<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                                   (Mark one)
       /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1999

     / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                         Commission file number: 1-10938


                                SEMX CORPORATION
                    ----------------------------------------
                    (Name of Business Issuer in Its Charter)


             Delaware                                       13-3584740
   ------------------------------                     ----------------------
  (State or other jurisdiction of                         (IRS Employer
   incorporation or organization)                     Identification Number)

                          1 Labriola Court
                          Armonk, New York                10504
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

         Issuer's telephone number, including area code: (914) 273-5500

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

                                             Name of Each Exchange
Title of Each Class                          on Which Registered
-------------------                          -------------------

Common Stock, $.10 par value                 NASDAQ National Market


Securities registered pursuant to Section 12(g) of the Exchange Act:  None.

Check 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 / /

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

                     The Exhibit Index is located on page 18
<PAGE>

At March 15, 2000 the aggregate market value of the voting stock of the
Registrant held by non-affiliates was approximately $62,807,779.

At March 15, 2000 the Registrant had 6,116,741 shares of Common Stock
outstanding, $.10 par value ("Common Stock"). In addition, at such date, the
Registrant held 334,600 shares of Common Stock in treasury.


                      DOCUMENTS INCORPORATED BY REFERENCE:

DOCUMENT                                Parts Into Which Incorporated
--------                                -----------------------------

Portions of the Definitive              Part III. Item 10,11,12 13
Proxy Statement prepared in
connection with the Company's
2000 Annual Meeting of Stockholders
which will be held on May 16, 2000.






                                      -ii-
<PAGE>

                                     PART I

Item 1:  Business

(a)   General. SEMX Corporation consists of a Delaware corporation and its
      wholly owned and majority owned subsidiaries (collectively the "Company").
      The Company primarily provides specialty materials and services to the
      microelectronic and semiconductor industries on a worldwide basis through
      its Materials and Services Groups.

      At the end of fiscal 1999, the Company's Materials Group consisted of the
      operating division of the parent company Semiconductor Packaging Materials
      Co. ("SPM") and its subsidiary, Polese Company, Inc. ("Polese"). The
      Materials Group primarily designs, develops, manufactures and markets
      metal matrix heat dissipation products, assembled products and components
      that utilize the heat dissipation products, bonding wire, precision metal
      stampings, seal frames, tape and reel packaged products and other
      specialty products and materials. Such products are incorporated into
      electronic components used in high end internet servers, the wireless
      products industry, automotive control systems, fiber optic packages and
      thermal management in the RF industry. The Company also serves related
      markets outside of the electronics industry. The Company's products are
      sold through internal sales personnel and a network of independent sales
      representatives, principally to manufacturers and assemblers of electronic
      devices. The Company sold its Retconn and S.T. businesses in February 1999
      and as of that date no longer designs, develops or manufacturers RF
      coaxial contacts, connectors and cable harness assemblies.

     The Company's Services group consists of its American Silicon Products,
     Inc. ("ASP") and American Silicon Products B.V. ("ASP BV") subsidiaries and
     a jointly owned Singapore corporation, International Semiconductor Products
     Pte Ltd. ("ISP"). Each provide silicon wafer polishing and reclaiming
     services to the semiconductor industry. Reclaimed wafers are used in the
     evaluation and testing of equipment and processes in semiconductor
     fabrication. ISP is 50.1% owned by the Company.

History - The registrant, SEMX Corporation, is a Delaware corporation
incorporated in 1988 as a successor to a company started in 1981. In December
1991 the Company had a public offering of its securities and became a public
company. In April 1998, the stockholders of the Company approved an amendment to
the Company's Certificate of Incorporation to change the name of the Company to
SEMX Corporation.

The Company has attained significant revenue growth over the last several years.
A substantial portion of that growth has been realized through the acquisition
of businesses and by applying financial and management resources to further the
growth of the companies.

Acquisitions

In 1993, the Company acquired Polese. Polese manufactures and markets heat
dissipation products and assembled products which incorporate the heat
dissipation materials, seal frames for use in the manufacture of electronic
components, and produces sophisticated parts through the use of electrical
discharge machines ("EDM") and computer numerical control ("CNC") turning
centers. At the time of acquisition, the Company acquired from Frank J. Polese
all of the rights, including, but not limited to, a patent which had been
recently issued to Mr. Polese, for the development and application of
copper/tungsten powdered metal technology to the electronics industry (See Part
II, Item 6, Management Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A")).

In 1994, A/S Acquisition Company, Inc., a Rhode Island corporation ("ASAC")
merged with and into the Company's wholly-owned subsidiary, American Silicon
Products, Inc., a Delaware corporation. ASAC had no operations of its own, but
simultaneously with the merger, acquired the assets of American Silicon
Products, Inc.("ASP"), a Rhode Island corporation.
The ASP assets acquired embodied a silicon wafer reclaiming and reconditioning
business located in Providence, Rhode Island.

In 1996, the Company acquired Retconn Incorporated. Retconn developed, designed
and manufactured subminiature coaxial contacts and connectors which were sold
principally to manufacturers in the communications and computer industries.

In that same year, the Company entered into a joint venture agreement to develop
a silicon wafer polishing and reclaiming facility in Singapore. The jointly
owned Singapore corporation, International Semiconductor Products Pte Ltd., is
50.1% owned by the Company.

On January 23, 1997, the Company acquired certain assets and assumed certain
liabilities of Silicon Materials Service ("SMS") of Garland, Texas and 100% of
the outstanding stock of Silicon Materials Service, B.V. ("SMSBV") of Helmond,
Netherlands. The SMS Texas operation was merged into ASP and SMSBV was renamed
American Silicon Products, B.V. ("ASPBV"). During 1998, the Company closed the
SMS Texas operation and relocated certain equipment to its Providence plant.

Effective July 30, 1997, Retconn, a wholly owned subsidiary of the Company,
acquired 100% of the outstanding stock of S.T. Electronics, Inc ("S.T."), a
company that manufactures and markets custom cable and cable harness assemblies.

<PAGE>

Dispositions

In February 1999, the Company completed the sale of its Retconn and S.T.
connector businesses (collectively "Retconn") to Litton Systems Inc.
Commensurate with the sale, the Company no longer engages in the manufacture,
development or design of subminiature coaxial contacts, connectors, custom
cables or cable harness assemblies. Information pertaining to these products,
contained herein, is relevant only through the February 1999 date of
disposition.

(b)  Financial Information about Industry Segments - The Company has operated in
     two industry segments, materials and services, during each of its last
     three years.

(c)  Narrative Description of Business

Products

Thermal Management - Thermal management products are used to conduct heat away
from critical areas of electronic components. Areas utilizing this product line
includes high power wireless communication devices and high-speed microprocessor
packages. Polese utilizes a patented, proprietary method to manufacture
copper/tungsten heat dissipation products. Polese has developed or acquired a
family of other metal matrix composites to become a full service provider of
thermal management solutions. The other products include Silvar, Nitral(TM) and
AlSiC. The Company has also developed a non-electronic use of its powdered metal
technology with the introduction of a copper/tungsten metal matrix composite for
sole weights, which are used in the manufacture of golf clubs. In 1998, Polese
bought the rights to Alcoa's AlSiC technology, which is used for thermal
management products as well as various electronic application.

Other Products - As a result of Polese's successful EDM operation in the
manufacture of seal frames, a number of special products have been brought to
Polese for manufacture. At this time, Polese is manufacturing small, complex
parts for the medical supply and various other industries.

Wire, Stampings and Tape on Reel Products - The Company manufactures bonding
wire that is used to conduct electrical signals between two points of a circuit.
Further, it produces precision metal stampings out of various metals for
interconnect or heat dissipation purposes. Since many of the Company's customers
are unable to accommodate bulk shipments of the final stampings, the Company
offers a selection of packaging options. The main alternative option is tape on
reel packaging to support surface mount assembly operations. Bonding wire is
primarily manufactured from pure aluminum or gold alloys: stamping from
aluminum, copper, molybdenum, kovar, invar, silicon carbide or a combination of
these materials (including clad materials); and tape on reel which packaging
method utilizes plastic tape manufactured for the individual products being
inserted.

Silicon Wafer Polishing and Reclaiming Services - ASP, ASPBV and ISP offer a
variety of high tech, state-of-the-art wafer polishing and reclaiming services
to the semiconductor industry. Reclaimed wafers are used in the evaluation and
testing of equipment and processes in semiconductor fabrication.

Raw Materials and Principal Suppliers

The Company in most cases utilizes two or more alternative sources of supply for
each of its raw materials. In certain instances, however, the Company will use a
single source of supply when directed by a customer or by need. In order to
ensure the quality of the Company's products, the Company has instituted strict
supplier evaluation and qualification procedures. Once a supplier has been
qualified to supply materials to the Company, they will be included on the
Company's preferred supplier list and will be reevaluated and rated on an
ongoing basis. The Company's precious metals vendors include Fleet Precious
Metals, Sigmund Cohen, Handy and Harmon and Degussa Metz Metallurgical Corp.

SPM makes extensive use of precious metals, including gold, as raw materials in
the manufacture of certain products. The prices at which the Company purchases
precious metals are based upon market prices at the time of purchase. Such
metals have historically been subject to significant price fluctuations and
subject to volatility as a result of numerous factors beyond the control of the
Company. Substantially all of SPM's gold requirements are currently purchased
from Fleet Precious Metals ("Fleet") pursuant to a consignment agreement. Under
the agreement, Fleet has agreed to advance up to the lesser of 5,000 troy ounces
of gold or gold having a market value of $1,870,000. The agreement provides that
title to the gold remains with Fleet until the finished material is shipped; at
which time SPM is required to replace the gold. The prices paid by SPM for its
purchases are generally based upon the Comex or the Second London gold price and
are fixed automatically on a first-order, first-priced basis. SPM pays for gold
in cash as of the date of purchase and pays a fee computed daily, currently at
the rate of 5.5% per annum, based upon the value of gold consigned SPM. The
revised and amended agreement with Fleet expires on June 30, 2000. The Company
believes that there are alternative sources of supply for SPM's gold
requirements in the event that the agreement with Fleet is terminated.

Production Process

Products manufactured to customer specifications account for almost all of the
Company's total revenues.

<PAGE>

The manufacturing process for metal matrix composite thermal management and
recreational products consists of manufacturing a tool and die for the specific
part, pressing the powdered materials in a powdered metal press, sintering the
parts in a furnace, and machining them to the customer's specifications. The
parts are then cleaned, plated, tested and packaged for shipment.

Wire and metal ribbon are manufactured by casting pure metals with selected
additives into cylindrical shapes which are then drawn through a series of
diamond dies to progressively reduce the metal to a finished size. Wire is then
either annealed in batches or strands. Metal ribbon is made by rolling wire into
a flat shape or by slitting strip into narrow widths. Annealing, spooling and
packaging are similar to those utilized for wire.

The manufacturing process for stamping consists of casting specific metals or
alloy combinations into ingots which are passed through a series of rolling
mills to meet specified thickness requirements, and then slit to specified
widths. The material is stamped in a press which contains the die for the
customer's part. The Company ships stampings in bulk form or employs packaging
methods to integrate its stampings with automated manufacturing equipment
utilized by its customers.

Silicon wafer polishing and reclaiming services begin with incoming inspection
of customer wafers. The wafers are sorted for reclaim suitability and
conformance to customer specifications. The wafers are then processed to remove
all diffusions and deposited layers (i.e., polysilicon, metals, nitrides,
oxides, etc.). A two step polishing process, similar to that which is utilized
by silicon suppliers, is then performed. The wafers are then cleaned with a
front and backside scrubbing followed by rinsing, drying and further removal of
particles. All cleaning is done in certified clean rooms utilizing deionized
water. Product quality is assured through procedural discipline and Statistical
Process Controls. The Company has achieved the ability to regularly process
wafers with particles of less than .12 microns in size, with extremely low trace
metals. The Company believes that its processing capability is comparable to
that of any reclaiming capability in the world.

SPM usually operates on an eight-hour daily shift five days per week, with its
tape on reel production and aluminum wire drawing operating on a two or three
shift basis, consistent with business requirements. Polese usually operates
seven days per week, with its various departments running two to three shifts
per day, consistent with business requirements. ASP usually operates on a
three-shift basis five days per week. Management believes that the Company
possesses sufficient capacity to expand production of its existing products. The
Company owns much of its equipment and when appropriate, leases certain
equipment from third parties.

Quality Control

The Company utilizes extensive in-house statistical process quality control
procedures ("SPC"), and employs 25 persons engaged full-time in quality control
functions.

A substantial portion of the Company's customers require the Company to qualify
as an approved supplier utilizing SPC. Generally, this qualification includes
providing samples to the customer, passing preliminary evaluations and usage
testing, completing customer evaluations and checklists and undergoing extensive
in-plant inspections of the Company's personnel, manufacturing processes,
equipment and associated quality control systems. The Company has undergone
numerous inspections by various customers and continues to undergo such
inspections on a regular basis. Accordingly, the Company's efforts are devoted
to ensure that its capabilities and quality control standards are adequate to
satisfy specific customer requirements. The Company receives quality control
certifications each year from various customers.

The Company is certified ISO 9000 (an international quality standard for the
European community) at five of its operations, and holds various quality awards
throughout the industries it serves. The Company believes that its ISO 9000
certifications are important in establishing the Company as a world class
supplier and greatly aids the Company in penetrating markets for the Company's
products throughout the world. The Company is also designated as a "Q-1"
supplier by The Ford Motor Company. One of the Company's divisions received QS
9000 Quality certification during 1999. The Company believes that QS 9000
certification will be important to the Company's status as a world class
supplier, especially within the automotive industry.

Marketing and Sales

The Company's domestic and foreign sales efforts are directed towards customers
in numerous industries where the Company's products have wide application. The
Company engages independent sales representatives in various regions throughout
the United States, Europe, South America, the Middle East and the Far East for
marketing to customers. These sales representatives are paid on a commission
basis. As of February 28, 2000, the Company had arrangements with 24 sales
representatives in the United States and 16 sales representatives in Europe, the
Middle East, Far East and South America, including France, Germany, Italy, the
United Kingdom, Sweden, Israel, Singapore, Hong Kong, China, Taiwan, Korea,
Malaysia, the Philippines, Mexico and Brazil. Pursuant to agreements with
independent sales representatives, such representatives are prohibited from
carrying a line of products competitive with the Company's products. The Company
continues to engage new sales representatives as needed. The Company believes
that additional sales representatives are available, if required.

The Company currently employs 27 inside sales and marketing personnel, including
two of its executive officers, who are responsible for direct sales to the
Company's customers. The Company's sales personnel also work closely with
customers to solicit future orders and to render technical assistance and
advice. Other marketing efforts include generation and distribution of the
Company's product

<PAGE>

catalogs and brochures and attendance at trade shows. The Company also
advertises in trade publications, primarily in the United States.

