<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

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

                     For the fiscal year ended June 30, 1999

                           Commission File No. 0-4123

                            MOYCO TECHNOLOGIES, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

           Pennsylvania                                23-1697233
-------------------------------------       ------------------------------------
(State or other jurisdiction of             (IRS Employer Identification Number)
incorporation or organization)

                200 Commerce Drive
          Montgomeryville, Pennsylvania                      18936
-----------------------------------------------    -----------------------------
     (Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code:     (215) 855-4300
                                                      --------------------------

Securities registered pursuant to Section 12(b) of the Act:

       Title of each class           Name of each exchange on which registered
------------------------------     ---------------------------------------------
              None                                 None

Securities registered pursuant to Section 12(g) of the Act:

                     Common stock, par value $.005 per share
--------------------------------------------------------------------------------
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                          YES  __X__          NO ____

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

The aggregate market value, based on the closing price of such stock as reported
by NASDAQ, of the voting stock (Common stock) held by non-affiliates of the
Registrant as of September 24, 1999 was $2,268,217.

For purposes of making this calculation only, the Registrant has defined
affiliates as including all directors, executive officers and beneficial owners
of more than 10% of the Common stock of the Registrant.

As of September 24, 1999, the number of shares outstanding of the Registrant's
Common stock was 4,544,674.



<PAGE>


                                     PART I

ITEM 1. BUSINESS.

Moyco Technologies, Inc. and subsidiaries was incorporated in 1968 under the
laws of the Commonwealth of Pennsylvania. As used herein, the term "Moyco" or
the "Company," includes Moyco Technologies, Inc. and subsidiaries unless the
context otherwise indicates.

General

The Company operates in two business segments: Dental Supplies and Precision
Abrasives. The Dental Supplies segment involves the manufacturing, marketing and
distributing of dental supplies, such as waxes, abrasives, medicaments, dental
mirrors, endodontic (root canal) instruments, materials and equipment, sundry
dental items, hand instruments, sterilization items, as well as the repacking
and distributing of other dental products for sale to the professional dental
market. The Precision Abrasives segment involves the manufacturing of commercial
coated abrasives, precision submicron coated abrasives, slurries (wet abrasives)
and polishing agents. These products are used for various applications and
industries, including but not limited to, fiber optics, lapidary, nail files,
dentistry, plastics and woods, semiconductor manufacturing and other high-tech
manufacturing procedures which require extremely fine abrasive films and/or
slurries to achieve consistently uniform polishing results. The Precision
Abrasives segment works closely with customers to develop specific products to
meet each customer's unique finishing requirements.

In August 1996, the Company acquired all of the outstanding Common stock of
Thompson Dental Mfg. Co. ("Thompson"), a manufacturer of dental hand instruments
and related products. Thompson's business activities since the date of
acquisition have been included in the Company's Dental Supplies segment.

Business Segments

Financial information relating to Moyco's two business segments and operations,
both domestically and internationally, is provided in Note 9 of Notes to
Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.

Dental Supplies

Moyco, through its Dental Supplies segment, is engaged in the manufacturing,
marketing and distributing of dental supplies, such as waxes, abrasives,
medicaments, dental mirrors, endodontic (root canal) instruments, materials and
equipment, sundry dental items, hand instruments, sterilization items, as well
as the repackaging and distributing of other dental products for sale to the
professional dental market.

The Dental Supplies segment sells products under the "Moyco Union Broach" and
"Thompson" trade names. The Moyco Union Broach product line includes various
patented and/or proprietary products under well-known trade names including, but
not limited to, FLEX-R Files, LIGHTNING Strips, ONYX-R Files, MASTERSOL, and
BEAUTY PINK wax. The Thompson product line offers the professional dental market
various proprietary products such as TACTILE TONE hand instruments and the
RE-BAG reusable sterilization pouch.


                                       -2-
<PAGE>


All products are generally sold through salaried salespersons to dental supply
wholesalers and distributors serving the professional dental market in the
United States and overseas, as well as to a limited number of end users. During
the years ended June 30, 1999 and 1998, one Dental Supplies segment customer
accounted for 11.9% and 11.1%, respectively, of the Company's total net sales.
Sales in the Dental Supplies segment to overseas customers were 12.1%, 17.5% and
10.5% of total net sales for the years ended June 30, 1999, 1998 and 1997,
respectively. See Note 9 of Notes to Consolidated Financial Statements.

Sales of the Company's endodontic (root canal) instruments accounted for 25.6%,
24.0% and 20.6% of the Company's total net sales for the years ended June 30,
1999, 1998 and 1997, respectively. Certain of these instruments are subject to
litigation with DENTSPLY International Inc. ("Dentsply"). (See discussion of
legal proceedings in Part I, Item 3 of this Form 10-K).

While the sales growth of the U.S. dental supplies business has been slower than
other industries during the past five years, endodontic (root canal) instrument,
material and equipment sales are increasing at a higher rate due to the aging of
the U.S. population, expansion of dental services offered by general dentists,
and the attractive economics of endodontics. With regard to Moyco's patented
line of nickel titanium endodontic instruments, after the dentist is properly
trained, use of these items will usually significantly reduce patient "chair
time" and potential complications which occur during traditional root canal
therapy. The Dental Supplies segment's strength, endodontic instruments, should
provide various opportunities for growth. Nevertheless, with regard to all of
the other product lines manufactured by the Dental Supplies segment and
endodontic instrument business in certain international territories, the Company
continues to experience price sensitivity of its customer base which only allows
for nominal product price increases. Additionally, the Company's dental
distribution customers have been in an environment characterized by
consolidations. As a result of these mergers, the Company has experienced, and
may continue to experience a reduction in sales as the merged entities combine
inventories and purchasing power while reducing the number of vendors supplying
commodity type products.

Moyco is in the process of introducing various innovative and proprietary
endodontic (root canal) products which are expected to compliment popular Moyco
Union Broach products and to fully integrate the endodontic product line. These
products, such as POW-R .06 coronal shapers, SLIDE file lubricant and the MARK V
apex locator, will allow Moyco to market complete endodontic systems to dental
professionals through seminars sponsored by Moyco and its network of authorized
distributors. To further expand its endodontic product offering, Moyco, through
its Thompson product line, has also developed several new endodontic hand
instruments featuring proprietary color-coded tactile tone grips to reduce hand
stress.

Precision Abrasives

Moyco, through its Precision Abrasives segment, is engaged in the manufacture of
commercial abrasive materials under the name "Flex-I-Grit" and the production of
extremely fine sub-micron and namometer abrasive films and slurries under the
trademark "Ultralap." Moyco also manufactures slurries (wet abrasives) for
various fine finishing procedures. The Company's abrasives are often
manufactured to the specifications of customers for various unique fine
polishing requirements.



                                       -3-
<PAGE>

Moyco's abrasive films are manufactured for more than twenty different
applications and, therefore, are made in numerous varieties which take into
account many factors such as (i) type of grit (i.e., aluminum oxide, diamond,
cerium, etc.), (ii) grit size, (iii) grit consistency, (iv) color, (v) type of
backing or substrate, (vi) finished product delivery type (i.e., rolls, disks,
sheets, strips, etc.) and (vii) customer requirements. The Company sells its
precision abrasive products to the following markets: semiconductor and other
high-tech manufacturing, fiber optics, dentistry, lapping gem, toy and hobby,
imaging, automotive parts, finger nail, ceramic roll and other markets which
require fine polishing, lapping and finishing films and/or slurries.

Moyco's abrasives made for the toy and hobby industry ("Flexi-I-Grit") are sold
by a master distributor and other repackers through the use of private label
arrangements, while the "Ultralap" products are sold by the Company's salesmen
either directly to end users or to distributors. Sales in the Precision
Abrasives segment to overseas customers were 7.9%, 4.9% and 3.6% of total net
sales for the years ended June 30, 1999, 1998 and 1997, respectively. See Note 9
of Notes to Consolidated Financial Statements.

Backlog

There is a backlog of orders in the aggregate of $2,076,024 as of June 30, 1999.
There had been a backlog of orders in the aggregate of $2,186,304 as of June 30,
1998. Approximately 75.9% and 67.0% of the backlog at June 30, 1999 and 1998,
respectively, relates to the Precision Abrasives segment.

Sources and Availability of Supplies

The Company procures its raw materials and supplies from various sources and
does not expect to have any difficulty in procurement during the coming year or
the foreseeable future.

Patents, Trademarks and Licenses

The Company's ability to compete effectively with other companies depends, in
part, on its ability to protect and maintain the proprietary nature of its
technology. The Company owns 9 United States patents, 1 Japanese patent and a
number of issued foreign patents and pending patent applications for its
products. The Company plans to continue to patent inventions which may provide
commercial benefit. Currently, the Company has one patent application pending
for a new endodontic instrument design. In addition, the Company is reviewing
the possibility of filing several new applications related to both its dental
and abrasives technologies. The Company treats its design and technical data as
confidential, and relies on nondisclosure safeguards, such as confidentiality
agreements, laws protecting trade secrets and agreements to protect proprietary
information. The Company has incurred substantial costs in enforcing its patents
against infringement by others and defending itself against similar claims of
others. Although the Company has been successful to date in disputes involving
the validity and enforceability of its patents and in defending itself against
claims by others of patent infringement, there can be no assurance that the
Company will continue to be successful in such matters in the future or that the
Company's patents or other proprietary rights, even if



                                       -4-
<PAGE>


continuing to be held valid, will be broad enough in scope to enable the Company
to prevent third parties from producing products using similar technologies or
processes. With regard to the current Dentsply litigation, the Company remains
confident that its intellectual property position is strong. For more
information, see discussion of legal proceedings in Part I, Item 3 of this Form
10-K. The Company also has registered various trademarks which have assisted the
Company in building brand identity and loyalty.

Research and Development

The Company engages in research activities directed toward the development of
new products relating to current product lines and the improvement of existing
products. Spending for research and development totaled $37,857, $986,690 and
$186,196, for the years ended June 30, 1999, 1998 and 1997, respectively.

Competition

All of the lines of business in which the Company is presently engaged are
highly competitive. There are numerous other manufacturers, many of which are
larger and have greater financial resources and more sales representatives than
the Company. The Company's material competitors in its Precision Abrasives
segment are: Minnesota Mining and Manufacturing Company, Nippon Mining Company
and Norton Corporation. The Company's material competitors in its Dental
Supplies segment are: Dentsply, Sybron International Corporation, Premier
Dental, Hu-Friedy, Coltene Whaledent, American Eagle, Nordent and Miltex.

Employees

As of June 30, 1999, the Company employs 174 persons, of whom 134 are involved
in manufacturing products for the Precision Abrasives and Dental Supplies
segments, and 40 are engaged in administration, sales, engineering, supervision
and clerical work. The Company has had no work stoppages and considers its
relationship with its employees to be good.

Other

The Company believes it produces no significant discharges of waste or
pollutants into the environment, and there are no significant effects on the
Company in complying with current Federal, state and local environmental laws
and regulations.



                                       -5-
<PAGE>


ITEM 2. PROPERTIES.

The Company is the owner of three buildings. The Montgomeryville, Pennsylvania,
facility is a one-story, cinder block building containing approximately 40,125
square feet, of which 14,250 square feet are used for manufacturing; 19,875
square feet for warehousing and 6,000 square feet for offices. This facility is
primarily used for the manufacture of precision abrasives. The York,
Pennsylvania, facility is 68,995 square feet, of which approximately 45,807
square feet are used for manufacturing; 16,542 for warehousing and 6,646 for
offices. The Missoula, Montana, facility is 9,600 square feet, of which
approximately 7,800 square feet are used for manufacturing and warehousing and
1,800 square feet for offices. The York, Pennsylvania, and Missoula, Montana,
facilities are used by the Company's Dental Supplies segment. There are
mortgages on all of the Company's properties. Moyco's facilities are suitable
for their respective uses and are, in general, adequate for Moyco's present
needs. If the Company requires additional capacity, the facility in York has
additional space available for warehousing, manufacturing and office personnel.
The building, which may be expanded up to 160,000 square feet, is zoned for
expansion and was built with two removable walls.











                                       -6-
<PAGE>



ITEM 3. LEGAL PROCEEDINGS.

As of the date of this Form 10-K, other than the litigation filed against the
Company by Dentsply (which is described below), the Company was not involved in
any material legal proceedings, other than ordinary litigation incidental to the
business and, specifically, was not involved in any material environmental
litigation or governmental proceedings.

Dentsply Litigation

On April 22, 1998, the Company was served with a complaint in the United States
Court for the Middle District of Pennsylvania by Dentsply claiming infringement
of a Dentsply patent by the Company's manufacturing process to fabricate nickel
titanium endodontic (root canal) instruments. By amendment, a claim for
infringement of a second related patent was later added. The Company has
retained counsel to vigorously defend against the Dentsply complaint, which
management believes to be without basis. The Company has asserted defenses which
management believes meritorious. In addition, the Company has filed
counterclaims alleging, among other things, that Dentsply is infringing three
Company patents, violating the Sherman Antitrust Act and the Lanham Act, and
interfering with the Company's business relationships.

In addition, a related arbitration was recently held in Tulsa, Oklahoma before
the American Arbitration Association which addressed issues relating to a
settled litigation between the Company and an entity subsequently acquired by
Dentsply. The Company is awaiting the arbitrator's ruling.

Moyco is in the process of negotiating an alternative fee agreement with its
primary trial attorneys in the Dentsply litigation. In accordance with the
proposed terms of the agreement, the Company has begun to pay a fixed monthly
fee, effective April 1999. In addition, there is also a proposed contingent fee
based on recoveries. Although this proposed agreement will limit certain legal
costs in the future, the Company anticipates that total legal and professional
fees incurred for the Dentsply litigation will continue to be significant and
have a material adverse effect on the Company's consolidated financial position
and results of operations for the foreseeable future.




