former owner of these two companies to manage the operations. The 
primary operation is manufacturing hanging parts used by manufactured housing 
producers to attach axles and tires to the homes. We paid the former owner 
$320,000 and assumed $58,000 of debt to complete the transaction.

In July 1998, we entered into an agreement to purchase Ford's Tires and Axles
located in Chandler, Arizona. As part of the purchase agreement, we also agreed
to manage Ford's Tires and Axles until we completed our due diligence and
finalized the terms of the purchase transaction. The management agreement allows
us to provide operating capital and expertise to improve the operation prior to
actually acquiring them. The state of Arizona is showing strong growth in the
manufactured housing industry and is on our list of most desirable new markets.

The acquisitions and expansion make TJT the leading axle and tire recycler in
the western United States. Management estimates that its market share in the
western United States, excluding the operation under management agreement in
Arizona, is approximately 63% of the used axle and tire sales to manufactured
housing factories.

                                     Page 15
<PAGE>

PERFORMANCE OVERVIEW

Net income for the fiscal year ended 1998 was $446,000, a 7% decrease over 1997
net income of $477,000. Earnings for 1998 were $.09 per share compared to $.11
per share for 1997. Average shares outstanding increased 7% in 1998 due to the
issuance of shares to acquire Leg-it in July 1997.

Net sales increased 34% to $34,073,000 in 1998 from $25,441,000 in 1997. The
1998 sales total was the highest in our history. The increase was due primarily
to the Leg-it acquisition and to manufactured housing production growth in
Idaho, Oregon, Washington and California.

Total assets increased to $11,054,000 at September 30, 1998 from $10,140,000 at
September 30, 1997. Total equity was $8,929,000 at September 30, 1998 compared
to $8,471,000 at September 30, 1997. Both of the increases were primarily a
result of operations.

RESULTS OF OPERATIONS

The breakdown of revenues and expenses by major categories as a percent of sales
for 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
                                                       1998           1997
                                                     --------       --------
<S>                                                  <C>            <C>
Axle and tire reconditioning                          75.8 %         73.1 %
Manufactured housing accessories and siding           24.2           26.9
Gross margin                                          18.0           17.4
Selling expense                                        9.2            9.2
Administrative expense                                 6.6            5.7
Interest income                                        0.2            0.4
Investment property income                             0.1            0.3
</TABLE>

Net sales for the fiscal year ended 1998 increased 34% to $34,073,000. Increases
in Oregon and Washington sales to factories and dealers were primarily due to
the acquisition of Bradley. Sales increases in California and Colorado were
primarily due to the acquisition of Leg-it. Combined manufactured housing
production in the states of Idaho, Oregon, Washington and California increased
7% for the eleven months ended August 31, 1998 compared to the same period in
1997.

                                     Page 16
<PAGE>

Overall gross margin increased to 18.0% for the year ended 1998 from 17.4% for
the year ended 1997. The increase was due primarily to strong gross margins in
the first and second fiscal quarters. Third and fourth quarter gross margins
decreased as we encountered inefficiencies related to completing the Leg-it
integration and start-up operations in Colorado, and increased axle and tire
costs. The decline in gross margin for the fourth quarter was also partially 
due to a $35,000 charge on the inventory value of seven-inch tires as a result 
of revised transportation regulations. Gross margin for accessories and siding 
increased from 23.4% in 1997 to 30.9% in 1998 due mainly to margin improvement 
in sales from the Centralia, Washington location.

Selling expense as a percent of sales was unchanged from last year while
administrative expense increased as a percent of sales. Administrative expense
increased due to higher wages and legal fees, travel expense related to the
integration of Leg-it and the Colorado start-up effort, and higher shareholder
expenses. The wage increase was due mainly to a full year of administrative
department expense from acquired locations compared to 1997. In an effort to
control administrative expenses, we have restructured reporting lines and our
two highest paid executives voluntarily reduced their base salaries by $50,000
each effective December 1, 1998.

SEASONALITY

The manufactured housing industry and the site-built construction industry are
seasonal within the majority of our market area. Typically, sales for the months
from November through March are lower than for other months due to weather and
ground conditions. Assuming normal weather conditions, we expect the quarters
ended September 30 and June 30 to be the high volume quarters and the quarter
ended March 31 to be the lowest volume quarter. The following table shows
summarized operating results by quarter and demonstrates the seasonal nature of
TJT's operations:

                                     Page 17
<PAGE>

<TABLE>
<CAPTION>
                                      December 31         March 31           June 30        September 30
                                     -------------     -------------     -------------      -------------
                                                       (Unaudited, 
                                                        dollars in
                                                        thousands)
<S>                                  <C>               <C>               <C>                <C>
Fiscal year ended 1998
   Net sales                           $ 8,093             $ 7,249           $ 9,196          $ 9,535
   Gross profit                          1,545               1,427             1,521            1,634
   Operating income                        213                 197               203              112
   Net income                              133                 120               122               71

Fiscal year ended 1997
   Net sales                           $ 4,177             $ 5,680           $ 6,850          $ 8,715
   Gross profit                            721                 770             1,355            1,591
   Operating income                          9                (178)              376              429
   Net income                               37                 (85)              251              274
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company's principal sources of liquidity have been cash flow
from operations and borrowings under a revolving line of credit with a bank.
Available credit under the bank line is $2,000,000. The credit line bears 
interest at the Federal Funds rate plus 2.60%. The line matures on March 31, 
1999 and we expect to renew the line at that time. During fiscal 1998, we were 
in compliance with restrictive covenants under the operating line agreement 
related to working capital and equity and all other restrictive covenants.