Product and Process Development

The Company places significant emphasis on product and process development and
believes that such efforts are important to take advantage of market trends and
to maintain its competitive position. The Company's product and process
development activities include refinement of its manufacturing and processing
capabilities and improvement in the metallurgical composition, durability and
reliability of its products. The Company's technical personnel and outside
consultants conduct specific projects to enhance performance of the Company's
products and to meet specific customer requirements. In recent years these
efforts have led to the development of various new products and processes.

The Company has expanded its product lines and processing capabilities through
various acquisitions and a joint venture and will continue to seek to expand
through acquisitions and other strategic alliances. Not withstanding the sale of
Retconn in February 1999, the Company continues to seek expansion of its product
lines.

Customers

The Company's products are sold principally to customers servicing the high end
internet server, wireless communications, automotive, aerospace, military,
medical and semiconductor industries. The Company's customers include Kyocera
America, Motorola, IBM, Texas Instruments, National Semiconductor, Hewlett
Packard, Analog Devices, Lucent, Hi-Tech Assemblies, Ford Motor Company, Delco
Electronics, ST Electronics, Northern Telecom, Cardiac Pacemakers,
Medtronics/Micro-Rel and Wafernet.

For the years ended December 31, 1999 and 1998, sales of the Company's products
to the Company's five largest customers accounted for approximately 41% and 29%,
respectively, of the Company's revenues. For the year ended December 31, 1999,
two customers accounted for approximately 21% and 10% of the Company's total
revenues. For the year ended December 31, 1998 a single customer accounted for
10% of the Company's total revenues.

The Company does not maintain contracts with many of its customers and generally
sells its products pursuant to customer purchase orders. Certain of the
customers purchase orders provide for annual requirements of a particular
product. A substantial portion of the Company's orders for products which
include precious metals provide that the initial price quotation is adjusted to
reflect any changes in the price of precious metals at the time of shipment.
Customer purchase orders are generally filled within two to six weeks and
shipped to customers by common carrier.

To date, the Company has relied upon foreign markets, including Europe and the
Far East, for a portion of its revenues. For the years ended December 31, 1999
and 1998, direct sales of the Company's products into foreign markets accounted
for approximately 24% and 18%, respectively, of the Company's consolidated
revenues. Sales of the Company's products to foreign customers are made through
16 foreign manufacturer's representatives. The Company believes that a portion
of its revenues will continue to be derived from the sale of its products in
foreign markets, which will result in the it being subject to risks associated
with foreign sales, including economic or political instability, shipping
delays, fluctuations in foreign currency exchange rates, custom duties and
export quotas and other trade restrictions. The Company is not aware of any
foreign tariffs with respect to products marketed by the Company. Although
export sales are subject to certain governmental restrictions, the Company has
not experienced any difficulties with foreign or domestic trade restrictions.

Backlog

The Company manufactures standard and custom products pursuant to customer
purchase orders. Backlog is comprised of orders for products which have a
scheduled shipment date within the next 12 months. Certain orders in the backlog
may be canceled under certain conditions without significant penalty to the
customer. At December 31 1999 and 1998, the Company's backlog of orders which
are believed to be firm, and exclude Retconn and ST, was approximately
$17,184,000 and $15,161,000, respectively. The Company believes that the
majority of the Company's backlog of orders existing as of December 31, 1999
will be shipped over the next twelve months.

Competition

The market for the Company's products is highly competitive. The Company
competes with numerous well-established foreign and domestic companies, many of
which possess substantially greater financial, marketing, personnel and other
resources than the Company and have established reputations for success in the
development, sale and service of products. Such companies include Kulicke &
Soffa Industries, Inc., Tanaka, Williams Advanced Materials, Climax Specialty
Metals, Inc., Exsil, Sumitomo Corporation, and Kobe. The Company believes that
it is one of a limited number of manufacturers which produces all of its primary
products and services. The Company believes that this capability provides an
advantage in marketing products to customers that seek to limit the number of
their suppliers.

The ability of the Company to compete successfully will depend in large measure
on its ability to fund and maintain development

<PAGE>

capabilities in connection with upgrading its products and quality control
procedures and to adapt to technological changes and advances in the electronics
industry.

Patents and Proprietary Information

The Company's ability to compete effectively may be materially dependent upon
the proprietary nature of its technologies. The Company has been issued a patent
for a Method for Making Heat-Dissipating Elements for Micro-Electronic Devices.
Polese Company utilizes this proprietary method, as well as others, to
manufacture copper/tungsten heat dissipation products. The powdered metal
technology covered by this patent was acquired by the Company in connection with
the Polese Company acquisition. In addition, Polese Co. has received a patent
covering its material, Nitral(TM)and three new patents in 1999. These include:
Heat Dissipating Package for Microcircuit Devices, Heat Dissipating Substrate
for Microelectronic Devices and Fabrication Method and Heat Dissipating Package
for Microcircuit Devices and Process for Manufacture. Few of the Company's other
manufacturing processes or products are protected by patents.

The Company relies on proprietary know-how and employs various methods to
protect its processes, concepts, ideas and documentation associated with its
proprietary products. However, such methods may not afford complete protection
and there can be no assurance that others will not independently develop such
processes, concepts, ideas and documentation. Although the Company has and
expects to have confidentiality agreements with its employees, there can be no
assurance that such arrangements will adequately protect the Company's trade
secrets.

Government Regulation

The Company is subject to regulations administered by the United States
Environmental Protection Agency, the Occupational Safety and Health
Administration, various state agencies and county and local authorities. Among
other things, these regulatory bodies impose restrictions to control air, soil
and water pollution and dictate safety in the workplace. The extensive
regulatory framework imposes significant compliance burdens and risks on the
Company. Governmental authorities have the power to enforce compliance with
these regulations and to obtain injunctions and/or impose civil and criminal
fines or sanctions in the case of violations.

The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), imposes strict, joint and several liability on the
present and former owners and operators of facilities which release hazardous
substances into the environment. The Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), regulates the generation, transportation, treatment,
storage and disposal of hazardous waste. The Company is also subject to various
state and local laws, which are the counterparts of CERCLA and/or RCRA in the
jurisdictions where the Company maintains facilities (New York, California, and
Rhode Island). The Company believes that it is in substantial compliance with
all material federal and state laws and regulations governing its operations.
The Company continually evaluates its environmental and safety practices with
respect to such requirements and maintains all required licenses or permits.

Various laws and regulations relating to safe working conditions, including the
Occupational Safety and Health Act, are also applicable to the Company. The
Company believes it is currently in substantial compliance with all material
federal, state and local laws and regulations regarding safe working conditions.
The Company believes that the cost of compliance with such government and
environmental regulations is not material.

Executive Corporate Officers of the Company

Gilbert D. Raker, 56, Chairman of the Board and Chief Executive Officer of the
Company since May 1990; President since December 31, 1995: Vice President of the
Company from November 1988 until May 1990.

Frank J. Polese, 43, Vice-Chairman of the Company since January 1996 and a
Director of the Company since July 1993. In December of 1999, in addition to
remaining as Vice-Chairman of the Company, he was appointed as the President of
the Company's Materials Group. Mr. Polese also served as President of the
Company from January 1994 through December 1995. From August 1991 until November
1996 and again since March 1997, Mr. Polese has served as President of Polese
Company, which was acquired by the Company on May 27, 1993, prior to which Mr.
Polese was its sole shareholder. Prior to August 1991, Mr. Polese was a
manufacturer's representative specializing in products incorporated into
microelectronic packages for the electronics industry.

Kenneth J. Huth, 61, Executive Vice President of the Company since January 1994,
President of the Company from January 1990 to December 1993 and President of the
Semiconductor Packaging Materials division since July 1998. From 1972 until
December 1989, Mr. Huth served as President of Kenneth J. Huth, Inc., a
manufacturer's representative specializing in precision stampings and related
products for the electronics industry.

Richard J. Brown, 50, President of the ASP subsidiary since May 1999, joined
ASP in June 1995 as Vice President of Finance. Prior to joining ASP, Mr. Brown
held a number of positions within Kendal Company, last serving as Director of
Risk and Asset Management.

Mark A. Koch, 41, Chief Accounting Officer, and Secretary of the Company since
February 1999; joined the Company in September

<PAGE>

1998 as Corporate Controller. Prior to joining the Company, Mr. Koch was
Corporate Controller of Reunion Industries, Inc. a publicly traded manufacturer
of specialty plastics and molded products. Prior to joining Reunion
Industries, Mr. Koch was Assistant Corporate Controller of Terex Corporation.

Employees

As of February 28, 2000, the Company employed approximately 615 persons. All
manufacturing personnel are paid on an hourly basis. The majority of employees
are employed full-time. None of the Company's employees are covered by a
collective bargaining agreement. The Company considers its relationship with its
employees to be good.

Item 2:  Properties

The Company's executive offices and SPM's manufacturing facility are located in
a 43,700 square foot building in Armonk, New York. The Company's Armonk facility
is suitable for the Company's current needs and is estimated to be currently
operating at approximately 50% of its productive capacity. The property is well
maintained and in good condition. SPM opened a 3,000 square foot facility in
Casablanca, Morocco in January 1999 to supply various products to North Africa
and Europe. In May 1999 SPM opened a 3,440 square foot facility in Penang,
Malaysia to supply the Asian markets.

Polese entered into an agreement to lease approximately 24,211 square feet of
industrial space at 10103 Carroll Canyon Road and 34,615 square feet at 10111
Carroll Canyon Road, San Diego, California. The lease term commenced on March
31, 1998 and expires on March 31, 2004 and calls for an initial monthly rental
of $29,833 for the first eight months, increasing to $35,296 for the next 4
months, with a 3% annual rent increase in the second through sixth years. The
performance of Polese Company's obligations under the lease is guaranteed by the
Company. Polese Company also leases approximately 10,600 square feet at 8680
Mirilani Drive, San Diego, California. The lease term commenced on January 1,
2000 and expires on December 31, 2002 and calls for a monthly rental of $ 6,678
with an increase of 4% effective January 1, 2001. In addition, Polese entered
into a lease for a facility adjacent to its 10111 Carol Canyon Road facility for
22,976 square Feet. The lease commenced on February 25, 2000 and extends through
December 31, 2005 and calls for an initial payment of $15,843 for the first year
and increasing 4% for each year thereafter. The facilities are suitable for the
Company's current and future needs. The properties are well maintained and are
in good condition.

ASP owns a 28,000 square foot facility in Providence, Rhode Island. The facility
is suitable for the Company's current needs and is currently operating at
approximately 70% of its productive capacity. The property is well maintained
and is in good condition. The Company completed its remaining lease obligations
regarding two leased facilities in Garland, Texas and vacated these facilities
as of February 28, 1999. American Silicon Products, B.V.'s operations are
located in a Company owned facility of approximately 25,800 square feet at
Achterdijk 8, 5705 CB, Helmond, Netherlands. The Helmond facility is suitable
for the Company's current needs and is currently operating at approximately 70%
of its productive capacity. The facility consists of production, office and
warehouse space and is well maintained and in good condition.

<PAGE>

Item 3:  Legal Proceedings

The Company is subject to claims and suits in the ordinary course of business.
Management believes that the ultimate resolution of such proceedings will not
have a material adverse effect on the Company.

During 1998, the Securities and Exchange Commission conducted an investigation
to determine whether any persons may have violated the federal securities laws
in connection with the purchase or sale of the Company's securities prior to a
December 30, 1996 announcement relating to its anticipated financial results for
the fourth quarter of fiscal 1996. As a general matter, the Commission takes the
position that its investigation should not be construed as an indication that
any violations of law have occurred or as an adverse reflection upon any person
or security. The Registrant cooperated fully with the Commission in its
investigation which commenced in early 1998. Since June 1998, the Company has
not received any additional requests for information or communications from the
SEC concerning this matter.

Item 4:  Submission of Matters to a Vote of Security-Holders

No matter was submitted to a vote of security holders during the quarter ended
December 31, 1999.



<PAGE>

                                     PART II

Item 5:  Market for Registrant's Common Equity and Related Stockholder Matters

The Company's Common Stock trades on the NASDAQ National Market (Ticker
Symbol: SEMX). The prices of the Company's Common Stock for each quarter
during 1999 and 1998 were as follows:

                                         1999               1998
                                         ----               ----

                                    HIGH      LOW       HIGH      LOW

1st Quarter...............         4-3/4     1-3/8     9-1/2     7-1/4
2nd Quarter...............         3-3/8     1-1/2     8-1/2     5
3rd Quarter...............         6-1/2     3-1/8     6-1/2     2-1/8
4th Quarter...............         8         5-1/6     4-7/8     2-1/16

As of March 15, 2000 there were approximately 89 holders of record of the
Company's Common Stock. On March 15, 2000, the high and low bid price of the
Common stock was $13 3/4 and $12 3/4 per share, respectively. The Company paid
no dividends on its Common Stock in 1999 or 1998.

On March 26, 1999, the Company's Board of Directors unanimously adopted a
shareholders rights plan (the "Rights Plan"), commonly referred to as a poison
pill. Under the Rights Plan, shareholders of record on June 15, 1999 (unless
excepted under the terms of the Rights Plan), until the distribution date, will
receive rights to purchase a unit consisting of one one-thousandth of a Series
of Preferred Shares of the Company at $50 per unit.

The Board of Directors may declare a distribution date within ten (10) business
days following (i) the acquisition of or right to acquire, by a person or group,
fifteen (15) percent or more of the outstanding shares of the Company or (ii)
the commencement of a tender offer or exchange offer that would, if consummated,
result in a person or group owning fifteen (15) percent or more outstanding
shares of the Company. Upon the declaration of a distribution date, each holder
of the right will have the right to receive, upon exercise, common shares having
a value equal to two times the exercise price of the right. In the alternative,
the Board of Directors, at its option, may exchange all outstanding and
exercisable rights for common shares at an exchange ratio of one common share
per each right. The Board may redeem the rights prior to an event triggering a
distribution date at $.001 per right.


<PAGE>

Item 6:  Selected Financial Data

<TABLE>
<CAPTION>

                                                 Year Ended December 31,
                                                 -----------------------
(In thousands except per
share amounts)                        1995       1996       1997       1998        1999
<S>                                 <C>        <C>        <C>        <C>         <C>
Operating Data:

     Revenue                        $ 28,064   $ 46,027   $ 71,076   $ 65,903    $ 63,524

     Net income (loss)              $  2,526   $  3,805   $  3,793   ($11,958)   $  7,383

Amounts Per Common Share:

     Basic                          $    .53   $    .64   $    .62   ($  1.98)   $   1.22

     Diluted                        $    .50   $    .62   $    .61   ($  1.98)   $   1.19

     Weighted average number
     of common and common
     equivalent shares:

     Basic                             4,784      5,968      6,070      6,054       6,047

     Diluted                           5,064      6,170      6,232      6,054       6,223

     Dividends declared             $      0   $      0   $      0   $      0    $      0

Balance Sheet Data:

     Working capital (deficiency)   $  9,175   $ 10,947   $  9,486   ($14,064)   $  4,213

     Total assets                   $ 36,071   $ 56,489   $ 91,865   $ 82,324    $ 61,072

     Long-term obligations
     excluding current portion      $  2,863   $ 12,432   $ 32,717   $ 13,055    $ 13,335

     Shareholders' equity           $ 29,261   $ 33,940   $ 37,458   $ 25,371    $ 32,564
</TABLE>


1)   Financial data presented includes the results of the following acquisitions
     and disposition: Acquisitions - American Silicon Products in December 1994,
     Retconn in January 1996, Silicon Materials Service in January 1997 and S.T.
     Electronics in July 1997. For details relating to these transactions please
     reference the Management Discussion and Analysis, Liquidity and Capital
     Resources sections. Dispositions - On February 19, 1999, the Company sold
     its Retconn and S.T. businesses.