                                       -7-
<PAGE>



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

None.





























                                       -8-
<PAGE>



                                     PART II
                                     -------

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

Since October 20, 1998, Moyco's Common stock has been traded on the NASDAQ
SmallCap Market. Between January 26, 1996, and October 19, 1998, the Company's
Common stock was traded on the NASDAQ National Market, and prior to that time
was traded in the over-the-counter market between dealers in securities.

The following table sets forth the high and low sales prices per share (adjusted
to give retroactive effect to the 10% stock dividend issued on September 30,
1998) for each quarter during fiscal year 1999 and 1998 based on NASDAQ SmallCap
and National Market Composite Transactions.

                                                            High       Low
                                                           -----      -----
First quarter ended September 30, 1998                     $3.50      $2.63
Second quarter ended December 31, 1998                      2.00       1.00
Third quarter ended March 31, 1999                          1.38       1.03
Fourth quarter ended June 30, 1999                          1.66       1.00

                                                            High       Low
                                                           -----      -----
First quarter ended September 30, 1997                     $7.45      $4.95
Second quarter ended December 31, 1997                      5.93       4.04
Third quarter ended March 31, 1998                          5.78       3.31
Fourth quarter ended June 30, 1998                          3.82       2.27

There were no cash dividends paid during the years ended June 30, 1999, 1998 and
1997. The ability of the Company to pay any cash dividends on its Common stock
is dependent on the Company's earnings and cash requirements. The Company does
not anticipate that it will declare or pay any cash dividends on its Common
stock for the foreseeable future. The Company issued a 10% stock dividend on all
shares of Common stock outstanding as of record September 18, 1998. The new
shares were distributed to shareholders on September 30, 1998. All earnings
(loss) per Common share data, shares used in computing earnings (loss) per
Common share and all share and option balances and prices were restated to give
retroactive effect to the 10% stock dividend. The number of shareholders of
record at June 30, 1999 was 614, which excludes shareholders whose shares are
held in nominee or "street" name by brokers.




                                       -9-
<PAGE>



ITEM 6. SELECTED FINANCIAL DATA.

Selected consolidated statement of operations data:
<TABLE>
<CAPTION>

                                                            For the Year Ended June 30
                                      ------------------------------------------------------------------
                                         1999          1998         1997(3)       1996          1995
                                      -----------  -----------   -----------   -----------   -----------
<S>                                       <C>           <C>          <C>           <C>           <C>
NET SALES                             $15,062,944  $15,337,641   $13,982,927   $11,914,303   $11,880,186

COST OF GOODS SOLD                      8,796,706    8,559,554     8,581,493     7,293,200     6,986,736
                                      -----------  -----------   -----------   -----------   -----------

         Gross profit                   6,266,238    6,778,087     5,401,434     4,621,103     4,893,450

OPERATING EXPENSES(1)                   6,656,528    6,756,281     6,296,883     3,268,965     3,473,919
                                      -----------  -----------   -----------   -----------   -----------

         Income (loss) from
           operations                    (390,290)      21,806      (895,449)    1,352,138     1,419,531

INTEREST (EXPENSE) AND OTHER
   INCOME, net (2)                       (279,972)   1,362,333      (492,783)     (420,605)     (404,873)

INCOME TAX BENEFIT (EXPENSE)              234,461     (322,810)      379,604      (186,394)     (478,344)
                                      -----------  -----------   -----------   -----------   -----------

NET INCOME (LOSS)                     $  (435,801) $ 1,061,329   $(1,008,628)  $   745,139   $   536,314
                                      ===========  ===========   ===========   ===========   ===========

BASIC EARNINGS (LOSS) PER COMMON
   SHARE(4)                           $     (.10)  $     0.23    $    (0.22)   $      0.17   $     0.12
                                      ==========   ==========    ==========    ===========   ==========

DILUTED EARNINGS (LOSS) PER COMMON
   SHARE(4)                           $     (.10)  $     0.23    $    (0.22)   $      0.17   $     0.12
                                      ==========   ==========    ==========    ===========   ==========
</TABLE>

(1)   In fiscal 1998, the Company made a one-time payment of $775,000 relating
      to certain research and development fees. See Note 3 of Notes to
      Consolidated Financial Statements.

(2)   On December 31, 1997, the Company sold its chemical mechanical
      planarization ("CMP") assets and CMP business product line for the
      electronics industry and related intellectual property to EKC Technology,
      Inc. ("EKC"), a subsidiary of ChemFirst Inc. for $2,450,000 in cash, as
      well as a deferred payment by EKC contingent on sales of CMP products
      during the period through June 30, 1999, and varying royalties based on
      sales of CMP products through 2004. This transaction resulted in a pre-tax
      gain of $1,660,483 for the Company in fiscal 1998. See Note 14 of Notes to
      Consolidated Financial Statements.

      Also on December 31, 1997, the Company sold certain particle dispersion
      technology to Nanophase Technologies Corporation ("Nanophase") for
      $223,000 in cash, resulting in a one-time pre-tax gain of $223,000.


                                      -10-
<PAGE>


(3)   On August 8, 1996, the Company acquired all of the outstanding Common
      stock of Thompson, a manufacturer of dental hand instruments and related
      products. The acquisition was accounted for as a purchase business
      combination. See Note 2 of Notes to Consolidated Financial Statements.

(4)   As adjusted to give retroactive effect to the 10% stock dividend issued on
      September 30, 1998.  See Note 3 of Notes to Consolidated Financial
      Statements.

Selected consolidated balance sheet data:
<TABLE>
<CAPTION>
                                                                 June 30
                                    ---------------------------------------------------------------------
                                       1999          1998           1997           1996           1995
                                    -----------   -----------    -----------    -----------   -----------
<S>                                 <C>               <C>            <C>           <C>             <C>
Working capital                     $ 5,159,438   $ 5,575,453    $ 3,729,300    $ 4,717,373   $ 4,589,745
                                    ===========   ===========    ===========    ===========   ===========
Total assets                        $16,205,774   $15,739,912    $15,044,732    $12,544,014   $12,983,665
                                    ===========   ===========    ===========    ===========   ===========

Capital lease obligations,
   excluding current portion        $   292,976   $   152,533    $       --     $       --    $       --
                                    ===========   ===========    ===========    ===========   ==========

Long-term debt, excluding current
   portion                          $ 5,436,092   $ 5,793,718    $ 5,255,263    $ 5,616,112   $ 6,735,460
                                    ===========   ===========    ===========    ===========   ===========
Shareholders' equity                $ 5,427,118   $ 5,879,969    $ 4,820,565    $ 4,975,488   $ 4,150,575
                                    ===========   ===========    ===========    ===========   ===========
</TABLE>




                                      -11-
<PAGE>



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

Safe Harbor for Forward-Looking Statements

From time to time, the Company may publish statements which are not historical
fact, but are forward-looking statements relating to such matters as anticipated
financial performance, business prospects, technological developments, new
products, research and development activities and similar matters. The Private
Securities Litigation Reform Act of 1995 provides safe harbor for
forward-looking statements.

These forward-looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from historical and
anticipated results or other expectations expressed in the Company's
forward-looking statements. Such forward-looking statements may be identified by
the use of certain forward-looking terminology, such as, "may," "will,"
"should," "expect," "anticipate," "intend," "plan," "project," "estimate,"
"believe," "goal," or "continue," or comparable terminology that involves risks
or uncertainties. Actual future results and trends may differ materially from
historical results or those anticipated depending on a variety of factors,
including, but not limited to (i) competition within the Company's industries;
(ii) changes in the economics of dentistry, including consolidation, reduced
growth in expenditures by private dental insurance plans, and the effects of
healthcare reform, which may affect future per capita expenditures for dental
services and the ability of dentists to invest in or obtain reimbursement for
the use of dental products; (iii) the effect of economic conditions; (iv) supply
risks, including shortages and increases in the costs of key raw materials; (v)
dependence on the services of the Company's executive officers, and other key
operations and technical personnel; (vi) legal proceedings (See discussion of
legal proceedings in Part I, Item 3 of this Form 10-K.); and (vii) the effects
of the casualty loss at one of the Company's manufacturing facilities (See
discussion of casualty loss below).

Overview

The Company recorded a loss of $435,801 for fiscal 1999 primarily due to the
significant professional and legal fees incurred by the Company related to the
Dentsply litigation, which will continue to have a material adverse effect on
the Company's consolidated financial position and results of operations for the
foreseeable future. In addition, the Company experienced a decrease in net
revenues from international customers in the Dental Supplies segment and
incurred expenses for the on-going introduction of a new sales, marketing and
growth strategy in the Precision Abrasives segment. The Precision Abrasives
segment has targeted four applications and markets to generate additional
revenues for its precision lapping films and slurries. The growth strategy is to
target specific opportunities related to the finishing and polishing of computer
heads, floppy disks, ceramic rolls and automotive parts.

In April 1999, certain coating equipment utilized in the manufacture of abrasive
materials in the Precision Abrasives segment was damaged at the Company's
Montgomeryville facility. The damage was caused by water seeping through a
section of the facility's roof which was being repaired, and was left
unprotected by an outside contractor during a rainfall. Minor amounts of raw
material inventory were also damaged.


                                      -12-
<PAGE>


The Company has received insurance proceeds to replace a portion of the damaged
equipment and additional funds for repairs on the remaining equipment. In
addition, the Company has filed additional claims for the resulting business
interruption which are being reviewed by Moyco's insurance provider. The Company
will replace the affected equipment in the first quarter of fiscal 2000, thus
production capacity may be reduced during this time. The Company is continuing
to utilize all practical initiatives to reduce the impact of the damaged
equipment and has not experienced any significant reductions in production to
date; however, the Company has experienced decreased gross profit margins as a
result of the damaged equipment and any reduced production capacity in fiscal
2000 could have a material impact on the future sales and operating income of
the Precision Abrasives segment. An accurate evaluation of the ultimate impact
on these areas has not yet been made.

Summary

The following table sets forth for the periods indicated the Company's key
financial information by segment.
<TABLE>
<CAPTION>
                                                     For the Year Ended June 30
                                                --------------------------------------
                                                    1999        1998           1997
                                                -----------  -----------   -----------
<S>                                                 <C>        <C>             <C>
Net sales:
   Dental Supplies                              $10,319,202  $10,915,768   $ 9,537,098
   Precision Abrasives                            4,743,742    4,421,873     4,445,829
                                                -----------  -----------   -----------
                                                $15,062,944  $15,337,641   $13,982,927
                                                ===========  ===========   ===========

Gross profit:
   Dental Supplies                              $ 5,058,017  $ 5,336,168   $ 3,718,354
   Precision Abrasives                            1,208,221    1,441,919     1,683,080
                                                -----------  -----------   -----------
                                                $ 6,266,238  $ 6,778,087   $ 5,401,434
                                                ===========  ===========   ===========

Operating income (loss):
   Dental Supplies                              $   140,814  $ 1,365,562   $  (977,814)
   Precision Abrasives                             (531,104)  (1,343,756)       82,365
                                                -----------  -----------   -----------
                                                $  (390,290) $    21,806   $  (895,449)
                                                ===========  ===========   ===========
</TABLE>

Results of Operations

Year Ended June 30, 1999 Compared to Year Ended June 30, 1998

Net sales in fiscal 1999 totaled $15,062,944, a decrease of $274,697 from fiscal
1998 sales of $15,337,641. Net sales in the Dental Supplies segment decreased
$596,566, primarily due to a decrease in international sales offset by an
increase in the sales of the Company's proprietary and patented endodontic (root
canal) instruments. Net sales in the Precision Abrasives segment increased
$321,869 primarily as a result of the introduction of newly developed higher
priced abrasive films for fiber-optic polishing applications.



                                      -13-
<PAGE>


Gross profit decreased $511,849 from fiscal 1998. As a result of the decreased
sales, the gross profit in the Dental Supplies segment decreased $278,151 from
$5,336,168 (48.9% of Dental Supplies net sales) in fiscal 1998 to $5,058,017
(49.0% of Dental Supplies net sales) in fiscal 1999. The gross profit in the
Precision Abrasives segment decreased $233,698 from $1,441,919 (32.6% of
Precision Abrasives net sales) in fiscal 1998 to $1,208,221 (25.5% of Precision
Abrasives net sales) in fiscal 1999. Gross profit as a percentage of net sales
in the Dental Supplies segment remained relatively constant between periods. The
decrease in gross profit percentage for the Precision Abrasives segment is
attributable to the casualty loss experienced at the Company's Montgomeryville
facility which caused production interruptions and the use of less efficient
manufacturing processes during the period subsequent to the loss.

Operating expenses decreased $99,753 from $6,756,281 (44.1% of net sales) in
fiscal 1998 to $6,656,528 (44.2% of net sales) in fiscal 1999. This decrease was
a result of a $948,833 decrease in research and development expenses as a result
of costs incurred in fiscal 1998 in connection with certain research and
development fees paid to Nanophase, as well as the investment of funds during
the same period to refine the Company's CMP slurry products. Sales and marketing
expenses increased $93,297 from $2,715,379 (17.7% of net sales) in fiscal 1998
to $2,808,676 (18.6% of net sales) in fiscal 1999 primarily as a result of
additional cooperative advertising and education seminars sponsored by the
Company offset by lower sales commissions. General and administrative expenses
increased $755,783 from $3,054,212 (19.9% of net sales) in fiscal 1998 to
$3,809,995 (25.3% of net sales) in fiscal 1999 due to higher legal and
professional fees in connection with the Dentsply litigation. The Company
believes it will incur significant costs, which the Company is unable to
estimate due to the nature of litigation, related to the Dentsply litigation for
the foreseeable future that will have a material adverse effect on the Company's
consolidated financial position and results of operations. (See discussion of
legal proceedings in Part I, Item 3 of this Form 10-K).