OTHER EVENTS

During November 1998 we announced the approval by our directors of a plan to buy
back up to 5%, or 240,000 shares, of our common stock. The purchases will be
made at management's discretion over the next two years. Any purchases will be
funded by cash from operations or from our revolving credit line.

YEAR 2000 DISCLOSURE

We have made an initial assessment of our Year 2000 issues. We expect to be Year
2000 compliant by June 30, 1999. Remediation will consist of minor hardware
upgrades to our PC's and installation of patches for various software packages
we have purchased from vendors. We plan to contact our vendors and develop any 
necessary contingency plans. We do not expect expenses related to the Year
2000 issue to be significant to our operations.

COMPANY STRATEGY

Our focus will be growth by expansion, particularly in our distribution
activities. We have distribution locations in each of the five states with
recycling operations. Expanding the distribution activity in each of these
locations will allow us to increase revenue with a minimum of additional
overhead expense. As a new line of business, we are planning to invest in and
develop real estate on a limited basis.

                                     Page 18
<PAGE>


                                  T.J.T., INC.
                                   FORM 10-KSB

                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

<TABLE>
<CAPTION>
                                                                       PAGE
                                                                       ----
<S>                                                                    <C>
Balance Sheets                                                          20

Statements of Income                                                    21

Statements of Cash Flows                                                22

Statements of Changes in Shareholders' Equity                           23

Notes to Financial Statements                                           24

Report of Independent Accountants                                       34
</TABLE>


                                     Page 19
<PAGE>

                                  T.J.T., INC.
                                 BALANCE SHEETS
                             (Dollars in thousands)

<TABLE>
<CAPTION>

At September 30,                                                                     1998           1997
                                                                                -------------   ------------
<S>                                                                              <C>            <C>
Current assets:
    Cash and cash equivalents                                                        $ 204          $ 835
    Accounts receivable and notes receivable (net of
        allowance for doubtful accounts of $38 and $14)                              2,111          1,738
    Inventories                                                                      3,774          3,480
    Prepaid expenses and other current assets                                          517            253
                                                                              -------------   ------------
        Total current assets                                                         6,606          6,306

Property, plant and equipment, net of
    accumulated depreciation                                                         1,944          1,318

Notes receivable                                                                       348            434
Real estate held for investment                                                        390            275
Deferred charges and other assets                                                      326            411
Goodwill                                                                             1,440          1,396
                                                                              -------------   ------------
    Total assets                                                                  $ 11,054       $ 10,140
                                                                              -------------   ------------
                                                                              -------------   ------------
Current liabilities:
    Accounts payable                                                               $ 1,117          $ 616
    Accrued liabilities                                                                809            708
    Income taxes payable                                                                 3            146
                                                                              -------------   ------------
        Total current liabilities                                                    1,929          1,470

Deferred income and other noncurrent obligations                                       136            146
Deferred income taxes                                                                   60             53
                                                                              -------------   ------------
    Total liabilities                                                                2,125          1,669
                                                                              -------------   ------------

Shareholders' equity:
    Common stock, $.001 par value; 10,000,000
        shares authorized;  4,854,739 shares issued and
        outstanding                                                                      5              5
    Common stock warrants                                                              113            113
    Capital surplus                                                                  6,068          6,068
    Retained earnings                                                                3,181          2,735
    Treasury stock (10,907 and 7,991 shares at cost)                                   (44)           (39)
    Stock subscriptions receivable                                                    (394)          (411)
                                                                              -------------   ------------
        Total shareholders' equity                                                   8,929          8,471
                                                                              -------------   ------------
           Total liabilities and shareholders' equity                             $ 11,054       $ 10,140
                                                                              -------------   ------------
                                                                              -------------   ------------
</TABLE>



See accompanying notes to financial statements.

                                     Page 20

<PAGE>

                                  T.J.T., INC.
                              STATEMENTS OF INCOME
                 (Dollars in thousands except per share amounts)

<TABLE>
<CAPTION>

For the year ended September 30,                                                   1998             1997
                                                                             ---------------   --------------
<S>                                                                          <C>                <C>
Sales (net of returns and allowances):
    Axles and tires                                                              $ 25,816         $ 18,610
    Accessories and siding                                                          8,257            6,831
                                                                           ---------------   --------------
        Total sales                                                                34,073           25,441

Cost of goods sold                                                                 27,946           21,004
                                                                           ---------------   --------------

    Gross profit                                                                    6,127            4,437

Selling, general and administrative expenses                                        5,402            3,802
                                                                           ---------------   --------------
    Operating income                                                                  725              635

Interest income                                                                        62              112
Income on investment property                                                          23               81
Other income (expense)                                                                  -               (1)
                                                                           ---------------   --------------

    Income before taxes                                                               810              827

Income taxes                                                                          364              350
                                                                           ---------------   --------------

    Net income                                                                      $ 446            $ 477
                                                                           ---------------   --------------
                                                                           ---------------   --------------
Net income per common share                                                         $ .09            $ .11
Weighted average shares outstanding                                             4,844,704        4,514,679
                                                                           ---------------   --------------
                                                                           ---------------   --------------
</TABLE>


See accompanying notes to financial statements.