2)   Financial data presented for 1998 includes special charges. For details
     please reference the Management Discussion and Analysis section.

3)   Amounts per common share for the years ended prior to December 31, 1997
     have been restated to conform to the provisions of Statement of Financial
     Accounting Standards No. 128, Earnings per Share, which was adopted during
     the fourth quarter of 1997.

<PAGE>

Item 7: Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following table sets forth, for the periods indicated, certain financial
data as a percentage of net sales:

Fiscal Year Ended
December 31                        1999        1998         1997
                                   ----        ----         ----

Net Sales                          100.0       100.0        100.0
Cost of Sales                       66.6        80.6         71.3
Gross Profit                        33.4        19.4         28.7
Selling, General and
     Administrative Expenses        22.1        24.0         16.9
Operating Income (loss)             11.2       (21.6)        11.8
Interest Expense (Net)               3.1         5.3          3.7
Income (Loss)
     before Income Taxes            21.4       (26.9)         8.1
Provision (Credit)
     for Income Taxes                9.8        (8.3)         3.1
Net Income (Loss)                   11.6       (18.1)         5.3

RESULTS OF OPERATIONS (1999 COMPARED TO 1998)

Total revenue for the 1999 period of $63,524,000 decreased $2,379,000 or 3.6%
from the comparable 1998 period. On February 19, 1999, the Company sold its
connector business, ("Retconn") as described herein. Retconn had sales through
the February 1999 disposition date of $2,122,000 compared to sales of
$17,974,000 for the year 1998. Excluding Retconn sales from all periods
presented, the Company's total revenue for 1999 increased $13,473,000 or 28.1%.

The Materials Group includes the Company's SPM, Polese and Retconn business
units. Excluding Retconn, the Materials Groups 1999 sales of $44,544,000
increased $14,994,000 or 50.7% from 1998 levels. SPM's 1999 sales increased by
$191,000 or 1.5% as compared to the comparable 1998 periods. Polese Company's
1999 sales increased by $14,803,000 or 89.5% as compared to the prior year
periods. Polese sales have increased due to improved sales of thermal management
products, microprocessor lids, wireless technology products and the introduction
of new products.

The Company's Services Group 1999 revenues decreased $1,521,000 to
$16,858,000 for 1999 as compared to the prior year. The Service Group
includes the Company's American Silicon Products ("ASP"), American Silicon
Products B.V. ("ASP B.V.") and International Semiconductor Products Pte. Ltd.
("ISP") business units. The Services Group 1999 revenue decrease was the
result of a slowdown in the demand for reclaimed wafers and pricing pressures
caused by a downturn in the semiconductor industry. Further, in July of 1998,
the Company closed its Texas operations and consolidated all of ASP's
domestic business into its Rhode Island facility. The 1999 and 1998 periods
included $0 and $1,537,000, respectively, in revenue from the Texas
operation. The Service Group's revenue from ASP's U.S. and European
operations for the year 1999 decreased a total of $2,515,000 or 16% as
compared to the comparable 1998 periods. Revenue from ISP of $2,930,000 for
1999 increased by $994,000 or 51% over the comparable 1998 periods.

Direct sales of the Company's products into foreign markets as a percentage of
consolidated revenue during 1999 was 24% compared to 18% for 1998. The Company
currently maintains foreign manufacturing operations in the Netherlands ("ASP
B.V."), in Morocco, Semiconductor Materials S.A. R. L. ("S.A.R.L."), in
Malaysia, SPM ("MSDN.BHD") and in Singapore, ISP. In 1999, the Company derived
revenue from ASP B.V. of $3,260,000, from S.A.R.L. of $770,000, from MSDN.BHD of
$115,000 and from ISP of $2,930,000. Foreign sales made through the Company's
domestic operations are made through foreign manufacturer's representatives and
are priced and paid for in U.S. dollars. Sales for ASP B.V., S.A.R.L., MSDN.BHD
and ISP are conducted in the local currencies of Dutch Guilders, Dirhams,
Ringits, and Singapore Dollars, respectively, and account for 11% of
consolidated revenues in 1999 and are subject to currency fluctuations.

The Company's consolidated backlog as of December 31, 1999 was $17,184,000 and,
excluding the backlog from the Retconn business, was $15,161,000 at December 31,
1998. The Polese backlog which was $5,003,000 at the end of 1998, has improved
to $8,117,000 as of December 31, 1999. The backlog for SPM increased $219,000 to
$3,440,000 as of December 31, 1999. The backlog for ASP decreased $1,310,000 to
$5,627,000 since the end of 1998.

GROSS PROFIT

Gross profit of $21,206,000 for 1999 increased $8,428,000 or 66%, from the
comparable 1998 periods. Excluding Retconn from all periods presented, 1999
gross profit increased by $12,456,000 or 159%, from 1998 levels. Without Retconn
the Materials Group's 1999 gross profit of $16,427,000 increased $11,804,000 or
255% as compared to 1998. The Materials Group's gross profit

<PAGE>

increases primarily reflected the increased sales at Polese Company. The Service
Group's gross profit of $3,888,000 increased $652,000 or 20% as compared to the
comparable periods in 1998 primarily due to the effects of cost reductions
during 1999.

GROSS MARGINS

The Company's gross margins increased from 19% to 33% over the comparable 1998
period. Excluding Retconn, the Company's gross margin for 1999 increased from
28% to 35%. The Materials Group's 1999 gross margin increased from 16% to 37%
from the comparable 1998 period. The Service Group's 1999 gross margins
increased from 18% to 23% from the comparable 1998 periods, reflecting the
consolidation of domestic operations and improved performance at ISP.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative ("SG&A") expenses in 1999, decreased
$1,727,000 or 11% from the comparable 1998 periods. The decrease in SG&A in 1999
reflects savings realized by the closing of the Services Group Texas Plant
during the second quarter of 1998 as well as reductions in SG&A due to the sale
of Retconn. Excluding Retconn, 1999 SG&A increased by $1,638,000 or 14%.
SG&A expenses as a percentage of revenue decreased from 24% in 1998 to 22%
in 1999 as a result of the above.

SPECIAL CHARGES

In 1998, the Company recorded special charges of $11,217,000, primarily related
to adjustments of the carrying values of the Company's Service Group assets and
the closing of a Service Group plant. During 1998 the Company performed a
restructuring of the Service Group that included closing its Texas operation and
consolidating domestic business and equipment into the Group's Rhode Island
facility. As a result of a more severe than anticipated market decline, the
division continued operating at a loss in 1998 which triggered an impairment and
utilization review of the Services Group's long lived assets. The review
identified approximately $4,700,000 of excess Services Group equipment that was
written down to estimated fair value, less cost of disposal. In addition the
Company wrote down approximately $2,700,000 of Goodwill associated with certain
Texas facility customers and lines of business that were eliminated. Due to
financial problems experienced during 1998, at the Service Groups 50.1% owned
Singapore operation, the Company recorded an asset impairment of $1,000,000 in
response to uncertainty regarding the ultimate recoverability of its investment.
The Company recorded no special charges during the year ended December 31, 1999.

GAIN ON SALE OF CONNECTOR BUSINESS

Income before income taxes and minority interest for 1999 includes a pretax gain
of $8,430,000 on the sale of Retconn to Litton Corporation on February 19, 1999
as described below in Liquidity and Capital Resources.

INTEREST EXPENSE (NET)

Net interest expense for 1999 decreased $1,515,000 from the comparable 1998
periods. The decrease in net interest expense is due to reduced debt levels from
February 19, 1999 forward due to the principal repayments from proceeds from the
sale of the Retconn business.

PROVISION (CREDIT) FOR INCOME TAXES

A provision of $6,201,000 for income taxes has been made for 1999 as compared to
a credit of $5,500,000 for the comparable 1998 periods. The provision in 1999
includes $4,527,000 associated with the gain on the sale of Retconn. The Company
has Federal net operating loss carryforwards available to offset a substantial
portion of the income tax return liability associated with the gain. The credit
for 1998 includes a $3,477,000 income tax credit associated with the special
charges recorded during that year.

MINORITY INTEREST

In 1999 and 1998 the Company has included income of $31,000 and loss of $244,000
respectively, associated with ISP in its income (loss) before minority interest
in (income) loss of consolidated subsidiary, net of tax. The Company has a 50.1%
interest in the joint venture and has accordingly, excluded 49.9% of such income
(loss) from its consolidated net income.

NET INCOME

As a result of the above, net income of $7,383,000 for 1999 increased by
$19,341,000 from the comparable 1998 period.

YEAR 2000

The year 2000 (Y2K) problem was a potential issue for the Company since many
computer programs and some pieces of computer hardware manipulate and store
dates as a two-digit field and were unable to recognize dates past December 31,
1999. In preparation for the year 2000 problem, the Company assessed the systems
and software at all of its operations, including external interfaces with

<PAGE>

critical suppliers and customers. During 1999, the Company replaced
non-compliant hardware, installed new manufacturing enterprise computer software
systems at SPM and installed software upgrades that are year 2000 compliant at
its other locations. The Company completed the installation and testing of these
new systems and upgrades by the end of 1999. Outside suppliers, and customers
were contacted and requested to complete the Company's assessment questionnaire
to determine their readiness.

The Company has expended approximately $500,000 through the end of 1999 in
addressing the potential Y2K problem. The Company experienced no known problems
upon the changeover to the year 2000 with any of its internal systems or
external interfaces with suppliers and customers.

RESULTS OF OPERATIONS (1998 COMPARED TO 1997)

Total revenue for 1998 decreased $5,173,000, or 7.3%, from the comparable 1997
period. Sales by the Company's Materials Group for the year ended December 31,
1998 decreased $505,000, or 1.1% from the 1997 period. The Materials Group
includes the Company's SPM, Polese and Retconn business units. The sales decline
was primarily due to a $2,003,000, or 10.8% decrease at Polese, offset by an
increase of $1,529,000, or 9.3% at Retconn. 1998 Retconn sales included a full
years revenue from S.T. Electronics, Inc., which was acquired on July 30, 1997.
Sales at SPM were slightly down from 1997 levels. In 1998, the sales decrease at
Polese was primarily due to a downturn in sales of heat dissipation products as
they relate to the communications and computer related marketplaces.

Service revenue from the Company's Service Group for the year ended December
31, 1998 decreased $4,668,000 or 20.3% from the 1997 period. The Service
Group includes the Company's ASP, ASP B.V. and ISP business units. The 1998
decrease included a $5,860,000, or 26.3% decrease in revenue at ASP's U.S.
and European operations, which was partially offset by increased revenue of
$1,192,000 from ISP. The Services Group revenue decrease was the result of a
slowdown in the demand for reclaimed wafers and pricing pressures caused by a
downturn in the semiconductor industry.

Direct sales of the Company's products into foreign markets accounted for 18%
and 15% of consolidated revenue for the years ended December 31, 1998 and
1997, respectively. The Company currently maintains foreign manufacturing
operations in the Netherlands ASP B.V., in Morocco, Semiconductor Materials
S.A. R. L. ("S.A.R.L."), and in Singapore, ISP. In the year ended December
31, 1998 and 1997, the Company derived revenue from ASP B.V. of $3,230,000
and $3,168,000 respectively, revenue from S.A.R.L. of $192,000 and $0
respectively, and revenue from ISP of $1,936,000 and $744,000, respectively.
Foreign sales made through the Company's domestic operations are made through
foreign manufacturer's representatives and are priced and paid for both in
local currencies and in U.S. dollars. Sales for ASP B.V., S.A.R.L. and ISP
are conducted in the local currencies of Dutch Guilders, Dirhams, and
Singapore dollars, respectively. These sales account for 8% and 6% of the
consolidated revenue for the years ended December 31, 1998 and 1997,
respectively and are subject to fluctuations in foreign currency exchange
rates.

The Company's consolidated backlog as of December 31, 1998 was $18,699,000.
This compares to consolidated backlog of $20,643,000 at December 31, 1997.
The $1,944,000 decrease was primarily the result of $200,000, $2,334,000 and
$594,000 decreases at Polese, ASP and Retconn, respectively. These decreases
were partially offset by a $1,204,000 increase in the backlog of SPM. The
decrease at Polese was the result of a significant decrease in order levels
by a customer servicing the communication-related industry. In 1998, Polese
experienced a significant increase in its backlog from December 1997 levels
primarily from increased order inflow from its communications, computer and
recreational products customers and has recently seen an increase in order
levels from the customer which had decreased order levels in 1998. While
ASP's backlog has recently improved, it still remains at depressed levels due
to the continuing slowdown in the semiconductor industry.

Gross profit for 1998 decreased $7,599,000, or 37.3% from the comparable 1997
period. In the Materials Group, the decrease was primarily due to a $3,756,000,
or 78.6% decrease at Polese, a $452,000, or 8.4% decrease at Retconn and a
$1,156,000, or 24.3% decrease at SPM. During the fourth quarter of 1998 the
Company's Materials Group adjusted the carrying value of its inventories in
response to changing semiconductor and microelectronic market conditions and
realized charges of $1,267,000 to cost of sales to record provisions for excess
and obsolete inventory. Materials Group gross profit in 1998 reflected the
decreased sales levels as well as provisions for excess and obsolete inventory.
In the Services Group, ASP's gross profit decreased $2,711,000, or 46.5% during
1998 as a result of decreased sales and pricing pressures. Gross profit declines
during 1998 at ASP were partially offset by an increase in gross profit of
$414,000 at ISP. Gross margin in the Materials Group decreased to 20.1% in the
1998 period from 30.9% in the 1997 period. As a result of the foregoing,
consolidated gross margin for the Company decreased to 19.4% in 1998 from 28.7%
in the 1997 period.

Selling, general and administrative ("SG&A") expenses in 1998, excluding
$11,217,000 of special charges, increased $3,796,000, or 31.7% over the 1997
period. The increase was primarily due to increased legal fees, corporate staff,
and infrastructure additions at the operational level in sales and research and
development. SG&A expenses as a percentage of revenue, excluding special
charges, increased to 24% in the 1998 period from 17% in the 1997 period.