Interest expense decreased due to a decrease in the average interest rate on the
Company's outstanding debt obligations (from the renegotiation of the rates on
certain mortgages and long-term debt in fiscal 1999) and as a result of lower
average outstanding borrowings on the Company's line of credit. Interest income
remained relatively constant between periods. Other income increased $149,139
due to the receipt of $200,000 in casualty insurance proceeds to replace
equipment damaged as a result of the aforementioned casualty loss at the
Montgomeryville facility.

In fiscal 1998, the Company sold its CMP assets and CMP business product line
for the electronics industry and related intellectual property to EKC, a
subsidiary of ChemFirst Inc. for $2,450,000 in cash, as well as a deferred
payment by EKC contingent on sales of CMP products during the period through
June 30, 1999, and varying royalties based on sales of CMP products through
2004. The additional deferred payment expected to be received for the period
through June 30, 1999 is not significant. This transaction resulted in a pre-tax
gain of $1,660,483 for the Company in fiscal 1998.

Also in fiscal 1998, the Company sold certain particle dispersion technology to
Nanophase for $223,000 in cash, resulting in a one-time pre-tax gain of
$223,000.




                                      -14-
<PAGE>



Year Ended June 30, 1998 Compared to Year Ended June 30, 1997

Net sales in fiscal 1998 increased $1,354,714 from fiscal 1997. Net sales in the
Dental Supplies segment increased $1,378,670, from $9,537,098 in fiscal 1997 to
$10,915,768 in fiscal 1998 primarily due to increased international sales and
increased sales of endodontic instruments. Net sales in the Precision Abrasives
segment decreased $23,956.

Gross profit in fiscal 1998 increased $1,376,653 from fiscal 1997. Gross profit
in the Dental Supplies segment increased $1,617,814 from $3,718,354 (39.0% of
Dental Supplies net sales) in fiscal 1997 to $5,336,168 (48.9% of Dental
Supplies net sales) in fiscal 1998. Gross profit in the Precision Abrasives
segment decreased $241,161 from $1,683,080 (37.9% of Precision Abrasives net
sales) in fiscal 1997, to $1,441,919 (32.6% of Precision Abrasives net sales) in
fiscal 1998. Gross profit in the Dental Supplies segment increased due to the
aforementioned increase in net sales. Gross profit as a percentage of net sales
in the Dental Supplies segment increased primarily due to improvements in the
manufacturing process at Thompson since the acquisition and a shift in product
sales to higher margin proprietary and/or patented products. Gross profit as a
percentage of net sales in the Precision Abrasives segment decreased due to wage
and price increases by various vendors.

Sales and marketing expenses increased $324,005 from $2,391,374 (17.1% of net
sales) in fiscal 1997 to $2,715,379 (17.7% of net sales) in fiscal 1998
partially as a result of the Thompson acquisition and partially due to increased
royalty payments and advertising and promotional spending by the Company.
General and administrative expenses increased $189,899 from $2,864,313 (20.5% of
net sales) to $3,054,212 (19.9% of net sales) due to the Thompson acquisition,
as well as legal and professional fees of approximately $520,000 related to the
conclusion of the foot powder investigation, settlement of litigation with Cabot
Corporation and the Dentsply litigation defense. Research and development
expenses increased $800,494 due to costs incurred in connection with certain
research and development fees paid to Nanophase, as well as the investment of
funds to refine the Company's CMP slurry products.

Interest expense increased due to increased borrowings related to the funding of
the Company's current operations. Interest income remained relatively constant
between periods.

On December 31, 1997, the Company sold the Precision Abrasives segment's CMP
assets and CMP business product line for the electronics industry and related
intellectual property to EKC for $2,450,000 in cash, as well as a deferred
payment by EKC contingent on sales of CMP products during the period through
June 30, 1999, and varying royalties based on sales of CMP products through
2004. This transaction resulted in a pre-tax gain of $1,660,483. Also on
December 31, 1997, the Company sold certain particle dispersion technology to
Nanophase for $223,000 in cash, resulting in a one-time pre-tax gain of
$223,000.

Other income, net increased $80,344 in fiscal 1998 from fiscal 1997 due to a
$72,000 gain on miscellaneous property and equipment dispositions in fiscal
1998.





                                      -15-
<PAGE>



Liquidity and Capital Resources

Historically, the Company's primary source of liquidity has been cash flow from
operations. These funds, combined with borrowings under long-term debt
obligations with both banks and municipal authorities, have provided the
liquidity to finance the Company's capital expenditures and continued
operations. Substantially all of the Company's assets are pledged as collateral
for its long-term debt.

Net cash of $51,215 and $1,567,970 was used in operations during fiscal 1999 and
1998, respectively. Net cash of $498,645 was provided by operations in fiscal
1997. In fiscal 1999, the decreasing use of cash between periods was a result of
the timing of receivable collections from customers, changes in the level of
inventory maintained by the Company and payments to vendors offset by an
increasing loss from operations and the timing of payments to taxing
authorities. The increased cash used in operations between fiscal 1998 and 1997
was primarily a result of an increase in accounts receivable caused by an
extension of credit terms to an increased foreign customer base, an increase in
inventory levels to reduce order fulfillment time and payments related to the
settlement of the foot powder matter.

Expenditures for property, plant and equipment totaled $291,838 in fiscal 1999,
$439,833 in fiscal 1998, and $466,983 in fiscal 1997. The Company received
proceeds of $2,673,000 related to the sale of its CMP assets, the CMP business
product line for the electronics industry and related intellectual property, and
certain particle dispersion technology during fiscal 1998.

Proceeds received from long-term debt were $975,000, $4,260,000, $340,000 for
fiscal 1999, 1998 and 1997, respectively, which includes proceeds of $750,000
related to a refinancing of a portion of its line of credit with long-term debt
with a bank during fiscal 1998. For fiscal 1999, 1998 and 1997, the Company made
payments on long-term debt and capital lease obligations of $1,734,887,
$3,651,897 and $1,337,535, respectively, which includes payments of $975,000 and
$2,562,921 related to refinancing of certain long-term debt during fiscal 1999
and 1998, respectively.

During fiscal 1999, the Company renegotiated certain of its mortgages and loans
to secure more favorable terms and interest rates.

The Company has a commitment for a $3,000,000 line of credit with a bank which
will expire on December 31, 1999, subject to renewal. Management intends to
renew the line of credit under similar terms and conditions. The line of credit
bears interest at the prime rate and is secured by substantially all of the
Company's assets. During fiscal 1999, the Company had net borrowings of
$1,200,000 under this line of credit. In addition, the Company has an additional
convertible line of credit with the same bank to finance legal fees and related
expenses under which it may borrow up to $500,000. Repayments on the convertible
line of credit will be made in monthly installments beginning October 1999,
based upon the then outstanding amount with the final payment due September
2003. Borrowings under the convertible line of credit bear interest at prime. As
of June 30, 1999, there had been no borrowings on the convertible line of
credit. Subsequent to June 30, 1999, the Company borrowed the maximum amount
available under the convertible line of credit. In 1997, the Company used
$1,025,000 in net borrowings under the line of credit to retire approximately
$670,000 in debt assumed in the Thompson acquisition, as well as for general
working capital purposes. These borrowings were repaid in fiscal 1998.



                                      -16-
<PAGE>


The Company expects to spend approximately $100,000 in fiscal 2000 on capital
expenditures, primarily for abrasive and dental instrument manufacturing
equipment. The Company also may be required to make additional expenditures to
repair and/or replace certain of its coating equipment damaged in April 1999.
The possible amount related to this loss is not known at this time. In addition,
the Company is obligated to pay $412,500 over three years relating to the
settlement of the foot powder matter, and expects to spend significant funds on
the Dentsply litigation. (See discussion of legal proceedings in Part I, Item 3,
of this Form 10-K.) The Company anticipates that sufficient cash will be
generated from operations to fund these payments and expenditures and, to the
extent they are not, they will be funded using the Company's credit facilities.

The Company is constantly evaluating its capital structure and considering
opportunities for strategic alliances, mergers, acquisitions, secondary
offerings, private placements or other transactions. The Company continually
evaluates and considers possible acquisition and/or merger opportunities. Among
other items, the Company would consider the following factors in determining
whether or not to pursue an acquisition or alliance including: (i) synergy with
the Company's current lines of business products, (ii) growth potential, (iii)
return on investment and (iv) technologies. However, at this time, none of the
above opportunities are planned or in process.

The Company believes that inflation has not, and will not, have a material
impact on the Company's financial condition and results of operations.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133, as amended by SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133 an amendment of FASB Statement No.
133," which must be adopted by the Company in the year ending June 30, 2001,
provides a comprehensive and consistent standard for the recognition and
measurement of derivatives and hedging activities. As the Company does not
currently hold derivative instruments or engage in hedging activities, the
adoption of this pronouncement is expected to have no impact on the Company's
financial position or results of operations.

In March 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This statement requires that
certain costs related to the development or purchase of internal-use software be
capitalized and amortized over the estimated useful life of the software, and is
effective for fiscal years beginning after December 15, 1998. The statement also
requires that costs related to the preliminary project stage and post
implementation/operations stage in an internal-use computer software development
project be expensed as incurred. As the Company's current policy falls within
the guidelines of SOP 98-1, the adoption of this pronouncement is expected to
have no impact on the Company's financial position or results of operations.



                                      -17-
<PAGE>


Risks Associated with the Year 2000

I. Background

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. In other words,
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the Year 2000. This could result in system failures or miscalculations
causing disruptions of operations, including, among others, a temporary
inability to process transactions and information, send invoices, or engage in
similar normal business activities.

II. Readiness Efforts

The Company does not believe that it has material exposure to the Year 2000
issue with respect to its own information and non-information systems
technology. The Company has reviewed its existing information and
non-information systems technology and they either correctly define the year
field in its programs with four digits or will be replaced before Year 2000
issues will arise.

In addition, the Company conducted an analysis to determine the extent to which
its major vendors' systems (insofar as they relate to the Company's business)
posed Year 2000 issues. Based upon this analysis the Company does not believe it
has material exposure to Year 2000 issues with respect to its major vendors'
systems; however, the failure of a major vendor to satisfactorily complete the
conversion of its systems or a final conversion that is ultimately incompatible
with the Company's systems could have a material adverse effect on the Company.

The Company also faces potential loss of revenue from customers who may have
Year 2000 issues. Currently, the Company is conducting a review of its customers
but is unable to predict how and to what extent its operations may be effected
by Year 2000 issues at its customers; however, Year 2000 issues at a significant
customer could have a material adverse effect on the Company.

III. Current Status

The expected completion date of the review of customer systems is October 1999.

IV. Costs

Historical and estimated costs directly related to Year 2000 issue remediation
at the Company have been and are expected to be immaterial as the Company's
systems have been and will be upgraded on a normal replacement schedule with
only immaterial opportunity costs of Company personnel to ensure new systems and
third parties are Year 2000 compliant.




                                      -18-
<PAGE>



V. Risk Assessment

Based upon current information related to the progress of its major vendors and
service providers, management has determined that the Year 2000 issue will not
pose significant operational problems for its computer systems. This
determination is based on the ability of those vendors and service providers to
renovate, in a timely manner, the products and services on which the Company's
systems rely. However, the Company can give no guarantees that the systems of
these suppliers will be timely renovated.

The Company is developing in 1999 contingency plans to address third-party Year
2000 risks, realizing that some disruption may occur despite its best efforts.
The Company is in the process of developing those contingency plans for each
critical system in the event that one or more of these systems fail.

Risk Factors

The statements contained in this Form 10-K that are not historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including
statements regarding the expectations, beliefs, intentions or strategies
regarding the future. Additionally, from time to time, the Company or its
representatives have made or may make forward-looking statements, orally or in
writing. Such forward-looking statements may be included in, but are not limited
to, press releases, oral statements made with the approval of an authorized
executive officer or in various filings made by the Company with the Securities
and Exchange Commission. These forward-looking statements reflect the Company's
views as of the date they are made with respect to future events and financial
performance and are, generally, but not exclusively, identified by the use of
such terms as "may," "will," "should," "expect," "anticipate," "intend," "plan,"
"project," "estimate," "believe," "goal," or "continue," or comparable
terminology that involves risks or uncertainties. However, these forward-looking
statements are subject to many uncertainties and risks which could cause the
actual results of the Company to differ materially from any future results
expressed or implied by such statements. Additionally, the Company does not
undertake any obligation to update any forward-looking statements.

The risk factors identified in the cautionary statements below could cause
actual results to differ materially from those suggested in these
forward-looking statements. Also, the Company may, from time to time, set forth
additional risk factors on Forms 10-Q and 8-K. However, the risk factors listed
below or in future reports of the Company are not exhaustive. New risk factors
emerge from time to time, and it is not possible for management to predict all
of such risk factors, nor can it assess the impact of all of such risk factors
on the Company's business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements. Accordingly, forward-looking statements should
not be relied upon as a prediction of actual results. The cautionary statements
below are being made pursuant to the "safe-harbor" provisions of the Private
Securities Litigation Reform Act of 1995 (the "Act"). The Company intends that
all forward-looking statements made, in whatever form, be considered subject to
the Act.




                                      -19-
<PAGE>


Changes in the U.S. Dental Health Care System. There has been substantial debate
in the political arena related to prospective changes in the U.S. health care
system. In addition, developments in both the public and the private sector may
significantly affect the financing and delivery of dental health care in the
United States, including the expansion of managed care programs, large dental
practices, franchises, purchasing groups and industry consolidation. Cost
containment has been a major element of these developments. There can be no
assurance that such changes in the financing and delivery of dental health care
will not continue to affect dental capital equipment and supplies procurement
patterns or dictate which procedures will be covered by applicable insurance or
government funded or subsidized programs. The Company also cannot predict the
extent or impact of future legislation or regulations.