                                     Page 21
<PAGE>

                                  T.J.T., INC.
                            STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)

<TABLE>
<CAPTION>

For the year ended September 30,                                                           1998            1997
                                                                                        ------------    ------------
<S>                                                                                      <C>            <C>
Cash flows from operating activities:
    Net income                                                                                $ 446           $ 477
    Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation and amortization                                                           591             388
        (Gain) loss on sale of assets                                                            28             (49)
        Change in receivables                                                                  (305)            170
        Change in inventory                                                                    (236)           (487)
        Change in prepaid expenses and other current assets                                    (264)            (56)
        Change in accounts payable                                                              501            (638)
        Change in other assets and liabilities                                                  (83)            423
                                                                                        ------------    ------------
           Net cash provided by operating activities                                            678             228
                                                                                        ------------    ------------

Cash flows from investing activities:
    Additions to property, plant and equipment                                                 (897)           (291)
    Issuance of notes receivable                                                                (46)            (24)
    Payments on notes receivable                                                                121              18
    Proceeds from sale of assets                                                                  -              18
    Land purchased for investment                                                              (119)              -
    Sale of land purchased for investment                                                         -             238
    Net cash paid for Hanger acquisition                                                       (320)              -
    Net cash paid for Bradley acquisition                                                         -            (467)
    Net cash paid for Leg-it acquisition                                                          -            (371)
    Direct acquisition costs                                                                    (10)            (41)
                                                                                        ------------    ------------
        Net cash used by investing activities                                                (1,271)           (920)
                                                                                        ------------    ------------

Cash flows from financing activities:
    Treasury stock transactions                                                                  (5)            (53)
    Proceeds from stock subscriptions receivable                                                 17              59
    Payments on debt                                                                            (50)         (1,216)
                                                                                        ------------    ------------
        Net cash used by financing activities                                                   (38)         (1,210)
                                                                                        ------------    ------------

Net decrease in cash and cash equivalents                                                      (631)         (1,902)
Cash and cash equivalents at October 1                                                          835           2,737
                                                                                        ------------    ------------

Cash and cash equivalents at September 30                                                     $ 204           $ 835
                                                                                        ------------    ------------
                                                                                        ------------    ------------
Supplemental information:
    Interest paid                                                                              $ 14             $ 6
    Income taxes paid                                                                           500             305

Noncash transactions:
    Acquisition of property, plant and equipment by capital lease                              $ 40             $ -
    Issuance of stock for business combinations                                                   -           1,764
    Accrued consulting costs                                                                      -             348
</TABLE>

See accompanying notes to financial statements.

                                     Page 22
<PAGE>

                                  T.J.T., INC.
                  STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                Common                                                   Stock
                                                   Common        Stock       Capital       Retained     Treasury     Subscriptions
                                                    Stock      Warrants      Surplus       Earnings      Stock        Receivable
                                                  ----------   ----------   -----------   -----------   ---------   ----------------
<S>                                               <C>          <C>          <C>           <C>           <C>         <C>         
Balance at October 1, 1996                           $ 3        $ 113       $ 4,320       $ 2,258         $ -             $ (470)

Issuance of 940,000 common shares for
    acquisition of Bradley Enterprises, Inc.           1            -         1,380             -           -                  -
Payments on stock subscriptions receivable             -            -             -             -           -                 59
Issuance of 291,176 common shares for
    acquisition of Leg-it Tire Co., Inc.               1            -           382             -           -                  -
Treasury stock transactions                            -            -           (14)            -         (39)                 -
Net income                                             -            -             -           477           -                  -
                                               ----------   ----------   -----------   -----------   ---------   ----------------

Balance at September 30, 1997                          5          113         6,068         2,735         (39)              (411)

Payments on stock subscriptions receivable                                                                                    17
Treasury stock transactions                            -            -             -             -          (5)                 -
Net income                                                                                    446
                                               ----------   ----------   -----------   -----------   ---------   ----------------

Balance at September 30, 1998                          5          113         6,068         3,181         (44)              (394)
                                               ----------   ----------   -----------   -----------   ---------   ----------------
                                               ----------   ----------   -----------   -----------   ---------   ----------------
</TABLE>

See accompanying notes to financial statements.

                                     Page 23
<PAGE>

                                  T.J.T., INC.
                          NOTES TO FINANCIAL STATEMENTS
                           September 30, 1998 and 1997

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

BUSINESS ACTIVITY

The Company is engaged in the business of repairing and reconditioning axles and
tires for the manufactured housing industry. The Company also sells skirting and
other aftermarket accessories to manufactured housing dealers, and vinyl and
steel siding primarily to the site-built housing market. The Company grants
trade credit to customers in Idaho, Oregon, California, Utah, Washington,
Montana, Colorado, Wyoming, Arizona and Nevada, substantially all of whom are
manufactured housing factories, manufactured housing dealers, site-built home
contractors or siding contractors.

MAJOR CUSTOMERS AND SUPPLIERS

The Company has certain major customers for reconditioned axles and tires, all
of which are manufactured housing producers. Fleetwood Homes represented 11% of
total Company sales in 1998 and 14% in 1997, respectively. The Company had no
single supplier of axles and tires or accessories that represented 10% or more
of total purchases.

CASH AND CASH EQUIVALENTS

The Company considers all investments purchased with a maturity of three months
or less to be cash equivalents. The Company has funds in a cash management
account at a commercial bank which are collateralized by government securities.

ACCOUNTS RECEIVABLE AND BAD DEBTS

The Company performs credit history checks and limited financial analysis before
credit terms are offered to customers. Accounts receivable are generally
unsecured. Bad debts are accounted for using the allowance method. Expense is
recognized based on an estimate of uncollectible accounts.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost. Depreciation is calculated
using the straight-line method for financial reporting purposes.

                                     Page 24
<PAGE>

NOTES RECEIVABLE

Notes receivable consist primarily of amounts owed by individuals related to the
sale of real estate and are secured by the real estate sold.