In 1998, the Company recorded special charges of $11,217,000, the majority of
which relate to a review of the carrying values of the Company's Service Group
assets and the closing of a Service Group plant. During the first quarter of
1998, the Company recorded a

<PAGE>

charge of $1,950,000 in conjunction with a restructuring of the Service Group
that included closing its Texas operation and consolidating domestic business
and equipment into the Group's Rhode Island facility. As a result of the
Services Group's inability to achieve the improvements anticipated by the
restructuring plan, primarily due to a more severe than anticipated market
decline, the division continued operating at a loss in 1998. This triggered an
impairment and utilization review of the Services Group's long lived assets. The
review identified approximately $4,700,000 of excess Services Group equipment
that was written down to estimated fair value, less cost of disposal. In
addition the Company wrote down approximately $2,700,000 of Goodwill associated
with certain Texas facility customers and lines of business that have been
eliminated. Due to continuing financial problems of the Service Groups 51% owned
Singapore operation, the Company recorded an asset impairment of $1,000,000 in
response to uncertainty regarding the ultimate recoverability of its investment.

The Company's Material's Group recorded a special charge of $620,000 in the
fourth quarter consisting of a write down of $473,000 in goodwill associated
with a line of business that has been eliminated and the write down of $147,000
of surplus equipment.

Net interest expense for the 1998 period increased $874,000 from the 1997 period
primarily due to increased interest costs associated with debt incurred with the
SMS and ST acquisitions, the ISP startup and increased capital lease
obligations.

A credit of $5,500,000 for income taxes was recorded for the 1998 period as
compared to a $2,214,000 provision in the 1997 period. In the 1998 period, the
Company received a tax credit at an effective rate of 31% as compared to an
effective tax rate of 38% in the comparable 1997 period. The 1998 losses have
generated net operating loss ("NOL") carryforwards for income tax purposes,
which are available to offset future taxable income.

Excluding $1,000,000 in special charges, the Company has included a $740,000
loss before income taxes and minority interest, as compared to $677,000 in the
1997 period, associated with ISP in its income before minority interest in loss
of consolidated subsidiary. The Company has a 50.1% interest in the joint
venture and has accordingly excluded $244,000, net of tax, as compared to
$223,000 in 1997, or 49.9% of such loss from its consolidated net income.

As a result of the foregoing, the net losses for 1998 amounted to $11,958,000 as
opposed to net income of $3,793,000 in 1997. In 1998, as a result of the above
and special charges taken during the year, all of the Company's operations
sustained a loss except for Retconn.



<PAGE>

                         LIQUIDITY AND CAPITAL RESOURCES

General

To maintain its growth, the Company has historically made significant capital
expenditures to support its facilities and manufacturing processes as well as
working capital needs. The Company has financed its capital needs through cash
flow from operations, its line of credit facility, term loans from the Bank,
other bank financing including gold consignment supply agreements, and capital
leases. The Company had Bank short term debt maturities, standby letter of
credit maturities, gold consignment agreements and debt service requirements
which were deferred until October 31, 1999 under a limited forbearance agreement
with its banks. The Company completed the sale of its Retconn business on
February 19, 1999 and repaid $22,191,000 of its then existing Bank debt. On
November 1, 1999 the Company entered into a Revolving Credit, Term Loan and
Security Agreement with PNC Bank, National Association ("PNC Bank") as lender
and agent ("the Credit Facility"). The Credit Facility, replaced the existing
revolving credit and interim term loan facilities with First Union and Fleet.

Summary of 1999 Activity

At December 31, 1999, the Company had cash and cash equivalents of $0, due to
the agreement with PNC Bank, and an available balance on its revolving credit
facility of $2,688,000 as compared to $1,141,000 and $200,000 respectively at
December 31, 1998.

Net cash provided by operating activities during 1999 amounted to $9,561,000 as
compared to cash provided of $872,000 in the comparable 1998 period. Cash
provided by operations increased compared to 1998 principally as a result of
1999 income and working capital changes. The decrease in the deferred tax assets
is due to utilization of net operating loss carryforwards generated by the 1998
losses.

Cash provided by investing activities amounted to $19,561,000 during the year
ended December 31, 1999. On February 19, 1999 the Company completed the sale of
Retconn, and realized cash proceeds of $22,191,000. During the years ended
December 31, 1999 and 1998, the Company invested $2,719,000 and $3,063,000,
respectively, in property and equipment. This investment excludes $896,000 and
$3,078,000, respectively, in the 1999 and 1998 periods for equipment acquired
under capital leases.

Net cash used by financing activities amounted to $26,131,000 during 1999 as
compared to cash provided of $916,000 during 1998. During the year ended
December 31, 1999 the Company repaid $23,868,000 under a bank term loan
facilities and $6,173,000 under its Bank revolving line of credit. In addition,
the Company made payments of $2,487,000 under capital leases obligations.

Current Credit Facilities

On November 1, 1999 the Company entered into a Revolving Credit, Term Loan
and Security Agreement with PNC Bank. The Credit Facility replaced the
existing revolving credit and interim term loan facilities with First Union
and Fleet. The Credit Facility, which has a three year term, consists of a
formula based $8,500,000 revolving credit facility and a $6,234,000 term loan
which are secured by substantially all of the Company's domestic assets.
Revolving credit facility availability of up to S$5,000,000 Singapore dollars
(approximately $3,000,000 US) is reserved for issuance of a standby letter of
credit in support of the Company's continuing guarantee of ISP's debt. The
interest rate on revolving credit borrowings are, at the Company's option,
based on either the prime rate or a floating Eurodollar rate plus a margin of
2.75%. At the Company's option, the term loan interest rate is based on
either prime plus 0.5% or a floating Eurodollar rate plus a margin of 3.0%.
Principal payments under the $6,234,000 term loan are due in equal monthly
installments of $74,214 over the three-year term.

Upon the November 2, 1999 funding of the Credit Facility, the Company repaid
its $7,664,000 remaining indebtedness to First Union and Fleet, with a
combination of $6,234,000 borrowed under the PNC term loan and $1,430,000 of
the Company's cash. Upon closing, the Company had excess PNC Bank revolving
credit borrowing availability of over $2,000,000.

The Company has guaranteed S$5,000,000 Singapore dollars (approximately
$3,000,000 US) of the debt of its 50.1% owned Singapore operation ISP. The
guarantee was secured by a standby letter of credit of up to S$5,000,000
Singapore dollars issued by First Union and Fleet in favor of ISP's lenders.
In the event of default, as defined by ISP's lending agreements, ISP's bank
could draw down the S$5,000,000 standby letter of credit provided by the
Company's Bank. On November 1, 1999 in conjunction with the closing of the
Credit Facilities, PNC Bank issued a backup letter of credit in support of
First Union and Fleet's existing S$5,000,000 standby letter of credit. In
January 2000 ISP's lenders accepted PNC Bank's sponsored standby letter of
credit in place of the existing instrument.

In December 1996, the Company entered into a consignment agreement (the "Gold
Consignment Agreement") with Fleet Precious Metals ("FPM") which expired
December 23, 1998. As part of the limited Forbearance Agreement, as amended, FPM
and the Bank extended the maturity to October 31, 1999. Under the Gold
Consignment Agreement, the Company purchases gold used in its manufacturing of
materials. The Gold Consignment Agreement provides for gold on consignment not
to exceed the lesser of 5,000 troy ounces of gold or gold having a market value
of $1,870,000. The Gold Consignment Agreement requires the Company to pay a
consignment fee of 5.5% per annum based upon the value of all gold consigned to
the Company. On November 1, 1999, in conjunction with the closing of the Credit
Facility, FPM and the Bank granted a 90-day extension of the Gold Consignment

<PAGE>

Agreement to permit the Company time to negotiate terms of a new agreement
with FPM. The final agreement with FPM extended the current gold agreement to
June 30, 2000.

Former Credit Facilities - refinanced on November 1, 1999

In January 1997, the Company entered into a $21,000,000 five-year term loan
("Term Loan") with First Union Bank and Fleet National Bank (collectively the
"Bank"). Under a limited forbearance agreement, as amended, the Bank extended a
previous waiver of the Term Loan's financial ratio covenants, agreed to waive
principal payments of $350,000 per month from August 1, 1998 forward and set the
maturity of the Term Loan at June 30, 1999. Coincident with the sale of its
Retconn subsidiary, on February 19, 1999 the Company repaid the remaining
$15,050,000 principal balance outstanding under this term loan.

In January 1997, the Company entered into a $15,000,000 line of credit with the
Bank that originally expired in February 1999. As part of the limited
Forbearance Agreement, as amended, the Bank extended the maturity to October 31,
1999. This credit line included a standby letter of credit for ISP in the amount
of approximately $3,000,000. Coincident with the sale of its Retconn subsidiary,
on February 19, 1999 the Company repaid $7,141,000 of the outstanding borrowings
under this facility. The remaining principal amount was paid in full in
conjunction with the PNC Bank refinancing described above.

On June 19, 1998 the Company entered into a 90-day note for $1,000,000 ("Interim
Term Loan") with the Bank to supplement the Company's working capital
requirements. The Interim Term Loan note provided for the payment of interest
monthly and for the repayment of principal on October 1, 1998. As part of the
limited Forbearance Agreement, as amended, the Bank extended the maturity to
October 31, 1999. The remaining principal amount was paid in full in conjunction
with the PNC Bank refinancing described above.

Other

In conjunction with the Company's acquisition of Polese Company on May 27, 1993,
the Company acquired from Frank J. Polese, the former sole shareholder of Polese
Company, all of the rights, including a subsequently issued patent, for certain
powdered metal technology and its application to the electronics industry. For a
period of ten years from May 1993, Mr. Polese has the right to receive 10% of
(i) the pre-tax profit from the copper tungsten product line, after allocating
operating costs and (ii) the proceeds of the sale, if any, by the Company of the
powdered metal technology. During 1999, the Company charged against operations a
total of $500,000 under this agreement.

On December 18, 1997, the Board of Directors authorized the Company to
repurchase up to $2,000,000 of SEMX common stock on the open market. Repurchased
shares will be held as treasury shares and may be reissued in the future or may
be reissued pursuant to the Company's stock option programs. During 1998 the
Company repurchased 34,600 shares at a cost of $212,000. The Company has
suspended the repurchase of any further stock at this time.

The Company continually seeks to broaden its product lines by various means,
including through acquisitions. The Company intends to pursue only those
acquisitions for which it will be able to arrange the necessary financing by
means of the issuance of additional equity, the use of its cash or, through bank
or other debt financing.

Forward Looking Statements

Portions of the narrative set forth in this document that are not historical in
nature are forward looking statements. These forward-looking statements speak
only as of the date of this document, and the Company expressly disclaims any
obligation or undertaking to publicly release any updates or revisions to any
forward-looking statements contained herein. The Company's actual performance
may differ materially from that contemplated by the forward looking statements
as a result of a variety of factors that include, but are not limited to, the
general economic or business climate, business conditions of the microelectronic
and semiconductor markets and the automotive and communications industry which
the Company serves and the economic volatility in geographic markets, such as
Asia.

Item 7(a) Quantitative and Qualitative Disclosure About Market Risk

Not applicable.

Item 8: Financial Statements.

The Company's consolidated financial statements are set for herein in Part IV
beginning at Page F-1.

Item 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.

<PAGE>

                                    PART III

Item 10, 11, 12 and 13. Directors and Executive Officers of the Registrant,
Executive Compensation, Security Ownership of Certain Beneficial Owners and
Management, and Certain Relationships and Related Transactions.

The information required by these Items is omitted because the Company will file
a definitive proxy statement pursuant to Regulation 14A with the Commission, not
later than 120 days after the end of the fiscal year, which information is
herein incorporated by reference as if set out in full.


                                     PART IV

Item 14:  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

The following is an index of the financial statements of the Company which are
incorporated herein.

(a) (1) Financial Statements:

<TABLE>
<S>                                                                         <C>
            Report of Independent Auditors'                                 F-2

            Consolidated Balance Sheet as of December 31, 1999 and 1998     F-3

            Consolidated Statement of Income for the Years
            Ended December 31, 1999, 1998 and 1997                          F-4

            Consolidated Statement of Shareholders' Equity for the Years
            Ended December 31, 1999, 1998 and 1997                          F-5

            Consolidated Statement of Cash Flows for the Years
            Ended December 31, 1999, 1998 and 1997                          F-6

            Notes to Consolidated Financial Statements                      F-7 - F-21
</TABLE>

<PAGE>

(a) (2) Financial Statement Schedules:

All schedules have been omitted because of the absence of conditions under which
they are required or because the required information is given in the above
financial statements or the notes thereto included in this report.

(b)     Reports on Form 8-K

No form 8-K reports have been filed by the Registrant during the last quarter of
the period covered by this Report.

(a)(3) Exhibits:

3.1          Certificate of Incorporation of the Company (1)

3.2          Amendment to Certificate of Incorporation (1)

3.3          Bylaws of the Company (1)

10.10(a)     Company's Employee Stock Option Plan (4)

10.10(b)     Company's Amended Employee Stock Option Plan (6)

10.12(a)     Stock Purchase Agreement dated April 30, 1993 by and between
             Registrant and Frank J. Polese (5)

10.12(b)     Asset Purchase Agreement dated April 30, 1993 by and between the
             Registrant and Frank J. Polese (5)

10.13(a)     Term Loan and Security Agreement dated May 27, 1993, between the
             Registrant and Union Trust Company (5)

10.13(c)     Promissory Note dated May 27, 1993 from the Registrant to Union
             Trust Company (5)

10.13(d)     Guaranty and Security Agreement between Polese Company, Inc. and
             Union Trust Company (5)

10.15        Lease Agreement dated as of October 22, 1993 between Transamerica
             Occidental Life Insurance Company and Polese Company, Inc. (6)

10.18        Promissory Note dated May 27,1993 payable to Frank J. Polese. (6)

10.19        Documents related to Secured Loan from Union Trust Company dated
             December 16, 1993

             (a)   Loan and Security Agreement (6)

             (b)   Promissory Note (6)

             (c)   Subordination and Intercreditor Agreement (6)

             (d)   Guaranty and Security Agreement (6)

             (e)   Loan Modification Agreement to Loan and Security Agreement
                   dated May 27, 1993 (6)

             (f)   Assignment of Patents (6)

10.20        Documents related to Revolving Loan Agreement from Union Trust
             Company dated June 16, 1994

             (a)   Revolving Credit Agreement (8)

             (b)   Revolving Credit Note (8)

<PAGE>

             (c)   Subordination and Pledge Agreement (8)

             (d)   Guaranty and Security Agreement of Parent (8)

             (e)   Guaranty and Suretyship Agreement of Polese Company, Inc. (8)

             (f)   Assignment of Patents (8)

10.21        Loan Modification Agreement dated November 23, 1994 to Revolving
             Credit Agreement between the Registrant and Union Trust Company (8)

10.22        Form of Modification of Gold Lease Agreement between the Registrant
             and Republic National Bank of New York dated December 6, 1994 (8)

10.23(a)     Employment Agreement dated as of December 15, 1994 between the
             Company and Gilbert D. Raker (8)

10.23(b)     Modification of Employment Agreement dated as of December 15, 1994
             between Polese Company, Inc and Frank J. Polese (8)

10.23(c)     Employment Agreement dated as of December 15, 1994 between the
             Company and Kenneth J. Huth (8)

10.25        Lease Agreement dated as of June 1, 1994 between Nobbs Family Trust
             and Polese Company, Inc. (8)

10.26        Lease Agreement dated as of January 1, 1995 between W. Ralph Byrne
             and American Silicon Products, Inc. (8)

10.27        Lease Agreement dated as of January 19, 1995 between Thomas A.
             Langton and David T. Kearns, Jr. d/b/a Alak Associates, and
             American Silicon Products, Inc. (8)

10.28        Documents related to the ASAC merger and the acquisition of the
             assets of American Silicon Products, Inc., a Rhode Island
             corporation

             (a)  Asset Purchase Agreement dated as of September 28, 1994, as
                  amended, among Peter Vessella, ASPI and ASAC. (7)

             (b)  Merger Agreement dated as of November 18, 1994 by and among
                  the Registrant, Newco, ASAC and the stockholders of ASAC. (7)

             (c)  Consulting Agreement dated as of December 15, 1994 by and
                  between the Registrant and Peter J. Hurley. (7)

             (d)  Term Loan Agreement (Bridge Loan) dated December 15, 1994 by
                  and between the Registrant and UTC. (7)

             (e)  Term Loan Agreement dated December 15, 1994 by and between the
                  Registrant and UTC. (7)

             (f)  Promissory Note in the principal amount of $8,250,000, dated
                  December 15, 1994 from the Registrant to UTC. (7)

10.29        Documents related to Revolving Loan Agreement from First Fidelity
             Bank dated December 20, 1995.