Competition. The Company faces substantial competition from other manufacturers.
Competitive pressure could result in price competition or the introduction of
new products by the Company's competitors, which could have an adverse impact on
the Company's revenues and results of operations. In addition, the Company is
engaged in industries characterized by extensive research efforts. Advances in
products and other discoveries or developments could render some of the
Company's products obsolete. Some of the companies with which the Company
competes or may compete in the future have or may have more extensive research,
marketing and manufacturing capabilities and significantly greater financial,
technical and personnel resources than the Company and may be better positioned
to continue to improve their technology in order to compete in evolving
industries.

Governmental Regulation. Government regulation in the U.S. and other countries
is a significant factor in the development, manufacturing and marketing of many
of the Company's products and in the Company's on-going research and development
activities. Specifically, dental devices are subject to United States Food and
Drug Administration ("FDA") approval or clearance before they can be utilized
for clinical studies or sold commercially. The process for obtaining the
necessary approvals and compliance with applicable regulations can be costly and
time consuming. There can be no assurance that regulatory review will not
involve delays or other actions adversely affecting the marketing and sales of
the Company's products. There is no assurance the Company will continue to be
able to obtain required government approvals or successfully comply with such
regulations in a timely and cost-effective manner, if at all, and failure to do
so may have an adverse effect on the Company's financial condition and results
of operation. Further, there can be no assurances that more stringent regulatory
requirements and/or safety and quality standards will not be issued in the
future with an adverse effect on the Company's business. Although the Company
believes that it is in compliance with all applicable regulations of the FDA,
current regulations depend heavily on administrative interpretation and there
can be no assurance that future interpretations made by the FDA or other
regulatory bodies, with possible retroactive effect, will not adversely affect
the Company.

The Company's products are similarly subject to foreign regulating bodies.
Typically, foreign bodies readily allow the Company's products to be traded
within their jurisdictions, based on the fact that the Company's products are
regulated by the FDA. However, there can be no assurance that such foreign
bodies will not impose different, additional requirements that may materially
hamper the Company's ability to compete in overseas markets. The Company has
received CE (Conformite European) certification for its major dental product
lines for European distribution and is constantly evaluating regulatory
requirements in various territories throughout the world to ensure compliance
with same.



                                      -20-
<PAGE>


Patents and Proprietary Technologies. The Company's ability to compete
effectively with other companies depends, in part, on its ability to protect and
maintain the proprietary nature of its technology. The Company owns 9 United
States patents, 1 Japanese patent and a number of issued foreign patents and
pending patent applications for its products. The Company plans to continue to
patent inventions which may provide commercial benefit. Currently, the Company
has one patent application pending for a new endodontic instrument design. In
addition, the Company is reviewing the possibility of filing several new
applications related to both its dental and abrasives technologies. The Company
treats its design and technical data as confidential, and relies on
nondisclosure safeguards, such as confidentiality agreements, laws protecting
trade secrets and agreements to protect proprietary information. The Company has
incurred substantial costs in enforcing its patents against infringement by
others and defending itself against similar claims of others. Although the
Company has been successful to date in disputes involving the validity and
enforceability of its patents and in defending itself against claims by others
of patent infringement, there can be no assurance that the Company will continue
to be successful in such matters in the future or that the Company's patents or
other proprietary rights, even if continuing to be held valid, will be broad
enough in scope to enable the Company to prevent third parties from producing
products using similar technologies or processes. With regard to the current
Dentsply litigation, the Company remains confident that its intellectual
property position is strong. (For more information, see discussion of legal
proceedings in Part I, Item 3 of this Form 10-K.)

Product Development. The Company is actively engaged in identifying market needs
and in developing products to satisfy those unmet needs. Such products are not
necessarily in the Company's current business segments. The Company attempts to
validate the existence of such unmet needs as well as the potential revenues,
costs and profits involved in satisfying such needs. There is a material risk
that the Company's competitors may satisfy those needs with more effective or
less expensive products. There is also a material risk that the Company's
estimates of the economic potential from such unmet needs may be incomplete or
inaccurate, or that the products which the Company develops to meet such needs
will be introduced on a timely basis or effective clinically or economically to
gain market acceptance.

Change in Marketing Approach. With regard to the Dental Supplies segment, the
Company plans to fund and/or sponsor various educational programs including, but
not limited to seminars, lectures and demonstrations by industry opinion
leaders. While trade shows, dealer product presentations, advertising and other
traditional marketing strategies will continue, the Company is shifting its
marketing emphasis to professional endorsement of products. The Company believes
that this method of marketing will create greater demand for technique sensitive
products. With regard to the Precision Abrasives segment, the Company plans to
focus on higher margin products. Although the Company believes that this
transition will have a long-term positive financial impact, no assurance can be
given that the actions taken will provide the intended results, or that the
Company will not experience short-term disruptions or an adverse impact of
operations during the transition to this new marketing approach.




                                      -21-
<PAGE>



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.




























                                      -22-
<PAGE>



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Index to Consolidated Financial Statements:
                                                                            Page
                                                                            ----

     Report of Independent Public Accountants                                24

     Consolidated Balance Sheets - June 30, 1999 and 1998                    25

     Consolidated Statements of Operations - For the Years Ended
       June 30, 1999, 1998 and 1997                                          27

     Consolidated Statements of Shareholders' Equity - For the Years
       Ended June 30, 1999, 1998 and 1997                                    28

     Consolidated Statements of Cash Flows - For the Years Ended
       June 30, 1999, 1998 and 1997                                          29

     Notes to Consolidated Financial Statements                              30


     Schedule II - Valuation and Qualifying Accounts (included
       in Part IV of this Form 10-K)                                         55

     All other schedules are omitted because they are not applicable,
       or not required, or because the required information is
       included in the Consolidated Financial Statements or notes thereto.






                                      -23-
<PAGE>






                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Moyco Technologies, Inc. and subsidiaries:



We have audited the accompanying consolidated balance sheets of Moyco
Technologies, Inc. (a Pennsylvania corporation) and subsidiaries as of June 30,
1999 and 1998, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended June 30, 1999. These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule 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 Moyco Technologies, Inc. and
subsidiaries as of June 30, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1999, in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the Index to
Financial Statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and regulations and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

                                                    /s/Arthur Andersen LLP


Philadelphia, Pennsylvania
    September 16, 1999





                                      -24-
<PAGE>



                    MOYCO TECHNOLOGIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                         June 30
                                                                                -------------------------
                                    ASSETS                                        1999           1998
                                    ------                                      -----------  ------------
<S>                                                                                <C>             <C>
CURRENT ASSETS:
   Cash and cash equivalents                                                    $ 1,752,468   $ 1,486,554
   Marketable securities                                                                --        185,904
   Accounts receivable, net of reserves of $401,323 and $267,741                  2,458,855     2,504,645
   Note receivable                                                                  206,107           --
   Other receivables                                                                212,928        71,531
   Income tax receivable                                                            155,872           --
   Inventories                                                                    4,373,256     4,335,174
   Deferred income taxes                                                            475,687       257,305
   Prepaid expenses                                                                  31,056        42,026
                                                                                -----------   -----------

                  Total current assets                                            9,666,229     8,883,139
                                                                                -----------   -----------

PROPERTY, PLANT AND EQUIPMENT:
   Land                                                                             602,433       602,433
   Buildings and improvements                                                     4,624,245     4,587,511
   Machinery and equipment                                                        6,431,093     5,751,307
   Furniture and fixtures                                                           683,941       840,413
   Automotive equipment                                                             139,630       139,630
                                                                                -----------   -----------

                                                                                 12,481,342    11,921,294
   Less- Accumulated depreciation and amortization                               (6,656,644)   (5,885,594)
                                                                                -----------   -----------

                  Net property, plant and equipment                               5,824,698     6,035,700
                                                                                -----------   -----------

OTHER ASSETS:
   Goodwill, less accumulated amortization of $91,242 and $59,734                   381,378       412,886
   Other                                                                            333,469       408,187
                                                                                -----------   -----------

                  Total other assets                                                714,847       821,073
                                                                                -----------   -----------

                                                                                $16,205,774   $15,739,912
                                                                                ===========   ===========
</TABLE>


        The accompanying notes are an integral part of these statements.



                                      -25-
<PAGE>



                    MOYCO TECHNOLOGIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)
<TABLE>
<CAPTION>

                                                                                         June 30
                                                                                ------------------------
                     LIABILITIES AND SHAREHOLDERS' EQUITY                           1999         1998
                     ------------------------------------                       -----------  -----------
<S>                                                                                <C>             <C>
CURRENT LIABILITIES:
   Line of credit                                                               $ 1,200,000  $        --
   Current portion of capital lease obligations                                      99,471       71,942
   Current portion of long-term debt                                                614,553      916,576
   Accounts payable                                                               1,968,921    1,323,170
   Income taxes payable                                                                 --       245,326
   Accrued expenses                                                                 623,846      750,672
                                                                                -----------  -----------

                  Total current liabilities                                       4,506,791    3,307,686
                                                                                -----------  -----------

CAPITAL LEASE OBLIGATIONS                                                           292,976      152,533
                                                                                -----------  -----------

LONG-TERM DEBT                                                                    5,436,092    5,793,718
                                                                                -----------  -----------

DEFERRED INCOME TAXES                                                               225,797      141,006
                                                                                -----------  -----------

OTHER LONG-TERM LIABILITIES                                                         317,000      465,000
                                                                                -----------  -----------

COMMITMENTS AND CONTINGENCIES (Note 11)

SHAREHOLDERS' EQUITY:
   Preferred stock, $.005 par value,
     2,500,000 shares authorized,
     none issued and outstanding                                                         --           --
   Common stock, $.005 par value, 15,000,000
     shares authorized, 5,205,547 shares issued                                      26,028       26,028
   Additional paid-in capital                                                     5,103,443    5,103,443
   Retained earnings                                                                448,095      883,896
   Less- Treasury stock of 660,873
     and 653,923 shares at cost                                                    (150,448)    (133,398)
                                                                                -----------  -----------

                  Total shareholders' equity                                      5,427,118    5,879,969
                                                                                -----------  -----------

                                                                                $16,205,774  $15,739,912
                                                                                ===========  ===========
</TABLE>


        The accompanying notes are an integral part of these statements.



                                      -26-
<PAGE>



                    MOYCO TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>



                                                                           For the Year Ended June 30
                                                                     ---------------------------------------
                                                                         1999         1998          1997
                                                                     -----------   -----------   -----------
<S>                                                                     <C>           <C>            <C>
NET SALES                                                            $15,062,944   $15,337,641   $13,982,927

COST OF GOODS SOLD                                                     8,796,706     8,559,554     8,581,493
                                                                     -----------   -----------   -----------

                  Gross profit                                         6,266,238     6,778,087     5,401,434

OPERATING EXPENSES:
   Sales and marketing                                                 2,808,676     2,715,379     2,391,374
   Research and development                                               37,857       986,690       186,196
   General and administrative                                          3,809,995     3,054,212     2,864,313
   Charge for litigation settlement                                          --            --        855,000
                                                                     -----------   -----------   -----------

                  Income (loss) from operations                         (390,290)       21,806      (895,449)

INTEREST EXPENSE, net                                                   (522,104)     (614,143)     (505,432)

GAIN ON SALE OF CMP BUSINESS                                                 --      1,660,483           --

GAIN ON SALE OF PARTICLE DISPERSION TECHNOLOGY                               --        223,000           --

OTHER INCOME, net                                                        242,132        92,993        12,649
                                                                     -----------   -----------   -----------

                  Income (loss) before taxes                            (670,262)    1,384,139    (1,388,232)

INCOME TAX BENEFIT (EXPENSE)                                             234,461      (322,810)      379,604
                                                                     -----------   -----------   -----------

NET INCOME (LOSS)                                                    $  (435,801)  $ 1,061,329   $(1,008,628)
                                                                     ===========   ===========   ===========

BASIC EARNINGS (LOSS) PER COMMON SHARE
   (NOTE 3)                                                          $    (0.10)   $     0.23    $    (0.22)
                                                                     ==========    ==========    ==========

SHARES USED IN COMPUTING BASIC EARNINGS (LOSS) PER COMMON SHARE
   (NOTE 3)                                                            4,546,602     4,552,152     4,539,845
                                                                     ===========   ===========   ===========

DILUTED EARNINGS (LOSS) PER COMMON SHARE (NOTE 3)                    $    (0.10)   $     0.23    $    (0.22)
                                                                     ==========    ==========    ==========

SHARES USED IN COMPUTING DILUTED EARNINGS (LOSS) PER COMMON SHARE
   (NOTE 3)                                                            4,546,602     4,562,866     4,539,845
                                                                     ===========   ===========   ===========
</TABLE>


        The accompanying notes are an integral part of these statements.


                                      -27-
<PAGE>

                    MOYCO TECHNOLOGIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                Common Stock       Additional                    Treasury Stock
                                            --------------------    Paid-In       Retained     --------------------
                                             Shares       Amount    Capital       Earnings     Shares      Amount         Total
                                            ---------    -------   ----------   -----------    -------    ---------    -----------
<S>                                         <C>            <C>         <C>          <C>          <C>         <C>           <C>
BALANCE, JUNE 30, 1996                      4,616,740    $23,084   $3,118,236   $ 1,955,121    591,875    $(120,953)   $ 4,975,488
   Issuance of Common stock
     in connection with purchase
     of Thompson Dental Mfg. Co.              115,000        575      861,925           --         --           --         862,500
   Purchase of Common stock for Treasury          --         --           --            --       2,000      (10,220)       (10,220)
   Exercise of Common stock options               475          2        1,423           --         --           --           1,425
   Net loss                                       --         --           --     (1,008,628)       --           --      (1,008,628)
                                            ---------    -------   ----------   -----------    -------    ---------    -----------

BALANCE, JUNE 30, 1997                      4,732,215     23,661    3,981,584       946,493    593,875     (131,173)     4,820,565
   Purchase of Common stock for Treasury          --         --           --            --         600       (2,225)        (2,225)
   Exercise of Common stock options               100          1          299           --         --           --             300
   10% Common stock dividend
      (Note 3)                                473,232      2,366    1,121,560    (1,123,926)    59,448          --             --
   Net income                                     --         --           --      1,061,329        --           --       1,061,329
                                            ---------    -------   ----------   -----------    -------    ---------    -----------

BALANCE, JUNE 30, 1998                      5,205,547     26,028    5,103,443       883,896    653,923     (133,398)     5,879,969
   Purchase of Common stock for Treasury          --         --           --            --       6,950      (17,050)       (17,050)
   Net loss                                       --         --           --       (435,801)       --           --        (435,801)
                                            ---------    -------   ----------   -----------    -------    ---------    -----------

BALANCE, JUNE 30, 1999                      5,205,547    $26,028   $5,103,443   $   448,095    660,873    $(150,448)   $ 5,427,118
                                            =========    =======   ==========   ===========    =======    =========    ===========
</TABLE>
        The accompanying notes are an integral part of these statements.