DEFERRED CHARGES AND OTHER ASSETS

Deferred charges and other assets consists primarily of prepaid consulting fees
and amounts capitalized related to merger costs incurred in connection with the
Bradley and Leg-it mergers. The prepaid consulting fees and merger costs are
being amortized over five years on the straight-line method.

GOODWILL

Goodwill consists of the excess of purchase price paid over net assets acquired
from Bradley Enterprises, Inc. (Bradley), Leg-it Tire Co. Inc. (Leg-it), and
Hanger Enterprises and Ken's Mobile Tire (Hanger). Goodwill is amortized over 
15 years on the straight-line method and is presented net of $160,000 and 
$61,000 in amortization as of September 30, 1998 and 1997, respectively.

DEFERRED INCOME

Deferred income consists of gains on the sale of land held for investment where
the Company provided virtually 100% financing to the buyer. The Company
recognizes income to the extent of payments received on the related notes
receivable until it has received 25% or more of the original principal balance,
at which point the remaining deferred gain is recognized.

SECURITIES SUBSCRIPTION AGREEMENT

On January 31, 1995, the Company entered into a securities subscription
agreement with a group of investors whereby the Company issued 400,000 shares of
common stock in exchange for an unsecured promissory note of $470,000. During
1997 one of the investors paid $58,750, representing his portion of the
promissory note. During 1998 two of the investors paid a total of $17,625. The
remaining principal is due September 30, 2000 and bears interest at 8%.

INCOME TAXES

Income taxes are accounted for using the asset and liability method under which
deferred income taxes are determined based on differences between the financial
reporting and tax basis of assets and liabilities. Deferred income taxes are
measured by applying enacted tax rates and laws to taxable years in which such
differences are expected to reverse.

                                    Page 25
<PAGE>

EARNINGS PER SHARE

Earnings per share is computed by dividing net income applicable to common
shareholders by the weighted average number of shares outstanding.

CONCENTRATION OF CREDIT RISK

All trade receivables are due from entities involved in the housing industry and
are unsecured. The accounting loss incurred if all parties failed entirely to
perform on their obligation is equal to the balance outstanding for trade
accounts receivable.

Notes receivable related to sales of real estate held for investment are secured
by real estate located near Emmett, Idaho. The accounting loss incurred if all
parties failed entirely to perform on their obligation is equal to the balance
outstanding on the notes receivable less amounts realizable from the foreclosure
and resale of the property securing the notes receivable.

As of September 30, 1998, a total of $281,000 was advanced to Ford's Tires and
Axles. The amount represented advances to cover additional working capital
requirements for increased inventory and accounts receivable.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has a number of nonderivative financial instruments, none of which
are held for trading purposes. The Company estimates that the fair value of the
financial instruments at September 30, 1998 approximates the aggregate carrying
values recorded on the balance sheet. The estimated fair values have been
determined by the Company using available market information and appropriate
valuation methodologies. Judgment is required in interpreting market data to
develop the estimates of fair value and the estimates are not necessarily
indicative of amounts the Company could realize in a current market exchange.

SIGNIFICANT ESTIMATES

Management uses estimates and assumptions in preparing financial statements.
Those estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and reported
revenues and expenses. Significant estimates used in preparing these financial
statements include those assumed in determining the collectibility of
receivables, and determining the lower of cost or market and obsolescence on
inventories. It is reasonably possible that the significant estimates may change
within the next year.

RECLASSIFICATIONS

Certain 1997 amounts have been reclassified to conform with the 1998
presentation.

                                     Page 26

<PAGE>

NOTE B - INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out and average
cost methods) or market.

<TABLE>
<CAPTION>

(Dollars in thousands)                                         1998                      1997
                                                         --------------            --------------
<S>                                                      <C>                       <C>
Raw materials                                                $   1,490                 $   1,219
Finished goods                                                   2,284                     2,261
                                                         --------------            --------------
      Total                                                  $   3,774                 $   3,480
                                                         --------------            --------------
                                                         --------------            --------------
</TABLE>

NOTE C - PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
(Dollars in thousands)                                         1998                      1997
                                                          --------------            -------------
<S>                                                       <C>                       <C>
Land and building                                           $      389                $     122
Leasehold improvements                                             362                      385
Furniture and equipment                                          1,092                      689
Vehicles and trailers                                            1,220                      884
                                                         --------------            -------------
                                                                 3,063                    2,080
Less accumulated depreciation                                    1,119                      762
                                                         --------------            -------------
      Net property, plant and equipment                      $   1,944                 $  1,318
                                                         --------------            -------------
                                                         --------------            -------------
</TABLE>

Depreciation expense was $402,000 and $290,000 for 1998 and 1997, respectively.

NOTE D - LEASES

The Company leases vehicles, administrative office space, manufacturing
facilities, building and warehouse space, and storage yard space. The leases,
which expire between December 1998 and June 2003, are classified as operating
leases. The leases have been entered into with related parties and unaffiliated
entities.

There are no significant renewal or purchase options or escalation clauses.