             (a)  Revolving Loan and Security Agreement

             (b)  Revolving Promissory Note

10.30        Documents related to Term Loan Agreement from First Union Bank of
             Connecticut dated January 4, 1996.

<PAGE>

             (a)  Term Loan Agreement

             (b)  Term Promissory Note

10.31(a)     Termination Agreement dated as of October 27, 1995 between the
             Company and John P. Holmes, III.

10.31(b)     Termination Agreement dated as of October 27, 1995 between the
             Company and J. Francis Lavelle.

10.31(c)     Termination Agreement dated as of October 27, 1995 between the
             Company and Rolf E. Soderstrom.

10.31(d)     Termination Agreement dated as of October 27, 1995 among the
             Company Peter J. Hurley, Harrison Hurley & Co., Inc and Harrison
             Hurley & Co. II, Inc.

10.49        1994 Amendment to Employees' Incentive Stock Option Plan. (9)

10.50        1995 Amendment to Employees' Incentive Stock Option Plan. (9)

10.51        Commercial Grid Note dated May 31, 1995 in the amount of $1,250,000
             from the Company to Union Trust Company. (9)

10.55        Stock Purchase Agreement dated as of December 20, 1995 by and among
             Retconn Acquisition, Inc. and Daniel A. LeDonne, The Richard C.
             Ashworth 1993 Trust, Richard C. Ashworth individually, William S.
             White and Retconn Incorporated.(10)

10.56        Employment Agreement dated January 4, 1996 between Retconn
             Incorporated and Daniel A. LeDonne. (10)

10.57        Closing Date Agreement dated January 4, 1996 among Retconn
             Acquisition, Inc., Daniel A. LeDonne, The Richard C. Ashworth 1993
             Trust, Richard C. Ashworth individually, William G. White and
             Retconn Incorporated. (10)

10.58        Joint Venture Agreement dated August 28, 1996 between Semiconductor
             Alliance Pte Ltd., the Company and International Semiconductor
             Products Pte Ltd.(11)

10.59        Intellectual Property License Agreement dated August 28, 1996
             between American Silicon Products, Inc. and International
             Semiconductor Products Pte Ltd.(11)

10.60        Purchase Agreement dated as of January 16, 1997 between American
             Silicon Products, Inc. and Air Products & Chemicals, Inc.(12)

10.61        Credit Agreement dated as of January 23, 1997 between the Company
             and First Union Bank of Connecticut. (12)

10.62        Stock Purchase Agreement dated as of July 30, 1997 by and among
             Retconn Incorporated, Semiconductor Packaging Materials Co., Inc.,
             Niwatana Chaimongkol, Somnuk Thongkumthamachart and S.T.
             Electronics, Inc. (13)

10.63        Fifth Amendment and Forebearance Agreement among SEMX Corporation
             and Subsidiaries and First Union Bank dated as of January 13, 1999
             (14)

10.64        Asset Purchase Agreement by and among Litton Systems, Inc. and SEMX
             Corporation, Retconn Incorporated, S.T. Electronics, Inc. and
             Retconn SPM (Malaysia) SDN. BHD. Dated as of January 26, 1999 and
             related documents.(14)

<PAGE>

10.65        Sixth Amendment and Forebearance Agreement among SEMX Corporation
             and Subsidiaries and First Union National Bank dated as of February
             19, 1999.(14)

10.66        Rights Agreement, dated as of June 15, 1999, between the Company
             and Continental Stock Transfer and Trust Company (15)

10.67        Seventh Amendment and Forbearance Agreement among SEMX Corporation
             and Subsidiaries and First Union National Bank dated as of June
             29,1999. (16)

10.68        Employment agreement dated as of August 1, 1999 between the Company
             and Gilbert D. Raker (16)

10.69        Employment agreement dated as of August 1, 1999 between the Company
             and Frank J. Polese (16)

10.70        Revolving Credit, Term Loan and Security Agreement between the
             Company and Subsidiaries and PNC Bank National Association (as
             agent and lender) dated November 1, 1999. (17)

10.71        Seventh Amendment, Waiver and Modification to the Consignment
             agreement Between Fleet Precious Metal Inc. and SEMX Corporation
             dated February 1, 2000

10.72        Form of Intellectual Property Protection Agreement

10.73        Employment agreement dated as of May 1, 1999 between American
             Silicon Products, Inc. and SEMX Corporation and Richard Brown.

22           List of Subsidiaries of the Company

23.1         The Consent of Goldstein Golub Kessler LLP, the Company's
             independent certified pubic accountants, to incorporation by
             reference to Registration Statement on Form S-8 of their report
             dated February 7, 2000.

27           Financial Data Schedule

             (1)  Incorporated herein by reference to the Company's Registration
                  Statement No. 33-43640-NY on Form S-18, filed with the
                  Securities and Exchange Commission on November 1, 1991.

             (2)  Incorporated herein by reference to the Company's Annual
                  Report for the year ended December 31, 1991, filed with the
                  Securities and Exchange Commission on March 31, 1992.

             (3)  Incorporated herein by reference to Amendment No. 1 to the
                  Company's Registration Statement No. 33-43640-NY on Form S-18,
                  filed with the Securities and Exchange Commission on
                  December 6, 1991.

             (4)  Incorporated herein by reference to Amendment No. 2 to the
                  Company's Registration Statement No. 33-43640-NY on Form S-18,
                  filed with the Securities and Exchange Commission on
                  December 20, 1991.

             (5)  Incorporated herein by reference to
                  Current Report on Form 8-K filed with the
                  SEC on June 11, 1993, as amended by Form
                  8-K/A.

             (6)  Incorporated herein by reference to the Company's Registration
                  Statement No. 33-70876 on Form S-3 filed, with the Securities
                  and Exchange on October 28, 1993 and as amended on December
                  30, 1993, January 20, 1994 and February 7, 1994.

             (7)  Incorporated herein by reference to
                  Current Report on Form 8-K filed with the
                  SEC on December 29, 1994.

             (8)  Incorporated herein by reference to the Company's Annual
                  Report for the year ended December 31, 1995, filed with the

<PAGE>

                  SEC for March 31, 1995.

             (9)  Incorporated herein by reference to the Company's Registration
                  Statement No. 33-93502 on Form SB-2 filed, with the Securities
                  and Exchange on June 16, 1995 and as amended on July 19, 1995
                  and July 26, 1995.

             (10) Incorporated by reference to the Company's Form 8-K filed
                  January 4, 1996.

             (11) Incorporated by reference to the Company's
                  10-QSB filed for the quarter ended
                  September 30, 1996.

             (12) Incorporated by reference to the Company's
                  Form 8-K filed February 4, 1997 and
                  amended by Form 8-K/A.

             (13) Incorporated by reference to the Company's Annual Report for
                  the year ended December 31, 1997, filed with the Securities
                  and Exchange Commission on March 20, 1998

             (14) Incorporated by reference to the Company's Annual Report for
                  the year ended December 31, 1998, filed with the Securities
                  and Exchange Commission on April 15, 1999

             (15) Incorporated by reference to the Company's Form 8-K filed
                  June 24, 1999

             (16) Incorporated by reference  to the Company's 10-Q filed for the
                  the quarter ended June 30, 1999

             (17) Incorporated by reference  to the Company's 10-Q filed for the
                  the quarter ended September 30, 1999

<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                          INDEX TO FINANCIAL STATEMENTS
================================================================================

Independent Auditors' Report                                             F-2

Consolidated Balance Sheet as of December 31, 1999 and 1998              F-3

Consolidated Statement of Operations for the Years Ended
      December 31, 1999, 1998 and 1997                                   F-4

Consolidated Statement of Shareholders' Equity for the Years Ended
      December 31, 1999, 1998 and 1997                                   F-5

Consolidated Statement of Cash Flows for the Years Ended
      December 31, 1999, 1998 and 1997                                   F-6

Notes to Consolidated Financial Statements                            F-7 - F-21


<PAGE>



INDEPENDENT AUDITORS' REPORT



To the Board of Directors
SEMX Corporation


We have audited the accompanying consolidated balance sheets of SEMX Corporation
and Subsidiaries as of December 31, 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 December 31, 1999. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of SEMX Corporation and
Subsidiaries as of December 31, 1999 and 1998 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with generally accepted accounting principles.



GOLDSTEIN GOLUB KESSLER LLP
New York, New York

February 7, 2000


                                      F-2
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                             (DOLLARS IN THOUSANDS)
================================================================================
<TABLE>
<CAPTION>

DECEMBER 31,                                                            1999          1998
---------------------------------------------------------------------------------------------
<S>                                                                 <C>           <C>
ASSETS
Current Assets:
   Cash and cash equivalents                                        $     --      $  1,141
   Accounts receivable, less allowance for doubtful
   accounts of $656 and $245, respectively                             7,700         8,007
   Inventories                                                         5,903        10,447
   Prepaid expenses and other current assets                           1,024           948
   Deferred income tax assets                                            999         5,643
---------------------------------------------------------------------------------------------
         TOTAL CURRENT ASSETS                                         15,626        26,186
---------------------------------------------------------------------------------------------
Property, Plant and Equipment - at cost, net of accumulated
   depreciation and amortization of $18,309 and $13,974,
   respectively                                                       34,837        38,352
---------------------------------------------------------------------------------------------
Other Assets:
   Goodwill                                                            8,573        15,938
   Technology rights and intellectual property                           897           963
   Other                                                               1,139           885
---------------------------------------------------------------------------------------------
         TOTAL OTHER ASSETS                                           10,609        17,786
---------------------------------------------------------------------------------------------
         TOTAL ASSETS                                               $ 61,072      $ 82,324
=============================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable                                                 $  3,846      $  5,262
   Accrued expenses                                                    2,544         2,947
   Income taxes payable                                                  589            --
   Current portion of long-term debt and short-term obligations        1,893        29,393
   Current portion of obligations under capital leases                 2,541         2,648
---------------------------------------------------------------------------------------------
         TOTAL CURRENT LIABILITIES                                    11,413        40,250
---------------------------------------------------------------------------------------------
Deferred Income Tax Liabilities                                        2,431         2,329
Long-term Debt                                                         9,255         6,657
Obligations under Capital Leases                                       4,080         6,398
---------------------------------------------------------------------------------------------
         TOTAL LIABILITIES                                            27,179        55,634
---------------------------------------------------------------------------------------------
Commitments and Contingencies
Minority Interest in Subsidiary                                        1,329         1,319
---------------------------------------------------------------------------------------------
Shareholders' Equity:
   Preferred stock - $.10 par value; authorized 1,000,000
   shares, none issued                                                    --            --
   Common stock - $.10 par value; authorized 20,000,000
   shares, issued 6,396,241 and 6,375,616 shares respectively            640           638
   Additional paid-in capital                                         28,296        28,199
   Accumulated other comprehensive loss                                 (611)         (322)
   Retained earnings (accumulated deficit)                             4,451        (2,932)
---------------------------------------------------------------------------------------------
                                                                      32,776        25,583
   Less treasury stock: 334,600 shares, at cost                         (212)         (212)
---------------------------------------------------------------------------------------------
         TOTAL SHAREHOLDERS' EQUITY                                   32,564        25,371
---------------------------------------------------------------------------------------------
         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                 $ 61,072      $ 82,324
=============================================================================================
</TABLE>

                The accompanying notes are an integral part of these statements.

                                      F-3
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                     (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
================================================================================

<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,                                             1999          1998          1997
----------------------------------------------------------------------------------------------------------
<S>                                                               <C>           <C>           <C>
Revenue:
   Net sales                                                      $ 46,666      $ 47,524      $ 48,029
   Service revenue                                                  16,858        18,379        23,047
----------------------------------------------------------------------------------------------------------
                                                                    63,524        65,903        71,076
----------------------------------------------------------------------------------------------------------

Cost of goods sold and services performed:
   Cost of goods sold                                               29,348        37,982        33,185
   Cost of services performed                                       12,970        15,143        17,514
----------------------------------------------------------------------------------------------------------
                                                                    42,318        53,125        50,699
----------------------------------------------------------------------------------------------------------
Gross profit                                                        21,206        12,778        20,377

Selling, general and administrative expenses                       (14,061)      (15,788)      (11,992)

Special charges                                                         --       (11,217)           --
----------------------------------------------------------------------------------------------------------

Operating income (loss)                                              7,145       (14,227)        8,385

Gain on sale of connector business                                   8,430            --            --

Interest expense - net                                              (1,960)       (3,475)       (2,601)
----------------------------------------------------------------------------------------------------------

Income (loss) before provision (benefit) for income
   taxes and minority interest in (income) loss of consolidated
   subsidiary                                                       13,615       (17,702)        5,784

Provision (benefit) for income taxes                                 6,201        (5,500)        2,214
----------------------------------------------------------------------------------------------------------

Income (loss) before minority interest in (income) loss of
   consolidated subsidiary                                           7,414       (12,202)        3,570

Minority interest in (income) loss of consolidated subsidiary          (31)          244           223
----------------------------------------------------------------------------------------------------------
Net income (loss)                                                 $  7,383      $(11,958)     $  3,793
==========================================================================================================

Earnings (loss) per common share:
   Basic                                                          $   1.22      $  (1.98)     $    .62
   Diluted                                                        $   1.19      $  (1.98)     $    .61
==========================================================================================================

Shares used in computing earnings (loss) per common share:
   Basic                                                             6,047         6,054         6,070
   Diluted                                                           6,223         6,054         6,232
==========================================================================================================
</TABLE>

               The accompanying notes are an integral part of these statements.