                                      -28-

<PAGE>

                    MOYCO TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                  For the Year Ended June 30
                                                                         ----------------------------------------
                                                                              1999            1998         1997
                                                                          ------------   -----------   -----------
OPERATING ACTIVITIES:
<S>                                                                       <C>            <C>           <C>
   Net income (loss)                                                      $  (435,801)   $ 1,061,329   $(1,008,628)
   Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities-
       Provision for accounts receivable reserves                             186,662         47,290       152,245
       Depreciation and amortization                                          829,736        834,805       843,352
       Gain on sale of CMP business                                               --      (1,660,483)          --
       Gain on sale of particle dispersion technology                             --        (223,000)          --
       Gain on disposition of property and equipment                              --         (72,000)          --
       Deferred income taxes                                                 (133,591)       (28,148)     (401,259)
   (Increase) decrease in-
     Accounts receivable                                                     (367,979)      (603,650)     (222,171)
     Note receivable                                                           21,000            --            --
     Other receivables                                                       (141,397)       (71,531)          --
     Income tax receivable                                                   (155,872)           --            --
     Inventories                                                              (38,082)      (683,033)      (17,567)
     Prepaid taxes and expenses                                                10,970         95,424        41,990
     Other assets                                                              47,540        (36,212)       27,643
   Increase (decrease) in-
     Accounts payable                                                         645,751        (29,399)      625,925
     Income taxes payable                                                    (245,326)       245,326           --
     Other accrued expenses                                                  (274,826)      (444,688)      457,115
                                                                          -----------    -----------   -----------
                  Net cash provided by (used in) operating activities         (51,215)    (1,567,970)      498,645
                                                                          -----------    -----------   -----------
INVESTING ACTIVITIES:
   Purchases of and deposits on property, plant and equipment                (291,838)      (439,833)     (466,983)
   Purchases of marketable securities                                             --        (185,904)          --
   Maturities of marketable securities                                        185,904            --            --
   Acquisition of Thompson, net of cash acquired                                  --             --          1,663
   Proceeds from sale of CMP business                                             --       2,450,000           --
   Proceeds from sale of particle dispersion technology                           --         223,000           --
   Proceeds from disposition of property and equipment                            --          72,000           --
                                                                          -----------    -----------   ----------
                  Net cash provided by (used in) investing activities        (105,934)     2,119,263      (465,320)
                                                                          -----------    -----------   -----------
FINANCING ACTIVITIES:
   Net borrowings (repayments) under line of credit                         1,200,000     (1,125,000)    1,025,000
   Proceeds from long-term debt                                               975,000      4,260,000       340,000
   Payments of capital lease obligations                                     (100,238)       (35,946)          --
   Payments of long-term debt                                              (1,634,649)    (3,615,951)   (1,337,535)
   Proceeds from exercise of stock options                                        --             300         1,425
   Purchase of Common stock for treasury                                      (17,050)        (2,225)      (10,220)
                                                                          -----------    -----------   -----------
                  Net cash provided by (used in) financing activities         423,063       (518,822)       18,670
                                                                          -----------    -----------   -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                     265,914         32,471        51,995
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                1,486,554      1,454,083     1,402,088
                                                                          -----------    -----------   -----------
CASH AND CASH EQUIVALENTS, END OF YEAR                                    $ 1,752,468    $ 1,486,554   $ 1,454,083
                                                                          ===========    ===========   ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
   Interest paid                                                          $   586,224    $   488,688   $   554,081
                                                                          ===========    ===========   ===========
   Income taxes paid                                                      $   510,000    $       --    $     4,638
                                                                          ===========    ===========   ===========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      -29-
<PAGE>

                    MOYCO TECHNOLOGIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999


1. THE COMPANY:

Moyco Technologies, Inc. and subsidiaries (the "Company") operates in two
business segments: Dental Supplies and Precision Abrasives. The Dental Supplies
segment involves the manufacturing, marketing and distributing of dental
supplies, such as waxes, abrasives, medicaments, dental mirrors, endodontic
(root canal) instruments, materials and equipment, sundry dental items, hand
instruments, sterilization items, as well as the repacking and distributing of
other dental products for the professional dental market primarily in the United
States with additional sales in Canada, Mexico, South America, Europe and Asia.
The Precision Abrasives segment involves the manufacturing of commercial coated
abrasives, precision submicron coated abrasives, slurries (wet abrasives) and
polishing agents. These products are used for various applications and
industries, including but not limited to, fiber optics, lapidary, nail files,
dentistry, plastics and woods, semiconductor manufacturing and other high-tech
manufacturing procedures which require extremely fine abrasive films and/or
slurries to achieve consistently uniform polishing results. The Precision
Abrasives segment sells primarily in the United States with additional sales, in
Canada, Mexico, Europe and Asia.

2. ACQUISITION:

In August 1996, the Company acquired all of the outstanding Common stock of
Thompson Dental Mfg. Co. ("Thompson"), a manufacturer of dental hand instruments
and related products, for 115,000 shares of the Company's Common stock and an
additional $450,000 cash "earn-out" payable to the selling shareholders over
seven years, contingent upon Thompson meeting certain sales targets. The
acquisition was accounted for under the purchase method of accounting. The fixed
portion of the purchase price of $911,154 includes $862,500 for the 115,000
shares issued and $48,654 for transaction costs. The $450,000 contingent portion
of the purchase price, if any, will be recorded when earned. The purchase price
was allocated to identifiable assets and liabilities based on their estimated
fair values. The $472,620 excess of the purchase price over the fair value of
the net assets acquired was allocated to goodwill and is being amortized on a
straight-line basis over 15 years.

                                      -30-

<PAGE>

The noncash assets and liabilities that were consolidated as a result of the
Thompson acquisition are as follows:

        Noncash assets (liabilities):
           Accounts receivable, net                             $ 277,595
           Inventories                                            600,795
           Prepaid expenses                                        17,844
           Property, plant and equipment                          915,036
           Goodwill                                               472,620
           Other assets                                            85,000
           Line of credit                                        (100,000)
           Accounts payable                                      (345,272)
           Accrued expenses                                      (245,315)
           Debt                                                  (588,206)
           Deferred income taxes                                 (229,260)
                                                                ---------
        Net noncash assets acquired                               860,837
        Less - Common stock issued                               (862,500)
                                                                ---------
        Net cash acquired                                       $   1,663
                                                                =========

The following unaudited pro forma information for the year ended June 30, 1997
is presented as if the acquisition of Thompson had occurred on July 1, 1996. The
unaudited pro forma information does not purport to be indicative of the results
that would have been attained if the operations had actually been combined for
the period presented and is not necessarily indicative of the operating results
to be expected in the future.


        Unaudited pro forma net sales                               $14,278,042
                                                                    ===========

        Unaudited pro forma operating loss                          $  (892,707)
                                                                    ===========

        Unaudited pro forma net loss                                $(1,023,143)
                                                                    ===========

        Unaudited pro forma basic loss per
            Common share (Note 3)                                   $    (0.23)
                                                                    ==========
        Unaudited pro forma diluted loss per
            Common share (Note 3)                                   $    (0.23)
                                                                    ==========

The pro forma adjustments reflected in the above information consist of
increased depreciation and amortization charges for assets which were recorded
at their estimated fair values at the purchase date and goodwill. The
depreciation and goodwill amortization adjustments were $10,812 and $3,282,
respectively, for the year ended June 30, 1997.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
all of its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

                                      -31-

<PAGE>

Management's Use of Estimates

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

Reclassifications

The consolidated financial statements for prior years have been reclassified to
conform with the current-year presentation.

Statements of Cash Flows

For the purpose of determining cash flows, the Company considers all highly
liquid investment instruments purchased with an original maturity of three
months or less to be cash equivalents. Cash equivalents consist of certificates
of deposit and investments in money market accounts. Interest income earned on
the investment of cash was $56,427, $60,812 and $47,708 for the years ended June
30, 1999, 1998 and 1997, respectively. The Company incurred $268,210 and
$224,475 of capital lease obligations during the years ended June 30, 1999 and
1998, respectively. There were no capital lease obligations incurred during the
year ended June 30, 1997. During the year ended June 30, 1999, the Company and a
customer agreed to convert $227,107 in accounts receivable into a note
receivable due in installments during the year ending June 30, 2000.

Marketable Securities

Investments in marketable securities are categorized as either trading,
available-for-sale or held-to-maturity. On June 30, 1998, marketable securities
consisted of certificates of deposit with contractual maturities of less than
one year which were held to maturity. The certificates of deposit were stated at
amortized cost.

Inventories

Inventories are valued at the lower of cost, determined on the first-in,
first-out method, or market.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Significant additions or
improvements are capitalized, while repairs and maintenance are charged to
expense as incurred. Depreciation and amortization expense is provided on a
straight-line basis over the estimated useful lives of the assets as follows:

           Buildings and improvements                    10-25 years
           Machinery and equipment                        5-10 years
           Furniture and fixtures                         5-10 years
           Automotive equipment                              3 years


Interest expense related to and incurred during the construction period of
buildings is capitalized as part of the cost of such assets and depreciated over

                                      -32-

<PAGE>

the estimated useful life of the building. Depreciation and amortization expense
related to property, plant and equipment including depreciation and amortization
expense on equipment under capital leases (see Note 11) was $771,050, $794,539
and $746,282, for the years ended June 30, 1999, 1998 and 1997, respectively.

Goodwill

Goodwill represents the excess of the purchase price of the Thompson acquisition
over the estimated fair value of the net assets acquired. Goodwill is being
amortized on a straight-line basis over 15 years. Amortization expense was
$31,508, $31,508 and $28,266 for the years ended June 30, 1999, 1998 and 1997,
respectively.

Long-Lived Assets

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," the Company records impairment losses on long-lived assets used
in operations whenever events or circumstances indicate that the carrying amount
of an asset may not be recoverable. An impairment is recognized to the extent
that the sum of undiscounted estimated future cash flows expected to result from
use of the assets is less than the carrying value. As of June 30, 1999,
management has evaluated the Company's asset base, under the guidelines
established by SFAS No. 121, and believes that no impairment has occurred.

Fair Value of Financial Instruments

For certain of the Company's financial instruments, including accounts
receivable, notes receivable, marketable securities, accounts payable and
accrued expenses, management believes that the carrying amounts approximate fair
value due to their short maturities. The carrying amount and estimated fair
value of debt, at June 30, 1999 is $6,050,645 and $5,314,196, respectively, and
$6,710,294 and $6,271,362, respectively, at June 30, 1998.

The fair value of the Company's debt is estimated based on the quoted market
prices for the same or similar issues or on the current prices for the same or
similar issues offered to the Company for debt of the same remaining maturities.

Revenue Recognition

The Company recognizes revenue upon the shipment of its products.

                                      -33-

<PAGE>

Research and Development

Research and development costs are charged to expense as incurred. During the
year ended June 30, 1998, the Company made a one-time payment of $775,000
relating to certain research and development fees. This payment was included in
research and development expense in the accompanying consolidated statement of
operations for the year ended June 30, 1998.

Advertising Costs

Advertising costs are charged to expense as incurred. The amounts charged to
sales and marketing expense in the accompanying consolidated statements of
operations for the years ended June 30, 1999, 1998 and 1997, were $336,831,
$321,027 and $303,285, respectively.

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, the liability method is used
for income taxes. Under this method, deferred tax assets or liabilities are
determined based on the differences between the financial reporting and tax
basis of assets and liabilities and are measured using enacted tax rates and the
laws that are expected to be in effect when the differences reverse.

Earnings (Loss) per Common Share

The Company has provided basic and diluted earnings (loss) per Common share
pursuant to SFAS No. 128, "Earnings per Share." SFAS No. 128 requires dual
presentation of basic and diluted earnings (loss) per share for complex capital
structures on the face of the statements of operations. According to SFAS No.
128, basic earnings (loss) per share is calculated by dividing net income (loss)
available to Common shareholders by the weighted average number of Common shares
outstanding for the period. Diluted earnings (loss) per share reflects the
potential dilution from the exercise or conversion of securities into Common
stock, such as stock options.