                                     Page 27
<PAGE>

The future minimum payments by fiscal year under noncancellable operating lease
agreements at September 30, 1998 were:

<TABLE>
<CAPTION>

(Dollars in thousands)
<S>                                                           <C>
1999                                                          $296
2000                                                           215
2001                                                           201
2002                                                           167
2003                                                            69
Thereafter                                                       -
                                                      -------------
   Total                                                      $948
                                                      -------------
                                                      -------------
</TABLE>


Rental expense and rent paid to related parties were:

<TABLE>
<CAPTION>

(Dollars in thousands)                            1998              1997
                                               ------------     -------------

<S>                                                 <C>               <C> 
Rental expense                                      $394              $260
Rent paid to related parties:
   MBFI, Inc.                                        103                91
   Ulysses Mori                                       56                14
   T.J.T. Enterprises                                 34                40
</TABLE>


MBFI, Inc. is a corporation owned by the Bradley family. Patricia I. Bradley, 
an Executive Vice President of the Company, owns approximately 95% of 
MBFI, Inc. Mr. Mori is a Senior Vice President of the Company. T.J.T. 
Enterprises is a partnership consisting of Terrence Sheldon, President and 
Chief Executive Officer of the Company, and Jerry L. Radandt, a former officer 
of the Company. Mr. Sheldon and Mr. Radandt are equal partners in T.J.T. 
Enterprises.

NOTE E - CREDIT FACILITY

The Company has a revolving credit facility secured by receivables and inventory
with a financial institution maturing in March 1999. The maximum amount
available under the line of credit is $2,000,000. The interest rate on the
credit line is the Federal Funds rate plus 2.60%. The Company has met the
various restrictive covenants attached to the revolving credit line.

NOTE F - SHAREHOLDERS' EQUITY

Authorized stock of the Company consists of 10,000,000 shares of $.001 par value
common stock and 5,000,000 shares of $.001 par value preferred stock. No shares
of preferred stock have been issued. The Company has issued 4,500,644 warrants
to purchase the Company's common stock. Each warrant entitles the holder to
purchase one share of common stock at $4.00 per share. The warrants are
exercisable beginning December 21, 1996 and expire 

                                     Page 28
<PAGE>

December 21, 2000. The warrants are redeemable by the Company with 30 days
written notice at the rate of $.10 per warrant after December 21, 1996 and only
if the average stock closing bid price equals or exceeds $7.50 per share for 10
consecutive trading days. The Company does not have the ability to call the
warrants as of September 30, 1998 because it has not met the closing bid
requirements.

Effective July 3, 1997 the Company issued 291,176 restricted shares of common 
stock and paid $412,500 to acquire Leg-it. Effective November 14, 1996 the 
Company issued 940,000 restricted shares of common stock and paid $500,000 to 
acquire Bradley.

NOTE G - STOCK OPTIONS

The Company has a stock option plan which allows officers, directors and key
employees of the Company to receive non-qualified and incentive stock options.
All authorized, non-qualified stock options were granted on October 1, 1994 and
vested on September 30, 1996. Incentive stock options vest at the rate of 20
percent per year and expire five years from the vesting date. The Company also
has a stock option plan established in 1998 which allows non-employee directors
of the Company to receive non-qualified stock options. The options vest at the
rate of 20 percent per year and expire ten years from the grant date. The fair
value of each option grant is estimated using the Black-Scholes option pricing
model.

<TABLE>
<CAPTION>
                                                         Non-qualified and                  Directors
                                                       Incentive Option Plan                  Plan
                                          -------------------------------------            ------------

                                             1998                      1997                    1998
                                         ------------              ------------            ------------
<S>                                      <C>                       <C>                      <C>
Number of option shares
     Beginning of year                        115,000                  100,000                       -
     Granted - incentive                            -                   15,000                  10,000
     Became exercisable                         3,000                        -                   2,000
     Outstanding at end of year               115,000                  115,000                  10,000
     Exercisable at end of year               103,000                  100,000                   2,000

Weighted-average exercise prices
     Beginning of year                   $       4.24                $    4.00                 $     -
     Granted at fair value                          -                     5.88                    2.00
     Outstanding at end of year                  4.24                     4.24                    2.00
     Exercisable at end of year                  4.05                     4.00                    2.00

Range of exercise prices
  at September 30, 1998                  $4.00 - 5.88                                          $  2.00

Remaining weighted-average
  contractual life of options
  outstanding at September 30, 1998        1.28 years                                       9.17 years
</TABLE>

                                     Page 29
<PAGE>

The Company has elected not to adopt the provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (FAS
123). Assumptions used to calculate the income statement impact of stock options
granted as if the Company had adopted FAS 123 were as follows:

<TABLE>
<CAPTION>
                                                     Non-qualified and                       Directors
                                                   Incentive Option Plan                       Plan
                                          -------------------------------------            ------------
                                             1998                     1997                     1998
                                          ------------            -------------            ------------
<S>                                       <C>                     <C>                      <C>
Weighted average:

     Risk-free interest rate                                             6.70%                   5.83%
     Expected life                                                     5 years                10 years
     Expected volatility                                                15.84%                  56.86%
     Expected dividends                                                   None                   None
</TABLE>

Using these assumptions, expenses related to the granting of stock options as
calculated under FAS 123 were not material to the Company's results of
operations.

NOTE H - INCOME TAXES

The Company accounts for income taxes as prescribed by Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," which requires
deferred income taxes to be accounted for using the liability method and allows
recognition of operating loss and tax credit carryforwards as deferred tax
assets.