                                      F-4
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                              (DOLLARS IN THOUSANDS)
================================================================================

<TABLE>
<CAPTION>
                                                                    ACCUMULATED
                                                                       OTHER      RETAINED
                                                       ADDITIONAL  COMPREHENSIVE   EARNINGS                           TOTAL
                                        COMMON STOCK     PAID-IN      INCOME     (ACCUMULATED    TREASURY STOCK   SHAREHOLDERS'
                                      SHARES     AMOUNT  CAPITAL      (LOSS)       DEFICIT)     SHARES    AMOUNT     EQUITY
----------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>    <C>          <C>        <C>           <C>       <C>      <C>
Balance at January 1, 1997           6,355,516    $636   $28,070      $  --      $  5,233      (300,000) $  --    $   33,939
Proceeds from exercise of stock
  options                               20,100       2       129         --            --            --     --           131
Comprehensive Income:
   Net Income                               --      --        --         --         3,793            --     --            --
   Foreign currency translation
   adjustment - net of deferred
   taxes of $385                            --      --        --       (405)           --            --     --            --
Total comprehensive income                  --      --        --         --            --            --     --         3,388
----------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1997         6,375,616     638    28,199       (405)        9,026      (300,000)    --        37,458
Purchase of treasury stock                  --      --        --         --            --       (34,600)  (212)         (212)
Comprehensive loss:
   Net loss                                 --      --        --         --       (11,958)           --     --            --
   Foreign currency translation
   adjustment - net of deferred
   taxes of $85                             --      --        --         83            --            --     --
Total comprehensive loss                    --      --        --         --            --            --     --       (11,875)
----------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1998         6,375,616     638    28,199       (322)       (2,932)     (334,600)  (212)       25,371
Proceeds from exercise of stock
  options                               20,625       2        56         --            --            --     --            58
Compensation expense from
  stock grants                              --      --        41         --            --            --     --            41
Comprehensive income:
   Net Income                               --      --        --         --         7,383            --     --            --
   Foreign currency translation
   adjustment - net of deferred
   taxes of $160                            --      --        --       (289)           --            --     --            --
Total comprehsensive income                 --      --        --         --            --            --     --         7,094

----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999         6,396,241    $640   $28,296      $(611)     $  4,451      (334,600) $(212)   $   32,564
==================================================================================================================================
</TABLE>

               The accompanying notes are an integral part of these statements.


                                      F-5
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
================================================================================
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,                                                            1999         1998         1997
---------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>          <C>          <C>
Cash flows from operating activities:
   Net income (loss)                                                            $  7,383     $(11,958)    $  3,793
Adjustments to reconcile net income (loss) to net cash provided by
   operating activities:
   Gain on sale of connector business                                             (8,430)          --           --
      Write-offs and accrued special charges                                          --        9,267           --
      Gain on sale of property, plant and equipment                                  (11)          --          (56)
      Depreciation and amortization of property, plant and equipment               5,079        5,182        4,072
      Other amortization                                                             629        1,022          855
      Compensation expense from issuance of stock grants                              41           --           --
      Deferred income taxes                                                        4,906       (5,542)       1,058
      Minority interest in subsidiary income (loss)                                   31         (244)        (223)
      Changes in operating assets and liabilities:
         (Increase) decrease in accounts receivable                               (2,007)       2,641       (3,195)
         (Increase) decrease in inventories                                       (1,537)       1,994       (2,298)
         (Increase) decrease in prepaid expenses and other current assets           (217)         539         (322)
         Increase (decrease) in accounts payable                                    (483)      (2,136)       3,210
         Increase (decrease) in accrued expenses                                    (497)         107        1,000
         Increase (decrease) in income taxes payable                                 579           --       (1,497)
---------------------------------------------------------------------------------------------------------------------
            NET CASH PROVIDED BY OPERATING ACTIVITIES                              5,466          872        6,397
---------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
   Purchase of property and equipment                                             (2,719)      (3,063)     (13,119)
   Net proceeds from sales of connector business                                  22,191           --           --
   Payments for acquisition of subsidiaries, net of cash acquired                     --           --      (14,939)
   Payment for technology rights                                                      --           --         (400)
   Proceeds from sale of property and equipment                                       64           --          278
   (Increase) decrease in other assets                                                25          129         (873)
---------------------------------------------------------------------------------------------------------------------
            NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                   19,561       (2,934)     (29,053)
---------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
   Proceeds from exercise of stock options                                            58           --          131
   Net proceeds under revolving credit                                               528        4,925        6,875
   Payments under capital leases                                                  (2,487)      (2,222)      (1,617)
   Payments under long-term debt                                                 (30,041)      (3,371)      (4,263)
   Proceeds from long-term debt                                                    6,234        1,796       20,343
   Payment of financing costs                                                       (423)          --           --
   Purchase of treasury stock                                                         --         (212)          --
---------------------------------------------------------------------------------------------------------------------
            NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                  (26,131)         916       21,469
---------------------------------------------------------------------------------------------------------------------
Effect of foreign translation on cash                                                (37)          27          (84)
---------------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents                                         (1,141)      (1,119)      (1,271)
Cash and cash equivalents at beginning of year                                     1,141        2,260        3,531
=====================================================================================================================
Cash and cash equivalents at end of year                                        $     0      $  1,141     $  2,260
=====================================================================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year
   for:
   Interest                                                                     $  2,111     $  3,623     $  2,654
=====================================================================================================================
   Income taxes                                                                 $    664     $    285     $  2,849
=====================================================================================================================
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
   Machinery and equipment, net of trade-in, acquired under capital lease       $    896     $  3,078     $  4,271
=====================================================================================================================
   Accrued amounts relating to acquisition of subsidiary                        $      0     $     0     $    621
=====================================================================================================================
   Notes payable in connection with the acquisition of a subsidiary             $      0     $     0     $  2,000
=====================================================================================================================
</TABLE>

               The accompanying notes are an integral part of these statements.

                                      F-6
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================

1.   PRINCIPAL BUSINESS ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING
     POLICIES:

     The accompanying consolidated financial statements include the accounts of
     SEMX Corporation ("SPM") and its wholly owned and majority-owned
     subsidiaries (collectively the "Company"). All significant intercompany
     transactions and balances have been eliminated. As further described in
     Note 2, on January 2, 1996, the Company acquired Retconn Incorporated
     ("Retconn"). Additionally, as described in Note 2, on August 28, 1996 the
     Company established International Semiconductor Products Pte Ltd. ("ISP"),
     a joint venture with an unrelated third party. As further described in Note
     2, on January 23, 1997 the Company acquired certain assets and assumed
     certain liabilities of Silicon Materials Service and the common stock of
     Silicon Materials Service, B.V. (collectively "SMS") and on July 30, 1997,
     the Company acquired S.T. Electronics Inc. ("ST"). The results of
     operations of Retconn, SMS and ST are included in the Company's
     consolidated financial statements from the dates of acquisition and the
     results of operations of ISP are included in the Company's consolidated
     financial statements from the date of its formation. On February 19, 1999,
     the Company completed the sale of its Retconn and ST businesses as
     described in Note 2.

     The Company primarily provides specialty materials and services to the
     microelectronic and semiconductor industries and operates in two business
     segments consisting of the Materials Group and the Services Group. The
     Materials Group includes the companies SPM, Polese Company, Inc. ("Polese")
     and Retconn (through the February 1999 disposition). The Services Group
     includes the Company's American Silicon Products, Inc. ("ASP"), American
     Silicon Products B.V. ("ASP BV") and ISP business units.

     Revenue from the sale of products is generally recognized at the date of
     shipment to customers. Service revenue is recognized when the services are
     performed.

     The Company considers all investments purchased with an original maturity
     of three months or less to be cash equivalents.

     The Company maintains cash in bank accounts, which, at times, may exceed
     federally insured limits. The Company has not experienced any loss on these
     accounts.

     The financial position and results of operations of the Company's foreign
     subsidiaries are measured using local currency as the functional currency.
     Assets and liabilities of these subsidiaries have been translated at
     current exchange rates, and related revenue and expenses have been
     translated at average monthly exchange rates. The aggregate effect of
     translation adjustments net of deferred taxes is reflected as a separate
     component of stockholders' equity until there is a sale or liquidation of
     the underlying foreign investment.

     Inventories, which consist principally of work-in-process inventory,
     include raw materials, labor and manufacturing expenses and are stated at
     the lower of cost, determined by the first-in, first-out method, or market.

     Deferred income taxes arise from differences in bases between tax reporting
     and financial reporting (see Note 8).

     Depreciation and amortization of property and equipment is provided for by
     the straight-line method over the estimated useful lives of the related
     assets.

                                      F-7
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires the use of estimates by management
     affecting the reported amounts of assets and liabilities and revenue and
     expenses and the disclosure of contingent assets and liabilities. Actual
     results could differ from those estimates.

     The excess of cost over fair value of net assets acquired (goodwill),
     amounting to approximately $10,597 and $18,281 at December 31, 1999 and
     1998, respectively, is being amortized over periods ranging from 25 to 40
     years using the straight-line method (see Note 2). Accumulated amortization
     at December 31, 1999 and 1998 was approximately $2,024 and $2,343,
     respectively. The Company reviews the carrying value of goodwill for
     impairment, periodically or whenever events or changes in circumstances
     indicate that the amounts may not be recoverable. The review for
     recoverability includes an estimate by the Company of the future
     undiscounted cash flows expected to result from the use of the assets
     acquired and their eventual disposition. An impairment will be recognized
     if the carrying value of the assets exceeds the estimated future
     undiscounted cash flows of those assets (see Note 13).

     Certain technology rights, proprietary rights and intellectual property,
     amounting to approximately $1,333 and $1,311 at December 31, 1999 and 1998,
     respectively, are being amortized over periods ranging from 11 to 17 years
     using the straight-line method. Accumulated amortization at December 31,
     1999 and 1998 was approximately $436 and $348, respectively.

     The Company elected to measure compensation cost using APB Opinion No. 25
     as is permitted by Statement of Financial Accounting Standards ("SFAS") No.
     123, ACCOUNTING FOR STOCK-BASED COMPENSATION, and has elected to comply
     with other provisions and the disclosure-only requirements of SFAS No. 123
     (see Note 10).

     Basic earnings per common share are computed using the weighted-average
     number of shares outstanding. Diluted earnings per common share is computed
     using the weighted-average number of shares outstanding adjusted for the
     incremental shares attributed to outstanding options to purchase common
     stock. Incremental shares of 175,878 in 1999 and 162,536 in 1997 were used
     in the calculation of diluted earnings per common share. No incremental
     shares were used in the 1998 calculation of diluted earnings per common
     share since they would have had an antidilutive effect.

     In 1998, the Company adopted SFAS No. 130, REPORTING COMPREHENSIVE INCOME.
     This statement establishes rules for the reporting of comprehensive income
     and its components. Comprehensive income consists of net income and foreign
     currency translation adjustments and is presented in the consolidated
     statement of shareholders' equity. The adoption of SFAS No. 130 had no
     impact on total shareholders' equity. Prior-year financial statements have
     been reclassified to conform with SFAS No. 130 requirements.

     The Company does not believe that any recently issued but not yet effective
     accounting standards will have a material effect on the Company's
     consolidated financial position, results of operations or cash flows.

2.   ACQUISITIONS, DISPOSITIONS AND INVESTMENTS:

     Effective January 2, 1996, the Company acquired all of the common stock of
     Retconn for $5,933 in cash. This business combination was accounted for as
     a purchase. In addition, the Company incurred approximately $1,132 in costs
     associated with the acquisition of Retconn, which included the issuance of
     15,000 shares of the Company's common stock. The fair value of assets
     acquired, including approximately $4,696 allocated to goodwill, amounted to
     approximately $8,033 and liabilities assumed amounted to approximately
     $968. On July 30, 1997, the Company acquired ST for $1,000 in cash plus
     approximately $54 based on ST's closing net worth and $2,000 in
     interest-bearing notes payable to the former shareholders

                                      F-8
<PAGE>

     of ST (see Note 6), in a business combination accounted for as a purchase.
     In addition, the Company incurred approximately $300 in costs associated
     with the acquisition of ST. The fair value of assets acquired, including
     approximately $2,788 allocated to goodwill, amounted to approximately
     $4,231 and liabilities assumed amounted to $877.

     In February 1999, the Company sold its connector businesses, Retconn and
     ST, to Litton Corporation ("Litton"). Litton acquired the specified
     assets and assumed certain liabilities of Retconn and ST, as defined in
     the purchase agreement, in consideration for a cash payment to the
     Company of $23,871. The liabilities assumed by Litton amounted to
     approximately $3,500. The purchase price was subject to adjustment for
     changes in Retconn's closing date balance sheet and in December, 1999
     the Company paid Litton $320 in settlement of the final purchase price
     adjustment. In addition, the Company is prevented from directly
     competing in the connector business for a period of three years. The
     Company recorded a pretax gain, during the first quarter of 1999, of
     $8,430 on the transaction.

     On August 28, 1996, the Company invested $2,004 in ISP, a joint venture
     located in Singapore, for a 50.1% ownership interest. On May 12, 1998 the
     Company invested an additional $385 as a redeemable convertible bond
     ("RCB"). The RCB bears interest at the rate of 8% per annum and matures in
     April 2001. The Company may convert the RCB at any time into ordinary
     shares of par value S$1.00 (Singapore dollar) at the rate of one ordinary
     share for every S$3.00 worth of RCB plus accrued interest. The RCB
     instrument ranks senior to all other existing shareholder loans. If the RCB
     was converted on December 31, 1999 the Company's ownership interest would
     have increased to 61%.

     Effective January 23, 1997, the Company's Services Group acquired SMS for
     approximately $10,400 in cash plus the working capital of SMS as of January
     23, 1997, approximately $2,572, in a business combination accounted for as
     a purchase. In addition, the Company incurred approximately $2,000 in costs
     in connection with the acquisition of SMS. The fair value of assets
     acquired, including approximately $2,923 allocated to goodwill, amounted to
     approximately $15,609 and liabilities assumed amounted to approximately
     $637. SMS provides silicon wafer polishing and reclamation services to the
     semiconductor industry. As described in Note 13, the Company closed the
     Texas operations of SMS during 1998.

3.   INVENTORIES:

     The components of inventories are as follows:

                   December 31,              1999         1998
                   -----------------------------------------------

                   Precious metals         $1,243      $ 1,245
                   Nonprecious metals       4,660        9,202
                   -----------------------------------------------
                                           $5,903      $10,447
                   ===============================================

     The Company has a consignment arrangement with a bank, as described in Note
     9, which provides for the leasing of precious metals by the Company. The
     Company pays for these precious metals based on actual usage.