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings (loss) per Common share computations. All share, per
share, options to purchase shares, and option exercise prices per share have
been adjusted to give retroactive effect to the 10% stock dividend issued on
September 30, 1998, (see below):

                                      -34-

<PAGE>
<TABLE>
<CAPTION>
                                                                   For the Year Ended June 30,
                                                                               1999
                                                       -----------------------------------------------------
                                                          Loss                 Shares              Per Share
                                                       (Numerator)          (Denominator)            Amount
                                                       -----------          -------------          ---------
<S>                                                    <C>                    <C>                    <C>
Basic loss per Common share
    Net loss                                           $(435,801)             4,546,602              $(0.10)
                                                                                                     ======
Effect of dilutive securities
    Stock options                                             --                     --
                                                       ----------             ---------
Diluted loss per Common share
    Net loss and assumed conversions                   $(435,801)             4,546,602              $(0.10)
                                                       =========              =========              ======
</TABLE>
<TABLE>
<CAPTION>
                                                                   For the Year Ended June 30,
                                                                               1998
                                                       -----------------------------------------------------
                                                         Income                Shares              Per Share
                                                       (Numerator)          (Denominator)            Amount
                                                       -----------          -------------          ---------
<S>                                                    <C>                    <C>                    <C>
Basic earnings per Common share
    Net income                                         $1,061,329             4,552,152              $0.23
                                                                                                     =====
Effect of dilutive securities
    Stock options                                              --                10,714
                                                       ----------             ---------
Diluted earnings per Common share
    Net income and assumed conversions                 $1,061,329             4,562,866              $0.23
                                                       ==========             =========              =====
</TABLE>
<TABLE>
<CAPTION>
                                                                      For the Year Ended June 30,
                                                                                1997
                                                       -----------------------------------------------------
                                                          Loss                 Shares              Per Share
                                                       (Numerator)          (Denominator)            Amount
                                                       -----------          -------------          ---------
<S>                                                    <C>                    <C>                    <C>
Basic loss per Common share
    Net loss                                           $(1,008,628)           4,539,845              $(0.22)
                                                                                                     ======
Effect of dilutive securities
    Stock options                                               --                   --
                                                       -----------            ---------
Diluted loss per Common share
    Net loss and assumed conversions                   $(1,008,628)           4,539,845              $(0.22)
                                                       ===========            =========              ======
</TABLE>
Options to purchase 25,135 shares of Common stock with an average exercise price
per share of $3.08 were outstanding during the year ended June 30, 1999, but
were not included in the computation of diluted loss per Common share because
the Company had a net loss for the year and all outstanding options would have
been anti-dilutive. The options, which expire at various times through December
2006, were still outstanding as of June 30, 1999. Options to purchase 4,923
shares of Common stock with an average exercise price per share of $5.91 were
outstanding during the year ended June 30, 1998, but were not included in the
computation of diluted earnings per Common share because the options' exercise
prices were greater than the average market price of the Common shares during
the period. Options to purchase 25,245 shares of Common stock with an average
exercise price of $3.08 were outstanding during the year ended June 30, 1997,
but were not included in the computation of diluted loss per Common share
because the Company had a net loss for the year and all outstanding options
would have been anti-dilutive.

                                      -35-

<PAGE>

Stock Dividend

In September 1998, the Company, prior to the filing of its annual report on Form
10-K for the fiscal year ended June 30, 1998, declared a 10% stock dividend to
shareholders of record as of September 18, 1998. The new shares were distributed
to shareholders on September 30, 1998. Amounts equal to the fair market value
(based on the quoted market price) of the additional shares issued were charged
to retained earnings and credited to Common stock and additional paid-in capital
effective June 30, 1998. Earnings (loss) per Common share, shares used in
computing earnings (loss) per Common share and all share and option balances and
prices were restated to give retroactive effect to the 10% stock dividend.

Recent Accounting Pronouncements

Effective with the year ended June 30, 1999, the Company was subject to the
provisions of SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130
establishes standards for reporting and display of comprehensive income in a
full set of general-purpose financial statements. Comprehensive income is
defined as the total of net income (loss) and all other non-owner changes in
equity. For the years ended June 30, 1999, 1998 and 1997 the Company's
comprehensive income consists only of net income (loss); therefore, there have
been no changes in the display of the Company's consolidated financial
statements.

Effective with the year ended June 30, 1999, the Company was subject to the
provisions of SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The adoption of this pronouncement did affect certain
financial statement disclosures (see Note 9).

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133, as
amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133 - an
amendment of FASB Statement No. 133," which must be adopted by the Company in
the year ending June 30, 2001, provides a comprehensive and consistent standard
for the recognition and measurement of derivatives and hedging activities. As
the Company does not currently hold derivative instruments or engage in hedging
activities, the adoption of this pronouncement is expected to have no impact on
the Company's financial position or results of operations.

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This statement requires that
certain costs related to the development or purchase of internal-use software be
capitalized and amortized over the estimated useful life of the software, and is
effective for fiscal years beginning after December 15, 1998. The statement also
requires that costs related to the preliminary project stage and post
implementation/operations stage in an internal-use computer software development
project be expensed as incurred. As the Company's current policy falls within
the guidelines of SOP 98-1, the adoption of this pronouncement is expected to
have no impact on the Company's financial position or results of operations.

                                      -36-

<PAGE>

4. INVENTORIES:

                                                               June 30
                                                       -----------------------
                                                          1999         1998
                                                       ----------   ----------

       Raw materials and supplies                      $1,194,084   $1,638,030
       Work-in-process                                  1,928,753    1,697,043
       Finished goods                                   1,250,419    1,000,101
                                                       ----------   ----------
                                                       $4,373,256   $4,335,174
                                                       ==========   ==========
5.       ACCRUED EXPENSES:

                                                               June 30
                                                       -----------------------
                                                          1999         1998
                                                       ----------   ----------

       Compensation and related benefits               $  303,234   $  247,377
       Other                                              320,612      503,295
                                                       ----------   ----------

                                                       $  623,846   $  750,672
                                                       ==========   ==========

6. LINES OF CREDIT:

The Company has a line of credit with a bank under which it may borrow up to
$3,000,000 through December 31, 1999, subject to renewal. There was $1,200,000
of borrowings outstanding on the line of credit at June 30, 1999. Borrowings
under the line of credit bear interest at prime (7.75% at June 30, 1999) and are
secured by all assets of the Company. The highest levels of borrowings during
the years ended June 30, 1999, 1998 and 1997 were $1,800,000, $850,000 and
$1,125,000, respectively. Interest expense on borrowings on the line of credit
was $89,595, $151,134 and $17,102 for the years ended June 30, 1999, 1998 and
1997, respectively, at weighted average interest rates of 8.0%, 8.5% and 8.3%,
respectively. In addition, the Company has an additional convertible line of
credit with the same bank to finance legal fees and related expenses under which
it may borrow up to $500,000. Repayments of borrowings under the convertible
line of credit will be made in monthly installments beginning October 1999,
based upon the then outstanding amount with the final payment due September
2003. Borrowings under the convertible line of credit bear interest at prime
(7.75% at June 30, 1999). As of June 30, 1999, there have been no borrowings on
the convertible line of credit. The lines of credit are subject to certain
financial and non-financial covenants, which include, among others, a ratio of
EBITDA to fixed charges, as defined, and a level of tangible net worth.

Thompson Dental Manufacturing Co., Inc., a subsidiary of the Company, is a
guarantor and surety of borrowings under these credit facilities.

                                      -37-

<PAGE>

LONG-TERM DEBT:
<TABLE>
<CAPTION>
                                                                                            June 30
                                                                                     ----------------------
                                                                                        1999        1998
                                                                                     ----------  ----------
<S>                                                                                      <C>        <C>
  Note payable to bank in monthly installments of $31,667, plus interest at prime
    minus .05%, through April 1, 2003.  (Interest rate not to exceed 8.45% or be
    below 8.20%).  Rate at June 30, 1999 was 8.20%.                                  $2,084,339  $2,528,384
  Mortgage payable to bank in monthly installments of $11,307, plus interest at
    LIBOR plus 1.63%, through August 2008.  (Interest rate not to exceed 7.29% or
    be below 7.04%).  Rate at June 30, 1999 was 7.04%.                                1,262,853   1,294,583
  Note payable (repaid in December 1998)                                                    --      975,000
  Note payable to bank in monthly installments of $16,525, plus interest at
    LIBOR plus 2.24%, through November 2003.  (Interest rate not to exceed
    7.52% or be below 7.27%.)  Rate at June 30, 1999 was 7.46%.                         954,012         --
  Mortgage payable to municipal authority in monthly installments of $6,371,
    including interest at 2.00%, through July 1, 2010.                                  744,182     804,998
  Mortgage payable to bank in monthly installments of $3,730, plus interest
    at LIBOR plus 1.63%, through August 2008.  (Interest rate not to exceed
    7.29% or be below 7.04%).  Rate at June 30, 1999 was 7.04%                          427,599     438,522
  Mortgage payable to municipal authority in monthly installments of $1,952,
    including interest at 2.00%, through April 1, 2010.                                 220,038     238,828
  Mortgage payable to bank in monthly installments of $2,543, including
    interest at prime plus 0.75%, through December 1, 2011.  Rate at June 30,
    1999 was 8.50%.                                                                     218,646     230,524
  Mortgage payable to bank in monthly installments of $5,305, plus interest
    at a floating interest rate through August 2001.  (Interest rate not to
    exceed 5.85% or be below 5.69%.)  Rate at June 30, 1999 was 5.69%.                  138,976     199,455
                                                                                     ----------  ----------
                                                                                      6,050,645   6,710,294
  Less- Current portion                                                                (614,553)   (916,576)
                                                                                     ----------  ----------
                                                                                     $5,436,092  $5,793,718
                                                                                     ==========  ==========
</TABLE>

Interest expense on the Company's long-term debt was $435,522, $542,366 and
$539,034 for the years ended June 30, 1999, 1998 and 1997, respectively. During
the year ended June 30, 1999, the Company renegotiated certain of its mortgages
and loans to secure longer terms and lower interest rates.


Substantially all of the Company's assets are pledged as collateral for the
long-term debt. In addition, a mortgage payable to a municipal authority is
collateralized by a standby letter of credit in the amount of $150,000 and the
two mortgages payable to municipal authorities are subordinate to certain other

                                      -38-

<PAGE>

debt obligations in the aggregate amount of approximately $4,900,000. The
Company's long-term debt payable to commercial banks is subject to the same
covenants as the lines of credit (see Note 6).

As of June 30, 1999, long-term debt matures as follows:

            2000                                          $  614,553
            2001                                             627,236
            2002                                             580,162
            2003                                           1,275,023
            2004                                             174,323
            Thereafter                                     2,779,348
                                                          ----------
                                                          $6,050,645
                                                          ==========

8. EMPLOYEE BENEFIT PLANS:

Profit Sharing Plan

The Company has a noncontributory profit sharing plan for employees who have
completed one full year of service and have attained the age of 21. The Company,
at the discretion of the Board of Directors, may make contributions to the plan.
The contributions cannot exceed the maximum amount which will constitute an
allowable deduction for federal income tax purposes and are based on the
Company's profitability and shall be paid from the Company's net and/or retained
earnings.

A participating employee's full account becomes payable to the employee's
designated beneficiary upon normal retirement, upon retirement at any age due to
disability, or upon death. In the event employment is terminated before normal
retirement, a portion of the Company's contribution is forfeited unless the
employee has at least seven full years of service.

The Company did not make any contributions during the years ended June 30, 1999,
1998 and 1997.

Employee Savings Plan

The tax deferred employee savings and protection plan under Section 401(k) of
the Internal Revenue Code is available for all eligible employees. This plan
allows an employee to contribute between 3.0% and 10.0% of compensation to the
plan and these contributions are not subject to current federal income taxes.
The Company matches 50% of the employee's contributions, to a maximum of 3.0% of
the employee's earnings, subject to the deferral limit under the Internal
Revenue Code. Participants are at all times fully vested in their contributions
and the Company contributions become vested at various percentages based on
years of service with 20% vested after three years and 20% for each year
thereafter.

The Company's matching contributions for the years ended June 30, 1999, 1998 and
1997 were $84,972, $80,863 and $46,855, respectively.

                                      -39-

<PAGE>

9. BUSINESS SEGMENTS:

The Company operates in two business segments: Dental Supplies and Precision
Abrasives. The reportable segments have been identified as they have separate
management teams and infrastructures. See Note 1 for a description of the
Company's business segments.

The accounting policies of the reportable segments are the same as those
described in Note 3. The Company evaluates the performance of its operating
segments based on operating income (loss). Intersegment sales and transfers are
not significant and all property is located in the United States.