The components of income tax expense for the years ended September 30 are as
follows:

<TABLE>
<CAPTION>

(Dollars in thousands)                                    1998                     1997
                                                     -------------            -------------
<S>                                                   <C>                      <C>
Current:

      Federal                                             $318                     $309
      State                                                 53                       57

Deferred:

      Federal                                               (6)                     (13)
      State

                                                            (1)                      (3)
                                                     -------------            -------------
                                                     -------------            -------------
            Total                                         $364                     $350
                                                     -------------            -------------
                                                     -------------            -------------
</TABLE>

                                     Page 30
<PAGE>

Deferred taxes for the years ended September 30 are as follows:

<TABLE>
<CAPTION>

                                                          1998                     1997
                                                    -------------            -------------
<S>                                                  <C>                     <C>
Book to tax depreciation differences                      $107                     $100
Vacation liability                                         (25)                     (17)
Installment sales of land                                  (22)                     (30)
                                                    -------------            -------------
        Total                                              $60                      $53
                                                    -------------            -------------
                                                    -------------            -------------
</TABLE>
The provision for income taxes varied from amounts computed at the federal
statutory rate for the years ended September 30 as follows:

<TABLE>
<CAPTION>
                                                          1998                     1997
                                                     -------------            -------------
<S>                                                  <C>                       <C>
Provision at statutory rate                                 $276                     $281
Amortization of goodwill                                      33                       20
State income taxes, net of federal benefit                   (18)                     (18)
Other non-deductible expenses                                 21                        5
Other                                                         --                        8
                                                     -------------            -------------
        Total                                               $312                     $296
                                                     -------------            -------------
                                                     -------------            -------------
</TABLE>

NOTE I - COMMITMENTS

The Company has entered into employment agreements with the two Senior Vice
Presidents providing for minimum annual base salaries of $150,000 each,
extending through June 24, 2001 and May 31, 2002, respectively. The Company has
entered into employment agreements with five employees providing for minimum
annual base salaries of $60,580 extending through December 31, 1998.

NOTE J - RELATED PARTY TRANSACTIONS

The Company has extended loans to various related parties. The notes are secured
by common stock of the Company or other property. The notes mature through 2000
and have interest rates ranging from 12.22% to 16.77%. The totals of the notes
and accrued interest receivable from the related parties were $57,872 and
$72,106 at September 30, 1998 and 1997, respectively. Long-term portions of
these notes are included in notes receivable and current portions of these notes
are included as current assets in notes receivable.

The Company sold 400,000 shares of its common stock to a private investor group
in exchange for a note receivable of $470,000 in January 1995. Three members of
the group qualify as related parties. Robert M. Rubin holds greater than 5% of
the outstanding stock, Stephen A. Weiss was a director of the Company until he
resigned on June 15, 1997, and 

                                     Page 31
<PAGE>

Arthur J. Berry is a director of the Company. Mr. Berry paid $58,750, plus
interest, representing his portion of the note on March 20, 1997. The
proportionate outstanding principal and accrued interest for these three
individuals at September 30, 1998 and 1997 was $415,752 and $410,208,
respectively.

Effective October 1, 1996, the Company retained the services Robert M. Rubin, an
individual who owns in excess of 5% of the outstanding common shares, to perform
consulting services in the areas of raising capital, analyzing acquisitions, and
developing long-term strategy. The Company agreed to pay a total of $348,200 to
Mr. Rubin. The amount is included in other assets and is being amortized over 60
months.

The Company entered into agreements with J.R. Strunk and Vance Strunk, brothers
of Douglas Strunk, a Director of the Company, to serve as independent buyers for
the Company during 1998 and 1997. These buyers purchased $910,436 and $1,269,105
of used axles and tires for the Company in 1998 and 1997, respectively. In order
to facilitate transactions between the Company and the buyers, the Company
advances cash to the buyers. At September 30, 1998 and 1997, the Company had
advanced $-0- and $62,750, respectively. The advances are included in accounts
receivable.

The Company purchased property held for investment from a related party for
$118,987 during 1998.

The Company purchases piers and other materials used to set up manufactured
homes from SAC Industries, Inc. (SAC). SAC is owned by four individuals with
each individual owning 25%. Patricia I. Bradley and Ulysses B. Mori, Directors
and executive officers of the Company, are two of the individuals. The Company
purchased $565,452 and $310,215 of materials from SAC in 1998 and 1997,
respectively.

NOTE K - EMPLOYEE BENEFITS

The Company has a 401(k) plan through which the employer matched 50% of
employees' contributions up to 6% of wages for contributions beginning August 1,
1996. Employees are eligible for participation in the 401(k) plan after 
completing one year of service. Employer contributions to the plan were 
$63,278 and $49,016 in 1998 and 1997, respectively.

NOTE L - ACQUISITIONS

On November 14, 1996, the Company issued 940,000 restricted shares of common
stock and paid $500,000 to acquire Bradley, an axle and tire recycler formerly 
headquartered in Centralia, Washington. The Company acquired cash of $33,000, 
accounts receivable of $657,000, inventory of $1,003,000, fixed assets of 
$572,000, and other assets of $86,000. The Company assumed $562,000 of 
accounts payable and accrued expenses and $908,000 of interest-bearing debt. 
Based upon the purchase price of $1,882,000, goodwill of $1,001,000 was 
recorded.

                                     Page 32
<PAGE>

On July 3, 1997, the Company issued 291,176 restricted shares of common stock
and paid $412,500 to acquire Leg-it, an axle and tire recycler formerly 
headquartered in Woodland, California. The Company acquired cash of $41,000, 
accounts receivable of $205,000, inventory of $328,000, fixed assets of 
$255,000, and other assets of $11,000. The Company assumed $193,000 of 
accounts payable and accrued expenses and $308,000 of interest-bearing debt. 
Based upon the purchase price of $795,000, goodwill of $456,000 was recorded.

In June 1998, the Company acquired specified assets and assumed specified 
liabilities of Hanger located in Eugene, Oregon. The Company hired the former 
owner of Hanger to manage the operations. The primary operation is 
manufacturing hanging parts used by manufactured housing producers to attach 
axles and tires to the homes. The Company paid the former owner $320,000 and 
assumed $58,000 of debt to complete the transaction.