                                      F-9
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================


4.   PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment, at cost, consists of the following:

<TABLE>
<CAPTION>

                                                                       Estimated
     December 31,                              1999       1998       Useful Life
     -------------------------------------------------------------------------------
<S>                                          <C>        <C>        <C>
     Land                                    $   642    $   642
     Buildings and leasehold improvements     10,856     10,301    1.5 to 39 years
     Machinery and equipment                  40,771     40,387    3 to 15 years
     Construction-in-progress                    877        996
     -------------------------------------------------------------------------------
                                              53,146     52,326
     Less accumulated depreciation and
     amortization                             18,309     13,974
     -------------------------------------------------------------------------------
     Property, plant and equipment, net      $34,837    $38,352
     ===============================================================================
</TABLE>

     Included in machinery and equipment are approximately $15,229 and $15,531
     at December 31, 1999 and 1998 respectively, of property acquired under
     capital leases. Amortization of these assets is included in depreciation
     and amortization expense. Accumulated amortization of these assets amounted
     to approximately $5,486 and $3,929 at December 31, 1999 and 1998,
     respectively. The property held under these leases is collateral for the
     related capital lease obligations described in Note 7. Included in
     machinery and equipment and in leasehold improvements are $63 and $75,
     respectively, of capitalized interest for the year ended December 31, 1999.

5.   ACCRUED EXPENSES:

     Accrued expenses consist of the following:

            December 31,                                1999      1998
            -------------------------------------------------------------

            Accrued payroll, bonuses and vacations     $1,423    $  801
            Other (all amounts are less than 5% of
              total current liabilities)                1,121     2,146
            -------------------------------------------------------------
                                                       $2,544    $2,947
            =============================================================

                                      F-10
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================

6.   LONG-TERM DEBT AND SHORT-TERM OBLIGATIONS:

     Long-term debt and short-term obligations consist of the following:

     December 31,                                         1999        1998
     ------------------------------------------------------------------------

     Term loan (a) (c) (g)                             $ 6,159     $16,050
     Line of credit (b) (c) (g)                            528      11,800
     Term loan (c) (h)                                       -       1,393
     Term loan (d) (h)                                   3,895       4,578
     Term loan (e) (h)                                       -       1,482
     Term loan (f) (h)                                     556         684
     Other                                                  10          63
     ------------------------------------------------------------------------

     Total long-term debt and short-term obligations    11,148      36,050
     Less current maturities                             1,893      29,393

     ------------------------------------------------------------------------
     Long-term debt                                    $ 9,255     $ 6,657
     ========================================================================

     (a)  The Company entered into a Term Loan and Security Agreement (and a
          revolving credit agreement discussed in (b) ) in November 1999 with
          PNC Bank N.A. ("PNC") which has a three-year term and is secured by
          substantially all of the Company's domestic assets. The term loan
          interest, at the Company's option, is based on either prime plus 1/2%
          or a floating Eurodollar rate plus an additional margin of 3%. At
          December 31, 1999, the interest rate was 9.25%. The term loan of
          $6,234 is payable in equal monthly installments of $74.

     (b)  Pursuant to the November 1999 financing with PNC, the Company entered
          into a Revolving Credit Borrowing and Security Agreement ("the
          revolving credit facility"). The revolving credit facility has a
          three-year term and provides for up to $8,500 in borrowings based upon
          eligible accounts receivable and inventory. The revolving credit
          facility includes a standby letter of credit for approximately $3,000
          ($5,000 Singapore dollars) reserved for possible issuance under a
          continuing guarantee of a foreign subsidiary's debt. The interest rate
          is based on either prime or a floating Eurodollar rate plus a margin
          of 2.75%. At December 31, 1999, the interest rate was 8.75% and the
          excess revolving credit borrowing availability was $2,688.

     (c)  During 1999, the Company repaid a remaining 1997 term loan balance of
          $15,050, a 1998 interim term loan balance of $1,000 and $11,800
          outstanding under a revolving credit line. These amounts were repaid
          with the net proceeds from the sale of its connector business,
          Retconn, in February 1999 (see note 2 for additional details) and
          proceeds from the refinancing with PNC. In addition, the Company
          repaid a 1996 term loan used to acquire a building with proceeds from
          the PNC refinancing.

     (d)  In 1997, ISP entered into a S$19,700 (approximately $11,900 at
          December 31, 1999) credit facility with a Singapore financial
          institution in order to acquire certain equipment, acquire a building,
          provide for an overdraft facility and to provide a multi-currency
          letter of credit facility. Amounts borrowed under the facility are
          subject to availability restrictions and bear interest at an average
          rate of approximately 6.75%. As described above, up to S$5,000
          (approximately $3,000) of this credit facility is guaranteed by a
          standby letter of credit with PNC. In the event of default, as defined
          by ISP's lending agreements, ISP's bank could draw down the
          S$5,000 standby letter of credit provided by PNC. At December 31,
          1999, ISP has outstanding S$6,457 (approximately $3,895) under the
          facility.

                                      F-11
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================

     (e)  As described in Note 2, the Company issued notes payable to the former
          shareholders of ST. Interest on the notes was payable quarterly, at 7%
          per annum. The principal on the notes was payable in 20 consecutive
          quarterly installments of $100, which commenced November 1, 1997.
          These notes were assumed by the purchaser of the Company's Retconn and
          ST business on February 19, 1999, as described in Note 2.

     (f)  In conjunction with the acquisition of a building, the Company
          entered into a term loan with a foreign bank in August 1998 in the
          principal amount of 1,300 Dutch Guilders (approximately $593
          translated at December 31, 1999 exchange rates). The loan bears
          interest at 5.25% for three years which increases to 5.5% for the
          remaining life of the loan and is payable in quarterly installments
          of approximately $9, plus interest, which commenced on December 15,
          1998. In addition, the Company entered into a 1,000 Dutch Guilder
          (approximately $456 translated at December 31, 1999 exchange rates)
          overdraft facility with the foreign bank, which is collateralized
          by accounts receivable. Interest is payable monthly at the rate of
          1.75% plus the central bank's promissory note discount rate. At
          December 31, 1999 there were no amounts outstanding under this
          facility.

     (g)  Because the interest rates will change with changes in the prime rate
          and Eurodollar rate, the fair value of the bank debt approximates the
          carrying amount.

     (h)  Based on market rates currently available to the Company for loans
          with similar terms and maturities, the fair value of the long-term
          debt does not vary significantly from the carrying amount.

     Maturities of long-term debt and short-term obligations are as follows:

            Year ending December 31,

                      2000                     $ 1,893
                      2001                       1,885
                      2002                       5,906
                      2003                         641
                      2004                         417
                   Thereafter                      406
            ------------------------------------------------
                                               $11,148
            ================================================

     The above bank loan agreements provide, among other things, that the
     Company is subject to restrictions related to the issuance of additional
     indebtedness, additional liens and security interests, capital expenditures
     and the payment of dividends. In addition, the above loans are
     collateralized by a blanket lien on substantially all the Company's assets,
     and require that the Company maintain a specific financial ratio.

                                      F-12
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================

7.   OBLIGATIONS UNDER CAPITAL LEASES:

     The Company is the lessee of property and equipment acquired under capital
     leases expiring in various years through 2004.

     Future lease payments under capital leases are as follows:

            Year ending December 31,

                     2000                          $2,753
                     2001                           2,521
                     2002                           1,680
                     2003                             545
                     2004                              52
            ------------------------------------------------
                                                    7,551
            Less amount representing interest         930
            ------------------------------------------------
                                                    6,621
            Less current portion                    2,541
            ------------------------------------------------
                                                   $4,080
            ================================================

     Interest rates on these capital leases range from 7.42% to 16.67% per
     annum.


8.   INCOME TAXES:

     The provision (benefit) for income taxes for the years ended December 31,
     1999, 1998 and 1997 consists of the following components:

     Year ended December 31,             1999         1998         1997
     ---------------------------------------------------------------------
     Current:
       Federal                        $  312      $             $  907
       State                             983           42          249
     Deferred:
       Federal                         5,152       (4,876)         948
       State                             (94)        (113)         210
       Foreign                          (152)        (553)        (100)

     ---------------------------------------------------------------------
                                      $6,201      $(5,500)      $2,214
     =====================================================================

     The provision (benefit) for income taxes for the years ended December 31,
     1999, 1998 and 1997 differs from the amount computed using the federal
     statutory rate of 34% as a result of the following:

                                      F-13
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================


     Year ended December 31,                    1999      1998      1997
     ------------------------------------------------------------------------

     Tax at federal statutory rate              34.0%    (34.0)%    34.0%
     Change in valuation allowance                --       4.3        --
     State tax credits                          (1.4)     (1.5)       --
     State income tax provision (benefit),
        net of federal tax effect                4.8      (3.3)      5.0
     Effect of permanent differences             7.7       1.8       1.4
     Other                                       0.4       1.6      (2.1)
     ------------------------------------------------------------------------
                                                45.5%    (31.1)%    38.3%
     ========================================================================

     The tax effects of available tax carryforwards and temporary differences
     that give rise to the net short-term deferred income tax asset are
     presented below:

     December 31,                              1999        1998
     --------------------------------------------------------------

     Federal net operating loss and tax
       credit carryforwards                    $617       $5,334
     Other                                      382          309

     --------------------------------------------------------------
                                               $999       $5,643
     ==============================================================

     The tax effects of available tax carryforwards, temporary differences and
     foreign currency translation adjustments that give rise to the net
     long-term deferred income tax liabilities are presented below:

<TABLE>
<CAPTION>

     December 31,                                               1999         1998
     --------------------------------------------------------------------------------
<S>                                                            <C>         <C>
     Deferred income tax liabilities:
           Accelerated depreciation                            $ 3,818     $ 3,151
           Basis difference in amortization of intangibles         835         920
     --------------------------------------------------------------------------------
              TOTAL DEFERRED INCOME TAX LIABILITIES              4,653       4,071
     --------------------------------------------------------------------------------
     Deferred income tax assets:
           Net loss in foreign subsidiaries                        838         686
           State tax, net operating loss carryforward              694         649
           State investment tax credit carryforward                781         790
           Accumulated translation adjustment                      460         300
           Other                                                   202          74
     --------------------------------------------------------------------------------
              TOTAL DEFERRED INCOME TAX ASSET                    2,975       2,499
     --------------------------------------------------------------------------------
     Less valuation allowance                                     (753)       (757)
     --------------------------------------------------------------------------------
              NET DEFERRED INCOME TAX ASSET                      2,222       1,742
     --------------------------------------------------------------------------------
              NET LONG-TERM DEFERRED INCOME TAX LIABILITIES    $ 2,431     $ 2,329
     ================================================================================
</TABLE>

     At December 31, 1999, the Company has a $764 federal net operating loss
     carryforward available to offset future taxable income through 2013. The
     Company also has state net operating loss carryforwards

                                      F-14
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================

     aggregating $15,085, which expire through 2004. State investment tax credit
     and research credit carryforwards aggregating $919 at December 31, 1999
     expire at various dates from 2003 through 2014. A valuation allowance has
     been established for the tax effect of those state net operating loss
     carryforwards and state investment tax credit and research credit
     carryforwards, which are not expected to be realized.

     The Company files a consolidated federal income tax return that includes
     the results of all its domestic subsidiaries and separate state and local
     income tax returns.

9.   COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS:

     The Company has noncancelable operating leases expiring through 2004 for
     the rental of office and manufacturing facilities. The leases also require
     payments for real estate taxes and other operating costs. The Company also
     leases land at one of its foreign subsidiaries. This lease expires in
     January 2026 with an option to renew for an additional 29 years.

     Approximate minimum future rental payments, exclusive of payments for real
     estate taxes and other operating costs under these leases, are as follows:

              Year ending December 31,

                        2000                     $  827
                        2001                        830
                        2002                        832
                        2003                        746
                        2004                        394
                     Thereafter                   1,551
               -----------------------------------------------
                                                 $5,180
               ===============================================

     Rent expense charged to operations for the years ended December 31, 1999,
     1998 and 1997 amounted to $741, $853, and $669, respectively.

     The Company has employment agreements with 4 officers (the "Officers"),
     expiring through 2004. The approximate aggregate commitment for future
     salaries, excluding bonuses, under these employment agreements is as
     follows:

               Year ending December 31,

                         2000                       $  701
                         2001                          547
                         2002                          414
                      Thereafter                       327

               -----------------------------------------------
                                                    $1,989
               ===============================================

     The employment agreement with one of these Officers automatically
     extends for one year and for two Officers automatically extend on a
     year to year basis unless modified or terminated by one of the parties.

     The Officers have agreed not to engage in a business that is
     competitive with the Company during the term of their agreement and for a
     period of one year thereafter.

                                      F-15
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================

     In December 1996, the Company entered into a consignment agreement (the
     "Gold Consignment Agreement") with Fleet Precious Metals ("FPM") which, as
     amended, expires on June 30, 2000. Under the Gold Consignment Agreement,
     the Company purchases gold used in its manufacturing of materials. The Gold
     Consignment Agreement provides for gold on consignment not to exceed the
     lesser of 5,000 troy ounces of gold or gold having a market value of
     $1,870. The Gold Consignment Agreement requires the Company to pay a
     consignment fee of 5.5% per annum based upon the value of all gold
     consigned to the Company. The Company and FPM intend to negotiate a longer
     term committed arrangement before the present June 30, 2000 maturity of the
     Gold Consignment Agreement. At December 31, 1999, the Company's obligation
     under the Gold Consignment Agreement was approximately 3,776 troy ounces of
     gold valued at approximately $1,096.

     The Securities and Exchange Commission (the "SEC") conducted a private
     investigation pursuant to a formal order to determine whether any persons
     may have violated the federal securities laws in connection with the
     purchase or sale of the Company's securities prior to the December 30, 1996
     announcement relating to its anticipated financial results for the fourth
     quarter of fiscal 1996. As a general matter, the SEC takes the position
     that its investigation should not be construed as an indication that any
     violations of law have occurred or as an adverse reflection upon any person
     or security. The Company has cooperated fully with the SEC in its
     investigation which commenced in early 1998. Since June 1998, the Company
     has not received any additional requests for information or communications
     from the SEC concerning this matter.

     In connection with the Company's acquisition of Polese in 1993, for a
     period of 10 years from the date of acquisition, the former sole
     shareholder of Polese and a current executive officer of the Company, is
     entitled to receive 10% of (i) the pretax profit from the Company's
     copper/tungsten product line after allocating operating costs, and (ii) the
     proceeds of the sale, if any, by the Company of the powdered metal
     technology. Amounts due pursuant to this agreement will be charged to
     operations as incurred. For the year ended December 31, 1999, $500 has been
     charged to operations pursuant to this agreement.

10.  CAPITAL TRANSACTIONS:

     SHARE HOLDER RIGHTS PLAN: On March 26, 1999, the Company's Board of
     Directors unanimously adopted a shareholder rights plan (the "Rights
     Plan"), commonly referred to as a "poison pill." Under the Rights Plan,
     shareholders of record on June 15, 1999 (unless excepted under the terms of
     the Rights Plan) will receive rights until the distribution date to
     purchase a unit consisting of one one-thousandth of a Series of Preferred
     Shares of the Company at $50 per unit.