Financial information for each business segment as of June 30, 1999, 1998 and
1997 and for the years then ended is as follows:
<TABLE>
<CAPTION>

                                                                         1999          1998         1997
                                                                     -----------   -----------   -----------
<S>                                                                      <C>           <C>           <C>
Net sales:
   Domestic customers-
     Dental Supplies                                                 $ 8,492,460   $ 8,237,237   $ 8,071,312
     Precision Abrasives                                               3,554,137     3,676,026     3,939,032
   International customers-
     Dental Supplies                                                   1,826,742     2,678,531     1,465,786
     Precision Abrasives                                               1,189,605       745,847       506,797
                                                                     -----------   -----------   -----------
                                                                     $15,062,944   $15,337,641   $13,982,927
                                                                     ===========   ===========   ===========
Gross profit:
   Dental Supplies                                                   $ 5,058,017   $ 5,336,168   $ 3,718,354
   Precision Abrasives                                                 1,208,221     1,441,919     1,683,080
                                                                     -----------   -----------   -----------
                                                                     $ 6,266,238   $ 6,778,087   $ 5,401,434
                                                                     ===========   ===========   ===========
Operating income (loss):
   Dental Supplies                                                   $   140,814   $ 1,365,562   $  (977,814)
   Precision Abrasives                                                  (531,104)   (1,343,756)       82,365
                                                                     -----------   -----------   -----------
                                                                     $  (390,290)  $    21,806   $  (895,449)
                                                                     ===========   ===========   ===========
Total assets:
   Dental Supplies                                                   $ 9,663,696   $ 9,705,348   $ 9,062,379
   Precision Abrasives                                                 4,175,463     4,196,755     4,403,386
   Corporate                                                           2,366,615     1,837,809     1,578,967
                                                                     -----------   -----------   -----------
                                                                     $16,205,774   $15,739,912   $15,044,732
                                                                     ===========   ===========   ===========
Depreciation and amortization:
   Dental Supplies                                                   $   567,844   $   558,164   $   568,649
   Precision Abrasives                                                   261,892       276,641       274,703
                                                                     -----------   -----------   -----------
                                                                     $   829,736   $   834,805   $   843,352
                                                                     ===========   ===========   ===========
Capital expenditures:
   Dental Supplies                                                   $   195,821   $   368,137   $   310,864
   Precision Abrasives                                                    96,017        71,696       156,119
                                                                     -----------   -----------   -----------
                                                                     $   291,838   $   439,833   $   466,983
                                                                     ===========   ===========   ===========
</TABLE>
                                      -40-

<PAGE>

10. INCOME TAXES:
<TABLE>
<CAPTION>
                                                                        For the Year Ended June 30
                                                                     --------------------------------
                                                                        1999       1998       1997
                                                                     ---------   --------   ---------
<S>                                                                     <C>         <C>         <C>
         Current:
             Federal                                                 $(101,690)  $426,372   $  (3,316)
             State                                                         820    (75,414)     24,971
                                                                     ---------   --------   ---------
                                                                      (100,870)   350,958      21,655
                                                                     ---------   --------   ---------
         Deferred:
             Federal                                                  (169,017)  (109,747)   (322,748)
             State                                                      35,426     81,599     (78,511)
                                                                     ---------   --------   ---------
                                                                      (133,591)   (28,148)   (401,259)
                                                                     ---------   --------   ---------
                                                                     $(234,461)  $322,810   $(379,604)
                                                                     =========   ========   =========
</TABLE>
A reconciliation of the U.S. Federal Income Tax rate to the effective income tax
rate is as follows:
<TABLE>
<CAPTION>
                                                                         For the Year Ended June 30
                                                                     ------------------------------------
                                                                            1999     1998         1997
                                                                     ----------- ----------   -----------
<S>                                                                      <C>           <C>        <C>
Federal taxes                                                            (34.0)%       34.0%      (34.0)%
State taxes                                                                5.4          0.4        (2.3)
Lower tax rate attributable to foreign sales corporation                    --         (5.2)         --
Other                                                                     (6.4)        (5.9)        9.0
                                                                     ---------   ----------    --------
                                                                         (35.0)%       23.3%      (27.3)%
                                                                     =========   ==========    ========
</TABLE>

Deferred income tax assets and liabilities are classified as current and
noncurrent based on the financial reporting classification of the related assets
and liabilities which gave rise to the temporary difference. Significant
components of the deferred income tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
                                                                                    June 30
                                                                             ----------------------
                                                                                1999        1998
                                                                             ---------    ---------
<S>                                                                              <C>           <C>
Deferred income tax assets:
    Net operating loss carryforwards                                         $ 187,583    $      --
    Accounts receivable reserves and inventory costs not
      currently deductible                                                     317,903      266,063
    Litigation reserves                                                        123,810       14,795
    Other accruals not currently deductible                                    199,762       81,766
                                                                             ---------    ---------
                                                                               829,058      362,624
Deferred income tax liabilities:
    Depreciation and amortization                                             (287,503)    (137,763)
                                                                             ---------    ---------
                                                                               541,555      224,861
Valuation allowance                                                           (291,665)    (108,562)
                                                                             ---------    ---------

         Net deferred income tax assets                                      $ 249,890    $ 116,299
                                                                             =========    =========
</TABLE>

                                      -41-

<PAGE>

The deferred income tax asset valuation allowance is attributed to certain
state deferred tax assets. Management believes sufficient uncertainty exists
regarding the realizability of these items that a valuation allowance is
required. The valuation allowance increased $183,103 during the year ended June
30, 1999, due principally to state net operating loss carryforwards generated
during the year ended June 30, 1999. The net operating loss carryforwards begin
to expire in 2008.

11. COMMITMENTS AND CONTINGENCIES:

Dentsply Litigation

On April 22, 1998, the Company was served with a complaint in the United States
Court for the Middle District of Pennsylvania by DENTSPLY International, Inc.
("Dentsply") claiming infringement of a Dentsply patent by the Company's
manufacturing process to fabricate nickel titanium endodontic (root canal)
instruments. By amendment, a claim for infringement of a second related patent
was later added. The Company has retained counsel to vigorously defend against
the Dentsply complaint which management believes to be without basis. The
Company has asserted defenses which management believes meritorious. In
addition, the Company has filed counterclaims alleging, among other things, that
Dentsply is infringing three Company patents, violating the Sherman Antitrust
Act and the Lanham Act, and interfering with the Company's business
relationships.

In addition, a related arbitration was recently held in Tulsa, Oklahoma before
the American Arbitration Association which addressed issues related to a settled
litigation between the Company and an entity subsequently acquired by Dentsply.
The Company is awaiting the arbitrator's ruling.

Moyco is in the process of negotiating an alternative fee agreement with its
primary trial attorneys in the Dentsply litigation. In accordance with the
proposed terms of the agreement, the Company has begun to pay a fixed monthly
fee, effective April 1999. In addition, there is also a proposed contingent fee
based on recoveries. The Company has recorded all fees owed to date as incurred
and will record the contingent fee based upon recoveries, if and when
determined, based upon the status of the litigation.

Foot Powder Investigation

The Company settled a Government investigation of Itch-Away Foot Powder which
the Company manufactured and sold pursuant to contracts with the United States
Defense Department. The Company entered into a civil settlement of the matter
agreeing to pay the Government a total of $505,000, without interest. These
payments are secured by an irrevocable letter of credit obtained by the Company
from a bank. The Company made the first payment of $100,000 in August 1997, the
second payment of $101,250 in August 1998 and the third payment of $101,250 in
August 1999 and will make two similar annual payments. In connection with this
matter, the Company was fined $350,000, which is payable in five annual
installments commencing in January 1998. The Company has paid the first and
second installments. Interest is payable at 5.42% per year and is due at the end
of the fiscal year payout.

                                      -42-

<PAGE>

Capital Leases

The Company has entered into capital leases for property and equipment which
expire at various dates through December 2005. Property and equipment acquired
under capital leases at a cost of $492,685 and $224,475, less accumulated
amortization of $103,377 and $38,414, are included in property and equipment in
the accompanying balance sheets as of June 30, 1999 and 1998, respectively.
Interest rates on these capital leases range from 5.1% to 11.1%. Future minimum
lease payments under capital leases as of June 30, 1999, are as follows:

           2000                                                   $123,888
           2001                                                    111,662
           2002                                                     71,322
           2003                                                     42,264
           2004                                                     42,264
           Thereafter                                               61,261
                                                                  --------
           Total minimum lease payments                            452,661
           Less - amount representing interest                     (60,214)
                                                                  --------
           Present value of minimum capital
               lease payments                                     $392,447
                                                                  ========

Royalties

The Company has entered into a number of license agreements with third parties.
Generally, the agreements require the Company to pay a royalty on sales of
certain products that are derived under these licensing agreements. The royalty
expense is accrued in the same period in which the revenues incorporating the
technology are recognized. Royalty expense for the years ended June 30, 1999,
1998 and 1997 was $228,601, $222,687 and $186,181, respectively.

12. STOCK OPTIONS:

The Company has an incentive stock option plan that provides for the awarding of
options for the purchase of up to 220,000 shares of Common stock (as adjusted
for the 10% stock dividend issued on September 30, 1998 (see Note 3). Under the
plan, options are granted at a price not less than the fair market value at the
grant date and become exercisable upon such date. Employee options expire 10
years after the grant date and directors' options expire five years after the
grant date. Of the total options authorized for issuance, 129,003 shares have
been granted, 102,108 shares have been exercised, and 1,760 shares have been
cancelled. As of June 30, 1999, 90,997 options are available for future grants.

                                      -43-

<PAGE>

The following summarizes information relative to the stock option plan:
<TABLE>
<CAPTION>
                                                                      Weighted
                                                       Exercise       Average
                                                         Price    Exercise Price  Aggregate
                                          Options     (per share)   (per share)    Proceeds
                                          -------     ----------- --------------  ---------
<S>                                          <C>          <C>           <C>          <C>
  Balance as of June 30, 1996              16,950    $0.75 - 3.00      $2.34       $39,599

     Granted                                6,475     5.25 - 6.50       6.11        39,588
     Exercised                               (475)           3.00       3.00        (1,425)
                                           ------    ------------      -----       -------

  Balance as of June 30, 1997              22,950     0.75 - 6.50       3.39        77,762

     Granted                                   --              --         --            --
     Exercised                               (100)           3.00       3.00          (300)
     Effect of 10% stock dividend on
       options (Note 3)                     2,285              --         --            --
                                           ------    ------------      -----       -------

  Balance as of June 30, 1998              25,135     0.68 - 5.91       3.08        77,462

     Granted                                   --              --         --            --
     Exercised                                 --              --         --            --
                                           ------    ------------      -----       -------
  Balance as of June 30, 1999              25,135    $ 0.68- 5.91      $3.08       $77,462
                                           ======    ============      =====       =======
</TABLE>

The expiration dates for outstanding options at June 30, 1999 range from
December 2003 to December 2006, with a weighted average remaining contractual
life of 4.6 years.

The following table summarizes information about the stock option plan as of
June 30, 1999 based upon the different ranges in exercise prices of the
outstanding options and adjusted for the 10% stock dividend issued on September
30, 1998 (see Note 3):

                                                Weighted
       Range of            Options               Average            Weighted
       Exercise          Outstanding            Remaining            Average
        Prices               and            Contractual Life      Exercise Price
      (per share)        Exercisable            (years)             (per share)
      -----------        -----------        ----------------      --------------
         $0.68               5,500                3.5                $ 0.68
          2.73              12,512                6.0                  2.73
       4.77 - 5.91           7,123                7.3                  5.55
                            ------
                            25,135
                            ======

                                      -44-

<PAGE>

The Company accounts for its options under Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," under which no compensation
cost has been recognized. In 1995, the Financial Accounting Standards Board
issued SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123
establishes a fair value based method of accounting for stock-based compensation
plans. SFAS No. 123 requires that an employer's financial statements include
certain disclosures about stock-based employee compensation arrangements
regardless of the method used to account for the plan. Had the Company
recognized compensation cost for its stock options consistent with the
provisions of SFAS No. 123, the Company's pro forma net income (loss) and pro
forma earnings (loss) per Common share would have been as follows:
<TABLE>
<CAPTION>
                                                             For the Year Ended June 30
                                                      --------------------------------------
                                                         1999         1998            1997
                                                      ----------   ----------   ------------
<S>                                                   <C>          <C>          <C>
    Net Income (Loss):
        As reported                                   $(435,801)   $1,061,329   $(1,008,628)
                                                      =========    ==========   ===========
        Pro forma                                     $(435,801)   $1,061,329   $(1,035,363)
                                                      =========    ==========   ===========
    Basic Earnings (Loss) per
      Common share (Note 3):
        As reported                                   $  (.10)     $    0.23    $    (0.22)
                                                      =======      =========    ==========
        Pro forma                                     $  (.10)     $    0.23    $    (0.23)
                                                      =======      =========    ==========
    Diluted Earnings (loss) per Common
        share (Note  3):
        As reported                                   $  (.10)     $    0.23    $    (0.22)
                                                      =======      =========    ==========
        Pro forma                                     $  (.10)     $    0.23    $    (0.23)
                                                      =======      =========    ==========
</TABLE>

The weighted average fair value of the stock options granted during the year
ended June 30, 1997 was $4.13. There were no options granted during the years
ended June 30, 1999 and 1998. The fair value of each option granted during the
year ended June 30, 1997 was estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions:



      Risk-free interest rate                           6.4%
      Expected dividend yield                             0%
      Expected life                                  5 years
      Expected volatility                              80.0%

13.  CUSTOMER INFORMATION:

The Company's customer base in the Dental Supplies segment consists principally
of distributors in the professional dental supply market. The Company's customer
base in the Precision Abrasives segment consists principally of large companies
in the high-technology industry. During the years ended June 30, 1999 and 1998,
one customer in the Dental Supplies segment accounted for 11.9% and 11.1%,
respectively, of the Company's total net sales. The Company did not have any
customers with net sales in excess of 10% of its total net sales for the year
ended June 30, 1997.

                                      -45-

<PAGE>

As of June 30, 1999, the Company had accounts receivable from one foreign
customer in the amount of $365,383. In addition, the Company had a note
receivable from the same customer with an outstanding balance of $206,107. The
note is scheduled to be repaid in installments during the year ending June 30,
2000. As of June 30, 1999, no other customer represented more than 10% of
outstanding receivables.

14. GAIN ON SALE OF CMP BUSINESS AND PARTICLE DISPERSION TECHNOLOGY

On December 31, 1997, the Company sold its chemical mechanical planarization
("CMP") assets and CMP business product line for the electronics industry and
related intellectual property to EKC Technology, Inc. ("EKC"), a subsidiary of
ChemFirst Inc. for $2,450,000 in cash, as well as a deferred payment by EKC
contingent on sales of CMP products during the period through June 30, 1999, and
varying royalties based on sales of CMP products through 2004. The additional
deferred payment expected to be received for the period through June 30, 1999 is
not significant. This transaction resulted in a pre-tax gain of $1,660,483 for
the Company. In connection with the sale, EKC agreed that during 1999 it would
purchase a portion of the Company's raw material inventory that was on hand at
December 31, 1997 for $250,000. As of June 30, 1999, EKC has purchased $125,000
of this inventory.

Also on December 31, 1997, the Company sold certain particle dispersion
technology to Nanophase Technologies Corporation ("Nanophase") for $223,000 in
cash, resulting in a one-time pre-tax gain of $223,000.