In July 1998, the Company entered into an agreement to purchase Ford's Tires and
Axles located in Chandler, Arizona. As part of the purchase agreement, the
Company also agreed to manage Ford's Tires and Axles until due diligence was
completed and the terms of the purchase transaction were finalized. The
management agreement allows the Company to provide operating capital and
expertise to improve the operation prior to the acquisition.

NOTE M - LEGAL PROCEEDINGS

The Company has been named as a defendant, along with other parties, in a
lawsuit seeking recovery for wrongful death arising out of an accident in
Northern Idaho in a which a wheel supplied by the Company came off a
manufactured home in transit and struck the vehicle. The claimant is the 
husband and children of the deceased. The lawsuit has been tendered to the 
Company's insurance carrier and the carrier is providing a defense. Counsel 
retained by the insurance company to provide a defense has advised the Company 
that the range of liability does not exceed the Company's policy limits.

Leg-it and Ulysses Mori, one of the Company's directors, have been named as 
defendants in a lawsuit alleging harassment, discrimination and retaliation. 
The suit is in the discovery phase and does not specify damages. Management is 
unable to determine the probability of loss or the range of loss, if any, at 
this time.

NOTE N - RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive 
Income," which establishes standards for reporting and display of 
comprehensive income, its components and accumulated balances. Comprehensive 
income is defined to include all changes in equity except those resulting from 
investments by owners and distributions to owners. SFAS 130 has been adopted 
and there was no affect on the financial statements.

Also in June 1997, FASB issued SFAS No. 131, "Disclosures about Segments of an 
Enterprise and Related Information" which supersedes SFAS No. 14, "Financial 
Reporting for Segments of a Business Enterprise." SFAS No. 131 establishes 
standards for the way that public companies report information about operating 
segments in annual and interim financial statements. SFAS No. 131 defines 
operating segments as components of a company for which separate financial 
information is available to and evaluated regularly by the chief operating 
decision maker in deciding how to allocate resources and in assessing 
performance. SFAS 131 is effective for financial statements for periods 
beginning after December 15, 1997 and requires comparative information for 
earlier years to be restated. Results of operations and financial position 
will be unaffected by implementation of this standard.

                                     Page 33
<PAGE>

INDEPENDENT AUDITORS' REPORT


To the Shareholders and Board of Directors
T.J.T., Inc.
Emmett, Idaho

We have audited the accompanying balance sheets of T.J.T., Inc., as of September
30, 1998 and 1997, and the related statements of income, cash flows, and changes
in shareholders' equity for the years 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 audits.

We conducted our audits 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 audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of T.J.T., Inc., as of September
30, 1998 and 1997, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.

Boise, Idaho
November 11, 1998

                                     Page 34
<PAGE>



ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS

         The following documents are filed as Exhibits to this Form 10-KSB:

         3.1      Articles of Incorporation of T.J.T., Inc., a Washington
                  corporation; incorporated by reference to Exhibit 3.1 to the
                  Registrant's Form SB-2 Registration Statement dated October
                  20, 1995, as amended December 6, 1995 (Commission
                  File No. 33-98404).

         3.2      Bylaws of T.J.T., Inc., a Washington corporation; incorporated
                  by reference to Exhibit 3.2 to the Registrant's Form SB-2
                  Registration Statement dated October 20, 1995, as amended
                  December 6, 1995 (Commission File No. 33-98404).

         4.1      Specimen Common Stock Certificate; incorporated by reference
                  to 4.1 to the Registrant's Form SB-2

                  Registration Statement dated October 20, 1995, as amended
                  December 6, 1995 (Commission File No. 33-98404).

         4.2      Specimen Redeemable Common Stock Purchase Warrant;
                  incorporated by reference to Exhibit 4.2 to the Registrant's
                  Form SB-2 Registration Statement dated October 20, 1995, as
                  amended December 6, 1995 (Commission File No. 33-98404).

         4.3      Form of Underwriter's Warrant Agreement; incorporated by
                  reference to Exhibit 4.3 to the Registrant's Form SB-2
                  Registration Statement dated October 20, 1995, as amended
                  December 6, 1995 (Commission File No. 33-98404).

         4.4      Form of Warrant Agreement issued to 1995 Private Placement
                  Investors in October 1995; incorporated by reference to
                  Exhibit 4.4 to the Registrant's Form SB-2 Registration
                  Statement dated October 20, 1995, as amended December 6, 1995
                  (Commission File No. 33-98404).

         4.5      Form of Registration Rights Agreement issued in connection
                  with 1995 Private Placement; incorporated by reference to
                  Exhibit 4.5 to the Registrant's Form SB-2 Registration
                  Statement dated October 20, 1995, as amended December 6, 1995
                  (Commission File No. 33-98404).

         9.1      Voting Trust Agreement - Not Applicable

                                     Page 35
<PAGE>

         10.1     Form of Employment Agreement with Terrence J. Sheldon,
                  President and Chief Executive Officer of the Company;
                  incorporated by reference to Exhibit 10.1 to the Registrant's
                  Form SB-2 Registration Statement dated October 20, 1995, as
                  amended December 6, 1995 (Commission File No. 33-98404).

         10.2     Form of Employment Agreement with Andy C. Doll, Chief 
                  Financial Officer; incorporated by reference to Exhibit 10.2 
                  to the Registrant's Form SB-2 Registration Statement dated
                  October 20, 1995, as amended December 6, 1995 (Commission
                  File No. 33-98404).

         10.3     Consulting Agreement with Stephen A. Weiss, Director;
                  incorporated by reference to Exhibit 10.3 to the Registrant's
                  Form SB-2 Registration Statement dated October 20, 1995, as
                  amended December 6, 1995 (Commission File No. 33-98404).