     The Board of Directors may declare a distribution date within ten (10)
     business days following (i) the acquisition of or right to acquire, by a
     person or group, fifteen (15%) percent or more of the outstanding shares of
     the Company or (ii) the commencement of a tender offer or exchange offer
     that would, if consummated, result in a person or group owning fifteen
     (15%) percent or more of the outstanding shares of the Company. Upon the
     declaration of a distribution date, each holder of a right will have the
     right to receive, upon exercise, common shares having a value equal to two
     times the exercise price of the right. In the alternative, the Board of
     Directors, at its option, may exchange all outstanding and exercisable
     rights for common shares at an exchange ratio of one common share per each
     right. The Board may redeem the rights prior to an event triggering a
     distribution date at $.001 per right.

     STOCK OPTIONS: The Company has an incentive stock option plan (the
     "Incentive Plan"), as amended, under which 900,000 common shares have been
     reserved for future issuance. The Incentive Plan provides for the sale of
     shares to employees of the Company at a price not less than the fair market
     value of the shares on the date of the option grant, provided that the
     exercise price of any option granted to an employee owning more than 10% of
     the outstanding common shares of the Company may not be less than 110% of
     the fair

                                      F-16
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================

     market value of the shares on the date of the option grant. The term of
     each option and the manner of exercise is determined by the board of
     directors, but in no case can the options be exercisable in excess of 10
     years beyond the date of grant. In May 1995, the Company adopted a
     nonqualified stock option plan (the "Nonqualified Plan"), as amended, under
     which 300,000 shares have been reserved for future issuance.

     At December 31, 1999, options to purchase 652,750 and 172,500 shares of
     common stock (excluding lapsed shares) have been granted under the
     Incentive Plan and the Nonqualified Plan, respectively, since the inception
     of both plans. In addition, at December 31, 1999, options to purchase
     211,250 shares of common stock have been granted outside the Incentive Plan
     and the Nonqualified Plan at a price equal to the fair market value of the
     shares at the date of grant.

     A summary of the status of the Company's options as of December 31, 1999,
     1998 and 1997, and changes during the years then ended is presented below:

<TABLE>
<CAPTION>

     December 31,                                      1999                     1998                      1997
     -------------------------------------------------------------------------------------------------------------------
                                                     Weighted-                 Weighted-                 Weighted-
                                                     Average                   Average                   Average
                                                     Exercise                  Exercise                  Exercise
                                          Shares      Price         Shares      Price         Shares      Price
     -------------------------------------------------------------------------------------------------------------------
<S>                                      <C>           <C>         <C>           <C>         <C>           <C>
     Outstanding at
        Beginning of year                492,925       $5.01       644,950       $7.69       510,000       $7.00
     Canceled                           (135,275)       6.11      (555,550)       7.73       (23,000)       8.06
     Granted                             403,000        2.64       403,525        4.48       178,050        9.55
     Exercised                           (20,625)       2.83          -          N/A         (20,100)       6.37
     -------------------------------------------------------------------------------------------------------------------

     Outstanding at                      740,025       $3.58       492,925       $5.01       644,950       $7.69
     end of year
     ===================================================================================================================

     Options exercisable                 467,025                   386,050                   499,900
     at year-end
     ===================================================================================================================

     Weighted-average fair value of                    $1.54                     $1.83                     $4.88
     options granted during the year
     ===================================================================================================================
</TABLE>

     The Board of Directors approved a stock option exchange and repricing
     program pursuant to which, on December 1 and December 10, 1998, certain
     holders of qualified and nonqualified options were eligible to reduce by
     1/2 the number of their existing shares under option in exchange for
     repriced options at a price of $3.00 per share. The market price of the
     underlying shares was $2.47 and $2.94 on December 1 and December 10,
     respectively, and therefore, no compensation expense has been recorded by
     the repricing. The repriced options under the program continued the terms
     and vesting periods of the underlying exchanged options. Of the 695,700
     options outstanding as of December 1, 1998, approximately 491,800 shares
     were eligible for the exchange and repricing program. Holders exchanged a
     total of 403,550 shares under option resulting in a total of 201,775
     repriced shares which are included for purposes of the accompanying table
     as shares canceled and granted, respectively, during 1998.

                                      F-17
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================

     The following table summarizes information about fixed stock options
     outstanding at December 31, 1999:

<TABLE>
<CAPTION>
                                        OPTIONS OUTSTANDING                      OPTIONS EXERCISABLE
                       --------------------------------------------------     --------------------------
                          Number             Weighted-                          Number
                        Outstanding           Average           Weighted-     Exercisable      Weighted-
                            at               Remaining           Average          at           Average
    Range of           December 31,         Contractual         Exercise      December 31,     Exercise
Exercise Prices            1999                Life               Price          1999           Price
------------------------------------------------------------------------------------------------------------
<S>                       <C>                   <C>              <C>            <C>            <C>
$  1.65 - $  1.79         243,000               8.6              $  1.64        10,000         $  1.63
$  1.85 - $  3.88         234,025               5.5                 3.05       224,025            3.05
$  4.00 - $  6.63         191,500               6.4                 4.78       161,500            3.37
$  7.69 - $  8.25          45,500               2.1                 8.10        45,500            8.10
$  8.88 - $  9.88          26,000               1.8                 9.83        26,000            9.88

------------------------------------------------------------------------------------------------------------
$  1.65 - $  9.88         740,025               6.4              $  3.58       467,025         $  4.01
============================================================================================================
</TABLE>

     The Company has elected, in accordance with the provisions of SFAS No. 123,
     to apply the current accounting rules under APB Opinion No. 25 and related
     interpretations in accounting for its stock options and, accordingly, has
     presented the disclosure-only information as required by SFAS No. 123. If
     the Company had elected to recognize compensation cost based on the fair
     value of the options granted at the grant date as prescribed by SFAS No.
     123, the Company's net income (loss) and earnings (loss) per common share
     for the years ended December 31, 1999, 1998 and 1997 would approximate the
     pro forma amounts indicated in the table below.

     Year ended December 31,                        1999        1998     1997
     ---------------------------------------------------------------------------

     Net income (loss) - as reported              $7,383    $(11,958)  $3,793
     ===========================================================================

     Net income (loss) - pro forma                $7,124    $(12,111)  $3,245
     ===========================================================================

     Earnings (loss) per share - as reported:
        Basic                                     $ 1.22    $  (1.98)  $  .62
        Diluted                                   $ 1.19    $  (1.98)  $  .61
     ===========================================================================

     Earnings (loss) per share - pro forma:
        Basic                                     $ 1.18    $  (2.00)  $  .53
        Diluted                                   $ 1.14    $  (2.00)  $  .52
     ===========================================================================

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes option-pricing model with the following weighted-average
     assumptions used for the years ended December 31, 1999, 1998 and 1997,
     respectively: expected volatility of 79.30%, 66.6% and 57%, respectively;
     risk-free interest rates of 5.2%, 5.6% and 6.3%, respectively; and
     expected lives of 4.1 years, 4.9 years and 3.5 years, respectively.

                                      F-18
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================

11.  SEGMENT INFORMATION

     In 1998, the Company adopted SFAS No. 131, DISCLOSURE ABOUT SEGMENTS OF AN
     ENTERPRISE AND RELATED INFORMATION. The accounting policies of the segments
     are described in Note 1. The Company evaluates performance of its segments
     and allocates resources to them based on sales and operating income.

     The Company operates primarily in two industry segments, the Materials
     Group and the Services Group. The tables below present information about
     reported segments:

<TABLE>
<CAPTION>
                                                            Corporate and
     Year Ended                      Materials   Services    Reconciling    Consolidated
     December 31, 1999                 Group       Group        Items          Total
     ---------------------------------------------------------------------------------------
<S>                                   <C>         <C>         <C>           <C>
     Revenue                          $46,666     $16,858     $       -     $ 63,524
     Cost of goods sold and
     services performed                29,348      12,970             -       42,318
     ---------------------------------------------------------------------------------------

     Gross profit                      17,318       3,888             -       21,206
     Operating expenses                10,065       3,996             -       14,061
     ---------------------------------------------------------------------------------------

     Income (loss) from operations    $ 7,253     $  (108)    $       -     $  7,145
     =======================================================================================
     Segment assets                   $62,627     $33,484     $ (35,039)    $ 61,072
     =======================================================================================
     Capital expenditures             $ 2,468     $   251     $       -     $  2,719
     =======================================================================================
     Depreciation expense             $ 2,530     $ 2,549     $       -     $  5,079
     =======================================================================================

<CAPTION>
                                                            Corporate and
     Year Ended                      Materials   Services    Reconciling    Consolidated
     December 31, 1998                 Group       Group        Items          Total
     ---------------------------------------------------------------------------------------
<S>                                   <C>         <C>         <C>           <C>
     Revenue                          $47,524     $ 18,379     $       -    $ 65,903
     Cost of goods sold and
     services performed                37,982       15,143             -      53,125
     ---------------------------------------------------------------------------------------

     Gross profit                       9,542        3,236             -      12,778
     Operating expenses                12,319       14,686             -      27,005
     ---------------------------------------------------------------------------------------

     Loss from operations             $(2,777)    $(11,450)    $       -    $(14,227)
     =======================================================================================
     Segment assets                   $76,688     $ 36,641     $ (31,005)   $ 82,324
     =======================================================================================
     Capital expenditures             $ 2,036     $  1,027     $       -    $  3,063
     =======================================================================================
     Depreciation expense             $ 2,460     $  2,722     $       -    $  5,182
     =======================================================================================
</TABLE>

                                      F-19
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================
<TABLE>
<CAPTION>
                                                            Corporate and
     Year Ended                      Materials   Services    Reconciling    Consolidated
     December 31, 1997                 Group       Group        Items          Total
     ---------------------------------------------------------------------------------------
<S>                                   <C>         <C>         <C>           <C>
     Revenue                          $48,029     $23,047     $       -     $71,076
     Cost of goods sold and
     services performed                33,185      17,514             -      50,699
     ---------------------------------------------------------------------------------------

     Gross profit                      14,844       5,533             -      20,377
     Operating expenses                 8,311       3,681             -      11,992
     ---------------------------------------------------------------------------------------

     Income from operations           $ 6,533     $ 1,852     $       -     $ 8,385
     =======================================================================================
     Segment assets                   $71,844     $47,390     $ (27,369)    $91,865
     =======================================================================================
     Capital expenditures             $ 2,734     $10,385     $       -     $13,119
     =======================================================================================
     Depreciation expense             $ 1,935     $ 2,137     $       -     $ 4,072
     =======================================================================================
</TABLE>

     The Company's areas of operation are principally in the United States.
     Operations outside the United States are worldwide but are primarily in
     Europe, North Africa and Asia. No single foreign country or geographic area
     is significant to the consolidated operations. Revenue from two customers
     accounted for 31% of the Company's total revenue for the year ended
     December 31, 1999. Revenue from one of these customers accounted for 10% of
     the Company's total revenue for the year ended December 31, 1998. For the
     year ended December 31, 1997 revenue from the other customer accounted for
     11% of the Company's total revenue.

12.  EXPORT REVENUE:

     For the years ended December 31, 1999, 1998 and 1997, export revenue to
     unaffiliated customers amounted to approximately 24%, 18% and 15%,
     respectively, of the Company's total revenue.

13.  SPECIAL CHARGES:

     In 1998, the Company recorded special charges of $11,217 ($7,740 after tax
     or $1.28 per share). The Company recorded $1,950 of this charge during the
     first quarter and the balance of $9,267 during the fourth quarter of the
     year. The majority of this charge relates to a review of the carrying
     values of the Company's Services Group assets and the closing of a Service
     Group plant in the first quarter of 1998.

     During the first quarter of 1998, the Company recorded this charge of
     $1,950 in conjunction with a restructuring of the Services Group that
     included closing its Texas operation and consolidating domestic business
     and equipment into the Group's Rhode Island facility. During 1998, the
     Company paid all of the $1,950 charges recorded in the first quarter. The
     Company recorded an additional $230 of charges in the fourth quarter
     related to a leased facility for costs which continued after the Texas
     facility was vacated.

     As a result of the Services Group's inability to achieve the improvements
     anticipated by the restructuring plan, primarily due to a more severe than
     anticipated market decline, the division continued operating at a loss in
     1998. This triggered an impairment and utilization review of the Services
     Group's long-lived

                                      F-20
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
================================================================================

     assets. The Company prepared revised projections by customer and product
     line which provided the basis for determining the continued usability and
     carrying value of its long-term assets. The Company identified
     approximately $4,700 of excess Services Group equipment that was written
     down to estimated fair value, less cost of disposal. In addition, the
     Company wrote down approximately $2,700 of goodwill associated with the
     Texas facility customers and lines of business that have been eliminated.
     Due to continuing financial problems of the Services Group's 50.1%-owned
     Singapore operation, the Company recorded an asset impairment of $1,000 in
     response to uncertainty regarding the ultimate recoverability of its
     investment.

     The Company's Materials Group recorded a special charge of $620 in the
     fourth quarter of 1998, consisting of a write-down of $473 in goodwill
     associated with a line of business that has been eliminated and the
     write-down of $147 of unusable equipment.

14.  ALLOWANCE FOR DOUBTFUL ACCOUNTS:

     Information relating to the allowance for doubtful accounts is as follows:

                                 Balance at   Charged to                Balance
                                  Beginning    Costs and                at End
     Description                   of Year     Expenses    Deductions   of Year

     Year ended December 31,

             1999                    $245        $417        $  6(a)      $656
     ===========================================================================
             1998                    $181        $188        $124(a)      $245
     ===========================================================================
             1997                    $143        $103        $ 65(a)      $181
     ===========================================================================

     (a)  Write-off of uncollectible accounts receivable.



                                      F-21
<PAGE>

                                   SIGNATURES

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

                             SEMX CORPORATION
                               (Registrant)

                             By: /s/ Gilbert D. Raker
                                 ------------------------------------
                                 Gilbert D. Raker, Chief Executive
                                 Officer, President, Chairman of the Board of
                                 Directors and Director

Dated: March 29, 2000

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


/s/ Gilbert D. Raker                                             March 29, 2000
------------------------------------
Gilbert D. Raker, Chief Executive
Officer, President, Chairman of
the Board of Directors and Director


/s/ Frank J. Polese                                              March 29, 2000
------------------------------------
Frank J. Polese, Vice Chairman
and Director


/s/ Mark A. Koch                                                 March 29, 2000
------------------------------------
Mark A. Koch,
Controller and Secretary
Chief Accounting Officer


/s/ Mark A. Pinto                                                March 29, 2000
------------------------------------
Mark A. Pinto, Director


/s/ John U. Moorhead, II                                         March 29, 2000
------------------------------------
John U. Moorhead, II, Director


/s/ Andrew Lozyniak                                              March 29, 2000
------------------------------------
Andrew Lozyniak, Director


/s/ Steven B. Sands                                              March 29, 2000
------------------------------------
Steven B. Sands, Director


/s/ Richard D. Fain                                              March 29, 2000
------------------------------------
Richard D. Fain, Director