15.  OTHER INCOME, NET:
<TABLE>
<CAPTION>
                                                        For the Year Ended June 30
                                                      ------------------------------
                                                        1999        1998        1997
                                                      --------     -------    -------
<S>                                                     <C>         <C>        <C>
    Proceeds from casualty insurance                  $200,000     $    --    $    --
    Gain on disposition of property and equipment           --      72,000         --
    Other income                                        65,690      20,993     15,479
    Other expense                                      (23,558)         --     (2,830)
                                                      --------     -------    -------

                                                      $242,132     $92,993    $12,649
                                                      ========     =======    =======
</TABLE>

In April, 1999, certain coating equipment, utilized in the manufacture of
abrasive materials in the Precision Abrasives segment, was damaged at the
Company's Montgomeryville facility. As a result, the Company received proceeds
under its insurance coverage of $200,000, which is being used to replace a
portion of the damaged equipment. In addition, the Company has filed additional
claims which if paid will be recognized as other income in the period of
receipt.

                                      -46-

<PAGE>

ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.

Change in Registrant's Certifying Accountant

None.

Disagreements with Accountants on Accounting and Financial Disclosures.

None.

                                      -47-

<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(1) Executive Officers of the Company:

    (a) The names, ages and positions with the Company of all of the executive
        officers of the Company, are as follows:
<TABLE>
<CAPTION>
                 Name                   Age          Position with the Registrant
        ---------------------           ---     ------------------------------------------

<S>                                     <C>                        <C>
        Marvin E. Sternberg*            65      Chairman of the Board, President and Chief
                                                   Executive Officer

        Joseph S. Sternberg*            36      Vice President and General Counsel

        Mark E. Sternberg*              32      Administrative Vice President

        William Woodhead                62      Secretary/Treasurer
</TABLE>
*Marvin E. Sternberg is Joseph S. Sternberg and Mark E. Sternberg's father.

    (b) The executive officers hold their respective offices until the first
        meeting of newly elected directors following the next annual meeting of
        the Company and the election of successor officers unless otherwise
        terminated by the Board of Directors.

    (c) The following is a brief account of the business experience of the
        executive officers of the Registrant:

        Mr. Marvin E. Sternberg joined Moyco in March of 1974, as a management
        consultant and was elected President of Moyco on August 9, 1974. From
        1965 to 1973, Mr. Sternberg was Trustee and Operating Officer for the
        Robinson Trust, Philadelphia, Pennsylvania. From 1965 to present, Mr.
        Sternberg has been a partner and/or director in a number of other
        companies in the Philadelphia, Pennsylvania, and Fort Lauderdale,
        Florida, areas including the RBB Fund, a family of Mutual Funds, and
        Cellucap Manufacturing Company, a producer of disposable headwear and
        garments. Mr. Sternberg has been a member of the Company's Board of
        Directors since 1974.

        Mr. Joseph S. Sternberg joined the Company on October 14, 1991, at which
        time he was named Vice President and General Counsel. Prior to that time
        he was engaged in the private practice of law. Mr. Sternberg is on the
        Board of Directors of the American Lung Association of Southeastern
        Pennsylvania.

        Mr. Mark E. Sternberg joined Moyco on August 15, 1991, at which time he
        was named Administrative Vice President.

        Mr. William Woodhead joined Moyco on January 7, 1985 as Controller. He
        was elected Secretary/Treasurer on December 18, 1985. Mr. Woodhead has
        been a member of the Company's Board of Directors since 1985.

                                      -48-

<PAGE>

(2) Directors of the Company:

    (a) The following table sets forth the name of each director of the Company
        and all offices presently held by him. The term of each director will
        expire on such date as the Annual Meeting of Shareholders is held and
        his successor is duly elected and qualified.

               Name                     Age      Other Position with Registrant
        -------------------             ---     --------------------------------
        Marvin E. Sternberg             65      Chairman of the Board, President
                                                  and Chief Executive Officer
        Irvin Paul                      69      None
        Marvin Cravetz                  62      None
        William Woodhead                62      Secretary/Treasurer


        Dr. Irvin Paul, DDS, has engaged in the practice of Dentistry, with
        offices in Upper Darby, Pennsylvania, for more than thirty years. Dr.
        Paul has been a member of Company's Board of Directors since 1974.

        Dr. Marvin Cravetz, DDS, was engaged in the practice of Dentistry, with
        offices in Hatboro, Pennsylvania, for more than twenty years. Dr.
        Cravetz has been a member of the Company's Board of Directors since
        1974.

        The experience of the other directors is reported under Section 1 of
        ITEM 10 -- Executive Officers of the Company.

                                      -49-


<PAGE>

ITEM 11. EXECUTIVE COMPENSATION.

The following table shows for fiscal years ended June 30, 1999, 1998 and 1997,
the cash compensation, as well as certain other compensation paid to the named
executive officers and certain other employees:

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                     Long-Term Compensation
                                                                        ----------------------------------------------
                                         Annual Compensation                         Awards          Payouts
                           -------------------------------------------  ----------------------------------------------
                                                                                   Securities     Long-
                                                               Other                 Under-       Term
                                                               Annual   Restricted   lying     Incentive      All
Name and Principal                                             Compen-    Stock     Options/      Plan       Other
   Position                  Year     Salary        Bonus      sation    Award(s)    SARs       Payouts   Compensation
--------------------         ----    --------       -----    ---------   --------    -----      -------   ------------
<S>                           <C>      <C>            <C>        <C>       <C>        <C>         <C>         <C>
Marvin E. Sternberg          1999    $289,450       $  --       $--        $--        $--         $--       $3,614
   Chairman of the Board,    1998     265,000          --        --         --         --          --        3,750
   President  and CEO        1997     270,000          --        --         --         --          --        3,450

Clarence F. Bartron          1999     136,182          --        --         --         --          --        1,645
   Vice President            1998     128,528          --        --         --         --          --        1,769
   Ultralap Division         1997     131,593          --        --         --         --          --        1,950

Joseph S. Sternberg          1999     115,040          --        --         --         --          --        2,876
   Vice President and        1998     103,175          --        --         --         --          --        2,804
   General Counsel           1997      99,210          --        --         --         --          --        2,193

Mark E. Sternberg            1999     110,400          --        --         --         --          --        2,760
   Administrative Vice       1998     101,775          --        --         --         --          --        2,769
   President                 1997      98,850          --        --         --         --          --        2,193

Jerome Lipkin                1999     124,020          --        --         --         --          --        3,100
   Operations Manager        1998     113,300          --        --         --         --          --        3,007
                             1997     124,880          --        --         --         --          --        2,995

William Woodhead             1999      96,150        5,000       --         --         --          --        2,400
   Secretary/                1998      90,000          --        --         --         --          --        2,345
   Treasurer                 1997      87,830        5,000       --         --         --          --        2,184
</TABLE>

STOCK OPTIONS

The following table shows stock options exercised and fiscal year-end values for
the named executive officers under the Company's stock option plan. The plan
does not permit the grant of stock appreciation rights ("SARs"). There have been
no stock options granted in the current fiscal year to the named executive
officers.

                                      -50-

<PAGE>

Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
<TABLE>
<CAPTION>
                                                                                 Number of               Value of
                                                                                Securities              Unexercised
                                                                                Underlying             In-the-Money
                                                                                Unexercised            Options/SARs
                                          Shares                               Options/SARs         At Fiscal Year End
                                     Acquired on            Value          at Fiscal Year End        Exercisable(2)/
            Name                    Exercise(1)(3)       Realized(2)          Exercisable(3)          Unexercisable
-----------------------------       ---------------   -----------------   ---------------------   ------------------
<S>                                      <C>                <C>                    <C>                      <C>
Marvin E. Sternberg                       --                $--                      --                 $   --/--
Clarence F. Bartron                       --                 --                   1,375                     --/--
Joseph S. Sternberg                       --                 --                      --                     --/--
Mark E. Sternberg                         --                 --                   5,500                  4,109/--
Jerome Lipkin                             --                 --                      --                     --/--
William Woodhead                          --                 --                      --                     --/--
</TABLE>

(1) Upon exercise of an option, the optionee must pay the exercise price in
    cash.

(2) Represents the difference between the fair market value of the common stock
    underlying the option and the exercise price at exercise, or fiscal
    year-end, respectively.

(3) As adjusted for the 10% stock dividend issued on September 30, 1998. See
    Note 3 of Notes to Consolidated Financial Statements.

DIRECTORS COMPENSATION

Each non-employee director is entitled to receive options to purchase 1,000
shares of the Company's Common stock for each meeting attended. The exercise
price of these options are equal to the fair market value of the Company's
Common stock on the date of grant. All directors who are also employees do not
receive any compensation for serving as directors.

                                      -51-

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

(a) The following table sets forth information as of June 30, 1999 with respect
    to any person who is known to the Registrant to be the beneficial owner of
    more than 5% of any class of Registrant's voting securities:
<TABLE>
<CAPTION>
                                                                      Shares                  Percentage
                                                                    Beneficially                 of
     Title of Class              Name and Address                      Owned                    Class
     --------------              ----------------                   ------------              ----------
<S>                                    <C>                               <C>                     <C>
     Common stock              Marvin E. Sternberg                  2,668,781(1)                58.7%
                               937 Mt. Pleasant Rd.
                               Bryn Mawr, PA 19010

                               (1) Of these shares 2,649,191 shares are held by
                                   Marvin E. Sternberg, legally and beneficially
                                   in his own name; 19,590 shares by Susan
                                   Sternberg, wife of said Marvin E. Sternberg,
                                   legally and beneficially in her own name.
</TABLE>
 (b)  The following table sets forth information as of June 30, 1999 as to each
      class of equity securities of the Registrant beneficially owned, directly
      or indirectly, by all directors and officers of the Registrant, as a
      group:
<TABLE>
<CAPTION>
                                                                           Shares              Percentage
                                                                        Beneficially               of
      Title of Class                Beneficial Owner                      Owned (1)               Class
      --------------            --------------------------              ------------           ----------
<S>                                    <C>                                   <C>                   <C>
      Common stock              Marvin E. Sternberg                       2,668,781               58.7%
      Common stock              Irvin Paul                                       --                 --
      Common stock              Marvin Cravetz                               36,000                0.8
      Common stock              William Woodhead                             11,566                0.3
      Common stock              Joseph S. Sternberg                         182,347                4.0
      Common stock              Mark E. Sternberg                           194,321                4.3
                                                                          ---------               ----
      Common stock              All Officers and Directors
                                (6 in number)                             3,093,015               68.1%
                                                                          =========               ====
</TABLE>
                (1) Refer to Footnote (1) of the previous table.

                                      -52-

<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

No director or officer had any material interest, direct or indirect, in any
business transaction of the Company during the period July 1, 1998 through June
30, 1999, or in any such proposed transaction.

                                      -53-
<PAGE>

                                     PART IV


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


Financial Statements: The following is a list of the Consolidated Financial
    Statements of the Company and Supplementary data filed as part of Item 8
    hereof:

    Report of Independent Public Accountants
    Consolidated Balance Sheets --June 30, 1999 and 1998
    Consolidated Statements of Operations -- For the Years Ended June 30, 1999,
      1998 and 1997
    Consolidated Statements of Shareholders' Equity -- For the Years Ended
      June 30, 1999, 1998 and 1997
    Consolidated Statements of Cash Flows -- For the Years Ended June 30, 1999,
      1998 and 1997 Notes to
    Consolidated Financial Statements

Financial Statement Schedules: Included in Part IV of this report.

    For the Years Ended June 30, 1999, 1998 and 1997 -- Schedule II -- Valuation
      and Qualifying Accounts

    All other schedules are omitted because they are not applicable, or not
      required, or because the required information is included in the
      Consolidated Financial Statements or notes thereto.

Exhibits:

    23.1 Consent of Arthur Andersen LLP
    27.0 Financial Data Schedule, which is submitted electronically to the
         Securities and Exchange Commission for information only, and not filed.

Reports On Form 8-K:

None.

                                      -54-

<PAGE>

                    MOYCO TECHNOLOGIES, INC. AND SUBSIDIARIES

                        VALUATION AND QUALIFYING ACCOUNTS

                     FOR THE THREE YEARS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
      Column A              Column B             Column C                Column D      Column E
--------------------       ----------      ------------------------    ------------  ------------
                                                 Additions
                                           ------------------------
                           Balance at      Charged        Charged                     Balance at
                           Beginning          to          to Other                      End of
                           of Period       Expense        Accounts     Deductions(1)    Period
                           ----------      --------      ---------     -------------  ----------
<S>                           <C>             <C>           <C>            <C>            <C>
Accounts receivable
   reserves:
     June 30, 1999          $267,741       $186,662       $    --         $53,080      $401,323
                            ========       ========       =======         =======      ========

     June 30, 1998          $251,330       $ 47,290       $    --         $30,879      $267,741
                            ========       ========       =======         =======      ========

     June 30, 1997          $ 78,990       $152,245       $57,065(2)      $36,970      $251,330
                            ========       ========       =======         =======      ========
</TABLE>

(1) Represents accounts written off against the reserve.

(2) Represents balance at acquisition of Thompson.

                                      -55-

<PAGE>

                                   SIGNATURES

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

                                            MOYCO TECHNOLOGIES, INC.

Dated:  September 28, 1999                  BY: /s/Marvin E. Sternberg
                                                -----------------------
                                                Marvin E. Sternberg
                                                Chairman of the Board, President
                                                and Chief Executive Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
is signed below by the following persons on behalf of the Registrant and in the
capacities and on the date indicated.

/s/Marvin E. Sternberg                                Dated:  September 28, 1999
-------------------------------------------
Marvin E. Sternberg
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer) and Director

/s/William Woodhead                                   Dated:  September 28, 1999
-------------------------------------------
William Woodhead
Secretary/Treasurer, Principal Financial
Officer and Principal Accounting Officer
and Director

/s/Marvin Cravetz, DDS                                Dated:  September 28, 1999
-------------------------------------------
Marvin Cravetz, DDS
Director

                                      -56-