         10.4     Stock Option Plan; incorporated by reference to Exhibit 10.4
                  to the Registrant's Form SB-2 Registration Statement dated
                  October 20, 1995, as amended December 6, 1995 (Commission File
                  No. 33-98404).

         10.5     Lease dated December 1984, as amended, between Theodore Muller
                  Trust, as lessor, and the Registrant as lessee, related to
                  recycling and distribution facility in Salem, Oregon;
                  incorporated by reference to Exhibit 10.5 to the Registrant's
                  Form SB-2 Registration Statement dated October 20, 1995, as
                  amended December 6, 1995 (Commission File No. 33-98404).

         10.6     Lease dated March 22, 1993 between T.J.T. Enterprises, as
                  lessor, and the Registrant as lessee, related to 
                  administrative office building in Emmett, Idaho; incorporated 
                  by reference to Exhibit 10.6 to the Registrant's Form SB-2 
                  Registration Statement dated October 20, 1995, as amended
                  December 6, 1995 (Commission File No. 33-98404).

         10.7     Lease dated March 22, 1993 between T.J.T. Enterprises, as
                  lessor, and the Registrant as lessee, related to storage yard
                  in Emmett, Idaho; incorporated by reference to Exhibit 10.7 to
                  the Registrant's Form SB-2 Registration Statement dated 
                  October 20, 1995, as amended December 6, 1995 (Commission 
                  File No. 33-98404).

                                     Page 36
<PAGE>

         10.8     Lease dated May 23, 1991 between Terrence J. Sheldon and
                  Jerry L. Radandt, as lessors, and the Registrant as lessee,
                  related to recycling plant in Emmett, Idaho; incorporated by
                  reference to Exhibit 10.8 to the Registrant's Form SB-2
                  Registration Statement dated October 20, 1995, as amended
                  December 6, 1995 (Commission File No. 33-98404).

         10.9     Lease dated May 23, 1991 between Terrence J. Sheldon and
                  Jerry L. Radandt, as lessors, and the Registrant as lessee,
                  related to tire shop in Emmett, Idaho; incorporated by
                  reference to Exhibit 10.9 to the Registrant's Form SB-2
                  Registration Statement dated October 20, 1995, as amended
                  December 6, 1995 (Commission File No. 33-98404).

         11.1     Statement Re: Computation of Earnings Per Share - Not 
                  Applicable

         16.1     Letter on Change in Certifying Accountant - Not Applicable

         21.1     Subsidiaries of the Registrant - Not Applicable

         23.1*    Consent of Independent Public Accountants

         24.1     Power of Attorney - Not Applicable

         27.1     Financial Data Schedule - Not Applicable

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

         *        Filed herewith

(b)      REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the last
         quarter of the fiscal year ended September 30, 1998.

                                     Page 37
<PAGE>

                                   SIGNATURES

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

                                              T.J.T., INC.
                                              REGISTRANT

Date:    December 29, 1998          By:/s/ Terrence J. Sheldon
                                       -----------------------------------------
                                       Terrence J. Sheldon, President and 
                                       Chief Executive Officer

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

Date:    December 29, 1998          By:/s/ Terrence J. Sheldon
                                       -----------------------------------------
                                       Terrence J. Sheldon, President, Chief 
                                       Operating Officer, Chief Executive
                                       Officer and Chairman of the Board of 
                                       Directors

Date:    December 29, 1998          By:/s/ Patricia I. Bradley
                                       -----------------------------------------
                                       Patricia I. Bradley, Executive Vice 
                                       President, and Director

Date:    December 29, 1998          By:/s/ Ulysses B. Mori
                                       -----------------------------------------
                                       Ulysses B. Mori, Senior Vice President,
                                       and Director

Date:    December 29, 1998          By:/s/ Rickie K. Treadwell
                                       -----------------------------------------
                                       Rickie K. Treadwell, Senior Vice 
                                       President and Director

Date:    December 29, 1998          By:/s/ Scott M. Beechie
                                       -----------------------------------------
                                       Scott M. Beechie, Vice President, 
                                       Treasurer, Chief Financial Officer and 
                                       Director

Date:    December 29, 1998          By:/s/ B. Kelly Bradley
                                       -----------------------------------------
                                       B. Kelly Bradley, Centralia, Washington
                                       Manager and Director

Date:    December 29, 1998          By:/s/ Darren M. Bradley
                                       -----------------------------------------
                                       Darren M. Bradley, Centralia, Washington 
                                       Assistant Manager and Director

                                     Page 38
<PAGE>



Date:    December 29, 1998          By:/s/ John W. Eames, III
                                       -----------------------------------------
                                       John W. Eames, III, Regulation Compliance
                                       Officer and Director

Date:    December 29, 1998          By:/s/Douglas A. Strunk
                                       -----------------------------------------
                                       Douglas A. Strunk, Sales Manager - Idaho
                                       Facility and Director

Date:    December 29, 1998          By:/s/Darle E. Lacey
                                       -----------------------------------------
                                       Darle E. Lacey, Centralia, Washington 
                                       Purchasing Manager and Director

Date:    December 29, 1998          By:/s/April L. Kierstead
                                       -----------------------------------------
                                       April L. Kierstead, Assistant Treasurer,
                                       Secretary and Director

Date:    December 29, 1998          By:/s/Scott M. Hayes
                                       -----------------------------------------
                                       Scott M. Hayes, Director

Date:    December 29, 1998          By:/s/Arthur J. Berry
                                       -----------------------------------------
                                       Arthur J. Berry, Director

                                     Page 39